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LAS VEGAS, Oct 21, 2008 /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 results and comparisons to prior year equivalents:
Unaudited 3Q08 3Q07 Change
Total operating revenue (millions) $116.9 $86.3 35.4%
Operating income (millions) $8.1 $9.5 (14.9)%
Operating margin 6.9% 11.1% -4.2pp
Net income (millions) $4.9 $7.0 (30.3)%
Diluted earnings per share $0.24 $0.34 (29.4)%
Scheduled Service:
Average fare - scheduled service $86.32 $83.02 4.0%
Average fare - ancillary 32.28 21.31 51.5%
Average fare - total $118.60 $104.33 13.7%
Total revenue per ASM (cents) 12.75 9.59 33.0%
Average stage length (miles) 856 920 (7.0)%
Total System*:
Operating expense per ASM (CASM) (cents) 11.49 8.41 36.6%
CASM, excluding fuel (cents) 5.49 4.40 24.8%
Average stage length (miles) 815 898 (9.2)%
* Total system includes scheduled service, fixed fee contract and
non-revenue flying
"We are very proud of our third quarter financial performance," stated Maurice J. Gallagher, Jr., CEO and President of Allegiant Travel Company. "The efforts of our excellent employees enabled us to achieve a great deal in the third quarter. We almost doubled profits sequentially, despite our average fuel price being largely unchanged from the second quarter and in what is seasonally our weakest time of the year. The steps we have taken to adapt to record high fuel prices, namely reducing our long haul flying, trimming capacity in select markets and focusing on increased load factors, are clearly paying off. Capacity reductions allowed us to increase unit revenues substantially -- third quarter scheduled service total RASM increased 33% to 12.75 cents compared to the prior year. All our scheduled service revenue drivers improved versus the prior year: ancillary revenue per passenger was up $11 to over $32, average airfare was up $3 to $86 (despite a 7% decline in average stage length) and passengers per flight increased 10% from 125 to 137, increasing load factor to an industry leading 93.8%."
Gallagher continued, "Our strong balance sheet and solid cash position provide a great deal of flexibility in today's financial environment. Looking forward, we have acquired and paid for much of our 2009 growth with our purchase for cash of six aircraft earlier this year which will take us to 43 operating aircraft by the end of 2009. Additionally, our third quarter aircraft utilization was only five block hours per day versus six hours in the prior year due to our capacity management related to higher fuel prices. The recent drop in fuel makes the economics of higher utilization more plausible. Increasing our fleet utilization in the coming year could drive additional growth with minimal investment. Regardless, the recent moderation in the price of oil, should it continue, bodes well for the remainder of 2008 and 2009."
Andrew C. Levy, CFO & Managing Director - Planning, stated, "Our aggressive capacity management has enabled us to remain profitable these past several quarters in a very challenging fuel environment. Due to record high fuel prices this past summer, we designed a fourth quarter schedule with reductions in off-peak capacity which we believe will result in a significant increase in scheduled total RASM. Moreover, our fuel leverage outweighs any other profitability driver in our business and, therefore, we expect record results in the fourth quarter if fuel prices remain near current levels.
"Our costs increased across the board on a unit basis, mainly due to a combination of lower aircraft utilization and a shorter average stage length. Maintenance and repairs had the largest percentage increase year-over-year due to more airframe heavy maintenance events, more engine maintenance events, and higher repair expense.
"Our balance sheet and liquidity remain strong. We ended the quarter with $138.6 million in unrestricted cash and short-term investments, down from $153.8 million at the end of the second quarter. The decline is due principally to the purchase of $8.4 million for aircraft, engines, parts and aircraft leasehold improvements."
Network Summary* September 30, 2008 September 30, 2007
Major leisure destinations 5 3
Other leisure destinations 4 2
Small cities served 54 51
Total cities served 63 56
Routes to Las Vegas 38 42
Routes to Orlando 26 24
Routes to Tampa Bay/St.
