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Allegiant Travel Group reports its second quarter 2019 results

Allegiant Travel Company (Allegiant Air) has reported the following financial results for the second quarter 2019, as well as comparisons to the prior year:

Consolidated	Three Months Ended June 30,				Percent		Six Months Ended June 30,				Percent
(unaudited)	2019		2018		Change		2019		2018		Change
Total operating revenue (millions)	$	491.8	$	436.8	12.6	%	$	943.4	$	862.2	9.4	%
Operating income (millions)	108.1		74.2		45.7		199.2		154.2		29.2
Net income (millions)	70.5		50.0		41.0		127.7		105.2		21.3
Diluted earnings per share	$	4.33	$	3.10	39.7	%	$	7.84	$	6.52	20.2	%

Airline only	Three Months Ended June 30,						Percent		Six Months Ended June 30,						Percent
(unaudited)	2019			2018			Change		2019			2018			Change
Airline operating revenue (millions)	$	486.8		$	434.6		12.0	%	$	935.1		$	858.9		8.9	%
Airline operating income (millions)	115.5			76.1			51.8		214.0			158.0			35.4
Airline operating margin⁽²⁾	23.7		%	17.5		%	6.2		22.9		%	18.4		%	4.5
Airline diluted earnings per share⁽¹⁾	$	4.81		$	3.21		49.8		$	8.80		$	6.75		30.4

Airline CASM ex fuel (cents)⁽¹⁾	5.65			6.02			(6.1	)	6.00			6.17			(2.8	)

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

“I’m happy to report the second quarter of 2019 was Allegiant’s 66^thconsecutive profitable quarter,” stated Maurice J. Gallagher, Jr., chairman and CEO of Allegiant Travel Company. “We commented last quarter about the benefits of our all Airbus fleet. These benefits are continuing and increasing. We led the industry in Q1 with a 22 percent airline operating margin; this quarter the airline generated a 24 percent operating margin, a six percentage point increase from the previous year. And we accomplished these results with seven fewer aircraft this year compared to 2018. The fuel efficiencies of the Airbus continue to impress. We consumed 4.9 percent more fuel in Q2 compared to last year but produced 13.4 percent more ASMs. Correspondingly, our CASM ex-fuel declined 6.1 percent year over year. I’m comfortable stating we believe we will be the only carrier this quarter who had lower unit costs this year versus last year.

“On the revenue front, scheduled service revenue was $11 million per aircraft during the first six months of the year, over $2 million more than last year’s per aircraft revenue during the same period. Additionally, we generated approximately $3.5 million of EBITDA per aircraft in the same period or about $1.1 million greater per aircraft than the same period last year.

“Our operations continue to excel. We have solely led or tied for the industry lead in completion factor every month in 2019. One of our challenges in the past few years has been our ability to scale our operations during our peak periods in the summer months and maintain a high completion rate. In June 2018, we were number five in completion rate; this year we were number one. I’m happy to report we have had only ten days where we have had a mechanical cancellation since the beginning of the year.

“This combination of superior financial results and industry-leading operational performance, along with the proprietary model we have developed and continue to operate is a tribute to our excellent team members. Looking forward, we are excited about the opportunities in front of us including our ability to operate our leisure model to Mexico and the Caribbean in the coming years.”

New Routes:

Airline operational highlights

•         Departures in the second quarter up 13.8 percent year over year despite seven fewer average aircraft in service
•         Average number of aircraft in service decreased 7.6 percent from 92 to 85 year over year
•         Spare aircraft reduced from twelve down to four spares year over year
•         Block hour utilization increased by 20.5 percent to 8.8 block hours per aircraft per day
•         Led industry in completion every month in 2019
•         Maintenance cancellations down 87.6 percent year over year
•         On time performance (A-14) for the quarter was 77.7 percent up 2.8pts year over year
•         Net promoter score is up an average of 8pts year over year
•         Irregular operation costs – second quarter down $7.2 million or 57.6 percent

