Tag Archives: Allegiant Travel Company

Allegiant Air posts its 45th consecutive profitable quarter

Allegiant Travel Company (Allegiant Air) (Las Vegas) reported net income of $34.2 million for the first quarter, up 7.2 percent from the same quarter a year ago. The travel company issued the following financial results for the first quarter 2014, as well as comparisons to prior year equivalents:

“We are very proud to report our 45th consecutive profitable quarter,” stated Maurice J. Gallagher, Jr., Chairman and CEO of Allegiant Travel Company. “We are pleased to produce another profitable quarter despite significant operational challenges and unusually high one-time costs that impacted our overall financial performance. This was a very difficult operational quarter as we navigated through significant flight crew availability issues stemming from external factors that occurred last year. I am happy to report that our Team Members overcame this adversity and pulled together another solidly profitable quarter.”

Notable company highlights:

Integrated A320 aircraft into scheduled operations. Ended the quarter operating three A319 and seven A320 aircraft

A319 and A320 fleet accounted for 17.9 percent of total ASM production during the quarter

Integrated two MD-80 aircraft configured with 166 seats to the fleet in March. Ended the quarter operating 53 166 seat MD-80 aircraft

Completed the reconfiguration of the 757 fleet from 223 seats to 215 seats and added six Giant Seats per aircraft

Announced a seasonal base in Myrtle Beach, SC, which will support two aircraft beginning in late May

Announced 12 new routes to begin operation in the second quarter

Returned $114 million to shareholders through share repurchases and a special dividend paid in January
In April, prepaid $121.3 million term loan facility using unrestricted cash and proceeds from a new $45.3 million loan through Wells Fargo Bank, collateralized by 53 MD-80 aircraft

Read the full report: CLICK HERE

Copyright Photo: Jay Selman/AirlinersGallery.com. McDonnell Douglas DC-9-83 (MD-83) N420NV (msn 49424) brings another group of vacationers to the Las Vegas base.

Allegiant Air:

Allegiant now offers “giant seats” on its Boeing 757s

Allegiant Air (Las Vegas) has announced the addition of several larger, more comfortable seats, known as “Giant Seats,” to each of its Boeing 757 aircraft. Giving Allegiant travelers a new option when customizing their vacation experience, the company will offer these Giant Seats on flights between Hawaii and several western U.S. cities.

Passengers who purchase a Giant Seat when making their reservations will take advantage of a more spacious, wider seat, comfortable headrests and more leg room.

“By adding these new Giant Seats, Allegiant passengers will enjoy the feeling and comfort of a premium seat, while flying to their destination at an affordable cost,” said Jude Bricker, Allegiant Travel Company, Senior Vice President of Planning. “We think the Giant Seats will be a welcome option for travelers, especially on our long-haul flights to Hawaii.”

Located in the first row and the mid-cabin emergency exit row of the aircraft, each of the six Giant Seats will be made available for a seat assignment fee on all flights to and from Hawaii and select flights to Las Vegas.

Allegiant installed the first of these new seats as part of compliance with changes to FAA crew rest rules, which require minimum seat requirements for augmented crews resting in the passenger cabin. A pair of the new seats was installed to comply with these rules, but the company also saw an opportunity to offer these more comfortable seats to passengers in other parts of the cabin and on flights that do not require augmented crew rest.

The new Giant Seats are part of an overall reconfiguration of the Allegiant 757 cabins, which includes creating a new seating option called “Legroom +.” Increasing the amount of leg room by up to six inches, Legroom + seats provide passengers with up to 34 inches between seat rows.

The installation of the new Giant Seats has been completed on all six of the carrier’s 757 aircraft. The new seat configuration will decrease the total number of seats in Allegiant’s Boeing 757s from 223 to 215.

Top Copyright Photo: Eddie Maloney/AirlinersGallery.com. Boeing 757-204 N904NV (msn 26967) touches down in Las Vegas.

Allegiant Air:

Allegiant Air reports its fourth quarter (44th consecutive profitable quarter) and 2013 financial results

Allegiant Travel Company (Allegiant Air) (Las Vegas) meanwhile has reported the following financial results for both the fourth quarter and full year 2013, as well as comparisons to prior year equivalents:

“We are very proud to report our 44th consecutive profitable quarter,” stated Maurice J. Gallagher, Jr., Chairman and CEO of Allegiant Travel Company. “This is the second consecutive year that we have grown both full year EBITDA and operating margin. As we continue to add more efficient Airbus aircraft to our operating fleet, we have the opportunity to continue margin improvement going forward. Thank you for the tireless efforts of our Team Members whose contributions were critical to our successful 2013.”

Notable fourth quarter and full year 2013 company highlights

Added the Airbus A320 and A319 onto the Allegiant operating certificate
Ended 2013 with three A319 and five A320 aircraft in service. Added two more A320 aircraft in January 2014
Retired five MD-80 aircraft
Completed the conversion of 51 MD-80 aircraft to 166 seats. Will add two more MD-80 aircraft configured with 166 seats to the fleet in March 2014. We expect our MD-80 fleet to remain at 53 aircraft for the foreseeable future
Returned $83 million to shareholders through the repurchase of 913,806 shares in 2013
Paid a special dividend of $2.25 per share in early January 2014
Added 44 new routes in 2013. Announced five new routes and two new cities starting service first quarter 2014
Delivered Allegiant2Go Mobile Boarding Pass functionality in the fourth quarter
Broadened third-party purchase options via one-way package and hotel-only booking path
Executed a new agreement with a large Las Vegas gaming company for the pre-purchase of rooms at discounted rates
Entered into a new three year agreement with Enterprise Holdings Inc. for the sale of rental cars
Included on the 100 America’s Best Small Companies list by Forbes magazine

Fourth quarter and full year 2013 revenue performance

Full year ancillary air-related charges per passenger has increased every year for eight consecutive years
16th consecutive quarter of year over year increases in total fare, four percent higher than a year ago
Fourth quarter Florida TRASM grew by two percent despite a 35 percent growth in ASMs
Same store routes, those operated in both the fourth quarter 2013 and 2012, generated a three percent increase in TRASM

Fourth quarter and full year 2013 cost performance

Full year 2013 fuel expense per ASM declined six percent primarily due to a two percent decrease in gallons per passenger. This fuel savings more than offset the one percent increase in average fuel cost per gallon. Full year system ASMs per gallon increased seven percent versus 2012
Full year 2013 CASM ex fuel rose five percent versus last year in part because aircraft utilization declined four percent. CASM ex fuel was also negatively impacted by expenses due to an operational disruption in September, and the FAA shutdown and the subsequent delay in placing A320s into service in December. The A320 delay drove higher expense in aircraft lease rentals as we contracted with other carriers for sub-service to fly scheduled flights, reduced crew productivity and increased expenses to temporarily assign flight crews to bases to support unplanned MD-80 flying in place of planned A320 flying
Fourth quarter salary and benefits expense increased 17 percent due to a 13 percent increase in full time equivalent employees to support fleet growth and more inflight staff to crew larger gauge MD-80 aircraft, increased bonus accrual which is tied to higher levels of profitability and higher stock compensation expense
Fourth quarter sales and marketing expense increased 46 percent due to advertising to support the launch of new routes
Fourth quarter aircraft lease rental expense was $5.5 million due to having two leased aircraft (none a year ago) and $4.2 million of sub-service expense due to the delays in planned A320 flying
Fourth quarter other expense increased 16 percent due to increases in flight crew training, contractor IT development resources, and losses on consignment and disposal of assets
Certain fourth quarter non-cash expenses totaled $5.4 million for the quarter and $19.3 million for the year. Please see the non-cash expense table in the Non-GAAP presentation for further detail

Full year and first quarter 2014 cost trends

Full year CASM ex fuel is expected to increase between four and seven percent due to a more normalized maintenance and repair expense of between $100 thousand and $110 thousand per aircraft per month, start-up expenses in non-airline subsidiaries (which do not generate airline capacity or ASMs) and continued investment in operations and IT management
First quarter 2014 CASM ex fuel is expected to increase between 13 and 15 percent due to expenses associated with the delay in training A320 crews resulting from the FAA shutdown and its continued effects and the subsequent delay in placing the A320 on the certificate, lower than planned capacity growth due to the same issue, higher maintenance expense due to substantially more heavy maintenance events scheduled in the quarter, and start-up expenses in two new non airline initiatives which do not generate airline capacity or ASMs. The effects of the A320 delays and non-airline activities are expected to account for 53 percent of the increase in CASM ex fuel for the quarter

Third party products performance

Full year transportation net revenue (revenue derived from car rentals) increased 11 percent
Las Vegas represented 82 percent of hotel net revenue in 2013, down from 87 percent in 2012 and 90 percent in 2011
Full year hotel net revenue excluding the effect of an air discount increased 25 percent versus last year. In the fourth quarter of 2012, the company phased out offering an air discount tied to hotel sales in order to increase overall company profitability

Balance Sheet highlights:

Returned $42 million to shareholders through a special dividend of $2.25 per share
Repurchased 913,806 shares of common stock for $83 million in 2013. The company has $40 million in repurchase authority remaining
Cumulative return of capital in the form of re-purchases of shares and special dividends totals $277 million as of January 2014
$178 million in capital expenditures during 2013, 83 percent for the purchase of eight Airbus series aircraft and a new headquarters building
Issued $106 million in debt in 2013, $96 million secured by eight A320 series aircraft and $10 million by the new headquarters building
Paid down $23 million in debt including $10.5 million previously secured by four 757 aircraft. $9 million in debt remains secured by the remaining two 757 aircraft in our fleet as well as a term loan due in 2017 of $122 million secured by MD-80 aircraft and parts
2014 CAPEX is expected to be between $60 and $80 million primarily driven by two A320 purchases occurring at the end of 2014 and IT projects

Unaudited (millions)	12/31/2013	12/31/2012	Change
Unrestricted cash*	$387.1	$352.7	9.8	%
Total debt	$234.3	$150.9	55.3	%
Total Allegiant Travel Company stockholders’ equity	$375.7	$400.5	(6.2	)%

	For the Year ended December 31,
Unaudited (millions)	2013	2012	Change
Capital expenditures	$177.6	$105.1	69.0%

* – Unrestricted cash includes investments in marketable securities.

At this time, Allegiant Travel Company provides the following guidance to investors, subject to revision.

Guidance, subject to revision

Revenue guidance	January 2014	1Q14
Estimated PRASM year-over-year change	6.5 to 8.5%	(2) to 0%
Estimated TRASM year-over-year change	2 to 4%	(4) to (2)%

Fixed fee and other revenue guidance		1Q14
Fixed fee and other revenue (millions)		$1 to $3

Capacity guidance
System	1Q14	2Q14	FY14
Departure year-over-year growth	8 to 12%	10 to 14%
ASM year-over-year growth	10 to 14%	8 to 12%	9 to 13%
Scheduled
Departure year-over-year growth	8 to 12%	10 to 14%
ASM year-over-year growth	10 to 14%	8 to 12%	9 to 13%

Cost guidance	1Q14		FY14
CASM ex fuel – year-over-year change	13 to 15%		4 to 7%
CASM – year-over-year change	4 to 6%		1 to 4%
Assumed fuel cost per gallon	$3.32		$3.22

CAPEX guidance			FY14
Capital expenditures (millions)			$60 to $80

CASM ex fuel – cost per available seat mile excluding fuel expense
CASM – total operating expenses / system ASMs
Fuel assumptions are modeled as of January 20, 2014

Aircraft fleet plan by end of period

Aircraft	YE13	1Q14	YE14	YE15
MD-80 (150)	1	–	–	–
MD-80 (166*)	51	53	53	53
757	6	6	6	6
A319	3	3	4	10
A320	5	7	7	9
Total	66	69	70	78

Aircraft listed in table above include only in service aircraft
* – MD-80s converted to 166 seats from 150 seats

Copyright Photo: James Helbock/AirlinersGallery.com. Allegiant is now operating three Airbus A319s and seven A320s. Airbus A319-112 N310NV (msn 2224) approaches the runway at Los Angeles International Airport.

Allegiant Air:

Allegiant Air’s pilots to meet with investors and analysts about safety concerns

Allegiant Air‘s (Las Vegas) pilots have issued this statement:

Allegiant Air’s pilots, represented by the Allegiant Air Pilots Executive Council, an employee group of Allegiant Travel Company (Las Vegas) and pilots represented by Teamsters Local Union 1224 in Wilmington, Ohio, announced plans to begin formal dialogues with Allegiant stakeholders and other influential voices in the financial community, including institutional shareholders, equity analysts, corporate lenders and insurers, in order to address operating and safety concerns that exist at the airline.

“Allegiant management has turned a deaf ear to serious operational concerns raised by the pilots,” said Capt. David Bourne, Director of Airline Division at the International Brotherhood of Teamsters. “We believe Allegiant’s financial backers have a right to know what is going on and be given a chance to weigh in on vital changes needed for Allegiant’s long-term success before it’s too late.”

“Allegiant’s low-cost model works if it can actually support the growth of the business,” Bourne said, “However, management’s lack of operational know-how and flat-out resistance to put badly needed investments into infrastructure is taking a significant toll on flight operations, which could ultimately jeopardize flight safety. It’s obvious to us that the major service disruptions over the last several months, ranging from multiple fleet shutdowns, chronic staffing and equipment shortages, significant ramp-up in 3rd party contracting for scheduled flights and sub-servicing and the shutdown of the company’s training department, all flow from the short-sighted decisions being made at the top.”

“It is very unusual for a company’s training department to be shut down,” said Dan Wells, President of Teamsters Local 1224. “Allegiant has yet to even acknowledge the training shutdown, much less show its pilots a plan for corrective action or indicate if those changes will adequately satisfy Federal Aviation Administration concerns. Many Allegiant pilots have been delayed in training for months, which we believe is driving a major increase in outsourcing due to the shortage of company pilots to fly scheduled flights and re-route equipment back to hubs and maintenance centers.”

“Management has ignored repeated requests for clarity on the training program by both the union and Allegiant’s own pilots,” Bourne said. “We’ve filed a Freedom of Information Act submission with the FAA on the matter, but the agency’s only reply was that there is an ongoing investigation at the company. In the meantime, Allegiant pilots continue to bend over backwards to work with the company to address the very significant issues that are interfering with the ability of Allegiant flight crews to do their jobs properly and service customers effectively. We are hopeful that conversations with investors and other Allegiant stakeholders will lead to a breakthrough on some of the key obstacles affecting the future of the airline.”

Copyright Photo: Jay Selman/AirlinersGallery.com. Allegiant Air’s Boeing 757-204 WL N904NV (msn 26967) arrives at the Las Vegas base.

Allegiant Air:

Allegiant Travel Company reports net income of $17.1 million in the 3Q, up 1%

Allegiant Travel Company (Allegiant Air) (Las Vegas) reported the following financial results for the third quarter 2013, as well as comparisons to prior year equivalents:

Unaudited	3 months endedSept 30,
	2013			2012			Change
Total operating revenue (m)	$	228.9		$	216.9		5.5	%
Operating income (millions)	$	29.2		$	28.7		1.7	%
Operating margin	12.8		%	13.3		%	(0.5)pp
EBITDA (millions)	$	46.7		$	44.6		4.7	%
EBITDA margin	20.4		%	20.6		%	(0.2)pp
Net income (millions)	$	17.1		$	16.9		1.0	%
Diluted earnings per share	$	0.91		$	0.87		4.6	%

“We are very proud to report our 43rd consecutive profitable quarter,” stated Maurice J. Gallagher, Jr., Chairman and CEO of Allegiant Travel Company. “We are pleased to produce another profitable quarter and be able to return cash to shareholders through our share repurchase program. In addition, I am proud to announce that Andrew Levy has been added to our Board of Directors and will also assume the role of Chief Operating Officer. His proven leadership abilities and extensive operational and financial expertise, as well as a deep understanding of the airline business, will be invaluable in his new role as COO.”

