Category Archives: Allegiant Travel Company

Allegiant reports its 3Q results, will now retire its last McDonnell Douglas MD-80 by the end of 2018

Allegiant Air McDonnell Douglas DC-9-83 (MD-83) N884GA (msn 49401) BWI (Tony Storck). Image: 939690.

Allegiant Travel Company (Allegiant Air) has reported the following financial results for the third quarter 2017, as well as comparisons to the prior year:

Three Months Ended
September 30,
Nine Months Ended
September 30,
Unaudited 2017 2016 Change 2017 2016 Change
Total operating revenue (millions) $ 348.8 $ 333.5 4.6 % $ 1,125.2 $ 1,026.9 9.6 %
Operating income (millions) $ 42.9 $ 76.8 (44.1 )% $ 201.0 $ 302.4 (33.5 )%
Net income (millions) $ 22.3 $ 45.5 (51.0 )% $ 112.4 $ 178.3 (37.0 )%
Diluted earnings per share $ 1.39 $ 2.75 (49.5 )% $ 6.85 $ 10.73 (36.2 )%
Return on capital employed* 14.7 % 24.8 %

* – see appendix for calculation, represents twelve months ended September 30

 

“Lastly, our board of directors approved a more aggressive retirement plan for our MD-80s. We now plan to retire our last MD by the end of 2018. This is one year earlier than was previously expected. A hearty ‘thank you’ goes out to the members of our fleet team, who through hard work were able to source enough used A320 aircraft to make this happen. This is the end of an era for our company. The ‘80’ has been critical to our success and growth for the past 15 years – it will be missed.”

Notable highlights

  • Operational improvements – 61 percent reduction in controllable cancellations in the quarter
  • Airbus growth – Added five A320s and one A319 into revenue service during the quarter
  • MD-80 retirements – Retired five MD-80s during the quarter – remainder expected to be retired by the end of 2018
    ◦ MD-80s and related assets have a net book value of $42 million and are being reviewed for impairment
  • Sunseeker Resorts – In August, announced plans to develop a hotel/condo resort in Charlotte County, Florida
  • Network growth – As of September 30, 2017 the company is operating 373 routes versus 337 last year
  • New aircraft base – Announced Indianapolis, Indiana as an aircraft base to support the growth in that area
  • Shareholder returns – $11 million was returned through its recurring dividend paid in September 2017. The company:
    ◦ Will pay dividend of $0.70/share on December 5, 2017 to shareholders of record as of November 22, 2017
    ◦ Has share repurchase authorization of up to $100 million

Third quarter 2017 revenue

  • TRASM results – Third quarter TRASM increased 0.7 percent in spite of:
    Increased MD-80 spares during the quarter, which resulted in a three percent decline in peak period capacity
    Hurricane Irma:
    ▪ Approximately two percent of scheduled ASMs for the quarter were canceled
    ▪ TRASM – Expected benefit from reduced ASMs – offset by refunds and decreased demand to Florida

Fourth quarter 2017 revenue trends

  • TRASM guidance – Expect a decline between three and 0.5 percent which is influenced by:
    ◦ Hurricane Irma and the Las Vegas mass shooting
           ▪ Approximately 80 percent of fourth quarter ASMs touch Las Vegas or Florida
    ▪ So far a decrease in demand during fourth quarter
    ▪ Impact on fourth quarter TRASM expected to be approximately between 3 and 3.5 percentage points
    ◦ Peak period flying – Fourth quarter peak capacity expected to increase nine percentage points

Third quarter cost

  • Third quarter CASM ex fuel increased 16.7 percent versus the same period last year, primarily driven by:
    ◦ Transition costs added four percentage points to increase, including:
    Reduced ASMs from fleet transition through lower utilization of MD-80s
    ▪ Other operational inefficiencies driven by the transition to an all Airbus fleet
      ◦ New pilot agreement – Added one percentage point
    Incremental depreciation from additional Airbus aircraft – added three percentage points
    Elimination of the credit card surcharge product
    ▪ January 2017 discontinued credit card surcharge which had offset sales and marketing expense
    ▪  Added four percentage points in quarter
    Hurricane Irma – Added almost two percentage points due to flight cancellations