Airline only second quarter 2019 results

•         Diluted earnings per share were $4.81, up 49.8 percent year over year
•         23.7 percent operating margin for the quarter and 22.9 percent year to date
•         TRASM decreased 1.6 percent on capacity growth of 13.6 percent
•         May TRASM grew 2.4 percent on 11 percent growth in ASMs
•         June TRASM grew 0.7 percent on 13.5 percent growth in ASMs
•         Total fare is down only 0.5 percent despite increasing aircraft utilization by 20.5 percent
•         Year-to-date average total fare has increased 1.0 percent to $120.49
•         Fixed fee flying revenue increased 63.2 percent
•         Fuel gallons used increased only 4.9 percent on ASM growth of 13.4 percent
•         Increase in ASMs per gallon of 8.1 percent to 82.3
•         Airline unit cost excluding fuel decreased by 6.1 percent
•         Maintenance and operational improvements were the largest drivers

Liquidity and shareholder returns

•         Total cash and investments at June 30 were $695 million
•         Paid off high yield bond balance of $102 million in July
•         Currently, we have 26 unencumbered aircraft
•         $81 million available under the revolving credit facility
•         Returned $11 million in dividends in the second quarter
•         Expect to pay dividend of $0.70 per share on September 27, 2019 to shareholders of record as of September 20, 2019

Non-airline highlights

•         Non-airline businesses resulted in a combined operating loss of $7.4 million during second quarter
•         Evaluating strategic alternatives for Teesnap
•         Triggered the business classification of an entity held for sale in July 2019
•         SunseekerResorts FY19 CAPEX reduced to a range between $150 and $175 million
•         Operated two family entertainment centers (FEC’s) during second quarter
•         Rebranded FEC’s from G4CE to Allegiant Nonstop effective June 1, 2019

Aircraft fleet plan by end of period

Aircraft – (seats per AC)	YE18	1Q19	2Q19	3Q19	YE19
A319 (156 seats)	32	37	37	37	38
A320 (177/186 seats)	44	47	49	53	55
Total	76	84	86	90	93

Aircraft listed in table above include only in-service aircraft and future aircraft under contract (subject to change)

Top Copyright Photo: Allegiant Air Airbus A320-214 WL N247NV (msn 7704) FLL (Bruce Drum). Image: 104577.

Allegiant Air aircraft slide show:

Route Map:

Teamsters: Pilots vote to authorize strike at Allegiant Air

The International Brotherhood Of Teamsters issued this statement:

Pilots at Allegiant Air—one of the country’s most profitable airlines—voted with 93.5 percent support to authorize a strike should it become necessary.

The vote comes in response to Allegiant’s years-long refusal to live up to its commitments and fix a sham scheduling system that has negatively impacted the lives of many pilots and their families.

Voting took place over a one-week period from June 29 to July 6 and was conducted online via a third-party election management provider.

A strike could result in cancellations out of major hubs including Las Vegas, Phoenix and Fort Lauderdale and impact thousands of passengers.

An airline that has made headlines for its bare minimum approach to business, Allegiant made the unilateral decision to force its pilots to use a homemade scheduling system that goes against industry standards and disregards pilots’ seniority and preferences—often upending pilots’ planned time away with their families. A growing number of Allegiant pilots have been leaving the company for other airlines that respect the basic needs and interests of pilots.

“We are people with spouses and children, not cells on a spreadsheet that Allegiant executives can move around with no rhyme or reason,” said Captain Andrew Robles, an Allegiant Air pilot and Executive Council Chairman at the pilots’ union, the Airline Pilots Association, Teamsters Local 1224. “Striking is a last resort, but we’ll do whatever it takes to hold Allegiant to its promises and to make our airline the best it can be for our pilots, our families and our passengers.”

Allegiant pilots have been raising concerns about the scheduling system for years. In 2016, the pilots and Allegiant reached an agreement requiring that they negotiate and implement a new system within 180 days. Allegiant has again stonewalled that negotiation process and recently backed out of its prior agreements with the pilots over terms for the new scheduling system.

Allegiant customers have felt the effects of the company’s bare minimum approach to business. In June, Allegiant canceled dozens of flights in and out of major airports across the country after Allegiant failed to deliver Airbus planes on time, affecting thousands of passengers’ travel plans.

“Allegiant has a long track record of breaking its commitments to its pilots and we’ve had enough. Allegiant executives are acting in complete and utter bad faith in failing to negotiate a fair, industry-standard scheduling system,” Captain Robles said.

Photo: Allegiant Air.

Allegiant Air is one of the most profitable commercial airlines in the U.S. with 60 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. The company enjoyed a $74 million windfall as a result of the recent tax bill.

Top Copyright Photo: Allegiant Air Airbus A320-214 WL N247NV (msn 7704) BWI (Tony Storck). Image: 941920.

Allegiant aircraft slide show:

Allegiant is coming to Nashville

Allegiant Air is coming to Nashville. Nashville will become the 120th Allegiant destination.

Service is due to start on June 7 with year-round flights to Punta Gorda, Florida and seasonal flights to Destin, Myrtle Beach, Richmond and Savannah.

The airline is expected to make an announcement today on other routes.

Allegiant Air aircraft slide show:

Allegiant Air to expand at Destin/Fort Walton Beach

Allegiant Air (Las Vegas) has announced it will convert its Destin/Fort Walton Beach destination into a year-round base with two new based aircraft. Destin/Fort Walton Beach in the Florida Panhandle will become the airline’s 14th year-round base.

The carrier is starting five new seasonal, twice-weekly routes from the new base in June to:

Bentonville, AR (Northwest Arkansas) (June 6)

Concord, NC (June 7)

Evansville, IN (June 8)

Lexington, KY (June 7)

Raleigh/Durham, NC (June 8)

Total service from Destin/Fort Walton Beach:

Allegiant made this announcement:

Allegiant announced plans to establish a two-aircraft base at Destin-Fort Walton Beach Airport (VPS). As part of Allegiant’s growth in Florida, the company anticipates adding more than 65 new, high-wage jobs during 2018. Destin-Fort Walton Beach Airport will become the airline’s 14th year-round aircraft base.

The Las Vegas-based company is investing more than $49 million to establish a year-round base of operations, which will house two Airbus aircraft. Allegiant set the stage for this expansion by utilizing Destin-Fort Walton Beach Airport as a seasonal base during the summer of 2017. Today Allegiant also announced new service to five cities – routes made possible only by establishing the Destin base.

Allegiant’s service in Destin-Fort Walton Beach began with six routes in 2016, and expanded to 16 cities in 2017. With a unique focus on leisure travelers, Allegiant flies all nonstop service built around an “out-and-back” model whereby aircraft and crews return to base after a day of flying.

As part of today’s celebration, Allegiant announced new, seasonal service to five cities, bring the total number of cities with service to the Emerald Coast to 21.

New seasonal service to Destin-Fort Walton Beach Airport (VPS) includes:

Bentonville, Arkansas via Northwest Arkansas Regional Airport (XNA) – begins June 6, 2018 with fares as low as $68.*
Concord, North Carolina via Concord Regional Airport (USA) – begins June 7, 2018 with fares as low as $46.*
Lexington, Kentucky via Blue Grass Airport (LEX) – begins June 7, 2018 with fares as low as $62.*
Evansville, Indiana via Evansville Regional Airport (EVV) – begins June 8, 2018 with fares as low as $61.*
Raleigh / Durham, North Carolina via Raleigh-Durham International Airport(RDU) – begins June 8, 2018 with fares as low as $46.*

“We are thrilled! Allegiant’s model fits like a glove at VPS and a year-round base will bring monumental widespread economic impacts to our region. We look forward to Allegiant’s continued success at the Destin-Fort Walton Beach Airport,” said Tracy Stage, Okaloosa Countyairports director.

The new routes will operate twice weekly and expand on the service Allegiant currently operates to Destin-Fort Walton Beach Airport (VPS), bringing the total number of Allegiant routes to VPS to 21.

*About the introductory one-way fares:

Seats are limited. Price includes taxes and fees. Fares are one way and not available on all flights. Flights between EVV and VPS must be purchased by Feb. 13, 2018 for travel by Aug. 27, 2018. Flights between LEX and VPS must be purchased by Feb. 13, 2018 for travel by Aug. 19, 2018. Flights between RDU and VPS must be purchased by Feb. 13, 2018 for travel by Aug. 27, 2018. Flights between USA and VPS must be purchased by Feb. 13, 2018 for travel by Aug. 26, 2018. Flights between XNA and VPS must be purchased by Feb. 13, 2018 for travel by Aug. 11, 2018. Additional restrictions may apply

Allegiant Air aircraft slide show: