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LAS VEGAS, Oct 29, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- Allegiant Travel Company (Nasdaq: ALGT), parent company of Allegiant Air and Allegiant Vacations, today reported the following third quarter 2007 results, and comparisons to prior year equivalents:
(Logo: http://www.newscom.com/cgi-bin/prnh/20060516/LATU102LOGO)
Unaudited 3Q07 3Q06 Change
Total operating revenue (millions) $86.3 $60.9 41.7 %
Operating income (millions) $9.5 $2.9 230.1 %
Operating margin 11.1 % 4.7 % 6.4pp
Net income (loss) (millions) $7.0 ($1.2) N/M
Diluted earnings per share $0.34 ($0.19) N/M
Diluted non-GAAP earnings per share adjusted by
excluding non-cash mark-to-market loss on fuel
derivatives (reconciled to GAAP
reconciled to GAAP on pg. 9) $0.35 $0.09 288.9 %
Scheduled Service:
Ancillary revenue per passenger $21.31 $17.99 18.5 %
Total revenue per ASM (cents) 9.59 8.75 9.6 %
Average stage length (miles) 920 984 (6.5)%
Total System*:
Operating expense per ASM, or CASM (cents) 8.41 8.33 1.0 %
CASM, excluding fuel (cents) 4.40 4.49 (2.0)%
Average stage length (miles) 898 932 (3.6)%
* Total system includes scheduled service, fixed fee contract and
non-revenue flying.
"Our results in the third quarter, historically our weakest, remain in line with our expectations," said Maurice J. Gallagher, Jr., Chairman, CEO and President of Allegiant Travel Company. "We more than doubled our operating margin to 11% despite substantial growth: year-over-year scheduled service passengers increased 57%, while scheduled service departures and ASMs were up 44% and 35%, respectively. Notwithstanding these growth rates, our terrific team members produced an excellent on-time operation in the third quarter with 85% of our scheduled service flights, excluding ATC and weather, departing within 15 minutes of scheduled departure and a 100% completion rate on scheduled flights."
Gallagher continued, "Our increased ancillary revenue was the largest contributor to our margin improvement. Our new ancillary products -- bag fees and 'Trip Flex' -- helped drive a year-over-year increase in per-passenger ancillary revenue of over $3. With $21 per passenger of ancillary revenue, we also focused on increasing scheduled passengers per departure -- 125 in 3Q07 up from 115 in 3Q06. This increase was also powerful in driving increased margins. Lastly, I want to congratulate Andrew Levy on his appointment to CFO. He has been critical to our success during the past six years."
Andrew C. Levy, Allegiant Travel Company CFO & Managing Director - Planning, stated, "Our balance sheet and liquidity remain very strong. We ended the quarter with $173 million in cash and short-term investments, down from $186 million at the end of the June quarter due to the purchase of $25.1 million in aircraft and engines to support our fourth quarter and 2008 growth. Cash was used to purchase $17.3 million of these assets with the balance being financed, resulting in an increase in debt of $4.1 million compared with the prior quarter. Cash flow from operations remains strong even during what has historically been our weakest quarter of the year. In the quarter we generated $11.9 million and our total for the first three quarters of 2007 is $62.9 million."
Levy continued, "We are also pleased with our continued good cost management. Cost per ASM, excluding fuel, decreased by 2% over the prior year despite a 3.6% decline in average stage length. Third quarter ex-fuel CASM is even more impressive sequentially, up only 4% versus the prior quarter despite a decrease in ASMs of 2%. Our third quarter ASMs declined sequentially due to the substantial pull down in Florida capacity we impose from August through the end of September to better manage weak seasonal demand we see at that time."
During the third quarter, Allegiant Air initiated service to three new small cities and on four new routes. Since Thursday, October 25th, we have initiated service on seven new routes from our fourth "world-class leisure destination" of Phoenix-Mesa, Arizona.
