Allegiant Travel Company Third Quarter 2014 Financial Results

47th Consecutive Profitable Quarter

Third Quarter Fully Diluted Earnings Per Share of $0.80

LAS VEGAS, Oct. 22, 2014 (GLOBE NEWSWIRE) -- Allegiant Travel Company (Nasdaq:ALGT) today reported the following financial results for the third quarter 2014, as well as comparisons to prior year equivalents:

"We are very proud to report our 47th consecutive profitable quarter," stated Maurice J. Gallagher, Jr., Chairman and CEO of Allegiant Travel Company. "During this quarter we saw the departure of Andrew Levy, our President and COO. Andrew will be missed.  He has left the company in great shape. His legacy includes building a solid, capable management team which ensures the company will maintain its strong performance into the future. In addition, we have also welcomed back Kris Bauer as the airline's Senior Vice President of Operations and COO while we conduct our search for a replacement. Earlier this week, our Board of Directors approved an increase to our share repurchase authority to $100 million from its current level of $7.4 million. We continue to see strength in the business model and are demonstrating that confidence by actively returning cash to shareholders. Lastly, I want to thank all of our Team Members for their continued efforts during the past quarter."

Notable company highlights

• Repurchased 456,296 shares during the quarter, which brings the total to 1,199,740 shares for the first nine months of 2014. Since the inception of the share repurchase program, the company has repurchased 4,692,385 shares for a total of $316.3 million through the third quarter 2014
• Purchased two A319s in August off operating lease
• Added three new destinations to Cincinnati. Cincinnati has become the fastest growing origination city in the company's history
• In-service Airbus fleet accounted for over 21 percent of total ASM production in the quarter. In the quarter the company operated ten Airbus aircraft which is 14 percent of the total fleet 

Third quarter 2014 revenue performance

• East Coast TRASM declined 1.4 percent, however capacity in these markets grew 27.3 percent. Flying on the East Coast accounted for 40 percent of entire network versus 36 percent a year ago
• Hawaii TRASM grew 12.7 percent versus the same period a year ago
• Average fare - ancillary air-related charges increased 2.1 percent, as we implemented a fee to print a boarding pass at the ticket counter in September 2014, and also due to continued strength in existing ancillary categories such as assigned seat fees, trip flex and priority boarding

Third party products performance

• Scheduled system capacity growth in markets outside of Las Vegas diluted overall average hotel net revenue per passenger. In addition the Company's previous pre-purchase agreement for discounted rooms concluded in the third quarter 2013 making for a difficult comp year over year. The Company entered into the current pre-purchase room agreement with the same gaming company late in the fourth quarter 2013
• Car rental net revenue continues to improve based on recently launched technology initiatives and the network growth in Florida markets

Third quarter 2014 cost performance

• Total operating expense per ASM (CASM) increased 6.0 percent year over year
• CASM and CASM ex fuel were impacted by approximately $7 million of nonrecurring expenses due to the immediate vesting of all unvested equity incentive options and restricted stock triggered by the departure of Andrew Levy
• Fuel expense per ASM decreased by 4.9 percent due to a combination of a 2.2 percent decrease in average cost per gallon and improved fuel efficiency. Our fuel efficiency metrics continued to improve as gallons per passenger declined 4.1 percent and ASMs per gallon increased by 2.8 percent versus the same period last year
• Salary and benefits expense per ASM increased 22.3 percent versus last year driven by a 15.6 percent increase in full time equivalents (FTEs) and one-time expenses tied to the departure of Andrew Levy. Excluding these one-time expenses, salary and benefits expense per ASM would have increased 5.2 percent. This line item is still being pressured by crew training constraints that have negatively impacted our crew productivity and overall growth
• Sales and marketing expense increased by $3.3 million from the prior year due to higher transaction costs driven by a 12.4 percent increase in scheduled service revenue, and a slight change in credit/debit card mix. Advertising expenses related to a national ad campaign and the production costs related to the completion of the company's "Game Plane" game show contributed $1.5 million during the quarter. In the third quarter of 2014, the company spent $.84 per scheduled passenger in advertising versus $0.32 per passenger in the prior year
• Depreciation and amortization expense increased 29.6 percent due to an 11.7 percent increase in average aircraft and depreciation related to twelve owned A319 aircraft currently on lease to a European carrier. Excluding the twelve A319s, which are non ASM producing aircraft, depreciation expense per ASM would have decreased 1.7 percent. The company announced on June 13, 2014 that it had purchased the twelve A319s and it will receive lease revenue of approximately $30 million a year from these aircraft through 2018
• Other operating expense per ASM increased 11.7 percent as the company moved flight crews to support seasonal bases in Myrtle Beach and Los Angeles and continues to use outside support for ongoing IT projects

Fourth quarter 2014 cost trends

• CASM ex fuel is expected to increase between 9 and 11 percent
• In comparison to last year, CASM and CASM ex fuel are both impacted by depreciation expense on twelve aircraft leased out to a European operator not producing ASMs for Allegiant. In addition, we expect higher maintenance expenses due to a larger number of planned maintenance events versus the same period last year. Full year 2014 maintenance expense per in service aircraft per month is expected to be between $105 thousand and $110 thousand 

Balance sheet highlights

• Repurchased 456,296 number of shares of common stock for $55.8 million in the third quarter. The company has increased its share repurchase authority to $100 million
• Purchased 82,000 square feet of additional space adjacent to our headquarters for approximately $10 million in October 2014

At this time, Allegiant Travel Company provides the following guidance to investors, subject to revision.

Allegiant, Travel is our deal.®

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 has been named one of America's 100 Best Small Companies by Forbes Magazine for four consecutive years. 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 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, 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, volatility of fuel costs, labor issues, the effect of economic conditions on leisure travel, debt covenants, terrorist attacks, risks inherent to airlines, demand for air services to our leisure destinations from the markets served by us, our dependence on our leisure destination markets, our competitive environment, an accident involving or problems with our aircraft, our reliance on our automated systems, 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, 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 Company
Non-GAAP Presentations
Three and Nine Months Ended September 30, 2014 and 2013
(Unaudited)

 "EBITDA" represents earnings before interest expense, income taxes, depreciation and amortization. EBITDAR is EBITDA less aircraft lease rentals expense. Neither EBITDA nor EBITDAR is 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 and EBITDAR are included as supplemental disclosures because we believe they are useful indicators of our operating performance. Further, both EBITDA and EBITDAR are well-recognized performance measurements that are frequently used by securities analysts, investors and other interested parties in comparing the operating performance of companies. We believe EBITDA and EBITDAR are useful in evaluating our operating performance compared to our competitors because their calculation generally eliminates the effects of financing and income taxes and the accounting effects of capital spending and acquisitions and lease versus purchase decisions, which items may vary between periods and for different companies for reasons unrelated to overall operating performance. The following represents the reconciliation of EBITDA and EBITDAR 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 measures EBITDA and EBITDAR 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 measures to the most comparable GAAP measure.  Our utilization of non-GAAP measurements 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. Neither EBITDA nor EBITDAR is a GAAP measurement and our use of these measures may not be comparable to similarly titled measures employed by other companies in the airline and travel industry. The reconciliations to GAAP net income follow.