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Press release from GlobeNewswire (a Nasdaq OMX company)

Allegiant Travel Company Third Quarter 2011 Financial Results

Wednesday, October 26, 2011

Allegiant Travel Company Third Quarter 2011 Financial Results13:00 EDT Wednesday, October 26, 201135th Consecutive Profitable QuarterFully Diluted Earnings per Share of $.49 LAS VEGAS, Oct. 26, 2011 (GLOBE NEWSWIRE) -- Allegiant Travel Company (Nasdaq:ALGT) today reported the following financial results for the 3rd quarter 2011 and comparisons to prior year equivalents:Unaudited3Q113Q10Change Total operating revenue (millions) $191.5 $163.6 17.0% Operating income (millions) $16.7 $19.5 (14.1)% Operating margin 8.7% 11.9% -3.2pp EBITDA (millions) $27.5 $28.4 (3.1)% EBITDA margin 14.4% 17.3% -2.9pp Net income (millions) $9.5 $13.2 (27.9)% Diluted earnings per share $0.49 $0.67 (26.9)%      Scheduled Service:       Average fare - scheduled service $84.94 $69.99 21.4% Average fare - ancillary air-related charges $30.38 $29.14 4.3% Average fare - ancillary third party products $5.31 $4.52 17.5% Average fare - total $120.63 $103.65 16.4% Scheduled service passenger revenue per ASM (PRASM)(cents) 8.58 6.89 24.5% Total scheduled service revenue per ASM (TRASM) (cents) 12.19 10.20 19.5% Load factor 92.2% 89.6% 2.6pp         Total System*:       Operating expense per passenger $110.71 $92.41 19.8% Operating expense per passenger, excluding fuel $57.42 $52.34 9.7% Operating expense, excluding fuel per ASM (CASM ex fuel) (cents) 5.69 4.96 14.7% *Total system includes scheduled service, fixed-fee contract and non-revenue flying       "We are very proud to report our 35th 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 continue to perform nicely. Most of the meaningful revenue metrics during the third quarter increased 15% or more year over year, another strong performance. We are continuing our focus on near term projects. We now have two 166 seat MD-80 aircraft in service on our Bellingham routes, and we are beginning to sell into the extra seats. "Our 757 activity was successful during the quarter as well. We began operations with our initial 757 aircraft in late July and operated it on two routes to and from Las Vegas. For a nominal amount of additional fuel burn, we are generating 67 additional profit potential seats. These additional seats on our peak days, in the proper markets, are expected to contribute significant incremental profit.  "Lastly we are making good progress on the revamp of our automation platform. Current plans call for our new platform to be available in time for the January 24th DOT cutover date. It will be the first enhancement of many to come, with the ultimate objective of creating an OTA style system that will enhance our efforts to sell additional hotel overnights and associated packages," concluded Gallagher. Andrew C. Levy, President of Allegiant Travel Company, stated, "We are very pleased in our ability to continuously offset increases in fuel prices with higher fares. Our total fare of $120.63 is a record high for the 3rd quarter, which is our seasonally weakest time of the year. It is the fourth consecutive quarter in which we have posted record fares for the respective quarter.  "Gains in the base airfare, air-related ancillary, third party ancillary and load factor all contributed to a 19.5% increase in TRASM. The unit revenue comparables become more difficult as the year progresses, but October should be another strong month with a projected year over year gain in PRASM between 16 and 18% despite 5% capacity growth. We expect 4th quarter PRASM to increase between 11 and 13% on a year over year basis despite capacity growth of between 5 and 9%. "Finally, we are again pleased with the growth in third party ancillary revenue. As noted below, we saw growth in both hotel room nights and rental car days which helped to account for a 17.5% increase in ancillary revenue per passenger for the quarter," concluded Levy.Supplemental Ancillary