Press Release

Allegiant Travel Company Second Quarter 2017 Financial Results
Second Quarter 2017 Fully Diluted Earnings per Share of $2.94

LAS VEGAS, July 26, 2017 (GLOBE NEWSWIRE) --  Allegiant Travel Company (NASDAQ:ALGT) today reported the following financial results for the second quarter 2017, as well as comparisons to the prior year:

  Three Months Ended
 June 30,
    Six Months Ended
 June 30,
 
Unaudited   2017   2016 Change     2017   2016 Change
Total operating revenue (millions) $ 400.6   $ 344.9   16.2 %   $ 776.5   $ 693.5   12.0 %
Operating income (millions) $ 85.2   $ 104.5   (18.5 )%   $ 158.1   $ 225.6   (29.9 )%
Net income (millions) $ 48.5   $ 60.8   (20.3 )%   $ 90.1   $ 132.8   (32.2 )%
Diluted earnings per share $ 2.94   $ 3.68   (20.1 )%   $ 5.43   $ 7.97   (31.9 )%
Return on capital employed*           18.2 %   25.2 %  

 * - see appendix for calculation, represents twelve months ended June 30

“I am pleased to announce we had our 58th consecutive profitable quarter," stated Maurice J. Gallagher Jr., chairman and CEO of Allegiant Travel Company. "I am also pleased with our 21.3 percent operating margin during this transition time for the company. We are well into the wind down of our MD-80 fleet. We have taken delivery of our first four new 186 seat A320 aircraft from Airbus as of July 26th. We expect to place into service another ten Airbus aircraft including six more new A320s throughout the remainder of 2017. We also signed an agreement to acquire an additional 13 used A320s which we announced in June 2017. This was the last transaction needed to solidify the plan to retire all the MD-80s by the end of 2019.  Thank you to all of our team members for another successful quarter."

 Notable highlights        

  • Airbus growth - In June, announced the lease arrangement of 13 used A320 aircraft to be delivered in 2017 and 2018. Will take the company to 92 committed Airbus either in service or for future delivery
  • Network growth - As of June 30, 2017 the company is operating 382 routes versus 342 at the same time last year
  • New routes - Announced 28 new routes expected to begin in the third and fourth quarters of 2017
    • Includes new cities of Milwaukee, Wisconsin; Norfolk, Virginia; and Gulfport, Mississippi
  • Shareholder returns - $92 million was returned through a combination of the recurring dividend paid in June 2017 and share repurchases during the quarter. The company:
    • Will pay a dividend of $0.70 per share on September 5, 2017 to shareholders of record as of August 18, 2017
    • Returned $84 million to shareholders through the repurchase of 589,000 open market shares in the quarter. This was the highest dollar amount spent in share repurchases for one quarter in the history of the company
    • The Board of Directors increased the share repurchase authorization to $100 million

 Second quarter 2017 revenue

  • TRASM results - Second quarter TRASM increased 3.1 percent
    • Impact of Easter shift into April this year benefited the quarter contributing approximately 1.5 percentage points of TRASM
  • New markets (markets operating less than one year) were approximately thirteen percent of ASMs for the second quarter which is similar to last year

 Third quarter 2017 revenue trends

  • TRASM guidance - Third quarter TRASM is expected to be between negative .5 and positive 1.5 percent versus the third quarter last year
     Increased MD-80 spares, which limits the ability to grow peak period flying, is expected to cost the third quarter one percentage point of TRASM
     Off peak flying is expected to be almost 26 percent of ASMs for the third quarter, versus approximately 22 percent last year

Second quarter cost trends

  • Second quarter CASM ex fuel increased 13.2 percent versus the same period last year driven by:
    • New pilot agreement - Added six percentage points
     Elimination of the credit card surcharge - Added four percentage points
        • In January 2017, we discontinued our credit card surcharge, which had previously been applied as a reduction to sales and marketing expense
     Irregular operations - Added two percentage points 

Third quarter 2017 cost trends

  • Third quarter 2017 CASM ex fuel is expected to increase between sixteen and eighteen percent versus the same period last year, driven by:
     New pilot agreement - Expected to add three percentage points
     Incremental depreciation on Airbus aircraft - Expected to add three percentage points
     Elimination of credit card surcharge - Expected to add three percentage points
     Transition costs - Cost related to the fleet transition such as reduced ASMs through less utilization of MD-80s and other operational inefficiencies driven by the move to an all Airbus fleet is expected to add five percentage points 