By the end of the fourth quarter, we will initiate service on an additional six new routes from Phoenix-Mesa, as well as twelve new routes from our fifth "world-class leisure destination" of Ft. Lauderdale (including one route to the new small city of Plattsburgh, NY) as well as three new routes from Orlando-Sanford, one of which is to the new small city of Bangor, ME. At year end we expect to serve 109 routes (including seasonal service), five "world-class leisure destinations" and 55 small cities. We have recently announced two further routes (including one to a new small city) to be launched in the first quarter of 2008.
Network Summary* Oct 29, 2007 Sep 30, 2007 Sep 30, 2006
"World-class leisure destinations" 4 3 2
Small cities served 53 53 40
Total cities served 57 56 42
Routes to Las Vegas 42 42 34
Routes to Orlando 24 24 15
Routes to Tampa Bay/St. Petersburg 14 14 0
Routes to Phoenix-Mesa 7 0 0
Other routes 2 2 0
Total routes 89 82 49
* includes cities served seasonally
During the third quarter, we purchased three additional MD-80 aircraft, two of which were acquired through capital leases, and one spare engine. We placed two MD-80s in service, bringing our current operating fleet to 29 MD-80 aircraft. Additionally, as previously disclosed, in the third quarter we bought eight spare engines on lease to another operator. Seven of these were returned to us in October and the eighth will be returned to us in the near future post-overhaul. The lease revenue from these engines (and an associated airframe, which we do not intend to operate) appears in the income statement as "Other revenue".
Subsequent to the end of the third quarter, we bought one additional MD-80 aircraft which we expect to operate by the end of the year. We also have a commitment to purchase four additional MD-80 aircraft (which come with seller financing) for delivery to us through the first quarter of 2008. We expect to have these aircraft in our operating fleet by the end of the second quarter 2008, for a total operating fleet of 37 MD-80s.
The following table summarizes year-over-year and recent changes in Allegiant Air's fleet:
MD-80 Aircraft in Service Oct 29, 2007 Sep 30, 2007 Sep 30, 2006
Owned (including capital leases) 25 25 16
Leased 4 4 5
Total 29 29 21
On October 16, 2007, we disclosed the signing of a fixed-fee contract with a subsidiary of Harrah's Entertainment ("Harrah's"). Under this two-year contract, beginning January 1, 2008 we will base two MD-80 aircraft in Tunica, MS to operate fixed-fee services at Harrah's direction from cities around the United States to Tunica, Gulfport/Biloxi, MS, New Orleans, LA, Shreveport, LA, St. Louis, MO and Council Bluffs, IA.
The terms and conditions of this new contract are similar to existing fixed-fee contracts under which we operate 2.5 MD-80 aircraft from Laughlin, Nev. and Reno, Nev. for Harrah's. The Reno and Laughlin contracts and flying are unaffected by the new Harrah's contract. The minimum annual fixed-fee contract revenue from the new Harrah's contract will be $11.8 million. As reflected in the guidance below, we expect this new contract to significantly increase our fixed-fee revenue in 2008. However, this increase will not be apparent in the first quarter because we will no longer fly for Apple Vacations from Milwaukee, WI, a contract which resulted in substantial first quarter fixed fee revenue in 2007. We will continue to fly for Apple from Rockford, IL.
Finally, on October 17, 2007, our board of directors elected Andrew Levy, our Managing Director of Planning, to the post of Chief Financial Officer effective that day. Levy will continue to serve as our Managing Director - Planning.
At this time, Allegiant Travel Company provides the following guidance to investors, which are subject to revision:
-- We expect fourth quarter 2007 year-over-year ASM growth of at least 43%
and departure growth of at least 43%.
-- We expect first quarter 2008 year-over-year ASM growth of at least 35%
and departure growth of at least 40%.
-- We expect full-year 2008 year-over-year ASM growth of at least 30% and
departure growth of at least 35%.