Petersburg 15 14
Routes to Phoenix-Mesa 9 0
Routes to Ft. Lauderdale 6 0
Other routes 4 2
Total routes 98 82
* includes cities served seasonally
During the third quarter, Allegiant Air initiated service on the following four Las Vegas routes: Appleton, WI (replacing Green Bay, WI), Casper, WY, Grand Forks, ND and Grand Island, NE (replacing Lincoln, NE). We have also announced 18 more routes to start in the fourth quarter (two to Las Vegas, six to Phoenix-Mesa and five each to Orlando-Sanford and St. Petersburg). These new routes include service to five small cities new to the Allegiant network: Bozeman, MT, Elmira, NY, Hagerstown, MD, Kalispell, MT and Lexington, KY. We expect to make further new service announcements shortly.
We are pleased to announce we were recently approved by the United States Department of Defense (DoD) to carry domestic military charter traffic. This enables us to access another important source of ad-hoc charter business. With no prior history with this important new customer, we are unable to reasonably predict how much additional charter business we will obtain from this program, but we believe it will result in a meaningful boost to our fixed-fee revenue.
MD-80 Aircraft in Service* September 30, 2008 September 30, 2007
Owned (including capital leases) 35 25
Leased 2 4
Total 37 29
* Does not include six owned MD-80 aircraft leased to a third party
During the third quarter, we exercised a previously-negotiated forward-purchase agreement to purchase, for cash, two previously-leased aircraft. Early in the fourth quarter we took delivery of the first of six aircraft we purchased earlier this year which have been on lease to a European carrier. We expect to place this aircraft into service late in the fourth quarter for a total of 38 aircraft in our operating fleet at year end.
We expect to place the remaining five aircraft into service in 2009, three in the first quarter and two in the fourth quarter, subsequent to their return from the lessee.
At this time, Allegiant Travel Company provides the following guidance to investors, which are subject to revision:
-- We expect fourth quarter 2008 year-over-year departures to be flat and
we expect a decline in ASMs of approximately 3%.
-- We expect first quarter 2009 year-over-year departure growth of
approximately 5% and ASM growth of approximately 7%.
-- By the end of 2008, Allegiant Air expects to operate 38 MD-80 aircraft.
By the end of 2009, Allegiant Air expects to operate at least 43 MD-80
aircraft.
-- We expect 4Q08 capital expenditure to be approximately $6 million,
including the purchase of two spare engines and improvements to
aircraft expected to be introduced to the fleet in the next two
quarters.
-- We expect 2009 capital expenditure of approximately $15-20 million, for
improvements to aircraft owned but not yet operated, purchase of
additional spare engines and other miscellaneous capital expenditure.
At this time we have no fuel hedges in place.
Allegiant Travel Company will host a conference call with analysts at 1 pm East Coast time tomorrow, October 22, 2008, to discuss its third quarter and nine-month 2008 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 ASM growth, departure growth, fleet growth and expected capital expenditures, 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 filed with the Securities and Exchange Commission at http://www.sec.gov. These risk factors include, without limitation, the effect of the economic downturn on leisure travel, increases in fuel prices, terrorist attacks, risks inherent to airlines, demand for air services to Las Vegas, Orlando, Tampa/St. Petersburg, Phoenix-Mesa 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 Income
Three Months Ended September 30, 2008 and 2007
(in thousands, except per share amounts)
(Unaudited)
Three months ended
September 30, Percent
2008 2007 change
OPERATING REVENUE:
Scheduled service revenue $73,796 $62,274 18.5
Fixed fee contract revenue 14,234 7,359 93.4
Ancillary revenue 27,591 15,989 72.6
Other revenue 1,265 705 79.4
Total operating revenue 116,886 86,327 35.4
OPERATING EXPENSES:
Aircraft fuel 56,795 36,628 55.1
Salary and benefits 17,272 13,399 28.9
Station operations 10,309 8,186 25.9
Maintenance and repairs 10,099 5,933 70.2
Sales and marketing 3,099 3,310 (6.4)
Aircraft lease rentals 517 817 (36.7)
Depreciation and amortization 6,219 4,238 46.7
Other 4,459 4,273 4.4
Total operating expenses 108,769 76,784 41.7
OPERATING INCOME 8,117 9,543 (14.9)
As a percent of total operating revenue 6.9% 11.1%
OTHER (INCOME) EXPENSE:
Gain on fuel derivatives, net - (348) N/M
Earnings from joint venture, net (13) (35) (62.9)
Interest income (878) (2,542) (65.5)
Interest expense 1,302 1,368 (4.8)
Total other expense (income) 411 (1,557) N/M
INCOME BEFORE INCOME TAXES 7,706 11,100 (30.6)
As a percent of total operating revenue 6.6% 12.9%
PROVISION FOR INCOME TAXES 2,816 4,085 (31.1)
NET INCOME $4,890 $7,015 (30.3)
As a percent of total operating revenue 4.2% 8.1%
Earnings per share:
Basic $0.24 $0.34 (29.4)
Diluted $0.24 $0.34 (29.4)
Weighted average shares outstanding:
Basic 20,223 20,625 (1.9)
Diluted 20,467 20,936 (2.2)
Allegiant Travel Company
Operating Statistics
Three Months Ended September 30, 2008 and 2007
(Unaudited)
Three months ended
September 30, Percent
2008 2007 change*
OPERATING STATISTICS
Total system statistics
Passengers 974,600 805,878 20.9
Revenue passenger miles (RPMs)
(thousands) 858,100 767,930 11.7
Available seat miles (ASMs)
(thousands) 946,366 912,496 3.7
Load factor 90.7% 84.2% 6.5
Operating revenue per ASM (cents) 12.35 9.46 30.5
Operating expense per ASM (CASM)
(cents) 11.49 8.41 36.6
Fuel expense per ASM (cents) 6.00 4.01 49.6
CASM, excluding fuel (cents) 5.49 4.40 24.8
Operating expense per passenger $111.60 $95.28 17.1
Fuel expense per passenger $58.27 $45.45 28.2
Operating expense per passenger,
excluding fuel $53.33 $49.83 7.0
Departures 7,835 6,867 14.1
Block hours 17,153 15,956 7.5
Average stage length (miles) 815 898 (9.2)
Average number of operating aircraft
during period 37.0 28.8 28.5
Total aircraft in service end of
period 37 29 27.6
Full-time equivalent employees at
end of period 1,282 1,035 23.9
Fuel gallons consumed (thousands) 16,507 15,812 4.4
Average fuel cost per gallon $3.44 $2.32 48.3
Scheduled service statistics
Passengers 854,833 750,170 14.0
Revenue passenger miles (RPMs)
(thousands) 745,188 703,442 5.9
Available seat miles (ASMs)
(thousands) 794,730 816,408 (2.7)
Load factor 93.8% 86.2% 7.6
Departures 6,223 6,000 3.7
Block hours 14,210 14,245 (0.2)
Yield (cents) 9.90 8.85 11.9
Scheduled service revenue per ASM
(cents) 9.28 7.63 21.6
Ancillary revenue per
ASM (cents) 3.47 1.96 77.0
Total revenue per ASM (cents) 12.75 9.59 33.0
Average fare - scheduled service $86.32 $83.02 4.0
Average fare - ancillary 32.28 21.31 51.5
Average fare - total $118.60 $104.33 13.7
Average stage length (miles) 856 920 (7.0)
Percent of sales through website
during period 85.8% 85.8% -
* except load factor and percent of sales through website, which is
percentage point change
Allegiant Travel Company
Non-GAAP Presentations
Three Months Ended September 30, 2008 and 2007
(in thousands, except per share and per ASM amounts)
(Unaudited)
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 without regard to different accounting treatment for fuel hedging activities.
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 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 (which reflects the mark-to-market non-cash loss or gain 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 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
(in thousands, except per share amounts) 2008 2007 change
Net income $4,890 $7,015 (30.3)
Mark-to-market non-cash loss on fuel
derivatives - 392 N/M
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 $4,890 $7,263 (32.7)
Adjusted earnings per share:
Basic $0.24 $0.35 (31.4)
Diluted $0.24 $0.35 (31.4)
Derivation of adjusted aircraft fuel expense:
Three months ended Percent
September 30, Change
(in thousands) 2008 2007
Aircraft fuel expense $56,795 $36,628 55.1
Cash gain on fuel derivatives - (740) N/M
Adjusted aircraft fuel expense $56,795 $35,888 58.3
Derivation of CASM treating cash gain on fuel derivatives as a reduction
in operating expense:
Three months ended
September 30, Percent
(in cents) 2008 2007 Change
CASM 11.49 8.41 36.6
Cash gain on fuel derivatives per ASM - (0.08) N/M
CASM treating cash gain on fuel derivatives
as a reduction in operating expense 11.49 8.33 37.9
Split of gain on fuel derivatives into cash-settled portion and mark-to-market non-cash portion:
Three months ended
September 30, Percent
(in thousands) 2008 2007 Change
Mark-to-market non-cash loss on fuel
derivatives - $392 N/M
Cash gain on fuel derivatives - (740) N/M
Gain on fuel derivatives, net - ($348) N/M
Allegiant Travel Company
Consolidated Statements of Income
Nine Months Ended September 30, 2008 and 2007
(in thousands, except per share amounts)
(Unaudited)
Nine months ended
September 30, Percent
2008 2007 change
OPERATING REVENUE:
Scheduled service revenue $253,175 $186,127 36.0
Fixed fee contract revenue 41,068 28,240 45.4
Ancillary revenue 83,846 44,545 88.2
Other revenue 3,495 705 395.7
Total operating revenue 381,584 259,617 47.0
OPERATING EXPENSES:
Aircraft fuel 192,357 103,265 86.3
Salary and benefits 51,558 40,286 28.0
Station operations 32,821 25,019 31.2
Maintenance and repairs 31,914 18,152 75.8
Sales and marketing 11,103 9,375 18.4
Aircraft lease rentals 2,461 2,125 15.8
Depreciation and amortization 17,190 11,613 48.0
Other 15,024 11,780 27.5
Total operating expenses 354,428 221,615 59.9
OPERATING INCOME 27,156 38,002 (28.5)
As a percent of total operating revenue 7.1% 14.6%
OTHER (INCOME) EXPENSE:
Loss (gain) on fuel derivatives, net 11 (2,252) N/M
Loss (earnings) from joint venture, net 30 (297) N/M
Other expense - 63 N/M
Interest income (3,638) (6,835) (46.8)
Interest expense 4,206 4,137 1.7
Total other expense (income) 609 (5,184) N/M
INCOME BEFORE INCOME TAXES 26,547 43,186 (38.5)
As a percent of total operating revenue 7.0% 16.6%
PROVISION FOR INCOME TAXES 9,339 16,448 (43.2)
NET INCOME $17,208 $26,738 (35.6)
As a percent of total operating revenue 4.5% 10.3%
Earnings per share:
Basic $0.85 $1.33 (36.1)
Diluted $0.84 $1.30 (35.4)
Weighted average shares outstanding:
Basic 20,295 20,106 0.9
Diluted 20,531 20,491 0.2
Allegiant Travel Company
Operating Statistics
Nine Months Ended September 30, 2008 and 2007
(Unaudited)
Nine months ended
September 30, Percent
2008 2007 change*
OPERATING STATISTICS
Total system statistics
Passengers 3,282,810 2,369,672 38.5
Revenue passenger miles (RPMs)
(thousands) 2,957,915 2,291,995 29.1
Available seat miles (ASMs)
(thousands) 3,395,714 2,773,203 22.4
Load factor 87.1% 82.6% 4.5
Operating revenue per ASM (cents) 11.24 9.36 20.1