Fourth quarter 2017 cost trends

  • Fourth quarter 2017 CASM ex fuel is expected to increase between seven and nine percent, primarily driven by:
    ◦ Transition costs – Expected to add three percentage points to increase, including:
    Reduced ASMs from fleet transition through lower utilization of MD-80s
    ▪ Other operational inefficiencies driven by the transition to an all Airbus fleet
      ◦ New pilot agreement – Expected to add one percentage point due to increased benefit costs
    Incremental depreciation on additional Airbus aircraft – Expected to add two percentage points
    Elimination of credit card surcharge – Expected to add three percentage points

Full year 2017 cost trends

  • Full year 2017 CASM ex fuel
      ◦ Expected to increase between eleven and twelve percent
    ◦ Previously guided range of plus ten to twelve percent
  • Maintenance and repairs expense
    ◦ Expected between $105 and $110 thousand per in-service aircraft per month for 2017
    ◦ Previously guided range – between $100 and $110 thousand
  • Total ownership expense per aircraft per month
      ◦ 2017 ownership expense per in-service aircraft – between $125 and $130 thousand per month
    ◦ Previously guided range between $125 and $135 thousand

Balance sheet activity and full year 2017 trends

  • Full year CAPEX guidance is expected to be $604 million, versus prior guidance of $525 million
    ◦ Higher amount driven by expected commitment for five additional Airbus A320 aircraft in the fourth quarter
    ◦ Excludes Airbus heavy maintenance and Sunseeker resort
  • Raised $158 million in debt proceeds during the third quarter
    ◦ Includes monies drawn from existing $56 million revolving credit facility
    ◦ Seven Airbus aircraft remain unencumbered at end of third quarter
    ▪ Includes one new A320 which was collateralized in October

Copyright Photo: Allegiant Air McDonnell Douglas DC-9-83 (MD-83) N884GA (msn 49401) BWI (Tony Storck). Image: 939690.

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Allegiant reports its 3Q net profit increased 213.4% to $44.5 million

Allegiant Travel Group (Allegiant Air) (Las Vegas) reported its third quarter net income jumped by 213.4 percent from $14.2 million in 2014 to $44.5 million for this year.

Allegiant logo-3

Aircraft fleet plan by end of period:

Aircraft – (seats per AC) 3Q15 4Q15 YE16
MD-80 (166 seats)         51       51      46
757 (215 seats)                6          5        4
A319 (156 seats)              7       10      17
A320 (177 seats)           10        15      16
Total                                74        81      83

Aircraft listed in table above include only in service aircraft, planned retirements and future aircraft under contract

Read the full report: CLICK HERE

Copyright Photo: Keith Burton/AirlinersGallery.com. Allegiant continues to expand its Airbus fleet. The company increased the number of Airbus aircraft in service by seven versus last year. According to the company, Airbus aircraft flew over 77 percent of the incremental scheduled service ASMs in the third quarter. In addition, Airbus aircraft flew over 32 percent of the third quarter ASMs versus 22 percent a year ago. Airbus A319-112 HB-JZN (msn 2387) became N302NV with Allegiant.

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Allegiant acquires three former Hamburg Airways Airbus A320s

Allegiant Travel Company (Allegiant Air) (Las Vegas) has announced that it has purchased three additional Airbus A320 aircraft. The aircraft were most recently operated by Hamburg Airways in Europe and are scheduled to enter the Allegiant operating fleet in 2015.

Specially the three aircraft are N227NV (msn 714, ex D-AHHH, N228NV (msn 716, ex D-AHHD) and N229NV (msn 730, ex D-AHHG).

On the financial side, the company reported first quarter net income of $64.9 million, up 89.8 percent from the same quarter a year ago.

The CEO commented on the results:

Allegiant logo-3

“We are very proud to report our 49th consecutive profitable quarter, a record quarter for the company, both in absolute terms and on a percentage basis,” stated Maurice J. Gallagher, Jr., Chairman and CEO of Allegiant Travel Company. “I especially want to thank our team members for their contributions. Their everyday efforts delivering customers safely and reliably is critical to our continued success. It’s nice to start the year off with such strong results after coming off one of the most operationally challenging years in recent memory.

“I’m also pleased to announce our pilots will be receiving a pay increase as a result of our continued success. Excluding a $43.3 million non-cash impairment change in the fourth quarter of 2014, our trailing twelve month operating margin was 21.8 percent as of March 31st. As part of our pilots’ variable pay band structure, pilot pay scales will increase between 5 and 7 percent per hour effective May 1st.

Finally CEO Gallagher commented on the on-going dispute with its pilots and additional focus by the FAA:

“And lastly we have had recent labor/legal issues with the representative of our pilots, the IBT. We expect a successful outcome on our Preliminary Injunction request before the Las Vegas Federal court in the coming weeks. In conjunction with these labor activities, our local FAA office has stepped up surveillance of our operations. We are not aware of any findings from the FAA related to this increased surveillance. However, the FAA has indicated their heightened focus and surveillance associated with the labor activity will continue until the outcome of the litigation is known. While this increased surveillance is in place, the FAA has indicated it will not process any current or additional requests for work that may relate to our planned growth. At the current time, we do not expect any immediate effect on our operations.”

Copyright Photo: Bruce Drum/AirlinersGallery.com. Airbus A320-214 N218NV (msn 1229) in the special “Make-A-Wish” livery arrives at Sanford (near Orlando).

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Allegiant goes to court to prevent a strike by its pilots

Allegiant Air (Las Vegas) and its relationship with its pilots, represented by the International Brotherhood of Teamsters (IBT), seems to be getting worse. Yesterday afternoon the airline went to a local U.S. District Court in Las Vegas to block a threatened strike by its pilots. The unionized pilots see a strike as their last resort in the stalled contract talks that are headed towards arbitration.

The company issued this statement:

Allegiant Air has received a court order, pilots will resume flying.

A court in Las Vegas has issued a temporary restraining order (TRO) against International Brotherhood of Teamsters Local 1224, which represents the Allegiant pilots.

Allegiant has every reason to believe that the Teamsters will honor the court’s instructions and will not be able to continue with their illegal intention to strike. This order will prevent a threatened pilots’ strike which would have left potentially thousands of travelers with cancelled flights over the Easter holiday weekend. Based on this, all scheduled Allegiant flights are expected to operate normally.

With the threat of an imminent strike over, Allegiant hopes that both parties can now focus on the next federally mediated negotiating session, scheduled for late April.

Previously before Allegiant went to court to get a restraining order, the pilot union issued this statement yesterday:

Veteran pilots at Allegiant Air, the country’s most profitable airline, announced this morning (April 1) that they will not be flying regularly scheduled routes on Thursday, April 2 from the airline’s major hubs across the country, including Orlando, Phoenix, Tampa and Las Vegas. The strike comes as Allegiant refuses to reestablish a prior scheduling system and restore other basic benefits that have been illegally rolled back over a two-year period during which the company has posted record-level profits. In January, 98 percent of the company’s pilots, including those on reserve duty, voted to authorize a strike.

“Striking is a last resort, but we cannot continue to stand by a company that flaunts the law by robbing the pilots of legally protected rights and benefits. The company has to restore the status quo that it illegally took from us,” said Tom Pozdro, a pilot based in Las Vegas. “We deeply regret the inconvenience to our passengers and other work groups and encourage them to call Allegiant, asking them to do what is right by honoring its commitment to its pilots and the public by restoring our basic, legally regarded standards, protections and benefits.”

The strike has the potential to ground more than 250 flights from taking off Thursday, impacting over 33,000 customers, including thousands headed to Las Vegas for March Madness Final Four events, Spring Break travelers and others. On Monday, pilots posted an open letter to Allegiant customers alerting them to concerns at the airline, including operational problems that lead to the delays and cancellations that have made Allegiant one of the least popular airlines in the travel industry.

Allegiant Air is the most profitable commercial airline in the U.S. with 48 consecutive profitable quarters. Its executives are among the highest compensated in the industry, with the company CEO – and largest shareholder – taking home tens of millions in shareholder returns in recent years.

“Allegiant is making millions in profits, yet executives refuse to invest in the company’s infrastructure, operations and workforce. The haphazard scheduling system is creating exhaustion and stress for pilots,” said Tom Cox, a pilot based out of Phoenix who has been with Allegiant for over five years. “Pilots at Allegiant want to put our company on the right track for long-term success, and that means reinvesting in its workforce and planes. They can start with complying with the law by reinstating the legally protected work rules and benefits they took from us.”

Read the full report from 8 News Now in Las Vegas: CLICK HERE

Anti-Union Allegiant CEO Maurice Gallegher’s worst nightmare: Read Ted Reed’s excellent story in Forbes: CLICK HERE

Copyright Photo: Bruce Drum/AirlinersGallery.com. Airbus A320-214 N217NV (msn 1347) arrives back at the Sanford (near Orlando base).

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Allegiant announces 22 new routes, will acquire two more Airbus A320s

Allegiant Air (Las Vegas) has announced new, nonstop jet service on 22 routes, including a new destination in the Allegiant network — Savannah-Hilton Head, Georgia.

New routes announced include:

Seasonal Nonstop Service to Austin-Bergstrom International Airport (AUS) from:

1. Cincinnati, Ohio – begins June 4, 2015

Seasonal Nonstop Service to Los Angeles International Airport (LAX) from:

1. Little Rock, Ark. – begins June 4, 2015

Seasonal Nonstop Service to Telluride, Colorado via Montrose Regional Airport (MTJ) from:

1. Los Angeles, California – begins June 5, 2015

Seasonal Nonstop Service to Myrtle Beach International Airport (MYR) from:

1. Akron / Canton, Ohio – begins June 3, 2015

2. Clarksburg, West Virginia – begins June 5, 2015

3. Indianapolis, Indiana – begins June 4, 2015

4. Sanford (near Orlando, Florida) – begins June 4, 2015

5. Pittsburgh, Pennsylvania – begins June 5, 2015

Seasonal Nonstop Service to Oakland International Airport (OAK) from:

1. Omaha, Nebraska – begins May 1, 2015

Seasonal Nonstop Service to Savannah-Hilton Head International Airport (SAV) from:

1. Akron / Canton, Ohio – begins May 21, 2015

2. Cincinnati, Ohio – begins May 8, 2015

3. Columbus, Ohio – begins June 4, 2015

Year-Round Nonstop Service to Fort Lauderdale-Hollywood International Airport (FLL) from:

1. Concord, North Carolina – begins May 8, 2015

2. Memphis, Tennessee – begins May 22, 2015

Year-Round Nonstop Service to Las Vegas McCarran International Airport (LAS) from:

1. Brownsville, Texas – begins June 4, 2015

2. Memphis, Tennessee – begins May 22, 2015

Year-Round Nonstop Service to Los Angeles International Airport (LAX) from:

1. Boise, Idaho – begins June 5, 2015

Year-Round Nonstop Service to Orlando-Sanford International Airport (SFB) from:

1. Memphis, Tennessee – begins May 22, 2015

2. Raleigh-Durham, North Carolina – begins May 7, 2015

Year-Round Nonstop Service to Punta Gorda Airport (PGD) from:

1. Raleigh-Durham, North Carolina – begins May 7, 2015

Year-Round Nonstop Service to St. Petersburg-Clearwater International Airport (PIE) from:

1. Akron / Canton, Ohio – begins May 21, 2015

2. Raleigh-Durham, North Carolina – begins May 6, 2015

Over the years, Allegiant has carried over 43 million passengers, and the company continues to grow, offering more nonstop service in more communities. In 2014, Allegiant announced service in six new cities and added 25 new routes to its network, at a time when many airlines are consolidating and cutting service. The company recently announced its 48th consecutive quarter of profitable operation while keeping its average one-way fare under $100.

Allegiant Travel Company also announced that it has entered into an agreement to purchase two additional A320 aircraft. The aircraft are currently being operated by Philippine Airlines (Philippines) and are scheduled to enter the Allegiant operating fleet toward the end of 2015.

Including the two A319s that deliver in 2015, which were announced on February 23, the company now expects 2015 CAPEX to be approximately $230 million.

Copyright Photo: Bruce Drum/AirlinersGallery.com. Airbus A320-214 N217NV (msn 1347) arrives at Orlando-Sanford International Airport (SFB).

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Allegiant Air to acquire six ex-Cebu Pacific Air Airbus A319s

Allegiant Travel Company (Allegiant Air) (Las Vegas) today (February 23) announced that it has entered into an agreement to purchase six additional Airbus A319 aircraft. The aircraft are currently being operated by Cebu Pacific Air and are scheduled to enter the Allegiant operating fleet from the end of 2015 through 2017.

“We continue to be able to find high quality, used A319s that fit our specification,” said Jude Bricker, Senior Vice President of Planning. “These aircraft will have 156 seats which is similar to our current A319s. Including these aircraft, we have added commitments for ten additional A320 series aircraft so far this year and will remain active in the used A320 market,” concluded Bricker.

Two of the aircraft will be purchased in 2015 and the company expects the remainder to be purchased in 2016. Allegiant’s expected fleet plan including all aircraft currently under contract is as follows:

Allegiant Fleet Numbers 2.2015

Meanwhile, Cebu Pacific Air issued this statement:

Cebu Pacific (CEB) signed a forward sale agreement with a subsidiary of Allegiant Travel Company, covering Cebu Pacific’s sale of six Airbus A319 aircraft. Allegiant is the parent company of Las Vegas-based low-cost airline, Allegiant Air. Delivery of aircraft to Allegiant is scheduled this year until 2016.

“This agreement is in line with CEB’s efforts to continuously improve operational efficiency by replacing and upgrading our fleet with the larger, more fuel efficient, and longer range A321neo aircraft,” said Lance Gokongwei, CEB President and CEO.

The A321neo is the largest model in the A320neo series, which incorporates new engines and large wing tip devices called sharklets. The advances will deliver fuel savings of 20 percent and additional payload or range capability. The fuel savings translate into some 5,000 tonnes less CO2 per aircraft per year. In addition, the aircraft will provide a double-digit reduction in NOx emissions and reduced engine noise.

CEB currently operates a fleet of 54 aircraft comprised of 10 Airbus A319, 31 Airbus A320, 5 Airbus A330 and 8 ATR 72-500 aircraft. Between 2015 and 2021, Cebu Pacific will take delivery of 7 more brand-new Airbus A320, 1 Airbus A330, and 30 Airbus A321neo aircraft.

CEB’s Airbus A321neo aircraft will be equipped with the Pratt and Whitney PurePower Geared Turbofan™ engine. The aircraft has a flying radius of over 6 hours and can be configured to have up to 240 seats. This will enable CEB to access new markets in the Indian subcontinent and Australia, including Perth, Brisbane and Adelaide. ​

Copyright Photo: Michael B. Ing/AirlinersGallery.com. The pictured Airbus A319-111 N301NV (msn 2319) is leased from GECAS and was previously operated by easyJet (Switzerland) as HB-JZK) and by easyJet (UK) as G-EZEX.

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Due to the write down of the Boeing 757 fleet, Allegiant reports a lower profit

Allegiant Travel Group (Allegiant Air) (Las Vegas) reported financial results for the fourth quarter and full year 2014. For the 4Q, the company reported net income of only $4.8 million, down 72.6 percent from the same period a year ago when it reported a 4Q net profit of $17.5.

For 2014, the company reported a net profit of $86.7 million versus $92.3 million for 2013.

This represents the 48th consecutive profitable quarter. The lower earnings were due to a write down in the value of its Boeing 757-200 fleet of $43.3 million in the fourth quarter as previously reported.

“We are very proud to report our 48th consecutive profitable quarter,” stated Maurice J. Gallagher, Jr., Chairman and CEO of Allegiant Travel Company. “Excluding the one-time charge related to the write down of our 757 fleet, full year operating margin increased again, for the third year in a row in spite of a number of operational challenges. Looking forward, we see better execution in 2015.”

Read the full report: CLICK HERE

Copyright Photo: TMK Photography/AirlinersGallery.com. Boeing 757-204 N905NV (msn 27235) lands at the Las Vegas home.

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