-- We expect first quarter 2008 year-over-year fixed fee contract revenue
to be essentially flat and full-year 2008 year-over-year fixed fee
contract revenue growth of at least 20%.
-- By the end of the year, Allegiant Air expects to operate at least 34
MD-80 aircraft. By the end of 2008, we expect to operate at least 40
MD-80 aircraft. There currently appear to be sufficient high-quality
MD-80 aircraft available on the market to support Allegiant Air growth.
-- We expect 2008 capital expenditures of $45 million, comprising $36
million for six aircraft and $9 million for engines and other.
Allegiant Air is hedged to 9% of its anticipated scheduled service jet fuel consumption for the fourth quarter of 2007 at a price of approximately $2.35 per gallon (including approximately $0.24 per gallon in expenses above the raw cost of jet fuel). Allegiant Air's jet fuel hedges for later periods are negligible.
Allegiant Travel Company will host a conference call with analysts at 1 pm EDT tomorrow, October 30, 2007, to discuss our third quarter 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.
About the Company
Las Vegas-based Allegiant Travel Company (Nasdaq: ALGT), is focused on linking travelers in small cities to world-class leisure destinations such as Las Vegas, Nev., Phoenix, Ariz., Fort Lauderdale, Fla., Orlando, Fla. and Tampa/St. Petersburg, Fla. Through its subsidiary, Allegiant Air, LLC the Company operates a low-cost, high-efficiency, all-jet passenger airline offering air travel both on a stand-alone basis and bundled with hotel rooms, rental cars and other travel related services. ALGT/G
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 revenues, future earnings per share, ASM growth, departure growth, fleet growth and expected fuel consumption and expense, as well as information concerning future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, the effects of future regulation and the effects of competition. 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," "anticipate," "intend," "plan," "estimate", "project" 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 and registration statements filed with the Securities and Exchange Commission at http://www.sec.gov. These risk factors include, without limitation, increases in fuel prices, terrorist attacks, risks inherent to airlines, demand for air services to Las Vegas, Orlando, Tampa/St. Petersburg, Phoenix and Ft. Lauderdale from the markets served by us, our ability to implement our growth strategy, our fixed obligations, our dependence on our leisure destination markets, our ability to add, renew or replace gate leases, our competitive environment, problems with our aircraft, dependence on fixed fee customers, our reliance on our automated systems, economic and other conditions in markets in which we operate, governmental regulation, increases in maintenance costs and insurance premiums 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 Operations
Quarters Ended September 30, 2007 and 2006
(in thousands, except per share amounts)
(Unaudited)
Three months ended September 30, Percent
2007 2006 change
OPERATING REVENUE:
Scheduled service revenue $62,274 $44,220 40.8
Fixed fee contract revenue 7,359 8,073 (8.8)
Ancillary revenue 15,989 8,618 85.5
Other revenue 705 - N/M
Total operating revenue 86,327 60,911 41.7
OPERATING EXPENSES:
Aircraft fuel 36,628 26,779 36.8
Salary and benefits 12,693 8,873 43.1
Station operations 8,186 6,325 29.4
Maintenance and repairs 5,933 6,757 (12.2)
Sales and marketing 3,310 2,202 50.3
Aircraft lease rentals 817 1,103 (25.9)
Depreciation and amortization 4,238 2,854 48.5
Other 4,979 3,127 59.2
Total operating expenses 76,784 58,020 32.3
OPERATING INCOME 9,543 2,891 230.1
As a percent of total operating
revenue 11.1 % 4.7 %
OTHER (INCOME) EXPENSE:
(Gain) loss on fuel derivatives, net (348) 3,505 N/M
Earnings from joint venture, net (35) - N/M
Interest income (2,542) (734) 246.3
Interest expense 1,368 1,369 (0.1)
Total other (income) expense (1,557) 4,140 N/M
INCOME (LOSS) BEFORE INCOME TAXES 11,100 (1,249) N/M
As a percent of total operating
revenue 12.9 % -2.1 %
PROVISION FOR INCOME TAXES 4,085 - N/M
NET INCOME (LOSS) $7,015 ($1,249) N/M
As a percent of total operating
revenue 8.1 % -2.1 %
Earnings per share:
Basic $0.34 ($0.19) N/M
Diluted $0.34 ($0.19) N/M
Weighted average shares outstanding:
Basic 20,472 6,433 218.2
Diluted 20,783 6,433 223.1
Unaudited pro forma data (reflecting
change in tax status)(1):
Income (loss) before income taxes $11,100 ($1,249) N/M
Pro-forma provision (benefit) for
income taxes 4,085 (421) N/M
Pro-forma net income (loss) $7,015 ($828) N/M
Unaudited net income (loss) per
share data (reflecting change in
tax status):
Basic pro-forma net income (loss)
per share $0.34 ($0.13) N/M
Diluted pro-forma net income
(loss) per share $0.34 ($0.13) N/M
(1) Prior to its December 2006 initial public offering, the Company was
organized as a limited liability company (LLC) and as such was
generally not subject to income taxes, except in certain state and
local jurisdictions. The pro-forma tax provision reflects income taxes
as if the Company were organized as a corporation effective
January 1, 2006.
Allegiant Travel Company
Operating Statistics
Quarters Ended September 30, 2007 and 2006
(Unaudited)
Three months ended September 30, Percent
2007 2006 change*
OPERATING STATISTICS
Total system statistics
Passengers 805,878 543,028 48.4
Revenue passenger miles (RPMs)
(thousands) 767,930 543,842 41.2
Available seat miles (ASMs)
(thousands) 912,496 696,345 31.0
Load factor 84.2 % 78.1 % 6.1
Operating revenue per ASM (cents) 9.46 8.75 8.1
Operating expense per ASM or CASM
(cents) 8.41 8.33 1.0
CASM, excl fuel (cents) 4.40 4.49 (2.0)
Departures 6,867 5,048 36.0
Block hours 15,956 12,231 30.5
Average stage length (miles) 898 932 (3.6)
Avg number of operating aircraft
during period 28.8 21.0 37.1
Total aircraft in service end of
period 29 21 38.1
Full-time equivalent employees at
end of period 1,035 787 31.5
Fuel gallons consumed (thousands) 15,812 11,705 35.1
Average fuel cost per gallon $2.32 $2.29 1.3
Scheduled service statistics
Passengers 750,170 479,085 56.6
Revenue passenger miles (RPMs)
(thousands) 703,442 483,194 45.6
Available seat miles (ASMs)
(thousands) 816,408 603,970 35.2
Load factor 86.2 % 80.0 % 6.2
Departures 6,000 4,153 44.5
Block hours 14,245 10,530 35.3
Yield (cents) 8.85 9.15 (3.3)
Scheduled service revenue per ASM
(cents) 7.63 7.32 4.2
Ancillary revenue per ASM (cents) 1.96 1.43 37.1
Total revenue per ASM (cents) 9.59 8.75 9.6
Average fare - scheduled service $83.02 $92.30 (10.1)
Average fare - ancillary 21.31 17.99 18.5
Average fare - total $104.33 $110.29 (5.4)
Average stage length (miles) 920 984 (6.5)
Percent of sales through website
during period 85.8 % 84.5 % 1.3
* except load factor and percent of sales through website, which is
percentage point change
Allegiant Travel Company
Non-GAAP Presentations
Quarters Ended September 30, 2007 and 2006
(in thousands, except per share and per ASM amounts)
(Unaudited)
Unlike many airlines, we do not qualify for fuel hedge accounting treatment under FAS 133. To facilitate investor comparisons with airlines that do qualify for fuel hedge accounting, we provide adjusted non-GAAP measures of net income and operating expense as if we did qualify for fuel hedge accounting, by excluding the mark-to-market non-cash gains or losses on fuel derivatives from net income and by treating cash gains or losses realized on fuel derivatives as part of aircraft fuel expense. We believe use of these non-GAAP measures assists investors in understanding the underlying economic performance of the Company.
The SEC has adopted rules (Regulation G) regulating the use of non-GAAP financial measures. Because of our use of non-GAAP financial measures, Adjusted net income or loss and Adjusted aircraft fuel expense, to supplement our consolidated financial statements presented on a GAAP basis, Regulation G requires us to include in this press release a presentation of the most directly comparable GAAP measures, which are Net income or loss (which includes mark-to-market non-cash loss on fuel derivatives), and Aircraft fuel expense (which is not impacted by the cash gain or loss on fuel derivatives), and a reconciliation of the non-GAAP measures to the most comparable GAAP measures. Our utilization of non-GAAP measurements is not meant to be considered in isolation or as a substitute for net income, aircraft fuel expense and other measures of financial performance prepared in accordance with GAAP. Adjusted net income or loss and adjusted aircraft fuel expense are not GAAP measurements and our use of them may not be comparable to similarly titled measures employed by other companies in the airline industry. The reconciliations to GAAP measures follow:
Derivation of adjusted net income (excluding non-cash mark-to-market loss on fuel derivatives) from net income:
Three months ended September 30, Percent
2007 2006 change
(in thousands, except per share
amounts)
Net income (loss) $7,015 ($1,249) N/M
Mark-to-market non-cash loss on fuel
derivatives 392 2,712 (85.5)
Tax impact of mark-to-market
non-cash loss on fuel derivatives (144) - N/M
Net of mark-to-market non-cash loss
on fuel derivatives:
Adjusted net income $7,263 $1,463 396.4
Adjusted earnings per share:
Basic $0.35 $0.23 52.2
Diluted $0.35 $0.09 288.9
Derivation of adjusted aircraft fuel operating expense:
Three months ended September 30, Percent
(in thousands) 2007 2006 change
Aircraft fuel expense $36,628 $26,779 36.8
Cash (gain) loss on fuel derivatives (740) 793 N/M
Adjusted aircraft fuel expense $35,888 $27,572 30.2
Derivation of operating cost per ASM treating cash (gain) loss on fuel derivatives as part of total operating expense per ASM:
Three months ended September 30, Percent
(in cents) 2007 2006 change
Total operating expense per ASM 8.41 8.33 1.0
Cash (gain) loss on fuel derivatives
per ASM (0.08) 0.11 N/M
Operating cost per ASM treating
cash gain or loss on fuel derivatives
as part of operating expenses 8.33 8.44 (1.3)
Split of (gain) loss on fuel derivatives into cash-settled portion and mark-to-market non-cash portion:
Three months ended September 30, Percent
(in thousands) 2007 2006 change
Mark-to-market non-cash loss on fuel
derivatives $392 $2,712 (85.5)
Cash (gain) loss on fuel derivatives (740) 793 N/M
(Gain) loss on fuel derivatives, net ($348) $3,505 N/M
Allegiant Travel Company
Consolidated Statements of Income
Nine Months Ended September 30, 2007 and 2006
(in thousands, except per share amounts)
(Unaudited)
Nine months ended September 30, Percent
2007 2006 change
OPERATING REVENUE:
Scheduled service revenue $186,127 $131,729 41.3
Fixed fee contract revenue 28,240 27,246 3.6
Ancillary revenue 44,545 21,239 109.7
Other revenue 705 - N/M
Total operating revenue 259,617 180,214 44.1
OPERATING EXPENSES:
Aircraft fuel 103,265 77,661 33.0
Salary and benefits 36,063 24,901 44.8
Station operations 25,019 18,674 34.0
Maintenance and repairs 18,152 14,234 27.5
Sales and marketing 9,375 6,955 34.8
Aircraft lease rentals 2,125 4,277 (50.3)
Depreciation and amortization 11,613 7,599 52.8
Other 16,003 10,730 49.1
Total operating expenses 221,615 165,031 34.3
OPERATING INCOME 38,002 15,183 150.3
As a percent of total operating
revenue 14.6 % 8.4 %
OTHER (INCOME) EXPENSE:
(Gain) loss on fuel derivatives, net (2,252) 2,927 N/M
Earnings from joint venture, net (297) - N/M