Operating expense per ASM (CASM)
(cents) 10.44 7.99 30.7
Fuel expense per ASM (cents) 5.66 3.72 52.2
CASM, excluding fuel (cents) 4.77 4.27 11.7
Operating expense per passenger $107.97 $93.52 15.5
Fuel expense per passenger $58.60 $43.58 34.5
Operating expense per passenger,
excluding fuel $49.37 $49.94 (1.1)
Departures 27,361 20,596 32.8
Block hours 62,083 48,886 27.0
Average stage length (miles) 837 909 (7.9)
Average number of operating aircraft
during period 36.1 27.0 33.7
Total aircraft in service end of
period 37 29 27.6
Full-time equivalent employees at
end of period 1,282 1,035 23.9
Fuel gallons consumed (thousands) 58,995 47,523 24.1
Average fuel cost per gallon $3.26 $2.17 50.2
Scheduled service statistics
Passengers 2,958,101 2,176,726 35.9
Revenue passenger miles (RPMs)
(thousands) 2,656,359 2,053,537 29.4
Available seat miles (ASMs)
(thousands) 2,951,035 2,427,024 21.6
Load factor 90.0% 84.6% 5.4
Departures 22,413 17,795 26.0
Block hours 53,223 42,772 24.4
Yield (cents) 9.53 9.06 5.2
Scheduled service revenue per ASM
(cents) 8.58 7.66 12.0
Ancillary revenue per ASM (cents) 2.84 1.84 54.3
Total revenue per ASM (cents) 11.42 9.50 20.2
Average fare - scheduled service $85.59 $85.51 0.1
Average fare - ancillary 28.34 20.46 38.5
Average fare - total $113.93 $105.97 7.5
Average stage length (miles) 884 923 (4.2)
Percent of sales through website
during period 86.6% 86.7% (0.1)
* 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, 2008 and 2007
(in thousands, except per share and per ASM amounts)
(Unaudited)
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 without regard to different accounting treatment for fuel hedging activities.
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 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 (which reflects the mark-to-market non-cash loss or gain 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 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 or gain on fuel derivatives) from net income:
Nine months ended
September 30, Percent
(in thousands, except per share amounts) 2008 2007 change
Net income $17,208 $26,738 (35.6)
Mark-to-market non-cash loss (gain) on
fuel derivatives 81 (2,045) N/M
Tax impact of mark-to-market non-cash
loss/gain on fuel derivatives (30) 779 N/M
Net of mark-to-market non-cash loss/gain
on fuel derivatives:
Adjusted net income $17,259 $25,472 (32.2)
Adjusted earnings per share:
Basic $0.85 $1.27 (33.1)
Diluted $0.84 $1.24 (32.3)
Derivation of adjusted aircraft fuel expense:
Nine months ended
September 30, Percent
(in thousands) 2008 2007 change
Aircraft fuel expense $192,357 $103,265 86.3
Cash gain on fuel derivatives (70) (207) (66.2)
Adjusted aircraft fuel expense $192,287 $103,058 86.6
Derivation of CASM treating cash gain on fuel derivatives as a reduction
in operating expense:
Nine months ended
September 30, Percent
(in cents) 2008 2007 change
CASM 10.44 7.99 30.7
Cash gain on fuel derivatives per ASM - (0.01) N/M
CASM treating cash gain on fuel derivatives
as a reduction in operating expense 10.44 7.98 30.8
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) 2008 2007 change
Mark-to-market non-cash loss (gain) on fuel
derivatives $81 ($2,045) N/M
Cash gain on fuel derivatives (70) (207) (66.2)
Loss (gain) on fuel derivatives, net $11 ($2,252) N/M
(Logo: http://www.newscom.com/cgi-bin/prnh/20060516/LATU102LOGO)
SOURCE Allegiant Travel Company
http://www.allegiantair.com
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