Revenue Information (unaudited)3Q113Q10Change Gross ancillary revenue - third party products (000) $27,315 $22,716 20.2% Cost of goods sold (000) ($18,395) ($15,043) 22.3% Transaction costs (a) (000) ($1,078) ($943) 14.3% Ancillary revenue - third party products (000) $7,842 $6,730 16.5% As percent of gross 28.7% 29.6% -0.9pp  As percent of income before taxes 52.6% 35.0% 17.6pp Ancillary revenue - third party products/scheduled passenger $5.31 $4.52 17.5% Hotel room nights 163,000 136,000 19.9% Rental car days 146,000 134,000 9.0% (a) includes credit card fees and travel agency commissions       Scott Sheldon, SVP and CFO of Allegiant Travel Company, stated, "During the quarter our cost per passenger ex-fuel increased 9.7% to $57.42. The increase in ex-fuel costs was due in part to a 6.5% reduction in aircraft utilization and a 2.3% decline in average stage length. As was the case in the 2nd quarter, we once again restricted capacity in the 3rd quarter in an effort to offset higher fuel which put additional pressure on our unit costs.     "Our increase in non-fuel costs was also due to the continued execution of our engine overhaul strategy, credit card processing fees related to a substantial increase in scheduled revenue and depreciation and amortization related to our four operating 757 aircraft, three of which are leased to other carriers. "Lastly, our unrestricted cash balance (including investments in marketable securities) decreased slightly during the 3rd quarter to $303 million, down $14 million from the end of the 2nd quarter. During the quarter we raised $7 million of debt secured by one 757 aircraft purchased during the first quarter. In addition we spent $19 million in cap ex bringing our year to date total to $69 million," concluded Sheldon.Unaudited (millions)9/30/1112/31/10Change Unrestricted cash * $303.4 $150.3 101.9% Unrestricted cash net of air traffic liability 186.4 48.9 281.2% Total debt 147.8 28.1 426.0% Total stockholders' equity 339.1 297.7 13.9%          nine months ended Sept 30,  Unaudited (millions)20112010Change Capital expenditures – year to date $69.0 $82.2 (16.1)% *-Unrestricted cash includes investments in marketable securities       At this time, Allegiant Travel Company provides the following guidance to investors, subject to revision. Guidance, subject to revision    Revenue guidanceOctober 20114th quarter 2011  Estimated PRASM year-over-year growth +16 to 18% +11 to 13%   Capacity guidance       System4th quarter 2011Full year 20111st quarter 2012 Departure year-over-year growth +5 to 9% 0 to +4% +8 to 12% ASM year-over-year growth +6 to 10% 0 to +4% +13 to 17% Scheduled       Departure year-over-year growth +2 to 6% 0 to +4% +10 to 14% ASM year-over-year growth +5 to 9% 0 to +4% +15 to 19%         Cost guidance4th quarter 2011Full year 2011  CASM ex fuel – year over year growth +7 to 9% +12 to 14%           Fixed fee and other revenue guidance4th 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 52 MD-80 and one 757 aircraft through the 4th quarter of 2011. 2011 capital expenditures of approximately $105 to $120 million.  Allegiant Travel Company will host a conference call with analysts at 4:30 East Coast time today, October 26, 2011, to discuss its 3rd 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 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 September 30, 2011 and 2010(in thousands, except per share amounts)(Unaudited)     Three months ended September 30,Percent 20112010change OPERATING REVENUE:       Scheduled service revenue $125,545 $104,188 20.5 Ancillary revenue:       Air-related charges 44,905 43,372 3.5 Third party products 7,842 6,730 16.5 Total ancillary revenue 52,747 50,102 5.3         Fixed fee contract revenue 9,676 8,972 7.8 Other revenue 3,532 359 883.8 Total operating revenue 191,500 163,621 17         OPERATING EXPENSES:       Aircraft fuel 84,118 62,495 34.6 Salary and benefits 29,517 28,442 3.8 Station operations 17,154 16,268 5.4 Maintenance and repairs 21,075 16,782 25.6 Sales and marketing 4,919 3,908 25.9 Aircraft lease rentals 303 489 (38) Depreciation and amortization 10,676 8,779 21.6 Other 7,007 6,978 0.4 Total operating expenses 174,769 144,141 21.2         OPERATING INCOME 16,731 19,480 (14.1) As a percent of total operating revenue8.7%11.9%   OTHER (INCOME) EXPENSE:       Earnings from unconsolidated affiliates, net (78) (106) (26.4) Interest income (338) (241) 40.2 Interest expense 2,255 596 278.4 Total other (income) expense  1,839 249 638.6         INCOME BEFORE INCOME TAXES 14,892 19,231 (22.6)As a percent of total operating revenue7.8%11.8%           PROVISION FOR INCOME TAXES 5,406 6,072 (11)         NET INCOME $9,486 $13,159 (27.9)As a percent of total operating revenue5.0%8.0%           Earnings per share to common stockholders (1):       Basic $0.50 $0.68 (26.5) Diluted $0.49 $0.67 (26.9)         Weighted average shares outstanding used in computing earnings per share to common stockholders (1):       Basic 18,940 19,349 (2.1) Diluted 19,128 19,569 (2.3)         (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 September 30, 2011 and 2010(Unaudited) Three months ended September 30,Percent 20112010change* OPERATING STATISTICS      Total system statistics       Passengers 1,578,645 1,559,836 1.2 Revenue passenger miles (RPMs) (thousands) 1,425,002 1,425,761 (0.1) Available seat miles (ASMs) (thousands) 1,593,766 1,646,431 (3.2) Load factor 89.4% 86.6% 2.8 Operating revenue per ASM (cents) 12.02 9.94 20.9 Operating expense per ASM (CASM) (cents) 10.97 8.75 25.4 Fuel expense per ASM (cents) 5.28 3.8 38.9 Operating CASM, excluding fuel (cents) 5.69 4.96 14.7 Operating expense per passenger $110.71 $92.41 19.8 Fuel expense per passenger $53.28 $40.07 33 Operating expense per passenger, excluding fuel $57.42 $52.34 9.7 Departures 12,527 12,761 (1.8) Block hours 28,050 28,748 (2.4) Average stage length (miles) 845 865 (2.3) Average number of operating aircraft during period 52.3 50.6 3.4 Total aircraft in service at period end 53 51 3.9 Average departures per aircraft per day 2.6 2.7 (3.7) Average block hours per aircraft per day 5.8 6.2 (6.5) Full-time equivalent employees at period end 1,545 1,623 (4.8) Fuel gallons consumed (thousands) 26,973 27,832 (3.1) Average fuel cost per gallon $3.12 $2.25 38.7        Scheduled service statistics       Passengers 1,478,046 1,488,600 (0.7) Revenue passenger miles (RPMs) (thousands) 1,347,896 1,356,043 (0.6) Available seat miles (ASMs) (thousands) 1,462,636 1,512,650 (3.3) Load factor 92.2% 89.6% 2.6 Departures 10,834 11,316 (4.3) Average passengers per departure 136 132 3 Block hours 25,306 26,258 (3.6) Yield (cents) 9.31 7.68 21.2 Scheduled service revenue per ASM (PRASM) (cents) 8.58 6.89 24.5 Total ancillary revenue per ASM (cents) 3.61 3.31 9.1 Total scheduled service revenue per ASM (TRASM) (cents) 12.19 10.2 19.5 Average fare - scheduled service $84.94 $69.99 21.4 Average fare - ancillary air-related charges $30.38 $29.14 4.3 Average fare - ancillary third party products $5.31 $4.52 17.5 Average fare - total $120.63 $103.65 16.4 Average stage length (miles) 892 891 0.1 Fuel gallons consumed (thousands) 24,435 25,342 (3.6) Average fuel cost per gallon $3.32 $2.36 40.7 Percent of sales through website during period 88.2% 88.2% --         * except load factor and percent of sales through website, which is percentage point change      Allegiant Travel CompanyConsolidated Statements of IncomeNine Months Ended September 30, 2011 and 2010(in thousands, except per share amounts) Nine months ended September 30,Percent 20112010change OPERATING REVENUE:       Scheduled service revenue $387,387 $322,074 20.3 Ancillary revenue:       Air-related charges 136,212 129,523 5.2 Third party products 23,122 18,824 22.8 Total ancillary revenue 159,334 148,347 7.4         Fixed fee contract revenue 31,168 30,142 3.4 Other revenue 7,291 1,045 597.7 Total operating revenue 585,180 501,608 16.7         OPERATING EXPENSES:       Aircraft fuel 249,759 182,083 37.2 Salary and benefits 90,266 81,098 11.3 