Other expense 63 - N/M
Interest income (6,835) (2,043) 234.6
Interest expense 4,137 3,970 4.2
Total other (income) expense (5,184) 4,854 N/M
INCOME BEFORE INCOME TAXES 43,186 10,329 318.1
As a percent of total operating
revenue 16.6 % 5.7 %
PROVISION FOR INCOME TAXES: 16,448 43 N/M
NET INCOME $26,738 $10,286 159.9
As a percent of total operating
revenue 10.3 % 5.7 %
Earnings per share:
Basic $1.33 $1.60 (16.9)
Diluted $1.30 $0.62 109.7
Weighted average shares outstanding:
Basic 20,106 6,433 212.5
Diluted 20,491 16,703 22.7
Unaudited pro forma data (reflecting
change in tax status)(1):
Income before income taxes $43,186 $10,329 318.1
Pro-forma provision for income
taxes 16,448 3,834 329.0
Pro-forma net income $26,738 $6,495 311.7
Unaudited net income per share
data (reflecting change in
tax status):
Basic pro-forma net income per share $1.33 $1.01 31.7
Diluted pro-forma net income per
share $1.30 $0.39 233.3
(1) Prior to its December 2006 initial public offering, the Company was
organized as a limited liability company (LLC) and as such was
generally not subject to income taxes, except in certain state and
local jurisdictions. The pro-forma tax provision reflects income taxes
as if the Company were organized as a corporation effective
January 1, 2006.
Allegiant Travel Company
Operating Statistics
Nine Months Ended September 30, 2007 and 2006
(Unaudited)
Nine months ended September 30, Percent
2007 2006 change*
OPERATING STATISTICS
Total system statistics
Passengers 2,369,672 1,599,851 48.1
Revenue passenger miles (RPMs)
(thousands) 2,291,995 1,690,603 35.6
Available seat miles (ASMs)
(thousands) 2,773,203 2,136,309 29.8
Load factor 82.6 % 79.1 % 3.5
Operating revenue per ASM (cents) 9.36 8.44 10.9
Operating expense per ASM or CASM
(cents) 7.99 7.73 3.4
CASM, excl fuel (cents) 4.27 4.09 4.4
Departures 20,596 14,632 40.8
Block hours 48,886 37,454 30.5
Average stage length (miles) 909 986 (7.8)
Avg # of operating aircraft during
period 27.0 20.4 32.4
Total aircraft in service end of
period 29 21 38.1
Full-time equivalent employees at
period end 1,035 787 31.5
Fuel gallons consumed (thousands) 47,523 35,658 33.3
Average fuel cost per gallon $2.17 $2.18 (0.5)
Scheduled service statistics
Passengers 2,176,726 1,408,738 54.5
Revenue passenger miles (RPMs)
(thousands) 2,053,537 1,483,902 38.4
Available seat miles (ASMs)
(thousands) 2,427,024 1,821,817 33.2
Load factor 84.6 % 81.5 % 3.1
Departures 17,795 11,967 48.7
Block hours 42,772 31,776 34.6
Yield (cents) 9.06 8.88 2.0
Scheduled service revenue per ASM
(cents) 7.66 7.23 5.9
Ancillary revenue per ASM (cents) 1.84 1.17 57.3
Total revenue per ASM (cents) 9.50 8.40 13.1
Average fare - scheduled service $85.51 $93.50 (8.5)
Average fare - ancillary 20.46 15.08 35.7
Average fare - total $105.97 $108.58 (2.4)
Average stage length (miles) 923 1,030 (10.4)
Percent of sales through website
during period 86.7 % 84.8 % 1.9
* except load factor and percent of sales through website, which is
percentage point change
Allegiant Travel Company
Non-GAAP Presentations
Nine Months Ended September 30, 2007 and 2006
(in thousands, except per share and per ASM amounts)
(Unaudited)
Unlike many airlines, we do not qualify for fuel hedge accounting treatment under FAS 133. To facilitate investor comparisons with airlines that do qualify for fuel hedge accounting, we provide adjusted non-GAAP measures of net income and operating expense as if we did qualify for fuel hedge accounting, by excluding the mark-to-market non-cash gains or losses on fuel derivatives from net income and by treating cash gains or losses realized on fuel derivatives as part of aircraft fuel expense. We believe use of these non-GAAP measures assists investors in understanding the underlying economic performance of the Company.
The SEC has adopted rules (Regulation G) regulating the use of non-GAAP financial measures. Because of our use of non-GAAP financial measures, Adjusted net income or loss and Adjusted aircraft fuel expense, to supplement our consolidated financial statements presented on a GAAP basis, Regulation G requires us to include in this press release a presentation of the most directly comparable GAAP measures, which are Net income or loss (which includes mark-to-market non-cash loss on fuel derivatives), and Aircraft fuel expense (which is not impacted by the cash gain or loss on fuel derivatives), and a reconciliation of the non-GAAP measures to the most comparable GAAP measures. Our utilization of non-GAAP measurements is not meant to be considered in isolation or as a substitute for net income, aircraft fuel expense and other measures of financial performance prepared in accordance with GAAP. Adjusted net income or loss and adjusted aircraft fuel expense are not GAAP measurements and our use of them may not be comparable to similarly titled measures employed by other companies in the airline industry. The reconciliations to GAAP measures follow:
Derivation of adjusted net income (excluding non-cash mark-to-market gain or loss on fuel derivatives) from net income:
(in thousands, except per share Nine months ended September 30, Percent
amounts) 2007 2006 change
Net income $26,738 $10,286 159.9
Mark-to-market non-cash (gain)
loss on fuel derivatives (2,045) 2,601 N/M
Tax impact of mark-to-market
non-cash gain (loss) on fuel
derivatives 779 - N/M
Net of mark-to-market non-cash (gain)
loss on fuel derivatives:
Adjusted net income $25,472 $12,887 97.7
Adjusted earnings per share:
Basic $1.27 $2.00 (36.5)
Diluted $1.24 $0.77 61.0
Derivation of adjusted aircraft fuel operating expense:
Nine months ended September 30, Percent
2007 2006 change
Aircraft fuel expense $103,265 $77,661 33.0
Cash (gain) loss on fuel derivatives (207) 326 N/M
Adjusted aircraft fuel expense $103,058 $77,987 32.1
Derivation of operating cost per ASM treating cash (gain) loss on fuel derivatives as part of total operating expense per ASM:
Nine months ended September 30, Percent
(in cents) 2007 2006 change
Total operating expense per ASM 7.99 7.73 3.4
Cash (gain) loss on fuel
derivatives per ASM (0.01) 0.02 N/M
Operating cost per ASM treating
cash gain or loss on fuel derivatives
as part of operating expenses 7.98 7.75 3.0
Split of (gain) loss on fuel derivatives into cash-settled portion and mark-to-market non-cash portion:
Nine months ended September 30, Percent
(in thousands) 2007 2006 change
Mark-to-market non-cash (gain)
loss on fuel derivatives ($2,045) $2,601 N/M
Cash (gain) loss on fuel
derivatives (207) 326 N/M
(Gain) loss on fuel derivatives, net ($2,252) $2,927 N/M
SOURCE Allegiant Travel Company
http://www.allegiantair.com
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