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Press release from GlobeNewswire (a Nasdaq OMX company)

Allegiant Travel Company Fourth Quarter and Full Year 2011 Financial Results

Wednesday, February 01, 2012

Allegiant Travel Company Fourth Quarter and Full Year 2011 Financial Results14:14 EST Wednesday, February 01, 201236th Consecutive Profitable QuarterFourth Quarter Fully Diluted Earnings per Share of $.56 andFull Year Fully Diluted Earnings per Share of $2.57LAS VEGAS, Feb. 1, 2012 (GLOBE NEWSWIRE) -- Allegiant Travel Company (Nasdaq:ALGT) today reported the following financial results for the 4th quarter and full year 2011 as well as comparisons to prior year equivalents:Unaudited4Q114Q10Change20112010Change Total operating revenue (millions) $193.9 $162.0 19.7% $779.1 $663.6 17.4% Operating income (millions) $20.2 $20.9 (3.2)% $85.4 $104.7 (18.4)% Operating margin 10.4% 12.9% -2.5pp 11.0% 15.8% -4.8pp EBITDA (millions) $31.3 $30.0 4.4% $127.4 $139.6 (8.7)% EBITDA margin 16.2% 18.5% -2.3pp 16.4% 21.0% -4.6pp Net income (millions) $10.8 $12.4 (12.7)% $49.4 $65.7 (24.8)% Diluted earnings per share $0.56 $0.64 (12.5)% $2.57 $3.32 (22.6)%               Scheduled Service:             Average fare - scheduled service $91.66 $81.62 12.3% $89.15 $76.26 16.9% Average fare - ancillary air-related charges $31.51 $30.96 1.8% $31.18 $30.25 3.1% Average fare - ancillary third party products $4.88 $4.28 14.0% $5.18 $4.34 19.4% Average fare - total $128.05 $116.86 9.6% $125.51 $110.85 13.2% Scheduled service passenger revenue per ASM (PRASM)(cents) 8.91 7.98 11.7% 8.88 7.45 19.2% Total scheduled service revenue per ASM (TRASM) (cents) 12.45 11.42 9.0% 12.50 10.83 15.4% Load factor 89.6% 89.9% -0.3pp 91.7% 90.8% 0.9pp               Total System*:             Operating expense per passenger $116.08 $103.52 12.1% $112.32 $94.69 18.6% Operating expense per passenger, excluding fuel $62.04 $58.36 6.3% $58.78 $53.41 10.1% Operating expense, excluding fuel per ASM (CASM ex fuel) (cents) 5.89 5.52 6.7% 5.70 5.05 12.9% *Total system includes scheduled service, fixed-fee contract and non-revenue flying "We are very proud to report our 36th 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 and year. "We had an excellent December and fourth quarter. In fourth quarter 2011, revenues were up 20 percent or $31.9 million on just a 9.3 percent increase in system capacity. 2011 was another momentous year for us, our fifth year in a row with double digit operating margins. While fuel put a dent in the operating results for the year, we made excellent progress in our ongoing projects including introduction of our 757 aircraft, beginning our 166 seat conversion and automation upgrades. "As part of our growth for 2012, we have announced eight new routes during the past 30 days and our new base in Oakland. Soon we will be in 76 cities, including 11 leisure destinations, with 178 routes. We currently have 53 aircraft in revenue service including one 757. We are expecting to have at least 16 166 seat MD-80 aircraft in service by the end of first quarter 2012, and we are on track with our forecast for ETOPS certification later this year, which will allow us to begin our Hawaii service," concluded Gallagher. Andrew C. Levy, President of Allegiant Travel Company, stated, "We had another successful quarter of offsetting higher fuel costs. In fourth quarter 2011, fuel expense per passenger increased almost $9 versus 2010, but we were able to successfully raise our average scheduled fare by $10. This increase comes despite an eight percent growth in available seat miles as compared to fourth quarter 2010. We have worked very hard this year to adapt our pricing and scheduling to higher fuel prices and the results have been strong. "We are carrying good momentum into 2012. Our January PRASM is projected to increase between nine and eleven percent, and we are expecting first quarter 2012 PRASM to be up between one and three percent on a year over year basis.  "Finally, we continue to see strength in our third party ancillary business. Third party ancillary net revenue increased 23 percent in both the fourth quarter of 2011 and the full year. As we have said in the past, third party products will continue to be an area of focus, and we expect to see strong growth continue into 2012," concluded Levy.  Supplemental Ancillary Revenue Information            Unaudited (millions)4Q114Q10Change20112010Change Gross ancillary revenue - third party products $23.0 $18.2 26.4% $106.3 $89.3 19.0% Cost of goods sold ($15.2) ($11.8) 28.8% ($72.0) ($60.9) 18.2% Transaction costs (a) ($.9) ($.8) 12.5% ($4.5) ($4.0) 12.5% Ancillary revenue - third party products $6.8 $5.5 22.6% $29.9 $24.4 22.8% As percent of gross 29.6% 30.4% -0.8pp 28.1% 27.3% 0.8pp  As percent of income before taxes 36.8% 27.0% 9.8pp 37.6% 23.6% 14.0pp Ancillary revenue - third party products/scheduled passenger $4.88 $4.28 14.0% $5.18 $4.34 19.4%               Hotel room nights (thousands) 142.7 119.9 19.0% 647.7 568.6 13.9% Rental car days (thousands) 113.8 94.2 20.8% 577.7 576.3 0.2%  (a) includes credit card fees and travel agency commission Scott Sheldon, SVP and CFO of Allegiant Travel Company, stated, "Fuel, maintenance and depreciation expense continued to place pressure on our cost structure during the fourth quarter of 2011. Consistent with prior quarters, fuel expense continued to be the largest contributor to the decrease in operating income. Our fuel cost per passenger increased nearly $9, or 19.7 percent, to $54 during the quarter. "Engine overhaul and repairs expense was the largest driver in our 6.3 percent increase in non-fuel per passenger costs during the quarter. In 2011, we invested heavily in our engine overhauls in an effort to improve reliability. The fourth quarter marked the high point both in the number of engines overhauled and in expense recognized at $9 million. For the full year, engine overhaul and repairs expense totaled $19 million (as projected), substantially higher than the $5 million in 2010. In 2012, engine overhaul and repairs expense is expected to diminish now that 50 percent of our engine pool has fewer than 1,000 cycles since overhaul as compared with only 11 percent in January of 2011.       "Excluding engine overhaul and repair expense and depreciation expense related to three leased 757 aircraft not producing passengers or ASMs, all other non-fuel costs per ASM were down 2.2 percent for the quarter. As we look forward to first quarter 2012, we expect CASM ex fuel to be up between zero to two percent as compared to the first quarter of 2011.     "During our 166 seat project, we will consistently have three or four aircraft out of scheduled service being reconfigured. The total fleet count, provided below, includes aircraft that are in the process of being upgraded to 166 seats and therefore are unavailable for flight operations. "Lastly, we ended the year with unrestricted cash of nearly $320 million, up $16 million from the end of the third quarter and $169 million from the end of 2010. During the year we paid down over $21 million in debt, bringing our total debt balance to $146 million at the end of 2011. Capital expenditures for the quarter totaled $18 million and $87 million on a full year basis. Although we anticipated closing on our fifth and sixth 757 aircraft during fourth quarter 2011, we now expect these aircraft to be acquired in first quarter 2012. As such, 2012 cap ex is expected to be in the range of $105 and $115 million, slightly higher than forecasted last quarter," concluded Sheldon. Unaudited (millions) 12/31/1112/31/10Change Unrestricted cash * $319.5 $150.3 112.6% Unrestricted cash net of air traffic liability $200.8 $48.9 310.6% Total debt $146.1 $28.1 419.9% Total stockholders' equity $351.5 $297.7 18.1%        Year ended Dec 31,  Unaudited (millions)20112010Change Capital expenditures $86.6 $98.5 (12.1)% *-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 guidanceJanuary 20121st quarter 2012 Estimated PRASM year-over-year growth +9 to 11% +1 to 3% Capacity guidance      1st quarter 2nd quarter System20122012 Departure year-over-year growth +10 to 14% +13 to 17% ASM year-over-year growth +17 to 21% +22 to 26% Scheduled     Departure year-over-year growth +13 to 17% +16 to 20% ASM year-over-year growth +19 to 23% +25 to 29%      Cost guidance1st quarter 2012   CASM ex fuel – year over year change 0 to 2%        Fixed fee and other revenue guidance1st quarter 2012   Fixed fee revenue and other revenue (millions) $10 to $12         Allegiant Travel Company will host a conference call with analysts at 4:30 p.m. EST today, February 1, 2012, to discuss its fourth quarter and full year 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 world-class leisure destinations. Through its subsidiary, Allegiant Air, the company operates a low-cost, high-efficiency, all-jet passenger airline, and offers other travel-related products such as hotel rooms, rental cars, and attraction tickets through its website, allegiant.com. The company was ranked ninth in the 2011 Forbes' Best Small Companies. Allegiant was also recently named one of FORTUNE magazine's "100 Fastest-Growing Companies" for the second consecutive year.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 December 31, 2011 and 2010(in thousands, except per share amounts)(Unaudited)   Three months ended December 31, Percent 20112010change     OPERATING REVENUE:       Scheduled service revenue $127,597 $105,751 20.7 Ancillary revenue:       Air-related charges 43,866 40,117 9.3 Third party products 6,794 5,542 22.6 Total ancillary revenue 50,660 45,659 11.0         Fixed fee contract revenue 12,522 10,434 20.0 Other revenue 3,158 189 1,570.9 Total operating revenue 193,937 162,033 19.7         OPERATING EXPENSES:       Aircraft fuel 80,898 61,588 31.4 Salary and benefits 29,590 26,902 10.0 Station operations 16,529 15,177 8.9 Maintenance and repairs 23,806 16,358 45.5 Sales and marketing 4,329 3,953 9.5 Aircraft lease rentals 153 154 (0.6) Depreciation and amortization 11,253 9,144 23.1 Other 7,205 7,907 (8.9) Total operating expenses 173,763 141,183 23.1         OPERATING INCOME 20,174 20,850 (3.2) As a percent of total operating revenue 10.4% 12.9%   OTHER (INCOME) EXPENSE:       Earnings from unconsolidated affiliates, net 83 (17) (588.2) Interest income (236) (188) 25.5 Interest expense 1,889 522 261.9 Total other (income) expense 1,736 317 447.6         INCOME BEFORE INCOME TAXES 18,438 20,533 (10.2) As a percent of total operating revenue 9.5% 12.7%           PROVISION FOR INCOME TAXES 7,628 8,152 (6.4)         NET INCOME 10,810 $12,381 (12.7) As a percent of total operating revenue 5.6% 7.6%           Earnings per share to common stockholders (1):       Basic $0.57 $0.65 (12.3) Diluted $0.56 $0.64 (12.5)         Weighted average shares outstanding used in computing earnings per share to common stockholders (1):       Basic 18,959 18,894 0.3 Diluted 19,207 19,091 0.6   (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 December 31, 2011 and 2010(Unaudited)   Three months ended December 31,Percent 20112010change* OPERATING STATISTICS      Total system statistics       Passengers 1,496,923 1,363,779 9.8 Revenue passenger miles (RPMs) (thousands) 1,363,855 1,248,333 9.3 Available seat miles (ASMs) (thousands) 1,575,899 1,441,801 9.3 Load factor 86.5% 86.6% (0.1) Operating revenue per ASM (cents) 12.31 11.24 9.5 Operating expense per ASM (CASM) (cents) 11.03 9.79 12.7 Fuel expense per ASM (cents) 5.13 4.27 20.1 Operating CASM, excluding fuel (cents) 5.89 5.52 6.7 Operating expense per passenger $116.08 $103.52 12.1 Fuel expense per passenger $54.04 $45.16 19.7 Operating expense per passenger, excluding fuel $62.04 $58.36 6.3 Departures 12,166 11,161 9.0 Block hours 27,998 26,129 7.2 Average stage length (miles) 853 867 (1.6) Average number of operating aircraft during period 54.6 51.3 6.4 Total aircraft in service at period end 57 52 9.6 Average departures per aircraft per day 2.4 2.4 -- Average block hours per aircraft per day 5.6 5.5 1.8 Full-time equivalent employees at period end 1,595 1,614 (1.2) Fuel gallons consumed (thousands) 26,230 24,544 6.9 Average fuel cost per gallon $3.08 $2.51 22.7        Scheduled service statistics       Passengers 1,392,092 1,295,703 7.4 Revenue passenger miles (RPMs) (thousands) 1,283,218 1,190,960 7.7 Available seat miles (ASMs) (thousands) 1,431,430 1,325,364 8.0 Load factor 89.6% 89.9% (0.3) Departures 10,360 9,774 6.0 Average passengers per departure 134 133 0.8 Block hours 24,961 23,676 5.4 Yield (cents) 9.94 8.88 11.9 Scheduled service revenue per ASM (PRASM) (cents) 8.91 7.98 11.7 Total ancillary revenue per ASM (cents) 3.54 3.45 2.6 Total scheduled service revenue per ASM (TRASM) (cents) 12.45 11.42 9.0 Average fare - scheduled service $91.66 $81.62 12.3 Average fare - ancillary air-related charges $31.51 $30.96 1.8 Average fare - ancillary third party products $4.88 $4.28 14.0 Average fare - total $128.05 $116.86 9.6 Average stage length (miles) 904 904 -- Fuel gallons consumed (thousands) 23,517 22,349 5.2 Average fuel cost per gallon $3.29 $2.61 26.1 Percent of sales through website during period 89.1% 89.9% (0.8)   * except load factor and percent of sales through website, which is percentage point change  Allegiant Travel CompanyConsolidated Statements of IncomeYears Ended December 31, 2011 and 2010(in thousands, except per share amounts)(Unaudited)   Years ended December 31,Percent 20112010change OPERATING REVENUE:       Scheduled service revenue $514,984 $427,825 20.4 Ancillary revenue:       Air-related charges 180,078 169,640 6.2 Third party products 29,916 24,366 22.8 Total ancillary revenue 209,994 194,006 8.2         Fixed fee contract revenue 43,690 40,576 7.7 Other revenue 10,449 1,234 746.8 Total operating revenue 779,117 663,641 17.4         OPERATING EXPENSES:       Aircraft fuel 330,657 243,671 35.7 Salary and benefits 119,856 108,000 11.0 Station operations 66,709 62,620 6.5 Maintenance and repairs 81,228 60,579 34.1 Sales and marketing 19,905 17,062 16.7 Aircraft lease rentals 1,101 1,721 (36.0) Depreciation and amortization 41,975 34,965 20.0 Other 32,242 30,367 6.2 Total operating expenses 693,673 558,985 24.1         OPERATING INCOME 85,444 104,656 (18.4) As a percent of total operating revenue 11.0% 15.8%   OTHER (INCOME) EXPENSE:       (Earnings) loss from unconsolidated affiliates, net (9) (14) (35.7) Interest income (1,236) (1,184) 4.4 Interest expense 7,175 2,522 184.5 Total other (income) expense 5,930 1,324 347.9         INCOME BEFORE INCOME TAXES 79,514 103,332 (23.0) As a percent of total operating revenue 10.2% 15.6%           PROVISION FOR INCOME TAXES 30,116 