Station operations 50,180 47,443 5.8 Maintenance and repairs 57,422 44,221 29.9 Sales and marketing 15,576 13,109 18.8 Aircraft lease rentals 948 1,567 (39.5) Depreciation and amortization 30,722 25,821 19.0 Other 25,037 22,460 11.5 Total operating expenses 519,910 417,802 24.4         OPERATING INCOME 65,270 83,806 (22.1) As a percent of total operating revenue11.2%16.7%   OTHER (INCOME) EXPENSE:       (Earnings) loss from unconsolidated affiliates, net (92) 3 (3,166.7) Interest income (1,000) (996) 0.4 Interest expense 5,286 2,000 164.3 Total other (income) expense  4,194 1,007 316.5         INCOME BEFORE INCOME TAXES 61,076 82,799 (26.2)As a percent of total operating revenue10.4%16.5%           PROVISION FOR INCOME TAXES 22,488 29,478 (23.7)         NET INCOME $38,588 $53,321 (27.6)As a percent of total operating revenue6.6%10.6%           Earnings per share to common stockholders (1):       Basic $2.03 $2.70 (24.8) Diluted $2.01 $2.67 (24.7)         Weighted average shares outstanding used in computing earnings per share to common stockholders (1):       Basic 18,927 19,167 (1.3) Diluted 19,109 19,899 (4.0)         (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 StatisticsNine Months Ended September 30, 2011 and 2010(Unaudited) Nine months ended September 30,Percent 20112010change* OPERATING STATISTICS      Total system statistics       Passengers 4,678,885 4,539,405 3.1 Revenue passenger miles (RPMs) (thousands) 4,276,723 4,217,904 1.4 Available seat miles (ASMs) (thousands) 4,788,343 4,804,743 (0.3) Load factor 89.3% 87.8% 1.5 Operating revenue per ASM (cents) 12.22 10.44 17.0 Operating expense per ASM (CASM) (cents) 10.86 8.7 24.8 Fuel expense per ASM (cents) 5.22 3.79 37.7 Operating CASM, excluding fuel (cents) 5.64 4.91 14.9 Operating expense per passenger $111.12 $92.04 20.7 Fuel expense per passenger $53.38 $40.11 33.1 Operating expense per passenger, excluding fuel $57.74 $51.93 11.2 Departures 37,194 36,825 1.0 Block hours 85,694 85,611 0.1 Average stage length (miles) 859 876 (1.9) Average number of operating aircraft during period 51.5 48.2 6.8 Total aircraft in service at period end 53 51 3.9 Average departures per aircraft per day 2.6 2.8 (7.1) Average block hours per aircraft per day 6.1 6.5 (6.2) Full-time equivalent employees at period end 1,545 1,623 (4.8) Fuel gallons consumed (thousands) 81,386 81,549 (0.2) Average fuel cost per gallon $3.07 $2.23 37.7        Scheduled service statistics       Passengers 4,384,370 4,314,149 1.6 Revenue passenger miles (RPMs) (thousands) 4,031,758 4,020,703 0.3 Available seat miles (ASMs) (thousands) 4,366,323 4,416,651 (1.1) Load factor 92.3% 91.0% 1.3 Departures 32,226 32,221 -- Average passengers per departure 136 134 1.5 Block hours 77,019 77,566 (0.7) Yield (cents) 9.61 8.01 20.0 Scheduled service revenue per ASM (PRASM) (cents) 8.87 7.29 21.7 Total ancillary revenue per ASM (cents) 3.65 3.36 8.6 Total scheduled service revenue per ASM (TRASM) (cents) 12.52 10.65 17.6 Average fare - scheduled service $88.36 $74.66 18.3 Average fare - ancillary air-related charges $31.07 $30.02 3.5 Average fare - ancillary third party products $5.27 $4.36 20.9 Average fare - total $124.70 $109.04 14.4 Average stage length (miles) 901 914 (1.4) Fuel gallons consumed (thousands) 73,483 73,804 (0.4) Average fuel cost per gallon $3.30 $2.37 39.2 Percent of sales through website during period 88.6% 88.3% 3.0         * except load factor and percent of sales through website, which is percentage point changeAllegiant Travel CompanyNon-GAAP PresentationsQuarters Ended September 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 September 30,Percent(in thousands)20112010change Net income $9,486 $13,159 (27.9)Plus (minus)     Interest income (338) (241) 40.2 Interest expense 2,255 596 278.4 Provision for income taxes 5,406 6,072 (11) Depreciation and amortization 10,676 8,779 21.6EBITDA$27,485$28,365(3.1)CONTACT: Media Inquiries: Brian Davis mediarelations@allegiantair.com Investor Inquiries: Chris Allen ir@allegiantair.com