Full year 2017 cost trends

  • Full year 2017 CASM ex fuel is expected to remain up between ten and twelve percent, consistent with prior guidance
  • Maintenance and repairs expense is expected to remain between $100 and $110 thousand per in-service aircraft per month for full year 2017, consistent with prior guidance
  • Total ownership expense per aircraft per month - Full year 2017 ownership expense per in-service aircraft per month is expected to remain between $125 and $135 thousand, consistent with prior guidance 

Balance sheet activity and full year 2017 trends

  • Full year CAPEX guidance (Excluding Airbus deferred heavy maintenance) is expected to be $525 million, consistent with prior guidance
  • Raised $113 million in debt proceeds during the second quarter
    • Currently have five unencumbered Airbus aircraft
     
Guidance, subject to revision    
     
    3Q17  
Estimated TRASM year-over-year change   (0.5) to 1.5%  
       
Fixed fee and other revenue guidance   3Q17  
Fixed fee and other revenue (millions)   $17 to $19  
       
Capacity guidance      
System 3Q17 4Q17 FY17
  Departure year-over-year growth 4 to 8% 7 to 11%  
  ASM year-over-year growth 3 to 7% 9 to 13% 9 to 11%
Scheduled      
  Departure year-over-year growth 4 to 8% 7 to 11%  
  ASM year-over-year growth 3 to 7% 9 to 13% 9 to 11%
       
Cost guidance 3Q17   FY17
CASM ex fuel* – year-over-year change 16 to 18%   10 to 12%
       
CAPEX guidance     FY17
Capital expenditures (millions)     $ 525
Capitalized Airbus deferred heavy maintenance (millions) **     $ 30
       
Aircraft leasing arrangement (millions) ***     $ 150

 * - CASM ex fuel – cost per available seat mile excluding fuel expense
** - Not included in capital expenditure total
*** - Not included in capital expenditure total, present value of leases over lease term

Aircraft fleet plan by end of period          
           
Aircraft - (seats per AC)   1Q17 2Q17 3Q17 YE17
MD-80 (166 seats)   47   45   40   37  
757 (215 seats)   2   2   2    
A319 (156 seats)   19   20   21   22  
A320 (177/186 seats)   17   21   25   29  
Total   85   88   88   88  

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

Allegiant Travel Company will host a conference call with analysts at 4:30 p.m. ET Wednesday, July 26, 2017 to discuss its second quarter 2017 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.

Allegiant®

Las Vegas-based Allegiant (NASDAQ:ALGT) is focused on linking travelers in small cities to world-class leisure destinations. The airline offers industry-low fares on an all-jet fleet while also offering other travel-related products such as hotel rooms and rental cars. All can be purchased only through the company website, Allegiant.com. Beginning with one aircraft and one route in 1999, the company has grown to more than 85 aircraft and 350 routes across the country with base airfares less than half the cost of the average domestic roundtrip ticket. For downloadable press kit, including photos, visit: http://gofly.us/iiFa303wrtF.

Under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, statements in this press release that are not historical facts are forward-looking statements. These forward-looking statements are only estimates or predictions based on our management's beliefs and assumptions and on information currently available to our management. Forward-looking statements include our statements regarding future unit revenue, future operating expense, ASM growth, departure growth, fixed-fee and other revenues, expected capital expenditures, number of contracted aircraft to be placed in service in the future, timing of aircraft retirements, as well as other information concerning future results of operations, business strategies, financing plans, industry environment and potential growth opportunities. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words "believe," "expect," “guidance,” "anticipate," "intend," "plan," "estimate", “project”, “hope” or similar expressions.

Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in the forward-looking statements. Important risk factors that could cause our results to differ materially from those expressed in the forward-looking statements generally may be found in our periodic reports filed with the Securities and Exchange Commission at www.sec.gov . These risk factors include, without limitation, an accident involving, or problems with, our aircraft, our reliance on our automated systems, limitation on growth as we transition to a single fleet type, risk of breach of security of personal data, volatility of fuel costs, labor issues and costs, the ability to obtain regulatory approvals as needed , the effect of economic conditions on leisure travel, debt covenants and balances, the ability to finance aircraft under contract, terrorist attacks, risks inherent to airlines, our competitive environment, our reliance on third parties who provide facilities or services to us, the possible loss of key personnel, economic and other conditions in markets in which we operate, governmental regulation, increases in maintenance costs and cyclical and seasonal fluctuations in our operating results.