“Finally, we were significantly challenged operationally at the end of September many of our MD-80s were taken out of service due to an evacuation slide issue. Through the tireless efforts of our Team Members, we were able to minimize the disruption to our customers. I am very thankful to all of those individuals who worked extremely hard to put the operation back together in such a short amount of time.”

Notable Company Highlights

Completed the acquisition of five Airbus A320 aircraft. The company now owns seven A320s
Repurchased 491,000 shares for $47 million during the third quarter, average purchase price of $95.85 per share
Announced service from nine existing cities to Punta Gorda (Southwest Florida) to begin in the fourth quarter
Announced service to 12 new cities with service beginning in the fourth quarter and first quarter
Announced 29 new routes which will begin operation in the fourth quarter
Average aircraft in service was flat versus last quarter as we retired three MD-80 aircraft and temporarily grounded two MD-80 aircraft early in the quarter
Increasing MD-80 operating fleet from 52 at the end of the year to 53 in the first quarter of 2014

Third Quarter 2013 Revenue Performance

15th consecutive quarter of year over year increases in total average fare, 4.8 percent higher than a year ago
Florida TRASM grew by 9.6 percent despite 12.7 percent growth in ASMs
Same store markets, those which were operated in both the third quarter 2013 and 2012, generated a 5.0 percent increase in TRASM
Grew scheduled load factor to 90.8 percent despite a 4.2 percent increase in seats per departure
The September slide interruption resulted in approximately $1 million in refunds given to customers

	3Q13		3Q12		Change
Scheduled Service:
Average fare – scheduled service	$86.94		$82.30		5.6	%
Average fare – ancillary air-related charges	$38.99		$37.05		5.2	%
Average fare – ancillary third party products	$5.06		$5.59		(9.5	)%
Average fare – total	$130.99		$124.94		4.8	%
Scheduled service passenger revenue per ASM (PRASM) (cents)	8.14		7.89		3.2	%
Total scheduled service revenue per ASM (TRASM) (cents)	12.26		11.98		2.3	%
Load factor	90.8	%	90.1	%	0.7pp
Passengers (millions)	1.7		1.6		6.3	%
Average passengers per departure	150		143		4.9	%
Average scheduled service stage length (miles)	932		910		2.4	%

ASMs = available seat miles
PRASM = scheduled passenger revenue per scheduled available seat mile
TRASM = (scheduled passenger revenue + ancillary air revenue + ancillary third party revenue) per scheduled available seat mile

Third Quarter 2013 Cost Performance

Fuel expense per ASM declined 3.9 percent primarily due to a 5.8 percent increase in ASMs per gallon versus last year, which more than offset a 1.9 percent increase in average cost per gallon
Operating expense excluding fuel was negatively impacted by lower aircraft utilization and approximately $2 million in expense attributable to the evacuation slide interruption. The expense associated with the slide event is isolated to September and resulted in higher aircraft lease rentals expense as we contracted with other carriers for sub-service of aircraft to move some of our customers, higher station operations expense due to customer interrupted trip costs, and increased salary and benefits expense due to additional overtime
Salary and benefits expense per passenger increased 15 percent versus last year primarily due to an increase in the number of full time equivalents to support our growth, higher stock-based compensation expense and the continuation of the higher pay band for pilots which began in November 2012. The current pay band will continue through April 2014 when it will be subject to adjustment based on a trailing 12 month profitability test. Based on our forecasted profitability, we currently expect the pilot pay band to remain unchanged
Depreciation and amortization expense per passenger increased 8 percent primarily due to a change in estimated MD-80 engine residual values and useful life, and operating a larger contingent of 166 seat MD-80 aircraft
Other expense per passenger increased 31 percent due to a higher write-down of engine values in our consignment program compared to the prior year, non capitalizable information technology development costs, crew training for our growing Airbus fleet and costs to support a seasonal operating base in Los Angeles

	3Q13	3Q12	Change
Total System*:
Operating expense per passenger	$114.54	$108.92	5.2	%
Operating expense per passenger, excluding fuel	$63.37	$56.85	11.5	%
Operating expense per ASM (CASM) (cents)	10.58	10.29	2.8	%
Operating expense, excluding fuel per ASM (CASM ex fuel) (cents)	5.85	5.37	8.9	%
Average block hours per aircraft per day	5.1	5.2	(1.9	)%

*Total system includes scheduled service, fixed-fee contract and non-revenue flying.

Fourth Quarter 2013 Cost Trends

Salary and benefits expense is expected to increase due to additional staff required to support our growth
Maintenance and repair expense is expected to be slightly higher than fourth quarter 2012. For the full year, maintenance expense per aircraft per month is expected to be $100 thousand to $105 thousand as previously guided
Aircraft utilization is expected to decline 1.5%, which will pressure ex fuel unit costs when compared to fourth quarter 2012
Depreciation and amortization expense is expected to increase as seven A320 aircraft are scheduled to enter service in the fourth quarter. For the full year, depreciation per aircraft per month is expected to be between $92 thousand and $95 thousand, as previously guided

Third Party Products Performance

Rental car days increased 6.5 percent primarily due to a 18 percent increase in Florida passengers
Hotel net revenue excluding the effect of an air discount was higher by 39 percent versus last year. The company has phased out offering an air discount which has historically subsidized hotel sales

Supplemental Ancillary Revenue Information Unaudited (millions)	3Q13		3Q12		Change
Gross ancillary revenue – third party products	$28.7		$28.3		1.4	%
Cost of goods sold	($19.6	)	($18.5	)	5.9	%
Transaction costs*	($0.5	)	($0.8	)	(37.5	)%
Ancillary revenue – third party products	$8.6		$9.0		(4.4	)%
As percent of gross	30.1	%	31.9	%	(1.8)pp
As percent of income before taxes	31.3	%	33.6	%	(2.3)pp
Ancillary revenue – third party products/scheduled passenger	$5.06		$5.59		(9.5	)%

Hotel room nights (thousands)	144.4		163.4		(11.6	)%
Rental car days (thousands)	195.3		183.3		6.5	%

*Includes payment expenses and travel agency commissions.

Balance Sheet Highlights

Repurchased 491,000 shares for $47 million and have over $43 million in repurchase authority remaining. Year to date, the company has repurchased 880,991 shares at an average price of $85.64 per share
Issued $48.0 million in debt secured by four Airbus aircraft
Pre-paid $10.5 million in debt secured by four 757 aircraft
Spent $84.5 million in capital expenditures in the third quarter, the majority of which was driven by the purchase of five Airbus A320 aircraft
Closed a $10 million debt financing in October, secured by our new headquarters building acquired earlier this year

Unaudited (millions)	9/30/2013	12/31/2012	Change
Unrestricted cash*	$303.6	$352.7	(13.9	)%
Total debt	$179.7	$150.9	19.1	%
Total Allegiant Travel Company stockholders’ equity	$402.4	$400.5	0.5	%

Nine months ended September 30,
Unaudited (millions)	2013		2012
Capital expenditures	$161.6	$88.8		82.0	%

*Unrestricted cash includes investments in marketable securities.

At this time, Allegiant Travel Company provides the following guidance to investors, subject to revision.

Guidance, subject to revision

Revenue guidance	October 2013	4Q13
Estimated PRASM year-over-year change	5 to 7%	3 to 5%
Estimated TRASM year-over-year change	1 to 3%	0.5 to 2.5%

Fixed fee and other revenue guidance		4Q13
Fixed fee and other revenue (millions)		$3 to $5

Capacity guidance
System	4Q13	1Q14	FY13
Departure year-over-year growth	(4) to 0%	8 to 12%
ASM year-over-year growth	4 to 8%	10 to 14%	8 to 10%
Scheduled
Departure year-over-year growth	2 to 6%	8 to 12%
ASM year-over-year growth	8 to 12%	10 to 14%	13 to 15%

Cost guidance	4Q13		FY13
CASM ex fuel – year-over-year change	4.5 to 6.5%		4 to 5%

CAPEX guidance			FY13
Capital expenditures (millions)			$170 to $180

CASM ex fuel – cost per available seat mile excluding fuel expense

Aircraft fleet plan by end of period

Aircraft	4Q13	4Q14
MD-80 (166*)	51	53
MD-80 (non 166*)	1	–
757	6	6
A319	3	4
A320	7	9
Total	68	72

*166 refers to MD-80s that have been converted to 166 seat aircraft, non 166 refers to those aircraft that will not be converted
Aircraft listed in table above include only in service aircraft

In other news, the company announced new, nonstop jet service from Cincinnati-Northern Kentucky International Airport to Orlando-Sanford International Airport starting on February 12, 2014 and Punta Gorda Airport beginning on February 14, 2014.

This announcement marks the 100th U.S. city served by Allegiant’s low-cost, nonstop service to popular vacation destinations, more than any other low-cost carrier in the U.S.

Copyright Photo: Tony Storck/AirlinersGallery.com. Allegiant Air’s McDonnell Douglas DC-9-82 (MD-82) N408NV (msn 53246) in the Blue Man Group special livery lands at the Las Vegas hub and base. Allegiant moved to Concourse A at LAS on October 15.

Allegiant Air:

Allegiant Air grounds half of its MD-80 fleet for emergency slide inspections

Allegiant Air (Las Vegas) yesterday (September 20) grounded upwards of 30 McDonnell Douglas MD-80s (DC-9-80s). The cancellation of flights was due to an inspection of the emergency chutes of its 52 MD-80s.

Allegiant issued this statement:

Allegiant announces it has discovered a compliance issue which will require immediate re-inspection of many slides in its MD-80 fleet. The Company has already begun the re-inspections and expects to complete the process by the end of September. MD-80 aircraft will be placed back in service as soon as possible after the slides pass re-inspection. In the meantime, Allegiant will take as many as 30 MD-80s out of service and delay, reschedule or cancel a number of flights over the next several days.

“We apologize for the disruption to our passengers and ask that they please remain patient as we work to correct the issue, reschedule affected flights and accommodate any passengers impacted,” said Andrew Levy, Allegiant Travel Company President. “Allegiant is committed, above all else, to the safety of our passengers and crew, and we are dedicated to working around-the-clock to ensure that all of our fleet meets the highest standards.”

At this time, it is unknown how long the disruption in flight schedule will last.

The company has secured sub-service on seven aircraft from other carriers to assist in operating its Sunday and Monday flight schedule and expects to have 22 MD-80 aircraft in service by Saturday. Allegiant expects delays and reschedules to continue, but is working around-the-clock to re-accommodate and update passengers.

