Tag Archives: Allegiant Air

Allegiant reports a $93.1 million net loss in the second quarter

Allegiant Travel Company reported the following financial results for the second quarter 2020, as well as comparisons to the prior year:

“The second quarter proved to be the most turbulent quarter in the history of the industry,” stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company. “As the virus spread throughout the country in March and April, the industry saw an unprecedented plummet in demand, followed by significant capacity cuts, upwards of 80 to 90 percent. As cases subsided, demand began trickling back in, only to begin recessing again with the uptick in cases beginning late June. It appears demand will continue to ebb and flow along with fluctuations in reported cases for the foreseeable future. We have built a unique way to operate our company as compared to the rest of the industry, which will continue to sustain us throughout the duration of these uncertain times.

“We are experts when it comes to managing capacity to meet demand. Our model was built around flexing capacity up and down to meet differing seasonal demand levels. This quarter proved to be the ultimate test of the model, and I believe our second quarter results highlight its inherent strength. Throughout the quarter, we maintained a very broad network and selling presence, cutting capacity when it made sense, but also capturing demand when it returned. We completed the quarter with roughly 50 percent reductions in capacity, maintaining the broadest schedule of any domestic carrier. Load factors were just over 50 percent, a significant step in the right direction from April lows. During the second quarter, Allegiant passengers accounted for more than five percent of all TSA screenings conducted. That is astonishing given our market share. These results are a testament to our ability to not only manage capacity, but also our ability to manage cost, further highlighting we are best equipped to react to these fluctuations in market conditions.

“Although we were able to manage through the chaos of the quarter, arguably better than most, this environment is unsustainable long-term. It continues to be of utmost importance to strengthen liquidity positions. We completed the quarter with an average daily cash burn of $900 thousand, a 57 percent reduction from our initial forecasts. June bookings were a significant contributor to this reduction, with several days in June exceeding prior year booking levels. In fact, June bookings resulted in cash breakeven for the month of June. We continued to remain disciplined in regard to cost savings and successfully cut more than 38 percent of operating expenses from the quarter. These efforts coupled with funds received related to the CARES Act as well as executed financing arrangements enabled us to grow our liquidity position by nearly $200 million to end the quarter with total liquidity of $663.1 million. Unfortunately, the strength seen in June has since weakened as case numbers have risen. I am comfortable the strides made in building liquidity throughout the quarter will act as a safety net as we continue to manage the ever-changing demand environment.

“In conclusion, I would like to thank our 4,000 team members for their continued hard work. These are difficult times, yet our employees continue to go the extra mile to prioritize the health and safety of our passengers by performing additional cleaning procedures on board our aircraft, encouraging social distancing practices, and exemplifying the principles of our Going the Distance for Health and Safety program. Although I believe the effects of this pandemic will linger well into 2021 and possibly beyond, I firmly believe Allegiant’s flexible model and financial strength will not only sustain us during these uncertain times, but will ultimately uniquely position us to recover quickly upon a normalized return of demand.”

Covid-19 Responses – Update

Maintain a comprehensive cleaning program for all aircraft that includes a regular schedule of standard and deep-clean procedures that exceed both CDC and Airbus guidance
Utilize VOC (volatile organic compound) filters on board every aircraft, which remove additional organic compounds and ensure that cabin air is changed on average, every three minutes, exceeding HEPA standards
Continue to encourage social distancing at check-in, while waiting at gates, and throughout the boarding process as well as offer complimentary health and safety kits to each passenger upon boarding the aircraft
Treat hard surfaces in all office areas, including airport station offices, maintenance facilities, headquarters/administrative offices, with antimicrobial disinfectant/protectant, and utilize wall-mounted and handheld thermometers for employee and crew member temperature checks
Partner with Quest Diagnostics to provide at-home self-collection COVID-19 test kits to employees in the event local testing is not immediately available
Effective July 2, require customers and crew members to wear face coverings through all phases of travel, including at the ticket counter, in the gate area, and during flight
Offer opt-in option in the booking path for customers to receive notification that their flight has reached 65 percent capacity with option to re-book on another flight with no fee or receive a refund
Continue to waive change and cancellation fees for all customers for future travel as well as extend expiry on credit vouchers to two years
- $80.7 million in cash refunds have been provided year to date
Reduced management and support teams by 220 positions, a 20 percent reduction of those work groups
- Employees will be paid through September 30, 2020, in compliance with the CARES Act

