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Press release from GlobeNewswire (a Nasdaq OMX company)

Allegiant Travel Company Second Quarter 2011 Financial Results

Monday, August 01, 2011

Allegiant Travel Company Second Quarter 2011 Financial Results13:00 EDT Monday, August 01, 2011 34th Consecutive Profitable Quarter Fully Diluted Earnings per Share of $.62 LAS VEGAS, Aug. 1, 2011 (GLOBE NEWSWIRE) -- Allegiant Travel Company (Nasdaq:ALGT) today reported the following financial results for the 2nd quarter 2011 and comparisons to prior year equivalents:Unaudited2Q112Q10Change Total operating revenue (millions) $200.4 $168.4 19.1% Operating income (millions) $20.7 $28.1 (26.2)%Operating margin10.3%16.7%-6.4pp EBITDA (millions) $30.9 $36.5 (15.3)%EBITDA margin15.4%21.7%-6.3pp Net income (millions) $11.9 $17.6 (32.0)% Diluted earnings per share $0.62 $0.87 (28.7)%         Scheduled Service:       Average fare - scheduled service $91.17 $73.15 24.6% Average fare - ancillary air-related charges $31.45 $29.61 6.2% Average fare - ancillary third party products $5.68 $4.87 16.6% Average fare - total $128.30 $107.63 19.2% Scheduled service passenger revenue per ASM (PRASM)(cents) 9.27 7.27 27.5% Total scheduled service revenue per ASM (TRASM) (cents) 13.04 10.70 21.9% Load factor92.0%91.8%0.2pp         Total System*:       Operating expense per passenger $115.24 $90.96 26.7% Operating expense per passenger, excluding fuel $59.81 $50.61 18.2% Operating expense, excluding fuel per ASM (CASM ex fuel) (cents) 5.92 4.87 21.6% *Total system includes scheduled service, fixed-fee contract and non-revenue flying "We are very proud to report our 34th 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. "Revenues have been very strong. Scheduled service revenues were up almost 24% versus 2nd quarter 2010 despite a reduction in capacity. The $19 increase in revenue per passenger more than offset the $15 per passenger increase in fuel cost during the quarter. "We are also very excited about the addition of the first 757 to our operating certificate, which occurred on July 1. We recently began operating this 217 seat aircraft on two of our Las Vegas routes, McAllen, Texas and Rockford, Illinois and have been receiving excellent feedback from our customers. Having the additional seats during the peak summer travel period is proving to be quite valuable. We are now working on preparing our application to the FAA for obtaining the requisite ETOPS approvals we need in order to commence Hawaii flights which we hope to be able to begin next summer. "The introduction of the 757, our Hawaii expansion and the previously announced MD-80 seat expansion projects are all important to the company and we are excited to see progress on all fronts. Our Team Members have been working diligently to complete these product additions as well as continue to provide our customers with low cost access to our world class destinations," concluded Gallagher. Andrew C. Levy, President of Allegiant Travel Company, stated, "We are very pleased with our revenue performance during the 2nd quarter. We produced the highest total fare in our company's history, driven by increases in the base air fare, and both air-related and third party ancillary revenues. A 2.6% reduction in capacity was a key factor enabling this strong revenue performance. We have again proven we can thrive during periods of high fuel price volatility if we are prudent in how we allocate our capacity. "Strength in revenue has continued as we enter this 3rd quarter, again aided by a tight capacity plan. Capacity this quarter will be lower as compared with the 3rd quarter of 2010 and we again expect to post substantial increases in unit revenues as more fully described in the guidance section later in the release. "Our current plan for the 4th quarter shows slight growth in capacity, mostly attributable to having a full quarter flying our first 757, as well as a small contribution from the presence of some re-configured MD-80 aircraft with 166 seats in the operating fleet. "Finally, we again experienced strong growth in our third party ancillary revenue primarily resulting from greater volume and yield in hotel room sales. Room nights grew over 12% versus the 2nd quarter last year, with almost half of the increase generated away from our traditionally strong Las Vegas market. Growth in the third party segment is a high priority and we continue to make investments in management and technology to further that goal," concluded Levy.Supplemental Ancillary Revenue Information (unaudited)2Q112Q10Change Gross ancillary revenue - third party products (000) $29,547 $25,859 14.3% Cost of goods sold (000) ($20,046) ($17,609) 13.8% Transaction costs (a) (000) ($1,210) ($1,098) 10.2% Ancillary revenue - third party products (000) $8,291 $7,152 15.9% As percent of gross 28.1% 27.7% 0.4pp  As percent of income before taxes 43.9% 25.7% 18.2pp Ancillary revenue - third party products/scheduled passenger $5.68 $4.87 16.6% (a) includes credit card fees and travel agency commissions Scott Sheldon, SVP and CFO of Allegiant Travel Company, stated, "During the 2nd quarter, we experienced a 27% increase in unit costs – cost per passenger was $115.24 compared with $90.96 in the 2nd quarter 2010 - but the results were as projected. Fuel costs per passenger were 37% higher, and non-fuel per passenger costs were up by 18% or slightly more than $9. "The increase in non-fuel unit costs was mostly due to reduced fleet utilization and $4.8 million of special items or $3.08 per passenger. These expenses included 757 pre-operating costs, manual integrations, the retirement of one MD-87 and the write down and impairment charges related to our engine consignment program. The increase in non-fuel per passenger costs would have been only $3.30 or 6.5% excluding these special items and if fleet utilization had remained unchanged on a year over year basis. "Apart from fuel, we experienced the most unit cost pressure in the maintenance area due to the execution of our engine overhaul and repair strategy as we have described in the past. We continue to project expenses between $20 and $25 million in 2011 for the overhaul of 30 to 35 engines, but the majority of these expenditures will occur in the 3rd and 4th quarters of this year. "While our full year 2011 engine operating expense projection remains unchanged, we have increased our projection for total cash outlays. We now expect to increase our capital expenditures to take advantage of current opportunities in the secondary engine market which will replenish our engine sparing levels and enable us to better manage the timing and costs associated with major engine overhaul events in the future. Please see the table below for more detailed information on this area Time periodTotal engine cash outlay (millions) Cap ex + Op exMaintenance expense per aircraft per month (thousands) Op ex only 2009 $11.9 $103 2010 $11.0 $103 Q3 2011 est. $20 -- $25 $120 -- $130 Q4 2011est. $10 -- $15 $125 -- $135 FY 2011 est. $45 -- $55 $120 -- $125 FY 2012 est. $15 -- $25 $95 -- $105 "Lastly, our unrestricted cash balance (including short term investments) grew slightly during the 2nd quarter to $317 million, up $11 million from the end of the 1st quarter. During the quarter, we repurchased approximately 34,300 shares for $1.6 million and we currently have $44.9 million in remaining board authorized authority," concluded Sheldon.Unaudited (millions)6/30/1112/31/10Change Unrestricted cash (including short term investments) $317.3 $150.3 111.1% Unrestricted cash net of air traffic liability 175.4 48.9 258.7% Total debt 142.3 28.1 406.4% Total shareholders equity 328.3 297.7 10.3%          Six months ended June 30,  Unaudited (millions)20112010Change Capital expenditures – year to date $51.2 $63.3 (19.1)% At this time, Allegiant Travel Company provides the following guidance to investors, subject to revision.Guidance, subject to revision    Revenue guidanceJuly 20113rd quarter 2011  Estimated PRASM year-over-growth +22 to 24% +19 to 21%   Capacity guidance       System3rd quarter 20114th quarter 2011Full year 2011 Departure year-over-year growth (5) to (1)% +4 to 8% 0 to +4% ASM year-over-year growth (5) to (1)% +5 to 9% 0 to +4% Scheduled       Departure year-over-year growth (8) to (4)% +1 to 5% 0 to +4% ASM year-over-year growth (5) to (1)% +4 to 8% 0 to +4%         Cost guidance3rd quarter 2011 Full year 2011 CASM ex fuel – year over year growth +14 to 16%   +10 to 12%         Fixed fee and other revenue guidance3rd quarter 2011     Fixed fee revenue and other revenue (millions) $11 to $13     CASM ex fuel – cost per available seat mile excluding fuel expense An operating fleet of 51 MD-80 and one 757 aircraft through the 3rd quarter of 2011.   2011 capital expenditures of approximately $140 million. Allegiant Travel Company will host a conference call with analysts at 4:30 East Coast time today, August 1st, 2011, to discuss its 2nd quarter 2011 financial results. A live broadcast of the conference call will be available via the Company's Investor Relations website homepage at http://ir.allegiant.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 major leisure destinations such as Las Vegas, Orlando, Fla., Tampa/St. Petersburg, Fla., Phoenix-Mesa, Los Angeles and Fort Lauderdale, Fla. Through its subsidiary, Allegiant Air, 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 The Allegiant Travel Company logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=8305Under 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 maintenance expenses, future operating expense, our ability to obtain regulatory approval to operate our 757 aircraft in extended overwater operations, our expected progress on reconfiguration of our MD-80 aircraft, ASM growth, departure growth, fleet growth, fixed-fee and other revenues and expected capital expenditures, as well as other 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," "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, the effect of the economic downturn on leisure travel, increases in fuel prices, terrorist attacks, risks inherent to airlines, demand for air services to our leisure destinations from the markets served by us, our ability to implement our growth strategy, unionization efforts, 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, aging aircraft and other 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 CompanyConsolidated Statements of IncomeThree Months Ended June 30, 2011 and 2010(in thousands, except per share amounts)(Unaudited) Three months ended June 30,    2011 2010Percent change OPERATING REVENUE:       Scheduled service revenue $133,309 $107,452 24.1 Ancillary revenue:       Air-related charges 45,991 43,501 5.7 Third party products 8,291 7,152 15.9 Total ancillary revenue 54,282 50,653 7.2         Fixed fee contract revenue 9,470 9,903 (4.4) Other revenue 3,388 342 890.6 Total operating revenue 200,449 168,350 19.1         OPERATING EXPENSES:       Aircraft fuel 86,454 62,222 38.9 Salary and benefits 29,884 26,764 11.7 Station operations 16,553 15,493 6.8 Maintenance and repairs 20,132 14,669 37.2 Sales and marketing 5,407 4,118 31.3 Aircraft lease rentals 330 571 (42.2) Depreciation and amortization 10,156 8,351 21.6 Other 10,821 8,081 33.9 Total operating expenses 179,737 140,269 28.1         OPERATING INCOME 20,712 28,081 (26.2)As a percent of total operating revenue10.3%16.7%  OTHER (INCOME) EXPENSE:       Earnings from unconsolidated affiliates, net (20) (33) (39.4) Interest income (386) (344) 12.2 Interest expense 2,235 655 241.2 Total other (income) expense  1,829 278 557.9         INCOME BEFORE INCOME TAXES 18,883 27,803 (32.1)As a percent of total operating revenue9.4%16.5%         PROVISION FOR INCOME TAXES 6,934 10,241 (32.3)         NET INCOME $11,949 $17,562 (32.0)As a percent of total operating revenue6.0%10.4%         Earnings per share to common stockholders (1):       Basic $0.63 $0.88 (28.4) Diluted $0.62 $0.87 (28.7)         Weighted average shares outstanding used in computing earnings per share to common stockholders (1): Basic 18,931 19,805 (4.4) Diluted 19,131 20,170 (5.2)         (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 CompanyOperating StatisticsThree Months Ended June 30, 2011 and 2010(Unaudited) Three months ended June 30,   2011 2010Percent change* OPERATING STATISTICS      Total system statistics       Passengers 1,559,619 1,542,110 1.1 Revenue passenger miles (RPMs) (thousands) 1,401,610 1,418,387 (1.2) Available seat miles (ASMs) (thousands) 1,576,791 1,601,126 (1.5) Load factor 88.9% 88.6% 0.3 Operating revenue per ASM (cents) 12.71 10.51 20.9 Operating expense per ASM (CASM) (cents) 11.40 8.76 30.1 Fuel expense per ASM (cents) 5.48 3.89 40.9 Operating CASM, excluding fuel (cents) 5.92 4.87 21.6 Operating expense per passenger $115.24 $90.96 26.7 Fuel expense per passenger $55.43 $40.35 37.4 Operating expense per passenger, excluding fuel $59.81 $50.61 18.2 Departures 12,430 12,364 0.5 Block hours 28,277 28,619 (1.2) Average stage length (miles) 848 869 (2.4) Average number of operating aircraft during period 51.0 47.9 6.5 Total aircraft in service at period end 51 50 2.0 Average departures per aircraft per day 2.7 2.8 (3.6) Average block hours per aircraft per day 6.1 6.6 (7.6) Full-time equivalent employees at period end 1,559 1,639 (4.9) Fuel gallons consumed (thousands) 26,868 27,315 (1.6) Average fuel cost per gallon $3.22 $2.28 41.2        Scheduled service statistics       Passengers 1,462,126 1,468,939 (0.5) Revenue passenger miles (RPMs) (thousands) 1,323,051 1,356,693 (2.5) Available seat miles (ASMs) (thousands) 1,438,659 1,477,455 (2.6) Load factor 92.0% 91.8% 0.2 Departures 10,789 10,824 (0.3) Average passengers per departure 136 136 -- Block hours 25,470 25,953 (1.9) Yield (cents) 10.08 7.92 27.3 Scheduled service revenue per ASM (PRASM) (cents) 9.27 7.27 27.5 Total ancillary revenue per ASM (cents) 3.77 3.43 9.9 Total scheduled service revenue per ASM (TRASM) (cents) 13.04 10.70 21.9 Average fare - scheduled service $91.17 $73.15 24.6 Average fare - ancillary air-related charges $31.45 $29.61 6.2 Average fare - ancillary third party products $5.68 $4.87 16.6 Average fare - total $128.30 $107.63 19.2 Average stage length (miles) 889 910 (2.3) Fuel gallons consumed (thousands) 24,329 24,756 (1.7) Average fuel cost per gallon $3.47 $2.42 43.4 Percent of sales through website during period 87.9% 88.3% (0.4)         * except load factor and percent of sales through website, which is percentage point change    Allegiant Travel CompanyConsolidated Statements of IncomeSix Months Ended June 30, 2011 and 2010(in thousands, except per share amounts)(Unaudited) Six months ended June 30,   2011 2010Percent change OPERATING REVENUE:       Scheduled service revenue $261,842 $217,886 20.2 Ancillary revenue:       Air-related charges 91,307 86,151 6.0 Third party products 15,280 12,094 26.3 Total ancillary revenue 106,587 98,245 8.5         Fixed fee contract revenue 21,492 21,170 1.5 Other revenue 3,759 686 448.0 Total operating revenue 393,680 337,987 16.5         OPERATING EXPENSES:       Aircraft fuel 165,641 119,588 38.5 Salary and benefits 60,749 52,656 15.4 Station operations 33,026 31,175 5.9 Maintenance and repairs 36,347 27,439 32.5 Sales and marketing 10,657 9,201 15.8 Aircraft lease rentals 645 1,078 (40.2) Depreciation and amortization 20,046 17,042 17.6 Other 18,030 15,482 16.5 Total operating expenses 345,141 273,661 26.1         OPERATING INCOME 48,539 64,326 (24.5)As a percent of total operating revenue12.3%19.0%  OTHER (INCOME) EXPENSE:       (Earnings) loss from unconsolidated affiliates, net (14) 109 (112.8) Interest income (662) (755) (12.3) Interest expense 3,031 1,404 115.9 Total other (income) expense  2,355 758 210.7         INCOME BEFORE INCOME TAXES 46,184 63,568 (27.3)As a percent of total operating revenue11.8%18.8%          PROVISION FOR INCOME TAXES 17,082 23,406 (27.0)         NET INCOME $29,102 $40,162 (27.5)As a percent of total operating revenue7.4%11.9%          Earnings per share to common stockholders (1):       Basic $1.53 $2.02 (24.3) Diluted $1.52 $1.99 (23.6)         Weighted average shares outstanding used in computing earnings per share to common stockholders (1): Basic 18,920 19,805 (4.5) Diluted 19,116 20,070 (4.8)         (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 CompanyOperating StatisticsSix Months Ended June 30, 2011 and 2010(Unaudited) Six months ended June 30,   2011 2010Percent change* OPERATING STATISTICS    Total system statistics       Passengers 3,100,240 2,979,569 4.0 Revenue passenger miles (RPMs) (thousands) 2,851,721 2,792,143 2.1 Available seat miles (ASMs) (thousands) 3,194,577 3,158,312 1.1 Load factor 89.3% 88.4% 0.9 Operating revenue per ASM (cents) 12.32 10.70 15.1 Operating expense per ASM (CASM) (cents) 10.80 8.66 24.7 Fuel expense per ASM (cents) 5.19 3.79 36.9 Operating CASM, excluding fuel (cents) 5.62 4.88 15.2 Operating expense per passenger $111.33 $91.85 21.2 Fuel expense per passenger $53.43 $40.14 33.1 Operating expense per passenger, excluding fuel $57.90 $51.71 12.0 Departures 24,667 24,064 2.5 Block hours 57,644 56,863 1.4 Average stage length (miles) 866 882 (1.8) Average number of operating aircraft during period 51.0 47.1 8.3 Total aircraft in service at period end 51 50 2.0 Average departures per aircraft per day 2.7 2.8 (3.6) Average block hours per aircraft per day 6.2 6.7 (7.5) Full-time equivalent employees at period end 1,559 1,639 (4.9) Fuel gallons consumed (thousands) 54,414 53,718 1.3 Average fuel cost per gallon $3.04 $2.23 36.3        Scheduled service statistics     Passengers 2,906,324 2,825,549 2.9 Revenue passenger miles (RPMs) (thousands) 2,683,861 2,664,659 0.7 Available seat miles (ASMs) (thousands) 2,903,687 2,904,001 0.0 Load factor 92.4% 91.8% 0.6 Departures 21,392 20,905 2.3 Average passengers per departure 136 135 0.7 Block hours 51,714 51,308 0.8 Yield (cents) 9.76 8.18 19.3 Scheduled service revenue per ASM (PRASM) (cents) 9.02 7.50 20.3 Total ancillary revenue per ASM (cents) 3.67 3.38 8.6 Total scheduled service revenue per ASM (TRASM) (cents) 12.69 10.89 16.5 Average fare - scheduled service $90.09 $77.11 16.8 Average fare - ancillary air-related charges $31.42 $30.49 3.1 Average fare - ancillary third party products $5.26 $4.28 22.9 Average fare - total $126.77 $111.88 13.3 Average stage length (miles) 905 927 (2.4) Fuel gallons consumed (thousands) 49,048 48,462 1.2 Average fuel cost per gallon $3.29 $2.36 39.4 Percent of sales through website during period 88.9% 88.3% 0.6         * except load factor and percent of sales through website, which is percentage point change    Allegiant Travel CompanyNon-GAAP PresentationsQuarters Ended June 30, 2011 and 2010 (Unaudited)         "EBITDA" represents earnings before interest expense, income taxes, depreciation and amortization. EBITDA is not a calculation based on generally accepted accounting principles and should not be considered as an alternative to net income or operating income as indicators of our financial performance or to cash flow as a measure of liquidity. EBITDA is included as a supplemental disclosure because we believe it is a useful indicator of our operating performance. Further, EBITDA is a well-recognized performance measurement that is frequently used by securities analysts, investors and other interested parties in comparing the operating performance of companies. We believe EBITDA is useful in evaluating our operating performance compared to our competitors because its calculation generally eliminates the effects of financing and income taxes and the accounting effects of capital spending and acquisitions, which items may vary between periods and for different companies for reasons unrelated to overall operating performance. The following represents the reconciliation of EBITDA to net income for the periods indicated below.         The SEC has adopted rules (Regulation G) regulating the use of non-GAAP financial measures. Because of our use of the non-GAAP financial measure EBITDA 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 measure, which is net income, and a reconciliation of the non-GAAP measure to the most comparable GAAP measure.  Our utilization of a non-GAAP measurement is not meant to be considered in isolation or as a substitute for net income or other measures of financial performance prepared in accordance with GAAP. EBITDA is not a GAAP measurement and our use of it may not be comparable to similarly titled measures employed by other companies in the airline industry. The reconciliations to GAAP measures follow.          Three months ended June 30,  (in thousands)20112010Percent change Net income $11,949 $17,562 (32.0) Plus (minus)     Interest income (386) (344) 12.2 Interest expense 2,235 655 241.2 Provision for income taxes 6,934 10,241 (32.3) Depreciation and amortization 10,156 8,351 21.6EBITDA$30,888$36,465(15.3)CONTACT: Media Inquiries: Jordan McGee +1-702-589-7260 mediarelations@allegiantair.com Investor Inquiries: Chris Allen +1-702-851-7365 ir@allegiantair.com