Any forward-looking statements are based on information available to us today and we undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise.

Detailed financial information follows: 


Allegiant Travel Company
Consolidated Statements of Income
(in thousands, except per share amounts)
(Unaudited)
 
  Three Months Ended June 30,   Percent
    2017     2016   change
OPERATING REVENUE:          
Scheduled service revenue $ 220,615     $ 189,122     16.7  
Ancillary revenue:          
Air-related charges   145,405       128,713     13.0  
Third party products   14,304       11,965     19.5  
Total ancillary revenue   159,709       140,678     13.5  
Fixed fee contract revenue   11,029       6,706     64.5  
Other revenue   9,261       8,345     11.0  
Total operating revenue   400,614       344,851     16.2  
OPERATING EXPENSES:          
Aircraft fuel   85,387       60,005     42.3  
Salary and benefits   92,221       68,553     34.5  
Station operations   38,998       33,328     17.0  
Maintenance and repairs   28,645       29,261     (2.1 )
Depreciation and amortization   30,129       25,396     18.6  
Sales and marketing   12,861       5,317     141.9  
Aircraft lease rentals   2,400       219     NM  
Other   24,777       18,296     35.4  
Total operating expense   315,418       240,375     31.2  
OPERATING INCOME   85,196       104,476     (18.5 )
OTHER (INCOME) EXPENSE:          
Interest income   (1,475 )     (710 )   107.7  
Interest expense   8,889       7,390     20.3  
Other, net   (493 )     (300 )   64.3  
Total other (income) expense   6,921       6,380     8.5  
INCOME BEFORE INCOME TAXES   78,275       98,096     (20.2 )
PROVISION FOR INCOME TAXES   29,800       37,249     (20.0 )
NET INCOME $ 48,475     $ 60,847     (20.3 )
Earnings per share to common shareholders (1):          
Basic $ 2.94     $ 3.69     (20.3 )
Diluted $ 2.94     $ 3.68     (20.1 )
Weighted average shares outstanding used in computing earnings per share to common shareholders (1):          
Basic   16,198       16,420     (1.4 )
Diluted   16,220       16,442     (1.4 )

NM - Not meaningful
(1) The Company's unvested restricted stock awards are considered participating securities as they receive non-forfeitable rights to cash dividends at the same rate as common stock. The Basic and Diluted earnings per share for the periods presented reflect the two-class method mandated by accounting guidance for the calculation of earnings per share. The two-class method adjusts both the net income and the shares used in the calculation. Application of the two-class method did not have a significant impact on the Basic and Diluted earnings per share for the periods presented.

 

Allegiant Travel Company
Operating Statistics
(Unaudited)
 
  Three Months Ended June 30,   Percent
  2017   2016   change*
OPERATING STATISTICS          
Total system statistics:          
Passengers 3,306,193     2,878,460     14.9  
Revenue passenger miles (RPMs) (thousands) 2,958,808     2,665,753     11.0  
Available seat miles (ASMs) (thousands) 3,584,209     3,178,904     12.7  
Load factor 82.6 %   83.9 %   (1.3 )
Operating expense per ASM (CASM) (cents)***
8.80     7.56     16.4  
Fuel expense per ASM (cents)*** 2.38     1.89     25.9  
Operating CASM, excluding fuel (cents) 6.42     5.67     13.2  
ASMs per gallon of fuel 71.9     72.0     (0.1 )
Departures 24,721     20,969     17.9  
Block hours 56,056     48,506     15.6  
Average stage length (miles) 866     893     (3.0 )
Average number of operating aircraft during period 85.3     83.8     1.8  
Average block hours per aircraft per day 7.2     6.4     12.5  
Full-time equivalent employees at end of period 3,628     3,228     12.4  
Fuel gallons consumed (thousands) 49,858     44,153     12.9  
Average fuel cost per gallon*** $ 1.71     $ 1.36     25.7  
Scheduled service statistics:          
Passengers 3,266,789     2,850,112     14.6  
Revenue passenger miles (RPMs) (thousands) 2,903,257     2,626,770     10.5  
Available seat miles (ASMs) (thousands) 3,436,872     3,072,135     11.9  
Load factor 84.5 %   85.5 %   (1.0 )
Departures 23,609     20,171     17.0  
Block hours 53,632     46,763     14.7  
Total scheduled service revenue per ASM (TRASM) (cents)** 11.07     10.74     3.1  
Average fare - scheduled service $ 67.54     $ 66.36     1.8  
Average fare - ancillary air-related charges $ 44.51     $ 45.16     (1.4 )
Average fare - ancillary third party products $ 4.38     $ 4.20     4.3  
Average fare - total $ 116.43     $ 115.72     0.6  
Average stage length (miles) 869     897     (3.1 )
Fuel gallons consumed (thousands) 47,821     42,698     12.0  
Average fuel cost per gallon*** $ 1.70     $ 1.36     25.0  
Percent of sales through website during period 95.1 %   93.9 %   1.2  

* Except load factor and percent of sales through website, which is percentage point change.
** Various components of this measurement do not have a direct correlation to ASMs. These figures are provided on a per ASM basis to facilitate comparison with airlines reporting revenues on a per ASM basis.
*** Includes effect of $8.3 million fuel tax refunds in the second quarter of 2016.


Allegiant Travel Company
Consolidated Statements of Income
 (in thousands, except per share amounts)
(Unaudited)

 
  Six Months Ended June 30,   Percent
    2017     2016   change
OPERATING REVENUE:          
Scheduled service revenue $ 432,713     $ 390,728     10.7  
Ancillary revenue:          
Air-related charges   276,970       249,643     10.9  
Third party products   27,046       23,223     16.5  
Total ancillary revenue   304,016       272,866     11.4  
Fixed fee contract revenue   22,289       13,507     65.0  
Other revenue   17,434       16,366     6.5  
Total operating revenue   776,452       693,467     12.0  
OPERATING EXPENSES:          
Aircraft fuel   170,049       113,663     49.6  
Salary and benefits   188,519       137,761     36.8  
Station operations   70,830       64,061     10.6  
Maintenance and repairs   58,740       55,753     5.4  
Depreciation and amortization   60,678       50,081     21.2  
Sales and marketing   22,859       11,125     105.5  
Aircraft lease rentals   2,564       452     NM  
Other   44,129       34,968     26.2  
Total operating expense   618,368       467,864     32.2  
OPERATING INCOME   158,084       225,603     (29.9 )
OTHER (INCOME) EXPENSE:          
Interest income   (2,739 )     (1,321 )   107.3  
Interest expense   17,291       14,629     18.2  
Other, net   (854 )     (663 )   28.8  
Total other (income) expense   13,698       12,645     8.3  
INCOME BEFORE INCOME TAXES   144,386       212,958     (32.2 )
PROVISION FOR INCOME TAXES   54,279       80,131     (32.3 )
NET INCOME   90,107       132,827     (32.2 )
Earnings per share to common shareholders (1):          
Basic $ 5.44     $ 7.98     (31.8 )
Diluted $ 5.43     $ 7.97     (31.9 )
Weighted average shares outstanding used in computing earnings per share to common shareholders (1):          
Basic   16,290       16,549     (1.6 )
Diluted   16,317       16,574     (1.6

NM - Not meaningful
(1) The Company's unvested restricted stock awards are considered participating securities as they receive non-forfeitable rights to cash dividends at the same rate as common stock. The Basic and Diluted earnings per share for the periods presented reflect the two-class method mandated by accounting guidance for the calculation of earnings per share. The two-class method adjusts both the net income and shares used in the calculation. Application of the two-class method did not have a significant impact on the Basic and Diluted earnings per share for the periods presented. 


Allegiant Travel Company
Operating Statistics
 (Unaudited)
 
  Six Months Ended June 30,   Percent
  2017   2016   change*
OPERATING STATISTICS          
Total system statistics:          
Passengers 6,187,441     5,471,367     13.1  
Revenue passenger miles (RPMs) (thousands) 5,667,306     5,185,903     9.3  
Available seat miles (ASMs) (thousands) 6,961,046     6,180,289     12.6  
Load factor 81.4 %   83.9 %   (2.5 )
Operating expense per ASM (CASM) (cents)*** 8.88     7.57     17.3  
Fuel expense per ASM (cents)*** 2.44     1.84     32.6  
Operating CASM, excluding fuel (cents) 6.44     5.73     12.4  
ASMs per gallon of fuel 72.0     72.1     (0.1 )
Departures 47,016     39,887     17.9  
Block hours 109,249     94,776     15.3  
Average stage length (miles) 883     913     (3.3 )
Average number of operating aircraft during period 85.0     83.0     2.4  
Average block hours per aircraft per day 7.1     6.3     12.7  
Full-time equivalent employees at end of period 3,628     3,228     12.4  
Fuel gallons consumed (thousands) 96,708     85,676     12.9  
Average fuel cost per gallon*** $ 1.76     $ 1.33     32.3  
Scheduled service statistics:          
Passengers 6,112,269     5,417,421     12.8  
Revenue passenger miles (RPMs) (thousands) 5,565,191     5,110,323     8.9  
Available seat miles (ASMs) (thousands) 6,674,035     5,970,086     11.8  
Load factor 83.4 %   85.6 %   (2.2 )
Departures 44,857     38,346     17.0  
Block hours 104,507     91,326     14.4  
Total scheduled service revenue per ASM (TRASM) (cents)** 11.04     11.11     (0.6 )
Average fare - scheduled service $ 70.80     $ 72.12     (1.8 )
Average fare - ancillary air-related charges $ 45.31     $ 46.08     (1.7 )
Average fare - ancillary third party products $ 4.42     $ 4.29     3.0  
Average fare - total $ 120.53     $ 122.49     (1.6 )
Average stage length (miles) 887     917     (3.3 )
Fuel gallons consumed (thousands) 92,713     82,852     11.9  
Average fuel cost per gallon*** $ 1.75     $ 1.33     31.6  
Percent of sales through website during period 94.2 %   94.1 %   0.1  


* Except load factor and percent of sales through website, which is percentage point change.
** Various components of this measurement do not have a direct correlation to ASMs. These figures are provided on a per ASM basis to facilitate comparison with airlines reporting revenues on a per ASM basis.
*** Includes effect of $8.3 million fuel tax refunds in the second quarter of 2016.


Summary Balance Sheet 

(millions) 6/30/2017   12/31/2016   Change
  (unaudited)        
Unrestricted cash          
Cash and cash equivalents $ 20.0     $ 64.7     (69.1 )%
Short-term investments 323.1     269.3     20.0  
Long-term investments 159.8     124.8     28.0  
Total unrestricted cash 502.9     458.8     9.6  
Debt          
Current maturities of long-term debt, net of related costs 101.3     86.2     17.5  
Long-term debt, net of current maturities and related costs 776.2     722.0     7.5  
Total debt 877.5     808.2     8.6  
Total Allegiant Travel Company shareholders’ equity $ 459.5     $ 473.6     (3.0 )%


Summary Cash Flow
 

  Six Months Ended June 30,    
Unaudited (millions) 2017   2016   Change
Cash provided by operating activities $ 263.1     $ 256.1     2.7 %
Purchase of property and equipment, including capitalized interest* (182.3 )   (105.2 )   73.3  
Repurchase of common stock (84.9 )   (63.3 )   34.1  
Cash dividends paid to shareholders (23.2 )   (44.4 )   (47.7 )
Proceeds from the issuance of long-term debt 134.5     28.0     380.4  
Principal payments on long-term debt (64.9 )   (39.2 )   65.6  

* Includes aircraft pre-delivery deposits.

 

Appendix A
Additional Financial Information
(Unaudited)
 
  Twelve Months Ended June 30,
Return on capital calculation (millions) 2017   2016
Net income attributable to Allegiant Travel Company $ 176.9     $ 234.0  
Income tax 100.5     138.0  
Interest expense 31.5     27.3  
Less interest income (4.4 )   (2.2 )
  304.5     397.1  
       
Interest income 4.4     2.2  
Tax rate 36.2 %   37.1 %
Numerator 197.1     251.2  
       
Total assets as of prior June 30 1,449.0     1,319.5  
Less current liabilities as of prior June 30 443.2     386.3  
Plus short term debt as of prior June 30 80.1     65.2  
Denominator 1,085.9     998.4  
Return on capital employed 18.2 %   25.2 %


Media Inquiries: mediarelations@allegiantair.com

Investor Inquiries: ir@allegiantair.com

Primary Logo

Allegiant Travel Company