Second Quarter 2020 Results

Reported adjusted loss per share of $5.96, which excludes one-time, non-recurring charges, as detailed in the section below titled “COVID-19 Related Special Charges”, the benefit from the CARES Act payroll support program, and a portion of the tax benefit attributable to the CARES Act
Completed the quarter with load factor in the month of June of 56.8 percent, up 38 points from April
Total revenue for the quarter was $133.3 million, down 72.9 percent year over year
- Progressive improvement in revenue throughout the quarter with April, May, and June decreases of 95 percent, 75 percent, and 52 percent, respectively
- Despite yield pressure, average air ancillary revenue per passenger for the quarter was $51.57, remaining consistent with prior year
Total operating expense was $246.6 million, down 35.7 percent year over year on reduced capacity of 50.1 percent
- Total operating expense, excluding one-time, non-recurring charges noted below and excluding the benefit related to CARES Act payroll support, was $240.0 million, down 37.5 percent

Network

Reduced second quarter capacity by 50.1 percent
- Anticipate third quarter capacity reductions to be 25 percent of planned capacity but will adjust in accordance with demand trends
Conducted minimal close-in cancellations for the months of June and July to date

COVID-19 Related Special Charges

Recognized total special charges related to COVID-19 of $101 million during the second quarter
- $81.2 million included as an operating expense and $19.8 million included as other non-operating expense
$59 million adjustment resulting from the accelerated retirements of seven aircraft, loss on sale leaseback transaction of four A320 series aircraft, and write-off of other aircraft related assets
$10 million adjustment for additional salary and benefits expense in relation to the elimination of 220 positions as well as other non-recurring compensation expense associated with the acceleration of certain existing awards
- Total cash outlay is expected to be only $1.5 million of the $10 million adjustment
$5 million impairment loss related to an investment interest held by the company since 2018
$2 million write-down on various non-aircraft assets
$20 million accrual on the expectation to terminate the loan agreement with Sixth Street Partners (formerly TSSP) intended to finance the development of Sunseeker Resorts Charlotte Harbor
- Expected to be paid throughout the remainder of the year
$5 million related to suspension of construction at Sunseeker

CARES Act

Received $154.7 million of the $171.9 million Payroll Support Program grant in the quarter
- Remaining $17.2 million to be received in July
- Received $17.4 million in loan funds (recorded as debt and warrants) related to the $154.7 millionreceived
  - Expense offset recognized during the second quarter related to the grant was $74.5 million
  - Remaining $62.8 million recorded as an accrued liability to be relieved during the third quarter
- Future expense offset of roughly $75 million to be recognized during the third quarter
$45.6 million of federal income tax refunds related to net operating losses from 2018 and 2019were received in May
- Additional $48.7 million received during July
Expect a federal income tax refund in excess of $125 million related to 2020 net operating losses to be received during the first half of 2021
Eligible to receive up to $276 million loan under the CARES Act

Balance Sheet, Cash and Liquidity

Total cash and investments at June 30^th was $663.1 million
Entered into a sale leaseback transaction on June 23, which included the sale of four A320-series aircraft, generating $48 million
Further sources of liquidity received during the third quarter around $65.9 million, including:
- Federal income tax refund of $48.7 million related to net operating losses from 2018
- Additional payroll support related to the CARES Act of $17.2 million
Federal excise tax refund of $21 million related to net refunds issued during 2020 is expected during the second half of the year
Evaluating option to access up to a $276 million loan available through the CARES Act as well as other secured financing options available
2Q20 daily cash burn averaged $900 thousand per day ⁽¹⁾
- 57 percent reduction from initial expectations of $2.1 million as reported in our first quarter earnings release
- Gross bookings averaged more than $2.5 million per day during the quarter
3Q20 daily cash burn is expected to be slightly above $1 million assuming gross bookings average roughly $2 million per day
- Includes a portion of the $20 million accrual related to expectation to terminate the loan agreement with Sixth Street Partners
24 unencumbered aircraft and 10 unencumbered spare engines with approximate market values of $387 million
Air traffic liability at June 30^th was $355 million
- Balance related to future scheduled flights is $139 million
- Balance related to travel vouchers issued for future use is $216 million

(1) Daily cash burn defined as cash from operations less debt and rent payments and capital expenditure outflows excluding aircraft and engine acquisitions as they are expected to be financed. Excludes impact of CARES Act Payroll Support Program funding.

Capital Expenditures

Remaining 2020 spend related to capital expenditures is roughly $165 million
- Includes five previously executed purchase commitments for aircraft during 2020, all of which are intended to be financed
Reduced Sunseeker capital expenditures by $300 million for the year
Reduced full year heavy maintenance spend by roughly $70 million, compared to initial guidance of $120 million
- Six planned aircraft retirements within the next ten months and one additional retirement within the next three years
- Five planned CFM-engine retirements

Allegiant Travel Company will host a conference call with analysts at 4:30 p.m. ET Wednesday, July 29 to discuss its second quarter 2020 financial results. A live broadcast of the conference call will be available via the Company’s Investor Relations website homepage at http://ir.allegiantair.com. The webcast will also be archived in the “Events & Presentations” section of the website.

As a result of the COVID-19 pandemic, we will hold this year’s annual stockholders meeting on Tuesday, August 4, 2020.

Allegiant Air aircraft photo gallery:

Allegiant Air aircraft slide show:

https://airlinersgallery.smugmug.com/frame/slideshow?key=j6jV5d&speed=3&transition=fade&autoStart=1&captions=0&navigation=0&playButton=0&randomize=0&transitionSpeed=2

Allegiant promotes its air quality

Allegiant’s campaign to get people to fly again

Besides rock-bottom fares, Allegiant Air is touting its aircraft cleaning:

We maintain a comprehensive cleaning program that ensures every aircraft is cleaned and disinfected to the highest possible standard. Exceeding guidance set by the CDC and Airbus, all aircraft undergo a regular schedule of standard and deep cleans. All touch surfaces, from seatbelts and tray tables to galleys and lavatories, are sanitized and disinfected thoroughly during every cleaning.

Adopting hospital-grade standards, we also routinely treat all aircraft with an advanced antimicrobial protectant that kills viruses and bacteria on contact for 14 days. This product is safe and effective, forming a colorless, odorless protective barrier on all surfaces. Our treatment schedule, along with our cleaning practices, far exceeds manufacturer guidelines.

See the video below to learn more about how we use our antimicrobial protectant to help protect the health and safety of you, your loved ones and our team members.

Allegiant Air aircraft photo gallery:

Allegiant Air aircraft slide show:

https://airlinersgallery.smugmug.com/frame/slideshow?key=j6jV5d&speed=3&transition=fade&autoStart=1&captions=0&navigation=0&playButton=0&randomize=0&transitionSpeed=2

Allegiant comments on June traffic and trends as it reduces daily cash burn

Allegiant Travel Company today reported preliminary passenger traffic results for June 2020 as well as second quarter 2020.

“We continued to see modest demand improvements throughout the month of June, building upon May’s demand increases,” stated Gregory Anderson, executive vice president, chief financial officer and principal accounting officer of Allegiant Travel Company. “Gross bookings for the month of June averaged more than $4 million per day, bringing the average daily gross bookings for the second quarter to over $2.5 million. June’s bookings exceeded our expectations, thus the average daily cash burn for the second quarter was $900 thousand, down from our previous forecast of $1.75 million.

However, within the last two weeks, several states have reported increases in the number of people with the virus, which has negatively impacted bookings and tempered expectations into the third quarter. Therefore, utilizing the average daily bookings from the second quarter of $2.5 million, we now expect daily cash burn will be approximately $750 thousand during the third quarter.

We recognize the situation is fluid, and that demand could be impacted by additional shutdowns and required quarantines in our markets. As a result, we remain focused on finding ways to eliminate costs and preserve cash. We continue to keep our finger on the pulse and will leverage the flexibility of our model to pull back capacity to match demand levels in the coming months.”

“During the month of June we operated 70 percent of our schedule while increasing load factor by nearly 10 points from May to 57.3 percent,” stated Drew Wells, vice president of revenue. “Capacity was down 17.5 percent for the month of June as compared with 2019, but peak day available seat miles actually grew 3.5 percent from prior year. Allegiant travelers represented roughly 6 percent of all travelers going through a TSA checkpoint in the month, and that trend continued into the Fourth of July weekend. We expect to operate roughly 75 percent of our schedule into the third quarter but will make any necessary adjustments as dictated by demand trends.”

Allegiant Air aircraft photo gallery:

Allegiant Air aircraft slide show:

https://airlinersgallery.smugmug.com/frame/slideshow?key=j6jV5d&speed=3&transition=fade&autoStart=1&captions=0&navigation=0&playButton=0&randomize=0&transitionSpeed=2

Allegiant to require customers to wear face masks

Allegiant Travel Company today announced that, beginning July 2, customers will be required to wear face masks during all phases of travel, including at the ticket counter, in the gate area, during boarding, on the aircraft and during the flight. This policy update builds on Allegiant’s comprehensive health and safety program by bringing an extra layer of protection to customers, crew and team members at Allegiant airports.

In early May, Allegiant became the first U.S.-based airline to provide all passengers with complimentary Health and Safety Kits, which include a face mask and cleansing wipes. The airline has strongly encouraged passengers to wear face masks, with most adopting the practice. Allegiant employees are required to wear face masks when they interact with customers.

Customers can use their own face mask or covering, or the mask provided in Allegiant’s Health and Safety Kit. Children ages 2 and under are exempt from the new policy, as are passengers with disabilities or documented medical conditions. Passengers will also be allowed to remove face coverings to briefly eat or drink. The new policy is highlighted when customers book their flights, as well as in confirmation and reminder emails ahead of their departure date. Acknowledgement of this policy will also be included in a health questionnaire required at check-in. Customers who do not comply will not be allowed to fly.

Additionally, when booking a flight, customers can request to be notified if a booked flight exceeds 65 percent capacity. If they’re not comfortable traveling at that time, they can choose from a number of options, including being rebooked on another flight.

Videos:

Allegiant sees increased demand in May and June

Allegiant Travel Company today reported preliminary passenger traffic results for May 2020.

“We are continuing to see material improvement in demand from the April lows,” stated Gregory Anderson executive vice president, chief financial officer and principal accounting officer of Allegiant Travel Company. “For the entire month we averaged over $2 million in gross bookings per day. As such, we are anticipating our cash burn per day in the second quarter to be down to approximately $1.75 million. This number includes variable components related to increased capacity and a higher fuel price than previously forecasted, as well as an increased rate of voucher redemptions. This daily cash burn improves upon our previously expected estimate of $2.1 million per day, which was based on $750 thousand in daily gross bookings. In addition, we are anticipating the third quarter cash burn to be less than $1 million per day if $2.0 million in daily gross bookings were to remain consistent. This is less than the $1.5 million per day we spoke about during our earnings call. Even with this improvement in demand, we are continuing to focus on finding ways to reduce costs. As we have stated previously, the flexibility which is central to our business model allows us to take advantage of these periods of extremely low demand – which is clearly unique in our industry.”

“We have been pleased to see that May demand trends were stronger than anticipated,” stated Drew Wells, vice president of revenue. “In fact, during Memorial Day weekend Allegiant accounted for approximately eight percent of all travelers going through a TSA checkpoint versus two percent last year. During the first week of June we operated 70 percent of our schedule versus roughly 50 percent of the schedule in May. Even with the increases in capacity, we were able to maintain load factors just shy of 50 percent. With Las Vegas casinos opening early June, we expect modest improvements to continue throughout the month.”

Scheduled Service

	May 2020	May 2019	Change
Passengers	362,528	1,269,429	(71.4%)
Revenue passenger miles (000)	326,748	1,093,781	(70.1%)
Available seat miles (000)	690,624	1,308,911	(47.2%)
Load factor	47.3%	83.6%	(36.3pts)
Departures	4,654	9,086	(48.8%)
Average stage length (miles)	856	843	1.5%

Total System*

	May 2020	May 2019	Change
Passengers	365,519	1,281,742	(71.5%)
Available seat miles (000)	710,712	1,357,963	(47.7%)
Departures	4,795	9,416	(49.1%)
Average stage length (miles)	855	844	1.3%

*Total system includes scheduled service and fixed fee contract. System revenue passenger miles and system load factor are not useful statistics as system available seat miles include both ASMs flown by fixed fee flying as well as non-revenue producing repositioning flights used for operational needs. Fixed fee flying is better measured through dollar contribution versus operational statistics.

Preliminary Financial Results

	$ per gallon
May 2020 estimated average fuel cost per gallon – system	$.91

Allegiant Air Pilots announce formation of Teamsters Local 2118

International Brotherhood of Teamsters made this announcement:

At the request of the pilots at Allegiant Air, Teamsters General President James P. Hoffa and the Teamsters General Executive Board approved the formation of Teamsters Local 2118. There are over 1,100 pilots who will be members of the union which will be headquartered in Las Vegas.

A low-cost regional carrier, Allegiant Air is one of the ten largest passenger airlines in North America. In addition to representing the flight crews, Teamsters also represent the company’s mechanics and dispatchers.

Allegiant loses $33 million in the first quarter

Allegiant Travel Company has reported the following financial results for the first quarter 2020, as well as comparisons to the prior year:

Consolidated	Three Months Ended March 31,						Percent Change
(unaudited) (in millions, except per share amounts)	2020			2019
Total operating revenue	$	409.2		$	451.6		(9.4)	%
Operating income (loss)	(117.8)			91.1			(229.3)
Income (loss) before income taxes	(130.7)			73.9			(276.9)
Net income (loss)	(33.0)			57.1			(157.8)
Diluted earnings (loss) per share	$	(2.08)		$	3.52		(159.1)

Consolidated – adjusted	Three Months Ended March 31,						Percent Change
(unaudited) (in millions, except per share amounts)	2020			2019
Adjusted operating income⁽¹⁾	$	55.1		$	91.1		(39.5)
Adjusted income before income taxes⁽¹⁾	42.2			73.9			(42.9)
Adjusted net income⁽¹⁾	33.3			57.1			(41.7)
Adjusted diluted earnings per share ⁽¹⁾	$	2.05		$	3.52		(41.8)

Airline only	Three Months Ended March 31,						Percent Change
(unaudited)	2020			2019
Airline operating revenue (millions)⁽¹⁾	$	404.7		$	448.3		(9.7)	%
Airline operating income (millions)⁽¹⁾	51.1			98.5			(48.1)
Airline operating margin	12.6		%	22.0		%	(42.7)
Airline income before income taxes (millions) ⁽¹⁾	$	38.8		$	81.5		(52.4)
Airline fully diluted earnings per share⁽¹⁾	$	1.89		$	3.98		(52.5)

Airline CASM ex fuel (cents)⁽¹⁾	6.51			6.40			1.7

(1) Denotes a non-GAAP financial measure. Refer to the Non-GAAP Presentation section within this document for further information.

“The events that have unfolded over the last eight weeks are truly unprecedented,” stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company. “We began to see the first signs of demand weakness at the end of February, with a steep downward demand trajectory by mid-March. Despite March revenues down nearly 40 percent year over year, we finished the quarter with airline-only EPS of $1.89 per share and an airline-only operating margin of 12.6 percent. These numbers are a true testament to the flexibility of our model and our ability to right-size capacity quickly and seamlessly.

“Since the onset of the pandemic, we have been laser-focused on ensuring the health and safety of our employees and passengers. Enhancing our cleaning procedures, adding health precautions and employing smart principles of social distancing, we recently launched our Going the Distance for Health and Safety initiative as a resource to customers, the details of which can be found in the bullets below. It outlines a set of principles which are as much a part of our DNA as flying from small cities to vacation destinations. These principles are designed to evolve with travel needs, as a permanent part of our operation.

“In addition to health and safety enhancements, we took early and decisive action to preserve liquidity and reduce cash burn. These measures, outlined below, have brought immediate and significant progress over the past few weeks. Most notably, more than 25 percent of our team members have strengthened these efforts by participating in voluntary leave and pay reduction programs. I am humbled by their generosity and personal investment in our company. These investments will help preserve jobs and the company alike. The effect of these combined liquidity preservation measures has reduced daily cash burn to roughly $2.1 million a day, in a matter of a few weeks.

“As previously reported, we will receive $172 million in payroll support under the CARES Act, of which $86 million has been received to date, with the remainder being paid in installments. In addition, we will receive nearly $100 million in federal income tax refunds during the second quarter of 2020 related to favorable net operating loss (NOL) carryback rules as outlined by the CARES Act. We anticipate another projected $100 million or more early next year related to 2020 expected losses and capital expenditures. I look at this very material $200 million plus in federal income tax refunds as our ‘equity’ offering other carriers are currently pursuing in the market. With these refunds and our aggressive cost and capital expenditure savings, we believe we have sufficient liquidity going forward. Should we project a need for additional funds, we have up to $276 million of dry powder available through the end of September from the CARES Act loan program.

“Near term is painful and will continue to be painful. But I believe our model, given the current economic impact, is best-suited to withstand the brutal impact from this pandemic. In the near term, we will most likely shrink our fleet by as many as 25 aircraft. These aircraft, particularly the motors, will ‘seed’ our near and long-term ability to materially reduce planned engine overhauls, beginning in 2020 and for years thereafter. Going forward, the market will favor buyers, not sellers as has been the case the past few years. We will be able to use our expertise, as we did with the MD80s, to purchase aircraft and associated parts at what we believe will be substantial discounts to recent prices. We will ‘manage’ planned overhauls via our balance sheet versus expensive overhaul shop visits. Another substantial advantage is that we do not have meaningful aircraft purchase commitments in 2021 and beyond. The combination of our retirements and the greatly reduced cost of used aircraft and their motors is a key part of both our near-term liquidity benefit and long-term – 2021 and beyond – reduced capital requirements for our growth. Finally, I am reminded of a saying I used with our MD80s, namely ‘we were a non-capital-intensive business in a capital-intensive industry.’

“Going forward, we are prepared to make tough choices and take any steps necessary to adapt and right-size our cost structure. Since the outset of the COVID-19 crisis, we have taken proactive measures to adjust quickly and aggressively to meet the demands of this challenging and changing environment. With that said, our low-cost business model has proven its resilience during past economic downturns, and we expect it will support our ability to rebound here as well. The Allegiant model, based on simplicity, flexibility and optionality is well-suited for these difficult environments.”

Covid-19 Responses – Going the Distance for Health and Safety

Enhanced aircraft cleaning, including regular treatment with an advanced antimicrobial protectant that kills viruses, germs and bacteria on contact for 14 days. Our treatment schedule, along with regular cleaning processes, far exceeds manufacturer guidelines
Social distancing principles at check-in, boarding and on-board, including limiting adjacent row seating and allowing only customers on the same itinerary to utilize middle seats as practicable
Volatile Organic Compound (VOC) air filters that ensure the air quality on our planes exceeds HEPA standards
Complimentary health and safety kits, which include a single-use face mask, a pair of non-latex disposable gloves and cleaning wipes, provided to all of our customers
Crew members wear face masks on board and gloves during in-flight service
- All in-flight service offerings consist of prepackaged, factory sealed goods
- In-flight service frequency has been reduced to once per flight

Network and Customer Experience

Reduced April capacity by 87.4 percent
- Evaluating May and June and expect significant capacity reductions based on diminished leisure demand trends
Waived change and cancellation fees for all customers for future travel
Extended expiry on credit vouchers to two years

Cash Outlay Reduction – as much as $375 million in cash outlay reductions to our initial 2020 plan

Suspended all stock buybacks and dividends
Executives reduced salaries by 50 percent and Board members are foregoing cash compensation
- Neither the chairman and CEO nor the president draw a salary
Enacted a hiring freeze and offering voluntary leave
- More than 1,100 team members are currently participating in some form of pay reduction program
Suspended nearly all contractor positions, subscriptions, non-essential training and travel
Suspended all non-essential capital expenditures including non-airline subsidiaries
Extended payment terms and renegotiating contracts with vendors

CARES Act Relief

Payroll support in the amount of $171.9 million comprised of $150.3 million in direct grants and a $21.6 million low-interest, unsecured 10-year loan.
- Received first installment of $86 million with remainder expected over the next three months
- Warrants will be issued to the U.S. Department of the Treasury to purchase 25,898 shares at a strike price of $83.33 per share
Federal income tax refund of $94 million related to 2018 and 2019 net operating loss carrybacks
Anticipated federal income tax refund of $100 million expected to be received between March and May 2021 for 2020 net operating loss carryback
Submitted application under the Loan Program with the option to access up to $276 millionsecured loan through September 2020

Balance Sheet, Cash and Liquidity

Total cash and investments at March 31^st and April 30^th were $464 million and $517 million⁽¹⁾, respectively
Repriced Term Loan B facility with a 150 basis points rate reduction and upsized by $100 millionin February
Obtained financing of $31 millionin April secured by two A320 aircraft
Current 2Q20 cash burn is expected to be $2.1 million per day⁽²⁾
- Cash burn assumes gross bookings for 2Q20 average $750 thousand per day
- 3Q20 cash burn is expected to be $1.5 million per day assuming gross bookings average $750 thousand per day
Further sources of liquidity expected during the second quarter around $163 million, including:
- Additional payroll support from CARES Act in the amounts of $68.7 million
- Federal income tax refund of $94 million related to net operating losses from 2018 and 2019
Reduced full year capital expenditures by $260 million
- $100 million reduction in airline capital expenditures
  - Expect all remaining 2020 aircraft and engine acquisitions to be financed
- $160 million reduction in non-airline capital expenditures
We currently have 28 unencumbered aircraft and 8 unencumbered spare engines with an appraised value of roughly $431 million
Air traffic liability at March 31 and April 30 was $304 million and $305 million, respectively
- March 31 and April 30 balance related to future scheduled flights are $137 million and $95 million
- March 31 and April 30 balance related to travel vouchers issued for future use are $167 million and $210 million

(1) April 30 ending cash balance of $517 million includes the first installment payment received under the CARES Act Payroll Support Program of $86 million.

(2) Daily cash burn defined as cash from operations less debt and rent obligations and capital expenditure outflows excluding aircraft and engine acquisitions as they are expected to be financed. Excludes impact of CARES Act Payroll Support Program funding.

Non-airline Subsidiaries

Nearly all non-airline subsidiary spend has been suspended indefinitely
COVID-19 triggered impairment review and as a result of the uncertainty moving forward, the company recognized a total impairment of $163 million over its non-airline subsidiaries:
- Sunseeker impairment of $137 million – suspended construction indefinitely
  - No plans for future capital commitments from Allegiant
  - Exploring potential strategic partnerships
- Nonstop impairment of $18 million – reorganized to be self-sufficient, not requiring future funding from the airline
  - Warren location temporarily closed – produced positive cash flow prior to closing
  - Permanently closed Utah locations
- Teesnap impairment of $8 million – reorganized to be self-sufficient, not requiring future funding from the airline
  - Remains an asset held for sale

First quarter 2020 results

TRASM decreased 13.4 percent
- March capacity cut 23.3 percent and down 12.2 percent year over year
Airline only CASM, excluding fuel increased 1.7 percent on capacity growth of 4.0 percent
- CASM, excluding fuel had been on track to be down 2.0 percent on capacity growth of 16.0 percent prior to COVID-19 scheduling changes

Top Copyright Photo (all others by the airline): Allegiant Air Airbus A320-214 WL N252NV (msn 7868) BFI (Nick Dean). Image: 949885.

Allegiant Air aircraft slide show:

Allegiant to provide personal health and safety kits to all passengers

Allegiant has made this announcement:

As the COVID-19 outbreak continues to impact our daily lives and the lives of our friends and family, our 4,500 Allegiant team members across America are — as always — one hundred percent focused on making sure your travels are as safe and seamless as possible. Whether you need to travel today, or are looking ahead to future vacations and long-overdue visits, we understand that your decision to travel is personal, and many factors are involved. And we know that a healthy environment is at the top of that list. It’s personal, and it’s critical — for you, and for our dedicated crew members who fly every day.

That’s why, beginning this week, we will be providing complimentary personal health and safety kits to all passengers as they board their Allegiant flights. These kits include a single-use face mask, a pair of non-latex disposable gloves and cleaning wipes. This program will be rolled out across our system this week, so watch for it on your upcoming Allegiant flight.

We are pleased to provide this service to help bring peace of mind as you travel. You’ll also see our crew members wearing masks on board. This is just one of the many ways our team is going the distance for health and safety. Because the further we go now, the safer it will be to go farther tomorrow.

Our commitment to you includes cleaning and disinfecting our aircraft to the highest possible standard, exceeding guidance from the Centers for Disease Control and from Airbus, our aircraft manufacturer. And we don’t just clean — we protect all surfaces, routinely treating our planes with an advanced antimicrobial protectant that kills viruses, germs and bacteria on contact for 14 days.

We’ve raised the bar by setting new standards for air purity and adopting a low-touch service approach, limiting unnecessary personal contact and shared items. The air quality on board our planes exceeds HEPA standards, thanks to state-of-the art VOC filtration, which removes additional organic compounds from the air to help keep you healthy. On average, cabin air is changed entirely every three minutes through a continuous flow of fresh and VOC-filtered air.

During check-in, during the boarding process and in our cabins, we are continuing to incorporate social distancing principles. Adding personal health and safety kits for each passenger will further ensure a healthy space to enjoy your flight. To learn more about these and many other ways Allegiant is prioritizing your health and safety, please visit our resource page here.

The coming weeks and months will undoubtedly bring many changes, as communities across the country begin the process of safely re-opening, and events and occasions we’ve all been looking forward to are rescheduled. As your plans develop, please know we’ll be with you on your journey, seeing you safely on your way.

Thanks once again for flying with us. We look forward to welcoming you aboard again soon.

Together we fly,

Scott Sheldon
Chief Operating Officer

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Allegiant announces agreement with Treasury for payroll support under the CARES Act

Allegiant Travel Company has announced an agreement with the U.S. Department of the Treasury to receive $171.9 millionin emergency relief under the Coronavirus Aid, Relief and Economic Security (CARES) Act. The Payroll Support Program (PSP) funds are targeted to support team member salaries and benefits for Allegiant’s 4,500-member workforce.

“The Payroll Support Program recognizes the essential role our team members play in our country’s air travel infrastructure,” said Maurice J. Gallagher, Jr., Allegiant chairman and CEO. “Their dedication in the face of the unprecedented crisis brought by the COVID-19 outbreak has been tremendous – and their continued work will be critical to our nation’s successful recovery in the months to come. On behalf of our entire team, I’d like to applaud the work of the administration, Treasury and the Department of Transportation, our hometown Nevada delegation, leadership of both houses of Congress and the Aviation Subcommittees for both the Senate and House for taking swift, bipartisan action to protect the jobs of our frontline team members. We thank you for your support and look forward to working with you to ensure Americans can once again be together, connecting with family and friends and conducting the business of our great nation.”

The PSP is expected to provide Allegiant with $171.9 million in funding and will cover approximately 76 percent of budgeted payroll and benefit costs through September 30, 2020. Of that funding, $21 million will be in the form of a 10-year term, low-interest loan, to be repaid at any time prior to maturity at par. Under the loan, the company will issue warrants to the U.S. Department of the Treasury to purchase 25,890 shares of common stock with a cash settlement right at the company’s option.

“We are incredibly grateful to the partners who made this critical support possible, but also want to thank our team members, who have stepped up in force to support the company during this unprecedented time,” said Greg Anderson, chief financial officer. “So far, more than 1,100 team members – 25 percent of our workforce – are already participating in a voluntary short-term leave program or voluntary pay reductions. Further participation will go a long way to maximize the payroll assistance funds and extend their impact as long as possible. We appreciate their action and know this shared sacrifice will be crucial to weathering the storm. With so much uncertainty regarding the arc of the coronavirus outbreak and when demand for travel will return, we believe the airlines maintaining the most flexibility will be best positioned to emerge from this crisis even stronger.”

Allegiant Air aircraft photo gallery: