Allegiant Travel Company Second Quarter 2017 Financial Results

LAS VEGAS, July 26, 2017 (GLOBE NEWSWIRE) --  Allegiant Travel Company (NASDAQ:ALGT) today reported the following financial results for the second quarter 2017, as well as comparisons to the prior year:

 * - see appendix for calculation, represents twelve months ended June 30

“I am pleased to announce we had our 58^th consecutive profitable quarter," stated Maurice J. Gallagher Jr., chairman and CEO of Allegiant Travel Company. "I am also pleased with our 21.3 percent operating margin during this transition time for the company. We are well into the wind down of our MD-80 fleet. We have taken delivery of our first four new 186 seat A320 aircraft from Airbus as of July 26th. We expect to place into service another ten Airbus aircraft including six more new A320s throughout the remainder of 2017. We also signed an agreement to acquire an additional 13 used A320s which we announced in June 2017. This was the last transaction needed to solidify the plan to retire all the MD-80s by the end of 2019.  Thank you to all of our team members for another successful quarter."

 Notable highlights        

• Airbus growth - In June, announced the lease arrangement of 13 used A320 aircraft to be delivered in 2017 and 2018. Will take the company to 92 committed Airbus either in service or for future delivery
• Network growth - As of June 30, 2017 the company is operating 382 routes versus 342 at the same time last year
• New routes - Announced 28 new routes expected to begin in the third and fourth quarters of 2017
  • Includes new cities of Milwaukee, Wisconsin; Norfolk, Virginia; and Gulfport, Mississippi
• Shareholder returns - $92 million was returned through a combination of the recurring dividend paid in June 2017 and share repurchases during the quarter. The company:
  • Will pay a dividend of $0.70 per share on September 5, 2017 to shareholders of record as of August 18, 2017
  • Returned $84 million to shareholders through the repurchase of 589,000 open market shares in the quarter. This was the highest dollar amount spent in share repurchases for one quarter in the history of the company
  • The Board of Directors increased the share repurchase authorization to $100 million

 Second quarter 2017 revenue

• TRASM results - Second quarter TRASM increased 3.1 percent
  • Impact of Easter shift into April this year benefited the quarter contributing approximately 1.5 percentage points of TRASM
• New markets (markets operating less than one year) were approximately thirteen percent of ASMs for the second quarter which is similar to last year

 Third quarter 2017 revenue trends

• TRASM guidance - Third quarter TRASM is expected to be between negative .5 and positive 1.5 percent versus the third quarter last year
  • Increased MD-80 spares, which limits the ability to grow peak period flying, is expected to cost the third quarter one percentage point of TRASM
  • Off peak flying is expected to be almost 26 percent of ASMs for the third quarter, versus approximately 22 percent last year

Second quarter cost trends

• Second quarter CASM ex fuel increased 13.2 percent versus the same period last year driven by:
  • New pilot agreement - Added six percentage points
  • Elimination of the credit card surcharge - Added four percentage points
      • In January 2017, we discontinued our credit card surcharge, which had previously been applied as a reduction to sales and marketing expense
  • Irregular operations - Added two percentage points 

Third quarter 2017 cost trends

• Third quarter 2017 CASM ex fuel is expected to increase between sixteen and eighteen percent versus the same period last year, driven by:
  • New pilot agreement - Expected to add three percentage points
  • Incremental depreciation on Airbus aircraft - Expected to add three percentage points
  • Elimination of credit card surcharge - Expected to add three percentage points
  • Transition costs - Cost related to the fleet transition such as reduced ASMs through less utilization of MD-80s and other operational inefficiencies driven by the move to an all Airbus fleet is expected to add five percentage points 

Full year 2017 cost trends

• Full year 2017 CASM ex fuel is expected to remain up between ten and twelve percent, consistent with prior guidance
• Maintenance and repairs expense is expected to remain between $100 and $110 thousand per in-service aircraft per month for full year 2017, consistent with prior guidance
• Total ownership expense per aircraft per month - Full year 2017 ownership expense per in-service aircraft per month is expected to remain between $125 and $135 thousand, consistent with prior guidance 

Balance sheet activity and full year 2017 trends

• Full year CAPEX guidance (Excluding Airbus deferred heavy maintenance) is expected to be $525 million, consistent with prior guidance
• Raised $113 million in debt proceeds during the second quarter
  • Currently have five unencumbered Airbus aircraft

 * - CASM ex fuel – cost per available seat mile excluding fuel expense
** - Not included in capital expenditure total
*** - Not included in capital expenditure total, present value of leases over lease term

Aircraft listed in table above include only in-service aircraft, planned retirements and future aircraft under contract (subject to change)

Allegiant Travel Company will host a conference call with analysts at 4:30 p.m. ET Wednesday, July 26, 2017 to discuss its second quarter 2017 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.

Allegiant^®

Las Vegas-based Allegiant (NASDAQ:ALGT) is focused on linking travelers in small cities to world-class leisure destinations. The airline offers industry-low fares on an all-jet fleet while also offering other travel-related products such as hotel rooms and rental cars. All can be purchased only through the company website, Allegiant.com. Beginning with one aircraft and one route in 1999, the company has grown to more than 85 aircraft and 350 routes across the country with base airfares less than half the cost of the average domestic roundtrip ticket. For downloadable press kit, including photos, visit: http://gofly.us/iiFa303wrtF.

Under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, statements in this press release that are not historical facts are forward-looking statements. These forward-looking statements are only estimates or predictions based on our management's beliefs and assumptions and on information currently available to our management. Forward-looking statements include our statements regarding future unit revenue, future operating expense, ASM growth, departure growth, fixed-fee and other revenues, expected capital expenditures, number of contracted aircraft to be placed in service in the future, timing of aircraft retirements, as well as other information concerning future results of operations, business strategies, financing plans, industry environment and potential growth opportunities. 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, an accident involving, or problems with, our aircraft, our reliance on our automated systems, limitation on growth as we transition to a single fleet type, risk of breach of security of personal data, volatility of fuel costs, labor issues and costs, the ability to obtain regulatory approvals as needed , the effect of economic conditions on leisure travel, debt covenants and balances, the ability to finance aircraft under contract, terrorist attacks, risks inherent to airlines, our competitive environment, our reliance on third parties who provide facilities or services to us, the possible loss of key personnel, economic and other conditions in markets in which we operate, 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: 

NM - Not meaningful
(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 the 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.

* Except load factor and percent of sales through website, which is percentage point change.
** Various components of this measurement do not have a direct correlation to ASMs. These figures are provided on a per ASM basis to facilitate comparison with airlines reporting revenues on a per ASM basis.
*** Includes effect of $8.3 million fuel tax refunds in the second quarter of 2016.

NM - Not meaningful
(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. 

* Except load factor and percent of sales through website, which is percentage point change.
** Various components of this measurement do not have a direct correlation to ASMs. These figures are provided on a per ASM basis to facilitate comparison with airlines reporting revenues on a per ASM basis.
*** Includes effect of $8.3 million fuel tax refunds in the second quarter of 2016.

Summary Balance Sheet 

Summary Cash Flow 

* Includes aircraft pre-delivery deposits.