37,630 (20.0)         NET INCOME $49,398 $65,702 (24.8) As a percent of total operating revenue 6.3% 9.9%           Earnings per share to common stockholders (1):       Basic $2.59 $3.36 (22.9) Diluted $2.57 $3.32 (22.6)         Weighted average shares outstanding used in computing earnings per share to common stockholders (1):       Basic 18,935 19,407 (2.4) Diluted 19,125 19,658 (2.7)         (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 StatisticsYears Ended December 31, 2011 and 2010(Unaudited)   Years ended December 31,Percent 20112010change* OPERATING STATISTICS      Total system statistics       Passengers 6,175,808 5,903,184 4.6 Revenue passenger miles (RPMs) (thousands) 5,640,577 5,466,237 3.2 Available seat miles (ASMs) (thousands) 6,364,243 6,246,544 1.9 Load factor 88.6% 87.5% 1.1 Operating revenue per ASM (cents) 12.24 10.62 15.3 Operating expense per ASM (CASM) (cents) 10.90 8.95 21.8 Fuel expense per ASM (cents) 5.20 3.90 33.3 Operating CASM, excluding fuel (cents) 5.70 5.05 12.9 Operating expense per passenger $112.32 $94.69 18.6 Fuel expense per passenger $53.54 $41.28 29.7 Operating expense per passenger, excluding fuel $58.78 $53.41 10.1 Departures 49,360 47,986 2.9 Block hours 113,691 111,739 1.7 Average stage length (miles) 858 874 (1.8) Average number of operating aircraft during period 52.2 49.0 6.5 Total aircraft in service at period end 57 52 9.6 Average departures per aircraft per day 2.6 2.7 (3.7) Average block hours per aircraft per day 6.0 6.2 (3.2) Full-time equivalent employees at period end 1,595 1,614 (1.2) Fuel gallons consumed (thousands) 107,616 106,093 1.4 Average fuel cost per gallon $3.07 $2.30 33.5        Scheduled service statistics       Passengers 5,776,462 5,609,852 3.0 Revenue passenger miles (RPMs) (thousands) 5,314,976 5,211,663 2.0 Available seat miles (ASMs) (thousands) 5,797,753 5,742,014 1.0 Load factor 91.7% 90.8% 0.9 Departures 42,586 41,995 1.4 Average passengers per departure 136 134 1.5 Block hours 101,980 101,242 0.7 Yield (cents) 9.69 8.21 18.0 Scheduled service revenue per ASM (PRASM) (cents) 8.88 7.45 19.2 Total ancillary revenue per ASM (cents) 3.62 3.38 7.1 Total scheduled service revenue per ASM (TRASM) (cents) 12.50 10.83 15.4 Average fare - scheduled service $89.15 $76.26 16.9 Average fare - ancillary air-related charges $31.18 $30.25 3.1 Average fare - ancillary third party products $5.18 $4.34 19.4 Average fare - total $125.51 $110.85 13.2 Average stage length (miles) 901 912 (1.2) Fuel gallons consumed (thousands) 96,999 96,153 0.9 Average fuel cost per gallon $3.30 $2.43 35.8 Percent of sales through website during period 88.8% 88.8% --   * except load factor and percent of sales through website, which is percentage point changeAllegiant Travel CompanyNon-GAAP PresentationsQuarters and Years Ended December 31, 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 and travel industry. The reconciliations to GAAP measures follow. Three months ended December 31, Percent(in thousands)20112010Change Net income $10,810 $12,381 (12.7) Plus (minus)       Interest income (236) (188) 25.5 Interest expense 1,889 522 261.9 Provision for income taxes 7,628 8,152 (6.4) Depreciation and amortization 11,253 9,144 23.1EBITDA$31,344$30,0114.4       Years ended December 31,Percent(in thousands)20112010change Net income $49,398 $65,702 (24.8) Plus (minus)       Interest income (1,236) (1,184) 4.4 Interest expense 7,175 2,522 184.5 Provision for income taxes 30,116 37,630 (20.0) Depreciation and amortization 41,975 34,965 20.0EBITDA$127,428$139,635(8.7)CONTACT: Media Inquiries: Brian Davis mediarelations@allegiantair.com Investor Inquiries: Chris Allen ir@allegiantair.com