During a thorough incident review earlier this week, Allegiant maintenance became aware of a discrepancy in its slide maintenance schedule. In 2007, the original manufacturer recommendation for slide maintenance schedule changed from once every three years to once a year for slides older than 15 years. Allegiant discovered that many of the slides had not been inspected within the last year and did not comply with this recommendation. This prompted Allegiant to proactively remove aircraft from service until all slides could be brought into compliance. To inspect and overhaul the slides, the slides must be removed and sent to a regulated inspection and maintenance facility.

Allegiant teams are working to accommodate all affected passengers and will offer the following compensation:

Flights delayed less than four hours: $100 voucher for future travel
Flights delayed 4-6 hours: $150 off voucher for future travel
Flights delayed 6 or more hours: $200 voucher for future travel
Reschedule flights: Full refund and $200 voucher for future travel

For passengers delayed overnight, hotel accommodations and meals will be provided. For travel and compensation questions, please call Allegiant Customer Care at 702-505-8888

Read the full report from Reuters: CLICK HERE

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Officially designed as a McDonnell Douglas DC-9-83 (MD-83), N417NV (msn 53347) prepares to depart from Long Beach.

Allegiant Air:

Allegiant’s 2Q net profit increases to $25.8 million

Allegiant Travel Company (Allegiant Air) (Las Vegas) reported a net income of $25.8 million in the second quarter, up 2.3 percent from the same quarter a year ago. This represents the 42nd consecutive profitable quarter.

Read the full report: CLICK HERE

Copyright Photo: Bruce Drum/AirlinersGallery.com. McDonnell Douglas DC-9-83 (MD-83) N879GA (msn 53486) approaches the Las Vegas base for landing dressed in the old 2003 livery.

Allegiant Air:

Allegiant’s 1Q net profit increases to $31.9 million

Allegiant Travel Company (Allegiant Air) (Las Vegas) reported the following financial results for the first quarter 2013:

Unaudited	1Q13	1Q12	Change
Total operating revenue (millions)	$273.0	$237.9	14.8%
Operating income (millions)	$52.4	$36.3	44.2%
Operating margin	19.2%	15.3%	3.9pp
EBITDA (millions)	$69.4	$48.3	43.6%
EBITDA margin	25.4%	20.3%	5.1pp
Net income (millions)	$31.9	$21.7	47.1%
Diluted earnings per share	$1.65	$1.12	47.3%

“We are very proud to report our 41st consecutive profitable quarter,” stated Maurice J. Gallagher, Jr., Chairman and CEO of Allegiant Travel Company. “The month of March is typically our busiest month of the year, and this year was no different. Thanks to the tireless efforts of our Team Members, we have had another profitable quarter.”

Notable company quarterly highlights

Began flying our first A319 on March 1, 2013, the second A319 on April 4, 2013
Repurchased over 284,000 shares for $22.2 million dollars, average purchase price of $78.15
Received board approval to increase share repurchase authority to $100 million
Completed the 166 seat MD-80 conversion project in February
Added two new small cities Provo, UT and Reno, NV
Added eight routes in the quarter
Announced five routes which will start in the second quarter, including one new city, Little Rock, AR
Operated 198 routes in the first quarter of 2013. Expect to operate 203 routes in the second quarter of 2013

First quarter 2013 revenue performance

13^th consecutive quarter of year over year increases in total average fare
First quarter 2013 average fare, average ancillary air per passenger, and total fare were the highest in the company’s history
First quarter TRASM increased by 1.2 percent even though we increased average scheduled service stage length by 4.9 percent and scheduled service ASMs grew by 17 percent
Load factor returned to a normalized rate closer to 90%
Same store markets, those which were operated in the first quarter 2012 and 2013, had a 4.3 percent TRASM increase versus the system average of 1.2 percent
Fixed fee revenue’s decline is attributable to no longer operating two aircraft in track charter programs as previously disclosed

	1Q13	1Q12	Change
Scheduled Service:
Average fare – scheduled service	$97.54	$94.95	2.7%
Average fare – ancillary air-related charges	$41.64	$32.39	28.6%
Average fare – ancillary third party products	$5.81	$5.36	8.4%
Average fare – total	$144.99	$132.70	9.3%
Scheduled service passenger revenue per ASM (PRASM) (cents)	8.60	9.04	(4.9)%
Total scheduled service revenue* per ASM (TRASM) (cents)	12.79	12.64	1.2%
Load factor	89.8%	91.1%	(1.3)pp
Passengers (millions)	1.8	1.7	8.4%
Average passengers per departure	148	138	7.2%
Average scheduled service stage length (miles)	978	932	4.9%

* Total scheduled service revenue includes scheduled service, ancillary air-related charges, and ancillary third party products revenue.
ASMs = available seat miles
PRASM = scheduled passenger revenue per scheduled available seat mile

First quarter 2013 cost performance

Operating CASM, excluding fuel increased only 0.2 percent to 5.18 cents despite an almost eight percent decrease in aircraft utilization for the same time period due to a higher concentration of flying during peak periods
Operating expense per ASM decreased by three percent even though our average fuel expense per gallon increased by three percent. System ASMs per gallon of fuel improved to 67.3; a 9.6 percent increase versus the first quarter 2012
Maintenance and repairs expense per passenger decreased by 19.2 percent due to a more normalized rate of engine overhaul expense compared to unusually high levels in the first quarter of 2012
Salary and benefits expense per passenger increased by 18.4 percent due mainly to increases in pilot compensation. As we reached a trailing twelve month operating margin of 14 percent in November of 2012, our pilots moved into a higher pilot pay rate band per our compensation agreement with our pilot work group. Additionally, higher flight attendant headcount resulting from the increased gauge of our MD-80 aircraft and operating six 757 aircraft as opposed to one during the first quarter 2012
Depreciation and amortization per passenger increased 35 percent primarily due to accelerated depreciation from the announced retirement of six MD-80s from first quarter 2013 through third quarter 2013, along with higher depreciation stemming from 51 converted 166 seat MD-80s at the end of the quarter versus 17 a year ago
Other expense per passenger increased 35 percent primarily attributable to a higher write-down of engine values in our consignment program

	1Q13	1Q12	Change
Total System*:
Operating expense per passenger	$117.31	$112.03	4.7%
Operating expense per passenger, excluding fuel	$59.62	$55.10	8.2%
Operating expense per ASM (CASM) (cents)	10.20	10.52	(3.0)%
Operating expense, excluding fuel per ASM (CASM ex fuel) (cents)	5.18	5.17	0.2%
Average block hours per aircraft per day	5.9	6.4	(7.8)%

* Total system includes scheduled service, fixed-fee contract and non-revenue flying.

Second quarter 2013 cost trends

Salary and benefit expense is still subject to the same pressures as in the first quarter including the higher pilot pay band in effect
We expect the bulk of the engine and heavy airframe maintenance for the year will be incurred in the second and third quarters. For the full year, we are still anticipating maintenance per aircraft per month to be between $100 thousand and $110 thousand which has been our normalized historical run rate
Second quarter depreciation expense will still feel the impact of the accelerated depreciation reflected in the first quarter and to a lesser extent the higher depreciation from the converted 166 seat MD-80s as we had converted 27 aircraft by the end of June 2012. Four of the MD-80s driving the bulk of the accelerated depreciation are scheduled to be retired in the third quarter of 2013. In addition, we are expecting higher depreciation in the fourth quarter as we are currently expecting to place seven A320s into service by the fourth quarter of 2013.

Copyright Photo: Keith Burton. Allegiant introduced the first Airbus A319 into operations on March 1. The second was introduced on April 4. The former easyJet (Switzerland) A319-111 HB-JZN became N302NV (msn 2387) when it was delivered on February 11, 2013. The airliner is leased from GECAS.

Allegiant:

Allegiant’s pilots pick the Teamsters to represent them

Allegiant Air‘s (Las Vegas) pilots have selected the Teamsters to represent them. The company issued the following statement:

Allegiant has received notification from the National Mediation Board (NMB) that employees voting in the pilot election have chosen to be represented by the International Brotherhood of Teamsters (IBT).

“Allegiant respects the right of the pilot group to elect third-party representation, and we will work with the IBT to the best interests of both our employees and the Company,” Maurice J. Gallagher, Jr., Allegiant CEO and Chairman, said. “Contract negotiations can be a lengthy process and we do not anticipate any disruptions to our business or operations.”

Copyright Photo: Stephen Tornblom. McDonnell Douglas DC-9-83 (MD-83) N868GA (msn 49554) prepares to taxi from the gate at Long Beach.

Allegiant:

Allegiant’s second quarter net income rises by 110% to $25.2 million

Allegiant Travel Company (Allegiant Air) (Las Vegas) is steady profit machine finding profits in its underserved small markets. It really has no competition in these markets.

The travel group reported its second quarter net profit increased over 110 percent to $25.2 million.

Here is the full company statement:

“Allegiant Travel Company reported the following financial results for the second quarter 2012 as well as comparisons to prior year equivalents:

Unaudited	2Q12	2Q11	Change
Total operating revenue (millions)	$231.2	$200.4	15.3%
Operating income (millions)	$41.9	$20.7	102.1%
Operating margin	18.1%	10.3%	7.8pp
EBITDA (millions)	$54.9	$30.9	77.9%
EBITDA margin	23.8%	15.4%	8.4pp
Net income (millions)	$25.2	$11.9	110.8%
Diluted earnings per share	$1.30	$0.62	109.7%

“We are very proud to report our 38^th consecutive profitable quarter,” stated Maurice J. Gallagher, Jr., Chairman and CEO of Allegiant Travel Company. “I’d like to thank our Team Members for their great efforts and contributions to another successful quarter.”

Notable company highlights

CASM ex-fuel declined 13.9 percent to 5.1 cents, cost per passenger ex-fuel decreased 11.4 percent to $52.98
Announced acquisition of 19 A319 aircraft
Announced retirement of two MD-87s by the second quarter of 2013
Currently testing new website. Only a limited portion of web traffic is pointed to the new site. We expect to have 100 percent of traffic on it by the fourth quarter
Instituted new boarding process to support carry-on bag policy
Initiated service to Honolulu from Las Vegas and Fresno, Calif
Announced service to Honolulu from Bellingham, Wash, Eugene, Ore, Santa Maria, Monterey, and Stockton, Calif to begin in mid November
Announced service to Maui from Bellingham, Wash to begin in mid-November
As of Aug 1, we have 30 MD-80s with 166 seats. Expect all west coast scheduled MD-80s to have 166 seats by end of the third quarter of 2012.
Received ETOPS certification and Flag Carrier Status – permits international scheduled flying
Since July 2, operating four 757s
Started Oakland and Punta Gorda bases, currently serving eight markets and seven markets, respectively

Revenue performance

Average fare — ancillary air-related revenue per passenger grew 7.8 percent
Ancillary revenues per passenger were $39.67 in the second quarter, highest in the company’s history

	2Q12	2Q11	Change
Scheduled Service:
Average fare – scheduled service	$89.43	$91.17	(1.9)%
Average fare – ancillary air-related charges	$33.90	$31.45	7.8%
Average fare – ancillary third party products	$5.77	$5.68	1.6%
Average fare – total	$129.10	$128.30	0.6%
Scheduled service passenger revenue per ASM (PRASM) (cents)	8.75	9.27	(5.6)%
Total scheduled service revenue* per ASM (TRASM) (cents)	12.63	13.04	(3.1)%
Load factor	90.1%	92.0%	(1.9)pp
Passengers (millions)	1.7	1.5	16.0%
Average passengers per departure	140	136	2.9%

* Total scheduled service revenue includes scheduled service, ancillary air-related, and ancillary third party revenue.

Cost performance

Cost per ASM excluding fuel decreased 13.9 percent to 5.1 cents, total cost per ASM decreased 10.9 percent to 10.16 cents
Aircraft fuel expense per gallon declined 2.5 percent or $.08 per gallon
Fuel cost per passenger was $52.50, a $2.93 decrease or a 5.3 percent drop from the second quarter 2011
Salary and benefit expense per passenger declined 3.4 percent primarily due to outsourcing of station personnel in Las Vegas in the second quarter of 2011 and continued productivity gains
Sales and marketing expense per passenger decreased 11.7 percent primarily due to an 8 percent decline in payment processing cost per passenger resulting from increased debit card usage
Maintenance and repairs expense per passenger decreased 34.9 percent due primarily to a 64 percent decline in engine overhaul expenses
Station operations expense per passenger increased 2.8 percent primarily due to outsourcing Las Vegas station personnel

	2Q12	2Q11	Change
Total System*:
Operating expense per passenger	$105.48	$115.24	(8.5)%
Operating expense per passenger, excluding fuel	$52.98	$59.81	(11.4)%
Operating expense per ASM (CASM) (cents)	10.16	11.40	(10.9)%
Operating expense, excluding fuel per ASM (CASM ex fuel) (cents)	5.10	5.92	(13.9)%

* Total system includes scheduled service, fixed-fee contract and non-revenue flying.

Third party products performance

Ancillary revenue — third party products per passenger increased 1.6 percent, our ninth consecutive quarter of year over year increases
Third party ancillary gross margin improved to 29.7 percent versus 28.1 percent last year
41 percent of hotel room night growth occurred outside of Las Vegas
Rental car days grew 28.4 percent year over year

Supplemental Ancillary Revenue Information Unaudited (millions)	2Q12	2Q11	Change
Gross ancillary revenue – third party products	$32,909	$29,547	11.4%
Cost of goods sold	($21,909)	($20,046)	9.3%
Transaction costs*	($1,218)	($1,210)	0.7%
Ancillary revenue – third party products	$9,782	$8,291	18.0%
As percent of gross	29.7%	28.1%	1.6pp
As percent of income before taxes	24.5%	43.9%	(19.4)pp
Ancillary revenue – third party products/scheduled passenger	$5.77	$5.68	1.6%
Hotel room nights (thousands)	204.3	186.2	9.8%
Rental car days (thousands)	201.6	157.0	28.4%

* Includes payment expenses and travel agency commissions.

Balance sheet highlights

Financed two 757s in the quarter for $14 million
$33 million of total debt secured by six 757 aircraft
Currently have $45 million in share repurchase authority

Unaudited (millions)	6/30/12	12/31/11	Change
Unrestricted cash*	$390.1	$319.5	22.1%
Unrestricted cash net of air traffic liability	$232.4	$200.8	15.8%
Total debt	$156.2	$146.1	6.9%
Total stockholders’ equity	$403.0	$351.5	14.6%

	Six months ended June 30,
Unaudited (millions)	2012	2011	Change
Capital expenditures	$61.1	$51.2	19.2%
* Unrestricted cash includes investments in marketable securities.

At this time, Allegiant Travel Company provides the following guidance to investors, subject to revision.

Guidance, subject to revision

Revenue guidance	July 2012	3Q12
Estimated PRASM year-over-year change	(3) to (1)%	(9) to (7)%

Fixed fee and other revenue guidance		3Q12
Fixed fee and other revenue (millions)		$10 to $12

Aircraft guidance		3Q12
Number of MD-80s to be converted to 166 seats*		37 to 39

Capacity guidance
System	3Q12	4Q12
Departure year-over-year growth	+2 to 6%	+5 to 9%
ASM year-over-year growth	+14 to 18%	+19 to 23%
Scheduled
Departure year-over-year growth	+3 to 7%	+6 to 10%
ASM year-over-year growth	+15 to 19%	+22 to 26%

Cost guidance	3Q12	FY12
CASM ex fuel — year-over-year change	(2) to 0%	(10) to (5)%

CAPEX guidance		FY12
Capital expenditures (millions)		$105 to $115

Full year capacity guidance	FY12	FY13
Scheduled ASM year-over-year growth	+20 to 25%	+20 to 25%

CASM ex fuel — cost per available seat mile excluding fuel expense
* Number of aircraft expected to be completed by end of the quarter