SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedSeptember 30, 20202021
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from               to            
Commission File Number 001-33166
algt-20210930_g1.jpg
Allegiant Travel Company
(Exact Name of Registrant as Specified in Its Charter)
Nevada20-4745737
(State or Other Jurisdiction of Incorporation or Organization)(IRS Employer Identification No.)
1201 North Town Center Drive
Las Vegas,Nevada89144
(Address of Principal Executive Offices)(Zip Code)
Registrant’s Telephone Number, Including Area Code: (702) 851-7300

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common stock, par value $.001$0.001ALGTNASDAQ Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ☐  No ☒

As of October 30, 2020,25, 2021, the registrant had 16,389,48118,087,726 shares of common stock, $.001$0.001 par value per share, outstanding.


ALLEGIANT TRAVEL COMPANY
FORM 10-Q
TABLE OF CONTENTS
PART I.FINANCIAL INFORMATION 
  
ITEM 1.
43
  
ITEM 2.
2120
  
ITEM 3.
3135
  
ITEM 4.
3236
  
PART II.OTHER INFORMATION
  
ITEM 1.
3237
  
ITEM 1A.
3238
  
ITEM 2.
3239
ITEM 3.
3240
ITEM 4.
3241
ITEM 5.
3242
  
ITEM 6.
3343
3444
2

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements
ALLEGIANT TRAVEL COMPANY
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, 2020December 31, 2019September 30, 2021December 31, 2020
(unaudited)(unaudited)
CURRENT ASSETSCURRENT ASSETS CURRENT ASSETS 
Cash and cash equivalentsCash and cash equivalents$268,042 $121,888 Cash and cash equivalents$193,627 $152,764 
Restricted cashRestricted cash17,426 14,897 Restricted cash42,337 17,555 
Short-term investmentsShort-term investments441,764 335,928 Short-term investments877,344 532,477 
Accounts receivableAccounts receivable166,924 25,516 Accounts receivable147,407 192,215 
Expendable parts, supplies and fuel, netExpendable parts, supplies and fuel, net26,305 28,375 Expendable parts, supplies and fuel, net28,424 24,006 
Prepaid expenses and other current assetsPrepaid expenses and other current assets30,742 35,617 Prepaid expenses and other current assets31,619 24,616 
TOTAL CURRENT ASSETSTOTAL CURRENT ASSETS951,203 562,221 TOTAL CURRENT ASSETS1,320,758 943,633 
Property and equipment, netProperty and equipment, net2,004,829 2,236,808 Property and equipment, net2,147,988 2,050,311 
Long-term investments0 15,542 
Deferred major maintenance, netDeferred major maintenance, net127,457 129,654 Deferred major maintenance, net146,563 127,463 
Operating lease right-of-use assets, netOperating lease right-of-use assets, net114,573 22,081 Operating lease right-of-use assets, net124,297 115,911 
Deposits and other assetsDeposits and other assets25,031 44,497 Deposits and other assets27,147 21,607 
TOTAL ASSETS:TOTAL ASSETS:$3,223,093 $3,010,803 TOTAL ASSETS:$3,766,753 $3,258,925 
CURRENT LIABILITIESCURRENT LIABILITIESCURRENT LIABILITIES
Accounts payableAccounts payable$64,674 $27,667 Accounts payable$35,386 $34,197 
Accrued liabilitiesAccrued liabilities130,665 159,031 Accrued liabilities148,634 116,093 
Current operating lease liabilitiesCurrent operating lease liabilities13,814 2,662 Current operating lease liabilities17,642 14,313 
Air traffic liabilityAir traffic liability334,061 249,950 Air traffic liability351,522 307,508 
Current maturities of long-term debt and finance lease obligations, net of related costsCurrent maturities of long-term debt and finance lease obligations, net of related costs233,680 173,274 Current maturities of long-term debt and finance lease obligations, net of related costs139,590 217,234 
TOTAL CURRENT LIABILITIESTOTAL CURRENT LIABILITIES776,894 612,584 TOTAL CURRENT LIABILITIES692,774 689,345 
Long-term debt and finance lease obligations, net of current maturities and related costsLong-term debt and finance lease obligations, net of current maturities and related costs1,316,171 1,248,579 Long-term debt and finance lease obligations, net of current maturities and related costs1,434,614 1,441,777 
Deferred income taxesDeferred income taxes292,661 232,520 Deferred income taxes310,952 301,763 
Noncurrent operating lease liabilitiesNoncurrent operating lease liabilities101,864 21,290 Noncurrent operating lease liabilities110,322 102,289 
Other noncurrent liabilitiesOther noncurrent liabilities23,805 12,279 Other noncurrent liabilities27,027 24,388 
TOTAL LIABILITIES:TOTAL LIABILITIES:2,511,395 2,127,252 TOTAL LIABILITIES:2,575,689 2,559,562 
SHAREHOLDERS' EQUITYSHAREHOLDERS' EQUITYSHAREHOLDERS' EQUITY
Common stock, par value $.00123 23 
Common stock, par value $0.001Common stock, par value $0.00125 23 
Treasury sharesTreasury shares(648,118)(617,579)Treasury shares(642,177)(646,008)
Additional paid in capitalAdditional paid in capital315,150 289,933 Additional paid in capital675,795 329,753 
Accumulated other comprehensive income, net183 98 
Accumulated other comprehensive income (loss), netAccumulated other comprehensive income (loss), net649 (27)
Retained earningsRetained earnings1,044,460 1,211,076 Retained earnings1,156,772 1,015,622 
TOTAL EQUITY:TOTAL EQUITY:711,698 883,551 TOTAL EQUITY:1,191,064 699,363 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY:TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY:$3,223,093 $3,010,803 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY:$3,766,753 $3,258,925 
 
The accompanying notes are an integral part of these consolidated financial statements.
3

ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
 (unaudited)
Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019 2021202020212020
OPERATING REVENUES:OPERATING REVENUES:OPERATING REVENUES:
PassengerPassenger$181,916 $391,222 $677,347 $1,265,978 Passenger$423,796 $181,916 $1,124,237 $677,347 
Third party productsThird party products11,337 18,207 35,756 53,557 Third party products24,541 11,337 61,164 35,756 
Fixed fee contractsFixed fee contracts5,284 19,797 17,440 42,859 Fixed fee contracts11,117��5,284 23,943 17,440 
OtherOther2,447 7,283 12,969 17,498 Other15 2,447 1,682 12,969 
Total operating revenues Total operating revenues200,984 436,509 743,512 1,379,892  Total operating revenues459,469 200,984 1,211,026 743,512 
OPERATING EXPENSES:OPERATING EXPENSES:OPERATING EXPENSES:
Salary and benefitsSalary and benefits95,829 107,586 303,264 340,589 Salary and benefits125,799 95,829 365,655 303,264 
Aircraft fuelAircraft fuel52,540 104,583 168,711 324,253 Aircraft fuel118,370 52,540 310,674 168,711 
Station operationsStation operations70,943 39,954 171,246 108,359 
Depreciation and amortizationDepreciation and amortization45,291 39,436 132,285 114,112 Depreciation and amortization46,399 45,291 134,095 132,285 
Station operations39,954 43,522 108,359 128,357 
Maintenance and repairsMaintenance and repairs14,038 24,768 48,866 68,470 Maintenance and repairs30,451 14,038 76,419 48,866 
Sales and marketingSales and marketing7,967 17,591 35,331 59,057 Sales and marketing22,047 7,967 51,288 35,331 
Aircraft lease rentalAircraft lease rental3,015 0 5,404 0 Aircraft lease rental5,670 3,015 15,507 5,404 
OtherOther19,755 26,907 70,225 73,756 Other22,379 19,755 55,655 70,225 
CARES Act grant recognition(77,909)0 (152,448)0 
Payroll Support Programs grant recognitionPayroll Support Programs grant recognition(49,210)(77,909)(202,181)(152,448)
Special chargesSpecial charges33,585 0 280,852 0 Special charges332 33,585 2,924 280,852 
Total operating expenses Total operating expenses234,065 364,393 1,000,849 1,108,594  Total operating expenses393,180 234,065 981,282 1,000,849 
OPERATING INCOME (LOSS)OPERATING INCOME (LOSS)(33,081)72,116 (257,337)271,298 OPERATING INCOME (LOSS)66,289 (33,081)229,744 (257,337)
OTHER (INCOME) EXPENSES:OTHER (INCOME) EXPENSES:OTHER (INCOME) EXPENSES:
Interest expenseInterest expense11,943 19,506 44,149 58,531 Interest expense16,595 11,943 50,103 44,149 
Capitalized interestCapitalized interest0 (903)(4,067)(3,444)Capitalized interest(401)— (401)(4,067)
Interest incomeInterest income(868)(3,335)(4,596)(10,038)Interest income(375)(868)(1,338)(4,596)
Loss on debt extinguishmentLoss on debt extinguishment0 0 1,222 3,677 Loss on debt extinguishment— — 71 1,222 
Special chargesSpecial charges0 0 26,632 0 Special charges— — — 26,632 
Other, netOther, net552 (57)1,173 (41)Other, net239 552 (164)1,173 
Total other expenses Total other expenses11,627 15,211 64,513 48,685  Total other expenses16,058 11,627 48,271 64,513 
INCOME (LOSS) BEFORE INCOME TAXESINCOME (LOSS) BEFORE INCOME TAXES(44,708)56,905 (321,850)222,613 INCOME (LOSS) BEFORE INCOME TAXES50,231 (44,708)181,473 (321,850)
INCOME TAX PROVISION (BENEFIT)INCOME TAX PROVISION (BENEFIT)(15,565)12,976 (166,595)51,017 INCOME TAX PROVISION (BENEFIT)10,977 (15,565)40,323 (166,595)
NET INCOME (LOSS)NET INCOME (LOSS)$(29,143)$43,929 $(155,255)$171,596 NET INCOME (LOSS)$39,254 $(29,143)$141,150 $(155,255)
Earnings (loss) per share to common shareholders:Earnings (loss) per share to common shareholders:Earnings (loss) per share to common shareholders:
BasicBasic$(1.82)$2.70 $(9.75)$10.55 Basic$2.18 $(1.82)$8.18 $(9.75)
DilutedDiluted$(1.82)$2.70 $(9.75)$10.54 Diluted$2.18 $(1.82)$8.18 $(9.75)
Shares used for computation:Shares used for computation:Shares used for computation:
BasicBasic16,006 16,037 15,953 16,037 Basic17,766 16,006 17,005 15,953 
DilutedDiluted16,006 16,039 15,953 16,045 Diluted17,767 16,006 17,015 15,953 
Cash dividends declared per share:Cash dividends declared per share:$0 $0.70 $0.70 $2.10 Cash dividends declared per share:$— $— $— $0.70 

The accompanying notes are an integral part of these consolidated financial statements.
4

ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
 
Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019 2021202020212020
NET INCOME (LOSS)NET INCOME (LOSS)$(29,143)$43,929 $(155,255)$171,596 NET INCOME (LOSS)$39,254 $(29,143)$141,150 $(155,255)
Other comprehensive income (loss):Other comprehensive income (loss):  Other comprehensive income (loss):  
Change in available for sale securities, net of taxChange in available for sale securities, net of tax(292)16 32 669 Change in available for sale securities, net of tax774 (292)676 32 
Foreign currency translation adjustmentsForeign currency translation adjustments51 17 53 21 Foreign currency translation adjustments— 51 — 53 
Total other comprehensive income(241)33 85 690 
Total other comprehensive income (loss)Total other comprehensive income (loss)774 (241)676 85 
TOTAL COMPREHENSIVE INCOME (LOSS)TOTAL COMPREHENSIVE INCOME (LOSS)$(29,384)$43,962 $(155,170)$172,286 TOTAL COMPREHENSIVE INCOME (LOSS)$40,028 $(29,384)$141,826 $(155,170)

The accompanying notes are an integral part of these consolidated financial statements.
5

ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in thousands)
(unaudited)
Three Months Ended September 30, 2020
Common stock outstandingPar valueAdditional paid-in capitalAccumulated other comprehensive income (loss)Retained earningsTreasury sharesTotal shareholders' equity
Balance at June 30, 202016,240 $23 $310,628 $424 $1,073,603 $(648,118)$736,560 
Share-based compensation58 — 4,099 — — — 4,099 
Other comprehensive income (loss)— — — (241)— — (241)
CARES Act warrant issuance— — 423 — — — 423 
Net loss— — — — (29,143)— (29,143)
Balance at September 30, 202016,298 $23 $315,150 $183 $1,044,460 $(648,118)$711,698 
Three Months Ended September 30, 2021
Common stock outstandingPar valueAdditional paid-in capitalAccumulated other comprehensive income (loss)Retained earningsTreasury sharesTotal shareholders' equity
Balance at June 30, 202117,986 $25 $671,893 $(125)$1,117,518 $(642,177)$1,147,134 
Share-based compensation59 — 3,902 — — — 3,902 
Other comprehensive income— — — 774 — — 774 
Net income— — — — 39,254 — 39,254 
Balance at September 30, 202118,045 $25 $675,795 $649 $1,156,772 $(642,177)$1,191,064 
Nine Months Ended September 30, 2020
Common stock outstandingPar valueAdditional paid-in capitalAccumulated other comprehensive incomeRetained earningsTreasury sharesTotal shareholders' equity
Balance at December 31, 201916,303 $23 $289,933 $98 $1,211,076 $(617,579)$883,551 
Share-based compensation171 — 23,842 — — — 23,842 
Shares repurchased by the Company and held as treasury shares(217)— — — — (33,773)(33,773)
Stock issued under employee stock purchase plan41 — — — — 3,234 3,234 
Cash dividends declared, $0.70 per share— — — — (11,361)— (11,361)
Other comprehensive income (loss)— — — 85 — — 85 
CARES Act warrant issuance— — 1,375 — — — 1,375 
Net loss— — — — (155,255)— (155,255)
Balance at September 30, 202016,298 $23 $315,150 $183 $1,044,460 $(648,118)$711,698 

Nine Months Ended September 30, 2021
Common stock outstandingPar valueAdditional paid-in capitalAccumulated other comprehensive income (loss)Retained earningsTreasury sharesTotal shareholders' equity
Balance at December 31, 202016,405 $23 $329,753 $(27)0$1,015,622 $(646,008)$699,363 
Share-based compensation71 — 10,800 — — — 10,800 
Issuance of common stock, net of forfeitures1,553 2 335,137 — — — 335,139 
Stock issued under employee stock purchase plan16 — — — — 3,831 3,831 
Other comprehensive income— — — 676 — — 676 
Payroll Support Programs warrant issuance— — 105 — — — 105 
Net income— — — — 141,150 — 141,150 
Balance at September 30, 202118,045 $25 $675,795 $649 $1,156,772 $(642,177)$1,191,064 


Three Months Ended September 30, 2020
Common stock outstandingPar valueAdditional paid-in capitalAccumulated other comprehensive income (loss)Retained earningsTreasury sharesTotal shareholders' equity
Balance at June 30, 202016,240 $23 $310,628 $424 $1,073,603 $(648,118)$736,560 
Share-based compensation58 — 4,099 — — — 4,099 
Other comprehensive loss— — — (241)— — (241)
Payroll Support Programs warrant issuance— — 423 — — — 423 
Net loss— — — — (29,143)— $(29,143)
Balance at September 30, 202016,298 $23 $315,150 $183 $1,044,460 $(648,118)$711,698 

6

Three Months Ended September 30, 2019
Common stock outstandingPar valueAdditional paid-in capitalAccumulated other comprehensive income (loss)Retained earningsTreasury sharesTotal shareholders' equity
Balance at June 30, 201916,305 $23 $280,783 $(4)$1,128,822 $(605,115)$804,509 
Share-based compensation— — 4,535 — — — 4,535 
Shares repurchased by the Company and held as treasury shares(110)— — — — (15,540)(15,540)
Cash dividends declared, $0.70 per share— — — — (11,409)— (11,409)
Other comprehensive income (loss)— — — 33 551 — 584 
Net income— — — — 43,929 — 43,929 
Balance at September 30, 201916,195 $23 $285,318 $29 $1,161,893 $(620,655)$826,608 
Nine Months Ended September 30, 2019
Common stock outstandingPar valueAdditional paid-in capitalAccumulated other comprehensive income (loss)Retained earningsTreasury sharesTotal shareholders' equity
Balance at December 31, 201816,183 $23 $270,935 $(661)$1,025,061 $(605,037)$690,321 
Share-based compensation124 — 14,383 — — — 14,383 
Shares repurchased by the Company and held as treasury shares(132)— — — — (18,549)(18,549)
Stock issued under employee stock purchase plan20 — — — — 2,931 2,931 
Cash dividends, $2.10 per share— — — — (34,214)— (34,214)
Other comprehensive income (loss)— — — 690 0 — 690 
Net income— — — — 171,596 — 171,596 
Cumulative effect of the New Lease Standard— — — — (550)— (550)
Balance at September 30, 201916,195 $23 $285,318 $29 $1,161,893 $(620,655)$826,608 

The accompanying notes are an integral part of these consolidated financial statements.
Nine Months Ended September 30, 2020
Common stock outstandingPar valueAdditional paid-in capitalAccumulated other comprehensive incomeRetained earningsTreasury sharesTotal shareholders' equity
Balance at December 31, 201916,303 $23 $289,933 $98 $1,211,076 $(617,579)$883,551 
Share-based compensation171 — 23,842 — — — 23,842 
Shares repurchased by the Company and held as treasury shares(217)— — — — (33,773)(33,773)
Stock issued under employee stock purchase plan41 — — — — 3,234 3,234 
Cash dividends, $0.70 per share— — — — (11,361)— (11,361)
Other comprehensive income— — — 85 — — 85 
Payroll Support Programs warrant issuance— — 1,375 — — — 1,375 
Net loss— — — — (155,255)— (155,255)
Balance at September 30, 202016,298 $23 $315,150 $183 $1,044,460 $(648,118)$711,698 
7

ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended September 30, Nine Months Ended September 30,
20202019 20212020
Cash flows from operating activities:Cash flows from operating activities:Cash flows from operating activities:
Net income (loss)Net income (loss)$(155,255)$171,596 Net income (loss)$141,150 $(155,255)
Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortizationDepreciation and amortization132,285 114,112 Depreciation and amortization134,095 132,285 
Special chargesSpecial charges279,114 0 Special charges2,924 279,114 
Other adjustmentsOther adjustments89,342 60,135 Other adjustments26,778 89,342 
Changes in certain assets and liabilities:Changes in certain assets and liabilities:Changes in certain assets and liabilities:
Air traffic liabilityAir traffic liability84,111 55,446 Air traffic liability44,014 84,111 
Other - netOther - net(152,872)(79,862)Other - net24,634 (152,872)
Net cash provided by operating activitiesNet cash provided by operating activities276,725 321,427 Net cash provided by operating activities373,595 276,725 
Cash flows from investing activities:Cash flows from investing activities:Cash flows from investing activities:
Purchase of investment securitiesPurchase of investment securities(511,667)(397,504)Purchase of investment securities(1,028,481)(511,667)
Proceeds from maturities of investment securitiesProceeds from maturities of investment securities421,658 413,038 Proceeds from maturities of investment securities679,588 421,658 
Purchase of property and equipmentPurchase of property and equipment(198,567)(350,187)Purchase of property and equipment(166,502)(198,567)
Proceeds from sale-leaseback transactionsProceeds from sale-leaseback transactions78,185 0 Proceeds from sale-leaseback transactions— 78,185 
Other investing activitiesOther investing activities1,247 10,647 Other investing activities2,062 1,247 
Net cash used in investing activitiesNet cash used in investing activities(209,144)(324,006)Net cash used in investing activities(513,333)(209,144)
Cash flows from financing activities:Cash flows from financing activities:Cash flows from financing activities:
Cash dividends paid to shareholdersCash dividends paid to shareholders(11,361)(34,214)Cash dividends paid to shareholders— (11,361)
Proceeds from the issuance of debt272,548 770,435 
Proceeds from the issuance of debt and finance lease obligationsProceeds from the issuance of debt and finance lease obligations106,657 272,548 
Repurchase of common stockRepurchase of common stock(33,773)(18,549)Repurchase of common stock— (33,773)
Principal payments on debt and finance lease obligationsPrincipal payments on debt and finance lease obligations(146,416)(670,148)Principal payments on debt and finance lease obligations(239,644)(146,416)
Debt issuance costsDebt issuance costs(4,505)(32,592)Debt issuance costs(705)(4,505)
Proceeds from issuance of common stockProceeds from issuance of common stock335,139 — 
Other financing activitiesOther financing activities4,609 325 Other financing activities3,936 4,609 
Net cash provided by financing activitiesNet cash provided by financing activities81,102 15,257 Net cash provided by financing activities205,383 81,102 
NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASHNET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH148,683 12,678 NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH65,645 148,683 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIODCASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD136,785 95,911 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD170,319 136,785 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIODCASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD$285,468 $108,589 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD$235,964 $285,468 
CASH PAYMENTS (RECEIPTS) FOR:CASH PAYMENTS (RECEIPTS) FOR:CASH PAYMENTS (RECEIPTS) FOR:
Interest paid, net of amount capitalizedInterest paid, net of amount capitalized$36,801 $53,089 Interest paid, net of amount capitalized$30,739 $36,801 
Income tax refunds(95,258)(2,227)
Income tax payments (refunds)Income tax payments (refunds)(12,762)(95,258)
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:
Right-of-use (ROU) assets acquiredRight-of-use (ROU) assets acquired$103,499 $2,213 Right-of-use (ROU) assets acquired$23,157 $103,499 
Flight equipment acquired under finance leasesFlight equipment acquired under finance leases40,826 — 
Purchases of property and equipment in accrued liabilitiesPurchases of property and equipment in accrued liabilities19,294 6,091 Purchases of property and equipment in accrued liabilities12,727 19,294 

The accompanying notes are an integral part of these consolidated financial statements.
8

ALLEGIANT TRAVEL COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

Note 1 — Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements include the accounts of Allegiant Travel Company (the “Company”) and its majority-owned operating subsidiaries. The Company's investments in unconsolidated affiliates, which are 50 percent or less owned, are accounted for under the equity or cost method, and are insignificant to the consolidated financial statements. All intercompany balances and transactions have been eliminated.

These unaudited consolidated financial statements reflect all normal recurring adjustments which management believes are necessary to present fairly the financial position, results of operations, and cash flows of the Company for the respective periods presented. Certain reclassifications have been made to prior year financial statements to conform to classifications used in the current year. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission for Form 10-Q. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company and notes thereto included in the annual report of the Company on Form 10-K for the year ended December 31, 20192020 and filed with the Securities and Exchange Commission.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates.

Recent Accounting Pronouncements

On June 16, 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments. The standard requires the use of an “expected loss” model on certain types of financial instruments. The standard also amends the impairment model for available-for-sale debt securities and requires estimated credit losses to be recorded as allowances instead of reductions to amortized cost of the securities. The Company adopted this accounting standard prospectively as of January 1, 2020, and it did not have a significant impact on its consolidated financial statements.

On December 18, 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes. The standard simplifies the accounting and disclosure requirements for income taxes by clarifying existing guidance to improve consistency in application of ASCAccounting Standards Codification ("ASC") 740. The standard also removes the requirement to calculate income tax expense for the stand-alone financial statements of wholly-owned subsidiaries. The standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020, with early adoption permitted in any interim period within that year. The Company plans to adoptadopted this accounting standard effectiveprospectively as of January 1, 2021.2021, and it did not have a significant impact on the Company's consolidated financial statements.
9

Note 2 — Impact of the COVID-19 Pandemic

The rapid spread of COVID-19 and the related government restrictions, social distancing measures, and consumer fears have impacted flight loads, resulted in unprecedented cancellations of bookings and substantially reduced demand for new bookings throughout the airline industry. Starting in March 2020, the Company and the airline industry experienced a severe reduction in air travel, whichtravel. Demand has continued.recovered to some extent in 2021, but load factors remain lower than pre-pandemic levels. Demand in the foreseeable future will continue to be affected by fluctuations in COVID-19 cases, variants, hospitalizations, deaths, treatment efficacy and the availability of a vaccine.vaccines. The Company is continuously reevaluating flight schedules and adjusting capacity based on demand trends.

The Coronavirus Aid, Relief and Economic SecurityOn December 27, 2020, the Consolidated Appropriations Act, 2021 (the "CARES Act""Payroll Support Program Extension") was enactedsigned into law. This Payroll Support Program Extension provides an additional $15.0 billion in March 2020, providing support forto the airline industry and other businesses and individuals.

industry. On April 20, 2020,January 15, 2021, the Company through its airline operating subsidiary Allegiant Air, LLC entered into a Payroll Support Program Extension Agreement (the “PSPA”“PSP2”) with the U.S. Department of the Treasury ("Treasury") for an award Allegiant Air would receive under the CARES Act. The total amount initially allocated to Allegiant Air under the PSP was $171.9 million, all of which wasand received by the end of July 2020. On September 30, 2020, the Company received an additional installment of $5.0 million for a total aggregate of $176.9$91.8 million under the PSPA.Payroll Support Program Extension. The proceeds of the awardfunds were used exclusively for wages, salaries and benefits during the second and third quarters 2020, in accordance with the agreement.benefits.

The $176.9In April 2021, the Company received $13.8 million received underin additional funds related to the PSPA duringPSP2 which included a loan of $1.7 million. In consideration for these additional funds, the second and third quartersCompany issued additional warrants ( the "PSP2 Warrants") to the Treasury to acquire 924 shares of 2020 includes direct grants,common stock at a $23.1 million loan, and warrants to purchase 27,681 sharesprice of $179.23 per share (based on the price of the Company's common stock as further discussed below.

9

In consideration for the grant, Allegiant Air issued to Treasury a low-interest rate, senior unsecured term promissory note (the “PSP Note”) which will mature 10 years after issuance. The principal amount of the PSP Note is $23.1 million. The PSP Note is guaranteed by the Company and is prepayable at any time at par (see Note 5).

Also in consideration for the grant, the Company issued warrants (the “PSP Warrants”) to Treasury to purchase 27,681 shares of common stock of the Company at a price of $83.33 per share (based on the closing price of the Company’s common stock on The Nasdaq Global Select Market on April 9,December 24, 2020). Warrants to purchase 19,700 shares (valued at $1.0 million) were issued in May and June 2020, and warrants for the remaining 7,981 shares (valued at $0.4 million) were issued in July and September 2020. The PSP Warrants expire five years after issuance, and will be exercisable either through net share settlement or cash, at the Company’s option. The PSP Warrants include customary anti-dilution provisions, do not have any voting rights and are freely transferable, with registration rights.

In connectionApril 2021, the Company through its airline operating subsidiary Allegiant Air, LLC entered into a Payroll Support Program 3 Agreement (the "PSP3") with the PSPA, the Company is required to comply with the relevant provisionsTreasury under section 7301 of the CARESAmerican Rescue Plan Act including those prohibiting the repurchase of common stock2021 and the paymentreceived a total of common stock dividends until$98.4 million. The funds were used exclusively for wages, salaries and benefits.

As of September 30, 2021, as well as those restricting the payment of certain executive compensation for periods through March 24, 2022.

Given the Company's efforts to conserve and raise liquidity and the Company's assumptions about the future impact of COVID-19 on travel demand, which could be materially different due to the inherent uncertainties of the current operating environment, the Company expects to meet its cash obligations as well as remain in compliance with the debt covenants in its existing financing agreements for the next 12 months based on its current level of unrestricted cash and short-term investments, its anticipated access to liquidity and tax refunds, and projected cash flows from operations.all Payroll Support Program funds have been fully utilized.

Special Charges

The effects of COVID-19 triggered an impairment review, and a non-cash impairment charge was recognized during the nine months ended September 30, 2020 (see Note 12 - Impairment for additional detail). The Company also identified expenses that were unique and specific to COVID-19. The impairment charges and other expenses that resulted from the effects of COVID-19 are recorded astable below summarizes special charges within both operating and non-operating expenses during the nine months ended September 30, 2020. See the table below for a summary of operating and non-operating special charges recorded by segment during the three and nine months ended September 30, 2021, and 2020.
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)(in thousands)AirlineSunseeker ResortOther
non-airline		Total(in thousands)2021202020212020
Three Months Ended September 30, 2020
OperatingOperating$32,617 $0 $968 $33,585 Operating$332 $33,585 $2,924 $280,852 
Non-operatingNon-operating0 0 0 0 Non-operating— — — 26,632 
Total special chargesTotal special charges$32,617 $0 $968 $33,585 Total special charges$332 $33,585 $2,924 $307,484 
Nine Months Ended September 30, 2020
Operating$118,059 $135,443 $27,350 $280,852 
Non-operating0 26,632 0 26,632 
Total special charges$118,059 $162,075 $27,350 $307,484 

Additional detail for the $2.9 million of total special charges for the nine months ended September 30, 2021 appears below:

•$2.4 million resulting from the accelerated retirement of 5 airframes and 8 engines
•$0.5 million impairment loss on a building in Chesterfield, Missouri associated with the Allegiant Nonstop family entertainment line of business.

Additional detail for the $307.5 million of total special charges (operating and non-operating) for the nine months ended September 30, 2020 appears below:

•$168.4 million in impairment charges
◦Includes Airline - $5.0 million; Sunseeker Resort - $136.8 million; Other primarily in our non-airline - $26.6 millionsubsidiaries
•$89.3 million adjustment resulting from the accelerated retirementsretirement of 7 airframes and 5 engines, loss on sale leaseback transactionstransaction of 7 aircraft, and write-offs of other aircraft related assets
•$21.5 million adjustment for additional salary and benefits expense in relation to the elimination of positions as well as other non-recurring compensation expense associated with the acceleration of certain existing stock awards
◦Includes Airline - $21.1 million; Sunseeker Resort - $0.4 million
•$19.8 million related to theaccrual on termination of the loan agreement with Sixth Street Partners (formerly TSSP) intended to finance the development of Sunseeker Resorts Charlotte Harbor,
◦$14.9 million paid during the third quarter 2020 and remaining $4.9 million recorded in accrued liabilities (subsequently which was paid in October 2020)the second half of 2020
•$5.0 million related to suspension of construction at Sunseeker
•$3.5 million write-down on various non-aircraft assets and other various expenses

10

Note 3 — Revenue Recognition

Passenger Revenue

Passenger revenue is the most significant category in the Company's reported operating revenues. Passenger revenue is primarily composed of scheduled service revenue (including passenger ticket sales and credit voucher breakage), revenue from ancillary air-related charges (including seat fees, baggage fees, and other travel-related services performed in conjunction with a passenger’s flight), as well as co-brand credit card point redemptions,revenues, as outlined below:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)(in thousands)2020201920202019(in thousands)2021202020212020
Scheduled serviceScheduled service$79,464 $200,233 $325,404 $672,690 Scheduled service$195,225 $79,464 $552,765 $325,404 
Ancillary air-related chargesAncillary air-related charges100,262 187,776 342,520 583,003 Ancillary air-related charges224,170 100,262 558,687 342,520 
Co-brand redemptionsCo-brand redemptions2,190 3,213 9,423 10,285 Co-brand redemptions4,401 2,190 12,785 9,423 
Total passenger revenueTotal passenger revenue$181,916 $391,222 $677,347 $1,265,978 Total passenger revenue$423,796 $181,916 $1,124,237 $677,347 

Sales of passenger tickets not yet flown are recorded in air traffic liability. Passenger revenue is recognized when transportation is provided or when ticket voucher breakage occurs, to the extent different from estimated breakage. As of September 30, 2020,2021, approximately 34.769.8 percent of the air traffic liability balance was related to forward bookings, with the remaining 65.330.2 percent related to credit vouchers for future travel.

The normal contract term of passenger tickets is twelve12 months and revenue associated with future travel will principally be recognized within this time frame. During$177.8 million of the nine months ended September 30, 2020, $204.1$307.5 million was recognized into passenger revenue that was recorded in the air traffic liability balance as of $250.0 million at December 31, 2019.2020 was recognized into passenger revenue during the nine months ended September 30, 2021.

In April 2020, the Company announced that credits issued for canceled travel beginning in April through the end of the COVID-19 pandemic willJanuary 2020 would have an extended expiration date of two years from the original booking date. This policy continued for vouchers issued through June 30, 2021. This change has been considered in estimating the future breakage rate, which represents the value of credit vouchers that are not expected to be redeemed prior to their contractual expiration date. Estimates of revenue to be recognized from air traffic liability for credit vouchers may be subject to variability and differ from historical experience due to the change in contract duration and uncertainty regarding demand for future air travel. Effective July 1, 2021, vouchers issued have an expiration date of one year from the original booking date.


Co-brand redemptions

In relation to the travel component of the co-branded credit card contract with Bank of America, the Company has a performance obligation to provide cardholders with points to be used for future travel award redemptions. Therefore, consideration received from Bank of America related to the travel component is deferred based on its relative selling price and is recognized into passenger revenue when the points are redeemed and the transportation is provided. In September 2020, the Company amended its existing co-brand agreement, which among other things extended the term of the agreement through August 2029 and provided for the pre-purchase of credit card points. This transaction was treated as a financing transaction for accounting purposes using an effective interest rate consistent with the Company’s credit rating.

The following table presents the activity of the co-brand point liability as offor the datesperiods indicated:
Nine Months Ended September 30,Nine Months Ended September 30,
(in thousands)(in thousands)20202019(in thousands)20212020
Balance at January 1Balance at January 1$15,613 $10,708 Balance at January 1$21,841 $15,613 
Points awarded (deferral of revenue)Points awarded (deferral of revenue)15,018 14,308 Points awarded (deferral of revenue)23,319 15,018 
Points redeemed (recognition of revenue)Points redeemed (recognition of revenue)(9,510)(10,285)Points redeemed (recognition of revenue)(12,785)(9,510)
Balance at September 30Balance at September 30$21,121 $14,731 Balance at September 30$32,375 $21,121 

As of September 30, 2021 and 2020, and 2019, $11.8$15.9 million and $10.6$11.8 million, respectively, of the current points liability is reflected in Accruedaccrued liabilities and represents the Company's current estimate of revenue to be recognized in the next twelve12 months based on historical trends, with the remaining balance reflected in other noncurrent liabilities expected to be recognized into revenue in periods thereafter. Given the inherent uncertainty of the current operating environment due to COVID-19, the Company will continue to monitor redemption patterns and may adjust its estimates in the future.

11

Note 4 — Property and Equipment

The following table summarizes the Company's property and equipment as of the dates indicated:
(in thousands)(in thousands)September 30, 2020December 31, 2019(in thousands)September 30, 2021December 31, 2020
Flight equipment, including pre-delivery depositsFlight equipment, including pre-delivery deposits$2,259,358 $2,289,157 Flight equipment, including pre-delivery deposits$2,474,650 $2,331,499 
Computer hardware and softwareComputer hardware and software151,602 171,516 Computer hardware and software157,334 149,727 
Land and buildings/leasehold improvements(1)Land and buildings/leasehold improvements(1)86,825 98,885 Land and buildings/leasehold improvements(1)87,657 87,030 
Other property and equipmentOther property and equipment80,156 161,760 Other property and equipment97,965 80,601 
Total property and equipmentTotal property and equipment2,577,941 2,721,318 Total property and equipment2,817,606 2,648,857 
Less accumulated depreciation and amortizationLess accumulated depreciation and amortization(573,112)(484,510)Less accumulated depreciation and amortization(669,618)(598,546)
Property and equipment, netProperty and equipment, net$2,004,829 $2,236,808 Property and equipment, net$2,147,988 $2,050,311 
(1) Balance for 2021 and 2020 includes a building currently held for sale in Chesterfield, Missouri with a carrying value of $4.3 million as of September 30, 2021.

Accrued capital expenditures as of September 30, 20202021 and December 31, 20192020 were $19.3$12.7 million and $16.5$16.9 million, respectively.

12

Note 5 — Long-Term Debt

The following table summarizes the Company's Long-term debt and finance lease obligations as of the dates indicated:
(in thousands)(in thousands)September 30, 2020December 31, 2019(in thousands)September 30, 2021December 31, 2020
Fixed-rate debt and finance lease obligations due through 2029$363,080 $235,071 
Fixed-rate debt and finance lease obligations due through 2030Fixed-rate debt and finance lease obligations due through 2030$634,761 $525,240 
Variable-rate debt due through 2029Variable-rate debt due through 20291,186,771 1,186,782 Variable-rate debt due through 2029939,443 1,133,771 
Total long-term debt and finance lease obligations, net of related costs1,549,851 1,421,853 
Total debt and finance lease obligations, net of related costsTotal debt and finance lease obligations, net of related costs1,574,204 1,659,011 
Less current maturities, net of related costsLess current maturities, net of related costs233,680 173,274 Less current maturities, net of related costs139,590 217,234 
Long-term debt and finance lease obligations, net of current maturities and related costsLong-term debt and finance lease obligations, net of current maturities and related costs$1,316,171 $1,248,579 Long-term debt and finance lease obligations, net of current maturities and related costs$1,434,614 $1,441,777 
Weighted average fixed-interest rate on debtWeighted average fixed-interest rate on debt3.9 %3.7 %Weighted average fixed-interest rate on debt5.7%5.7%
Weighted average variable-interest rate on debtWeighted average variable-interest rate on debt2.4 %4.5 %Weighted average variable-interest rate on debt2.4%2.4%

Maturities of long-term debt and finance lease obligations for the remainder of 20202021 and for the next four years and thereafter, in the aggregate, are: remaining in 2020 - $44.7 million; 2021 - $229.3$38.3 million; 2022 - $135.5$133.3 million; 2023 - $122.1$133.9 million; 2024 - $656.3$803.9 million; 2025 - $87.1 million; and $362.0$377.7 million thereafter.

CARES Act Payroll Support Program Loan

In April 2020 the Company entered into a low-interest rate, senior unsecured term promissory note (the "PSP" Note) with the Treasury under the CARES Act payroll support program. The PSP Note will mature 10 years after issuance and bears interest at a rate of 1.0 percent for the first five years, with interest at the secured overnight financing rate (SOFR) plus 2.0 percent thereafter. The PSP Note is prepayable at any time at par, without penalty.

During the second and third quarters 2020, the Company received $23.1 million in funds under the PSP Note, which is recorded within noncurrent debt on the balance sheet.

In connection with the PSP Note, the Company is required to comply with the relevant provisions of the CARES Act, including those prohibiting the repurchase of common stock and the payment of common stock dividends until September 30, 2021, as well as those restricting the payment of certain executive compensation for periods through March 24, 2022.

Senior Secured Revolving Credit Facility

TheIn March 2021, the Company hasentered into a senior securednew revolving credit facility under which it is ableentitled to borrow up to $81.0$50.0 million. The facility has a term of 24 months and the borrowing ability is based on the value of the Airbus A320 series aircraft placed in the collateral pool. In 2019 the Company drew down the entire $81.0 million under this facility. A principal payment of $11.7 million was made in September 2020, and the remaining balance as of September 30, 2020 is $69.3 million. Aircraft remain in the collateral pool for up to two years, and, as of September 30, 2020, there were 6 aircraft ininto the collateral pool. The notes for the amounts borrowed under the facility bear interest at a floating rate based on LIBOR and are due in March 2021.

2023. As of September 30, 2021, no aircraft collateral had been added to the collateral pool and the facility was undrawn.

1213

Other Secured Debt

In September 2020, the Company borrowed $84.0 million under a loan agreement secured by 2 aircraft and 8 spare engines. The note bears interest at a fixed rate, payable in monthly installments with maturity after five and six years for the spare engines and aircraft, respectively.

Term Loan

In February 2019, the Company entered into a Credit and Guaranty Agreement (the “Term Loan”) to borrow $450.0 million, guaranteed by all of the Company's subsidiaries, excluding Sunseeker Resorts Inc. and its subsidiaries, and other insignificant subsidiaries (the "Term Loan Guarantors"). In February 2020 the Company entered into an amendment to the Term Loan under which the interest rate was reduced by 150 basis points, and the principal amount of the debt was increased by a net amount of $100.0 million to $545.5 million. Quarterly principal payments increased under the amendment, but the remaining provisions were substantially unchanged, including the maturity date. The Term Loan is secured by substantially all property and assets of the Company and the Term Loan Guarantors, excluding aircraft and aircraft engines, and excluding certain other assets. The Term Loan bears interest based on LIBOR and provides for quarterly interest payments along with quarterly principal payments of $1.4 million through February 2024, at which time the Term Loan is due. The Term Loan may be prepaid at any time without penalty.

Construction Loan Agreement

In March 2019, Sunseeker Florida, Inc. (“SFI”), a wholly-owned subsidiary of the Company, entered into a Construction Loan Agreement with certain lenders affiliated with TPG Sixth Street Partners, LLC (the “Lender”). Under the Construction Loan Agreement, SFI would have been able to borrow up to $175.0 million (the “Loan”) to fund the construction of Phase 1 of Sunseeker Resort -Charlotte Harbor. NaN amount was ever drawn under this agreement.

Due to the various impacts of COVID-19, the Company suspended construction of Sunseeker Resort, and it is uncertain when construction will resume. In light of these conditions, the Company reached a $19.8 million settlement agreement with the Lender to terminate the Loan. During the third quarter 2020, the Company paid $14.9 million of the settlement, and the remaining $4.9 million was paid in October 2020. The expense is reflected within non-operating special charges on the statement of income for the nine months ended September 30, 2020.

Note 6 — Income Taxes

The Company recorded a $15.6 million tax benefit (34.8 percentan effective tax rate) compared to a $13.0 million tax provision (22.8rate of 21.9 percent effective tax rate)and 34.8 percent for the three months ended September 30, 2021 and 2020, respectively. The effective tax rate for the three months ended September 30, 2021 differed from the statutory Federal income tax rate of 21.0 percent primarily due to state income taxes and 2019, respectively.the impact of ASU 2016-09 related to share-based payments. The effective tax rate for the three months ended September 30, 2020 differed from the statutory federal income tax rate of 21.0 percent primarily due to the tax accounting impact of the CARES Act which allowsallowed the Company to carryback the 2020 net operating loss at the 35.0 percent tax rate applicable in earlier years. While the Company expects its effective tax rate to be fairly consistent in the near term, it will vary depending on recurring items such as the amount of income earned in each state and the state tax rate applicable to such income. Discrete items during interim periods may also affect the Company's tax rates.

The Company recorded a $166.6 million tax benefit (51.8 percentan effective tax rate) compared to a $51.0 million tax provision (22.9rate of 22.2 percent effective tax rate)and 51.8 percent for the nine months ended September 30, 2021 and 2020, respectively. The effective tax rate for the nine months ended September 30, 2021 differed from the statutory Federal income tax rate of 21.0 percent primarily due to state income taxes and 2019, respectively.the impact of ASU 2016-09 related to share-based payments. The 51.8 percent effective tax rate for the nine months ended September 30, 2020 differed from the statutory federal income tax rate of 21.0 percent primarily due to the tax accounting impact of the CARES Act which includesincluded a $40.9 million discrete federal income tax benefit related to the full utilization of 2018 and 2019 net operating losses as well as the ability to carryback the 2020 net operating loss at a 35.0 percent rate applicable in earlier years. The effective tax rate was also impacted by the remeasurement of deferred taxes and state taxes. 

1314

Note 7 — Leases

The Company evaluates all operating leases and they are measured on the balance sheet with a lease liability and right-of-use asset (“ROU”) at inception. ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make scheduled lease payments. Airport terminal leases mostly include variable lease payments outside of those based on a fixed index, and are therefore not recorded as ROU assets.

The following table summarizes the Company's total assets and liabilities related to leases as of the dates indicated:
(in thousands)(in thousands)Classification on the Balance SheetSeptember 30, 2020December 31, 2019(in thousands)Classification on the Balance SheetSeptember 30, 2021December 31, 2020
AssetsAssetsAssets
Operating lease assets(1)
Operating lease assets(1)
Operating lease right-of-use assets$114,573 $22,081 
Operating lease assets(1)
Operating lease right-of-use assets$124,297 $115,911 
Finance lease assets(2)
Finance lease assets(2)
Property and equipment, net106,777 111,665 
Finance lease assets(2)
Property and equipment, net235,759 133,175 
Total lease assetsTotal lease assets$221,350 $133,746 Total lease assets$360,056 $249,086 
LiabilitiesLiabilitiesLiabilities
CurrentCurrentCurrent
Operating(1)
Operating(1)
Current operating lease liabilities$13,814 $2,662 
Operating(1)
Current operating lease liabilities$17,642 $14,313 
Finance(2)
Finance(2)
Current maturities of long-term debt and finance lease obligations7,922 7,666 
Finance(2)
Current maturities of long-term debt and finance lease obligations14,951 9,767 
NoncurrentNoncurrentNoncurrent
Operating(1)
Operating(1)
Noncurrent operating lease liabilities101,864 21,290 
Operating(1)
Noncurrent operating lease liabilities110,322 102,289 
Finance(2)
Finance(2)
Long-term debt and finance lease obligations101,955 107,930 
Finance(2)
Long-term debt and finance lease obligations247,035 117,060 
Total lease liabilitiesTotal lease liabilities$225,555 $139,548 Total lease liabilities$389,950 $243,429 
(1) RepresentsThe September 30, 2021 number represents assets and liabilities of 1016 aircraft, office equipment, certain airport and terminal facilities, and other assets under operating leases
(2) RepresentsThe September 30, 2021 number represents assets and liabilities of 512 aircraft under finance leases

Sale-Leaseback Transaction

During the nine months ended September 30, 2020,2021, the Company entered into two separatea sale-leaseback transactionstransaction involving 7 total aircraft. The transactions qualified as sales,3 aircraft and generated $78.2generating $105.0 million of proceeds. AsThe lease was classified as a finance lease and as a result, of the sales, thetransaction did not qualify as a sale. The aircraft were not removed from property and equipment in the Company's balance sheet resulting in a $49.8 million loss on the sales. The loss is reflected within operating special charges on the statement of income sinceand the Company would not likely have completedrecorded a financial liability in the transactions absent cash conservation efforts as a resultamount of COVID. The leased aircraft were subsequently recorded within operating lease right-of-use assets, with the related lease liabilities recorded within current and noncurrent operating lease liabilities on the balance sheet.$105.0 million. The proceeds from the sales of aircraft in these transactionsthis transaction are treated as cash inflows from investingfinance lease obligations and reported in financing activities on the statement of cash flows.
15

Note 8 — Fair Value Measurements

The Company utilizes the market approach to measure the fair value of its financial assets. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. The assets classified as Level 2 primarily utilize quoted market prices or alternative pricing sources including transactions involving identical or comparable assets and models utilizing market observable inputs for valuation of these securities. No changes in valuation techniques or inputs occurred during the nine months ended September 30, 2020.2021.

14

Financial instruments measured at fair value on a recurring basis:
September 30, 2020December 31, 2019September 30, 2021December 31, 2020
(in thousands)(in thousands)TotalLevel 1Level 2TotalLevel 1Level 2(in thousands)TotalLevel 1Level 2TotalLevel 1Level 2
Cash equivalentsCash equivalents   Cash equivalents   
Money market fundsMoney market funds$80,121 $80,121 $0 $42,653 $42,653 $0 Money market funds$100,965 $100,965 $— $5,340 $5,340 $— 
Commercial paper22,783 0 22,783 5,807 0 5,807 
Commercial PaperCommercial Paper25,199 — 25,199 48,908 — 48,908 
Municipal debt securitiesMunicipal debt securities10,205 0 10,205 1,202 0 1,202 Municipal debt securities16,674 — 16,674 34,338 — 34,338 
Federal agency debt securitiesFederal agency debt securities1,340 0 1,340 0 0 0 Federal agency debt securities— — — 51,400 — 51,400 
Total cash equivalentsTotal cash equivalents114,449 80,121 34,328 49,662 42,653 7,009 Total cash equivalents142,838 100,965 41,873 139,986 5,340 134,646 
Short-termShort-term     Short-term     
Commercial paperCommercial paper212,992 0 212,992 161,286 0 161,286 Commercial paper387,044 — 387,044 229,821 — 229,821 
Corporate debt securitiesCorporate debt securities139,659 0 139,659 145,975 0 145,975 Corporate debt securities267,821 — 267,821 166,768 — 166,768 
Municipal debt securitiesMunicipal debt securities52,437 0 52,437 12,237 0 12,237 Municipal debt securities219,479 — 219,479 87,290 — 87,290 
Federal agency debt securitiesFederal agency debt securities35,389 0 35,389 13,515 0 13,515 Federal agency debt securities3,000 — 3,000 48,598 — 48,598 
US Treasury bonds1,287 0 1,287 2,915 0 2,915 
Total short-termTotal short-term441,764 0 441,764 335,928 0 335,928 Total short-term877,344 — 877,344 532,477 — 532,477 
Long-term      
Corporate debt securities0 0 0 15,396 0 15,396 
US Treasury bonds0 0 0 146 0 146 
Total long-term0 0 0 15,542 0 15,542 
Total financial instrumentsTotal financial instruments$556,213 $80,121 $476,092 $401,132 $42,653 $358,479 Total financial instruments$1,020,182 $100,965 $919,217 $672,463 $5,340 $667,123 

None of the Company's debt is publicly held and as a result, the Company has determined the estimated fair value of these notes to be Level 3. Certain inputs used to determine fair value are unobservable and, therefore, could be sensitive to changes in inputs. The Company utilizes the discounted cash flow method to estimate the fair value of Level 3 debt.

Carrying value and estimated fair value of long-term debt, including current maturities and without reduction for related costs, are as follows:
September 30, 2020December 31, 2019September 30, 2021December 31, 2020
(in thousands)(in thousands)Carrying ValueEstimated Fair ValueCarrying ValueEstimated Fair ValueHierarchy Level(in thousands)Carrying ValueEstimated Fair ValueCarrying ValueEstimated Fair ValueHierarchy Level
Non-publicly held debtNon-publicly held debt$1,461,705 $1,349,111 $1,329,882 $1,140,232 3Non-publicly held debt$1,329,907 $1,157,257 $1,555,637 $1,191,008 3

Due to their short-term nature, the carrying amounts of cash, cash equivalents, restricted cash, accounts receivable and accounts payable approximate fair value.

16

Note 9 — Earnings (Loss) per Share

Basic and diluted earnings (loss) per share are computed pursuant to the two-class method. Under this method, the Company attributes net income (loss) to two classes: common stock and unvested restricted stock. Unvested restricted stock awards granted to employees under the Company’s Long-Term Incentive Plan are considered participating securities as they receive non-forfeitable rights to cash dividends at the same rate as common stock.

Diluted net income per share is calculated using the more dilutive of the two methods. Under both methods, the exercise of employee stock options is assumed using the treasury stock method. The assumption of vesting of restricted stock, however, differs:

1.Assume vesting of restricted stock using the treasury stock method.

2.Assume unvested restricted stock awards are not vested, and allocate earnings to common shares and unvested restricted stock awards using the two-class method.

For the three and nine months ended September 30, 2019,2021, the second method which assumes unvested awards are not vested, was used in the computation because it was more dilutive than the first method.

15

The following table sets forth the computation of net income (loss) per share, on a basic and diluted basis, for the periods indicated (share count and dollar amounts other than per-share amounts in the table are in thousands):
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
20202019202020192021202020212020
Basic:Basic:  Basic:  
Net income (loss)Net income (loss)$(29,143)$43,929 $(155,255)$171,596 Net income (loss)$39,254 $(29,143)$141,150 $(155,255)
Less income allocated to participating securitiesLess income allocated to participating securities0 (578)(236)(2,441)Less income allocated to participating securities(573)— (2,028)(236)
Net income (loss) attributable to common stockNet income (loss) attributable to common stock$(29,143)$43,351 $(155,491)$169,155 Net income (loss) attributable to common stock$38,681 $(29,143)$139,122 $(155,491)
Earnings (loss) per share, basicEarnings (loss) per share, basic$(1.82)$2.70 $(9.75)$10.55 Earnings (loss) per share, basic$2.18 $(1.82)$8.18 $(9.75)
Weighted-average shares outstandingWeighted-average shares outstanding16,006 16,037 15,953 16,037 Weighted-average shares outstanding17,766 16,006 17,005 15,953 
Diluted:Diluted:    Diluted:    
Net income (loss)Net income (loss)$(29,143)$43,929 $(155,255)$171,596 Net income (loss)$39,254 $(29,143)$141,150 $(155,255)
Less income allocated to participating securitiesLess income allocated to participating securities0 (578)(236)(2,440)Less income allocated to participating securities(573)— (2,027)(236)
Net income (loss) attributable to common stockNet income (loss) attributable to common stock$(29,143)$43,351 $(155,491)$169,156 Net income (loss) attributable to common stock$38,681 $(29,143)$139,123 $(155,491)
Earnings (loss) per share, dilutedEarnings (loss) per share, diluted$(1.82)$2.70 $(9.75)$10.54 Earnings (loss) per share, diluted$2.18 $(1.82)$8.18 $(9.75)
Weighted-average shares outstanding(1)
16,006 16,037 15,953 16,037 
Weighted-average shares outstandingWeighted-average shares outstanding17,766 16,006 17,005 15,953 
Dilutive effect of stock options and restricted stockDilutive effect of stock options and restricted stock103 — 121 — 
Adjusted weighted-average shares outstanding under treasury stock methodAdjusted weighted-average shares outstanding under treasury stock method17,869 16,006 17,126 15,953 
Participating securities excluded under two-class methodParticipating securities excluded under two-class method(102)— (111)— 
Adjusted weighted-average shares outstanding under two-class methodAdjusted weighted-average shares outstanding under two-class method17,767 16,006 17,015 15,953 
(1) Dilutive effect of common stock equivalents excluded from the diluted per share calculation is not material.
17


Note 10 — Commitments and Contingencies

As of September 30, 2020, the Company had commitments to purchase 8 Airbus A320 aircraft as well as purchase agreements for 2 spare engines.

The Company's contractual purchase commitments consist primarily of aircraft and engine acquisitions. The total future commitments are as follows:
(in thousands)September 30, 2020
Remaining in 2020$110,762 
202137,900 
202221,000 
Total commitments$169,662 

Contingencies

The Company is subject to certain legal and administrative actions it considers routine to its business activities. The Company believes the ultimate outcome of any potential and pending legal or administrative matters will not have a material adverse impact on its financial position, liquidity or results of operations.

18
Note 11 — Segments

Operating segments are components of a company for which separate financial and operating information is regularly evaluated and reported to the Chief Operating Decision Maker ("CODM"), and is used to allocate resources and analyze performance. The Company's CODM is the executive leadership team, which reviews information about the Company's 3 operating segments: the Airline, Sunseeker Resort, and other non-airline.

Airline Segment

The Airline segment operates as a single business unit and includes all scheduled service air transportation, ancillary air-related products and services, third party products and services, fixed fee contract air transportation and other airline-related revenue. The CODM evaluation includes, but is not limited to, route and flight profitability data, ancillary and third party product and service offering statistics, and fixed fee contract information when making resource allocation decisions with the goal of optimizing consolidated financial results.

16

Sunseeker Resort Segment

The Sunseeker Resort segment represents activity related to the development and construction of Sunseeker Resort in Southwest Florida, as well as the operation of Kingsway Golf Course. Due to the various impacts of COVID-19, the Company suspended construction of Sunseeker Resort and temporarily closed operation of Kingsway Golf Course. At this time, it is uncertain when construction will resume and when the golf course will re-open.

Other non-Airline Segment

The other non-airline segment includes the Teesnap golf course management solution and Allegiant Nonstop family entertainment centers. Allegiant Nonstop family entertainment centers are comprised of games, attractions, and food facilities.

Due to the impacts of COVID-19, the Company temporarily closed the Allegiant Nonstop location in Warren, MI (which has subsequently opened as of early October 2020). The Company also permanently closed the Allegiant Nonstop location in Clearfield, Utah, and permanently discontinued all activity for the Allegiant Nonstop location in West Jordan, Utah, which was being developed.

In July 2019, management began evaluating strategic alternatives for Teesnap, and its business-to-business software as a service offering.

Selected information for the Company's segments and the reconciliation to the consolidated financial statement amounts are as follows:
17

(in thousands)AirlineSunseeker ResortOther non- airlineConsolidated
Three Months Ended September 30, 2020
Operating revenue:
    Passenger$181,916 $— $— $181,916 
    Third party products11,337 — — 11,337 
    Fixed fee contract5,284 — — 5,284 
    Other(224)0 2,671 2,447 
Operating income (loss) (1)
(28,836)(2,619)(1,626)(33,081)
Interest expense, net11,075 0 0 11,075 
Depreciation and amortization45,247 44 0 45,291 
Capital expenditures25,066 0 0 25,066 
Three Months Ended September 30, 2019
Operating revenue:
    Passenger$391,222 $— $— $391,222 
    Third party products18,207 — — 18,207 
    Fixed fee contract19,797 — — 19,797 
    Other1,648 251 5,384 7,283 
Operating income (loss)77,335 (1,281)(3,938)72,116 
Interest expense, net14,761 507 0 15,268 
Depreciation and amortization38,409 329 698 39,436 
Capital expenditures98,308 16,931 479 115,718 
(in thousands)AirlineSunseeker ResortOther non- airlineConsolidated
Nine Months Ended September 30, 2020
Operating revenue:
    Passenger$677,347 $— $— $677,347 
    Third party products35,756 — — 35,756 
    Fixed fee contract17,440 — — 17,440 
    Other1,460 653 10,856 12,969 
Operating income (loss) (2)
(83,106)(142,741)(31,490)(257,337)
Interest expense, net34,925 561 0 35,486 
Depreciation and amortization130,938 577 770 132,285 
Capital expenditures155,810 45,160 442 201,412 
Nine Months Ended September 30, 2019
Operating revenue:
    Passenger$1,265,978 $— $— $1,265,978 
    Third party products53,557 — — 53,557 
    Fixed fee contract42,859 — — 42,859 
    Other3,578 1,526 12,394 17,498 
Operating income (loss)291,371 (4,199)(15,874)271,298 
Interest expense, net43,906 1,143 0 45,049 
Depreciation and amortization110,528 811 2,773 114,112 
Capital expenditures305,356 33,502 11,329 350,187 
(1) For the three months ended September 30, 2020, Operating loss was impacted by special charges of: $32.6 million for the Airline and $1.0 million for Other non-airline.
(2) For the nine months ended September 30, 2020, Operating loss was impacted by special charges of: $118.1 million for the Airline; $135.4 million for Sunseeker Resort; and $27.4 million for Other non-airline.

18

Total assets were as follows as of the dates indicated:
(in thousands)September 30, 2020December 31, 2019
Airline$3,170,834 $2,830,236 
Sunseeker Resort37,264 133,362 
Other non-airline14,995 47,205 
Consolidated$3,223,093 $3,010,803 

Note 1211 — Impairment

Accounting Standards Codification (ASC) 360 - Property, Plant, and Equipment (ASC 360) requires long-lived assets to be assessed for impairment when events and circumstances indicate that the assets may be impaired.

As described in Note 2, in the first nine months of 2020, the Company's operations and liquidity were significantly impacted by decreased passenger demand and U.S. government travel restrictions and quarantine requirements due to COVID-19. As a result of these events and circumstances, the Company performed impairment tests on its long-lived assets in connection with the preparation of its financial statements.

In accordance with ASC 360, an impairment of a long-lived asset or group of long-lived assets exists only when the sum of the estimated undiscounted future cash flows expected to be generated directly by the assets is less than the carrying value of the assets. Assets were grouped by operating segment when estimating future cash flows, and further grouped within each segment as applicable. Estimates of future cash flows were generally based on historical results, and management's best estimate of future market and operating conditions.

Airline Segment

Long-lived assets for the Airline segment consist primarily of owned and leased flight and ground equipment. To test the recoverability of the Company's airline operating fleet, undiscounted future cash flows for each aircraft under the Company's current expected operating fleet plan were assessed and it was determined that there was 0 impairment as of September 30, 2020. As the Company obtains greater clarity about the duration and extent of reduced demand and potentially executes further capacity adjustments, the Company will continue to evaluate its current fleet compared to network requirements and may decide to permanently retire additional aircraft.

The Airline has an equity investment in a technology company. A $5.0 million charge was recorded to impair the investment in the second quarter 2020. As a result of the impairment, net book value of the investment is zero. This decision reflects management's best estimate of the fair value of this investment based on recent market trends.Subsequent Events

Sunseeker Resort Segment

Long-lived assets forOn October 13, 2021, Sunseeker Resort and related Kingsway Golf Course consist primarilyFlorida, Inc. (“SFI”), a wholly-owned subsidiary of the land,Company, entered into a Credit Agreement pursuant to which SFI may borrow up to $350.0 million (the “Loan”) funded by one or more entities directly or indirectly managed by Castlelake, L.P.(“Lender”) to be applied to the remaining construction in process, building, and other various equipment. As a result of the impairment tests performed, theinitial phases of Sunseeker Resorts at Charlotte Harbor (the “Project”). The Company determined the sumexpects $175.0 million of the undiscounted cash flows was less thanloan to be advanced before the long-lived assets' carrying value. A $136.8 million impairment charge was recordedend of October with the remaining balance to be received in the first quarter 2020 to reflect the difference between the carrying values of these assets2 tranches scheduled for April and their fair values. Fair value reflects management's best estimate,including valuation inputs from third parties and recent market transactions. Based on an evaluation of impairment indicators in the second and third quarters 2020, 0 additional impairment was recognized.October 2022.

Other non-Airline SegmentThe Loan is secured by the Project. All of the shares in SFI are also pledged to secure the Loan. The Loan bears interest at 5.75 percent per annum payable semi-annually, provides for semi-annual principal payments of $26.0 million beginning in 2025 and matures in October 2028. The Credit Agreement includes covenants similar to the covenants in the Company’s Term Loan B.

Long-lived assets for Allegiant Nonstop family entertainment centers consist primarily of leasehold improvements, arcade games, various equipment, and ROU assets. As a resultTo support the credit, the Company has guaranteed the full amount of the impairment tests performed, the Company determined the sumdebt and has agreed to guarantee completion of the undiscounted cash flows were less than the long-lived assets' carrying value. An $18.3 million impairment charge was recordedProject in the first quarter 2020 to reflect the difference between the carrying values of these assetsaccordance with approved plans and their fair values. Fair value reflects management's best estimate,including valuation inputs from third parties and recent market trends. Based on an evaluation of impairment indicators in the second and third quarters 2020, 0 additional impairment was recognized.specifications.

Long-lived assets for Teesnap consist primarilyThe Credit Agreement contains various events of capitalized softwaredefault and computer equipment. As a resultupon an event of default the Lender may, subject to various customary cure rights, be relieved of further obligations to fund and require the immediate payment of all amounts outstanding under the Loan. SFI and the Company will use the proceeds of the impairment tests performed,Loan to fund the construction of the Project.

Federal Income Tax Refund

In October 2021, the Company determined the sum of the undiscounted cash flows was less than the long-lived assets' carrying value. Management does not expectreceived $115.8 million in federal income tax refunds related to recover any of the book value of the assets through operations, and an $8.3 million impairment charge was recorded in the first quarter 2020 to write down all long-lived assets to a net book value of 0. This reflects management's best estimate of the fair value of these assets based on recent market trends.operating losses.

Collective Bargaining Agreement

In October 2021, maintenance technician and related employees represented by the International Brotherhood of Teamsters (IBT) have voted to ratify their first collective bargaining agreement with the Company. The contract is effective from the date of ratification - October 26, 2021 – for a five-year term. The Company currently employs 415 maintenance technician and related employees – a group which includes line and heavy maintenance technicians, as well as stores employees and some administrative maintenance staff.
19

Note 13 — Subsequent Events


In October 2020, the Company closed on the private offering of $150.0 million principal amount of a 8.5 percent Senior Secured Note due 2024. The Notes and related guarantees are secured by first priority security interests in substantially all of the property and assets of the Company and the guarantors of the Notes (excluding aircraft, aircraft engines and certain other assets).The guarantors of the Notes include all significant subsidiaries other than Sunseeker Resorts, Inc. and its subsidiaries.


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis presents factors that had a material effect on our results of operations during the three and nine months ended September 30, 20202021 and 2019.2020. Also discussed is our financial position as of September 30, 20202021 and December 31, 2019.2020. You should read this discussion in conjunction with our unaudited consolidated financial statements, including the notes thereto, appearing elsewhere in this Form 10-Q and our consolidated financial statements appearing in our annual report on Form 10-K for the year ended December 31, 2019.2020. This discussion and analysis contains forward-looking statements. Please refer to the section below entitled “Cautionary Note Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements.

20

Third Quarter 2021 Review
Highlights:

–Diluted earnings per share of $2.18
–Total operating revenue was $459.5 million, up 5.3 percent when compared with the third quarter of 2019
–Total average fare of $116.91, up 7.2 percent year over two-year
–Continued sequential improvement in load factor, which came in at 76.6 percent, up nearly 6 percentage points from the second quarter
–Total cash and investments at September 30, 2021 were $1.11 billion, up from $702.8 million at December 31, 2020
–Yield remained strong throughout the quarter down only 5.9 percent year over two-year on scheduled service capacity increases of 17.0 percent
–Allegiant World Mastercard voted USA Today Readers' Choice Best Airline Co-Branded Credit Card for the third consecutive year
–Launched the Allways Rewards program during the quarter with over 13 million active members
21

AIRCRAFT

The following table sets forth the aircraft in service and operated by us as of the dates indicated:
September 30, 2021December 31, 2020
A31935 34 
A320(1)
71 61 
Total106 95 
(1) Does not include seven aircraft of which we have taken delivery as of September 30, 2021, but were not yet in service as of that date.



22

NETWORK

As of September 30, 2020,2021, we were selling 520598 routes versus 466520 as of the same date last year,in 2020 and 466 as of September 30, 2019, which represents an 11.6a 15.0 and 28.3 percent increase.increase, respectively. Our total active number of origination cities and leisure destinations (for operating routes) were 9796 and 29,31, respectively, as of September 30, 2020.2021.

Our unique model is predicated around expanding and contracting capacity to meet seasonal travel demands. We are currently leveraging this core strength, just at a much more significant contracting level than normal seasonal demand changes would dictate. We are maintainingmaintained a broad network and selling presence.presence during the pandemic and have grown our network as air travel is recovering. We consistently monitor flights to assess for cash profitability.

23

TRENDS

COVID-19
The COVID-19 pandemic and shelter-in-place directives have greatlyhas significantly impacted our operating results for the three and nine months ending September 30, 20202021 and willmay continue to do so into the future. Air traffic demand is down substantially and base air faresOur load factors are down as well.a result. We cannot predict when air travel will return to customarypre-pandemic levels or at what pace. In the meantime, our revenues will be adversely affected. We believe that demand in the foreseeable future will continue to fluctuate in response to fluctuations in COVID-19 cases, variants of the virus, hospitalizations, deaths, treatment efficacy, and the availability of a vaccine.vaccines, CDC recommendations, and government restrictions.
The impactsDespite the pandemic and airline industry challenges, since the beginning of the pandemic have resulted in a reduction in our flight schedule. It is likely that reduced schedules will continue into the future. We are closely monitoring bookings2021 and making decisions on schedule changes as necessary based on demand.
Though we cannot control the current demand environment, our primary focus at the current time has been to conserve cash, andthrough September 30, 2021, we have taken immediateannounced service on 120 new routes and extensive measures to reduce daily cash burn. We have reduced managementnine new cities, including seasonal and support teams by roughly 300 positions. We have suspended payment of cash dividends and stock buybacks. We have suspended construction of the Sunseeker Resort in Southwest Florida as well as spend on our other non-airline subsidiaries. We have reduced airline capital expenditures for this year and into the future. We have eliminated other nonessential expenditures and have renegotiated arrangements with outside vendors, all in an effort to conserve cash until revenues recover.
temporary routes. We will continue to focus on conserving cash, along with managingmanage capacity to meet demand, which we believe is a core strength of our business model.
Operations

RESPONSES TO THE COVID-19 PANDEMICNoncontrollable and controllable factors have contributed to a higher than normal level of cancellations beginning in second quarter 2021 and have resulted in increased irregular operations costs. The noncontrollable factors include weather, TSA delays generally and particularly at smaller airports, airport overcrowding, supply chain disruptions and labor shortages. Controllable issues relate to various aspects of our operations as we had to readjust to providing peak capacity while also facing a number of external issues as indicated above. We believe these issues are not unique to Allegiant nor do we believe they are systemic. Our irregular operations costs are also impacted by our policy to provide what we believe to be generous allowances to passengers impacted by our cancellations.

BeginningWe are investing incrementally in Marchour operations in an attempt to improve performance and continuing throughout 2020,this may put pressure on unit costs in the near term and into 2022. However, if these problems persist, we have taken many actions to mitigate the effects of COVID-19 on our business, as outlined below:may suffer reputational damage and incur higher costs for irregular operations.

Network and Customer ExperienceGrowth

•Reduced third quarter system-wide capacityWe plan to continue to grow our aircraft fleet and route network and have executed agreements to acquire 22 incremental aircraft year-to-date, of which 14 have yet to be delivered at September 30, 2021. Our future profitability will be affected by 9.4 percent
•Continually evaluating forward schedules to adjust capacity according to demand trends
•Waived change and cancellation fees for all customers
•Extended expiry on credit vouchers to two years
•Offered opt-in option in the booking path for customers to receive notification that their flight has reached 65.0 percent capacity with option to re-book on another flight with no fee or receive a refundsuccess of our growth initiatives.

20Aircraft Fuel

The cost of fuel is volatile, as it is subject to many economic and geopolitical factors we can neither control nor predict. Significant increases in fuel costs could materially affect our operating results and profitability. We have not sought to use financial derivative products to hedge our exposure to fuel price volatility, nor do we have any plans to do so in the future.

Sunseeker Resort

We have recommenced the construction of our Sunseeker Resort in Southwest Florida in August 2021. In October 2021, we entered into a credit agreement with affiliates of Castlelake L.P. to finance up to $350 million of the remaining construction cost. With this funding, we expect to complete the Project by early 2023.


Cash Outlay Reduction

•Suspended all stock buybacks and dividends
•Enacted a hiring freeze and offered voluntary leaves
•Reduced management and support teams by approximately 300 positions (includes 220 positions previously disclosed in the prior quarter), a 25 percent reduction in these work groups
•Furloughed 100 pilots as of October 1, 2020, and an additional 27 furloughs as of November 1, 2020
•Suspended nearly all contractor positions, subscriptions, non-essential training and travel
•Suspended all non-essential capital expenditures including, but not limited to, Sunseeker Resorts, Teesnap and Allegiant Nonstop family entertainment centers

Liquidity Response

•Implemented immediate and meaningful cash spend reductions
•Obtained $84 million in proceeds from financings secured by A320 aircraft and CFM engines in September
•Received proceeds of $30.0 million in September through a sale-leaseback transaction on three aircraft
•As of September 30, 2020, we had 21 unencumbered aircraft and two unencumbered spare engines
•During the second and third quarters, received $176.9 million under the payroll support program agreement ("PSPA") with the Treasury, comprised of direct grants, a $23.1 million low-interest 10-year loan, and warrants to purchase 27,681 shares of our common stock.
•Received $94.3 million of tax refunds during the second and third quarters related to the 2018 and 2019 net operating loss carrybacks due to the change in loss carryback period under the CARES Act
–Under current law, we expect a sizable federal income tax refund to be received in the first half of 2021 related to 2020 net operating losses
•Deferring payment of the employer portion of Social Security taxes, as permitted under the CARES Act, to provide additional liquidity - $7.8 million in Social Security taxes deferred as of September 30, 2020 (half to be paid by December 31, 2021 and the other half to be paid by December 31, 2022)

Health and Safety

Amid various uncertainties and public concern during the COVID-19 pandemic, we have implemented the below measures to ensure health and safety for all traveling on our flights. Due to our focus on these health and safety measures, we were ranked by Safe Travel Barometer in August 2020 as the #1 airline among North American carriers and among the top five worldwide for best COVID-19 Traveler Safety Measures, with results based on an independent audit of more than 150 airlines.

•Maintain a comprehensive cleaning program for all aircraft that includes a regular schedule of standard and deep-clean procedures that exceed both CDC and Airbus guidance
•Aircraft receive regular treatment with an advanced antimicrobial protectant that kills viruses, germs and bacteria on contact for 14 days
•Utilize VOC (volatile organic compound) filters on board every aircraft, which remove additional organic compounds and ensure that cabin air is changed, on average, every three minutes, exceeding HEPA standards
•Effective July 2, 2020, require customers to wear face coverings through all phases of travel, including at the ticket counter, in the gate area and during flight
•Complimentary health and safety kits,which include a single-use face mask, a pair of non-latex disposable gloves and cleaning wipes, provided to all of our customers
•Crew members required to wear face masks on board and during any interaction with customers
•Social distancing principles at check-in, boarding and on-board, including limiting adjacent row seating and allowing only customers on the same itinerary to utilize middle seats as practicable
•Treat hard surfaces in all office areas, including airport station offices, maintenance facilities, headquarters/administrative offices, withantimicrobial disinfectant/protectant, and utilize wall-mounted and handheld thermometers for employee and crew member temperature checks
•Partner with Quest Diagnostics to provide at home COVID-19 test kits to employees in the event local testing is not immediately available

2124

RESULTS OF OPERATIONS

Comparison of three months ended September 30, 20202021 to three months ended September 30, 2020

As comparisons of our 2021 results to periods during 2020 reflect disproportionate changes due to the impact of the pandemic on air travel, we have also provided analysis of certain revenue and expense line items to 2019 results where helpful to understand trends in our performance.

Operating Revenue

Passenger revenue. For the third quarter 2020,2021, passenger revenue decreased 53.5increased 133.0 percent compared to the same period in 2020. This increase was due to a significant decline in passenger demand related to COVID-19 during the third quarter 2020. Scheduled service passengers were up 91.4 percent and scheduled service average base fare was up 27.7 percent.

Passenger revenue for the third quarter 2021, as compared to third quarter 2019. The decrease was due to2019, increased by 8.3 percent, as passengers increased by 2.2 percent on a 46.617.0 percent declineincrease in scheduled service passengers fromcapacity resulting in a 36.39.4 percentage point decrease in load factor. These declines are largely due to a dramatic decline in passenger demand and government travel restrictions and quarantine requirements related to COVID-19, which continued during the third quarter 2020. Additionally, we reduced ourAverage scheduled service capacityfares increased by 6.56.0 percent duringover the third quarter,same period 2019 as a result of a 16.8 percent increase in response toair ancillary revenue per passenger.

The increase in air ancillary revenue per passenger demand trends. Average total passenger fare (includes scheduled service and air ancillary) decreased 12.9 percent year over year,was primarily driven by a 24.8 percent decrease in scheduled service average base fare as fares were reduced in an effort to stimulate demand.higher take rate on bundled products.

Third party products revenue. Third party products revenue for the third quarter 2020 decreased 37.72021 increased 116.5 percent compared to the same period inthird quarter 2020 and 34.8 percent compared to the third quarter 2019. ThisThe increase from 2020 is primarily due to decreased net revenue from boththe result of greater travel demand for rental cars and hotels as a resultthan during the early part of substantiallythe pandemic. The increase from 2019 is attributable to increased rental car rates (which more than offset the impact of fewer passengers as well as reduced hotel room inventory, particularlyrental car days) and growth in the Las Vegas market.our co-branded credit card revenues.

Fixed fee contract revenue. Fixed fee contract revenue for the third quarter 2021 increased 110.4 percent compared to the same period in 2020 decreased 73.3as a result of a 57.0 percent year over yearincrease in related departures due to decreases in demand. Departures decreased 57.9 percent resulting from a significant drop in ad hoclower charter opportunities inactivity during the pandemic.

Fixed fee contract revenue for the third quarter 2020. The decreases in fixed fee revenue are related2021, as compared to COVID-19.2019, decreased by 43.8 percent due to continuing depressed demand for group charters compared to pre-pandemic periods.

Other revenue. Other revenue decreased 66.499.4 percent for the third quarter 20202021 from 2019.the same period in 2020. The decrease was due to decreased activity in the non-airline segments, especially for Kingsway Golf Course and our family entertainment centers. As a result of the COVID-19 pandemic, we temporarily closed our family entertainment center in Warren, Michigan and permanently discontinued all activity for our locations in Utah. We also temporarily closed Kingsway Golf Course, initially for renovation but now the renovation has been delayed as a result of our cash conservation efforts.subsidiaries.


Operating Expenses

We primarily evaluate our expense management by comparing our costs per ASMavailable seat mile (ASM) across different periods, which enables us to assess trends in each expense category. The following table presents airline-only unit costs on a per ASM basis, or CASM, for the indicated periods. Excluding fuel on a per ASM basis provides management and investors the ability to measure and monitor our cost performance absent fuel price volatility. Both the cost and availability of fuel are subject to many economic and political factors beyond our control.
Three Months Ended September 30,Percent Three Months Ended September 30,Percent Change
Airline only unitized costs (in cents)20202019Change
Unitized costs (in cents)Unitized costs (in cents)202120202019YoYYo2Y
Salary and benefitsSalary and benefits2.68 2.66 0.8 %Salary and benefits2.83 2.72 2.77 4.0 %2.2 %
Aircraft fuelAircraft fuel2.67 1.49 2.69 79.2 (0.7)
Station operationsStation operations1.60 1.13 1.12 41.6 42.9 
Depreciation and amortizationDepreciation and amortization1.28 0.99 29.3 Depreciation and amortization1.04 1.29 1.01 (19.4)3.0 
Station operations1.13 1.12 0.9 
Maintenance and repairsMaintenance and repairs0.40 0.64 (37.5)Maintenance and repairs0.69 0.40 0.64 72.5 7.8 
Sales and marketingSales and marketing0.23 0.45 (48.9)Sales and marketing0.50 0.23 0.45 117.4 11.1 
Aircraft lease rentalsAircraft lease rentals0.09 — NMAircraft lease rentals0.13 0.09 — 44.4 NM
OtherOther0.43 0.54 (20.4)Other0.50 0.56 0.69 (10.7)(27.5)
CARES Act grant recognition(2.21)— NM
Operating Special charges0.93 — NM
Airline CASM, excluding fuel4.96 6.40 (22.5)
Aircraft fuel1.49 2.69 (44.6)
Airline CASM6.45 9.09 (29.0)
Payroll Support Programs grant recognitionPayroll Support Programs grant recognition(1.12)(2.21)— (49.3)NM
Operating special chargesOperating special charges0.01 0.95 — (98.9)NM
CASMCASM8.85 6.65 9.37 33.1 (5.5)
Operating CASM, excluding fuelOperating CASM, excluding fuel6.18 5.16 6.68 19.8 (7.5)
NM - Not meaningful
25


Salary and benefits expense. Salary and benefits expense decreased $11.8increased $30.0 million, or 10.931.3 percent, for the third quarter 20202021 when compared to the same period in 2019.2020. Although the average number of full-timefull time equivalent employees wasremained relatively flat year over year, overall expense decreasedincreased due to temporary voluntary leave programs offered to employees, voluntary pay reductions, and suspension of the bonus accrual that were in effect during the year. We expectthird quarter 2020.

When compared to the same period in 2019, salaries and benefits expense increased by $18.2 million or 16.9 percent on a relatively flat number of full-timefull time equivalent employees year over two year. On a per ASM basis, salary and benefits expense increased only 2.2 percent. The cost increases primarily relate to decline by up to 9.0 percent during fourth quarter 2020 due to furloughsannual increases in crew pay and reductions in force.increased costs associated with irregular operations.

Aircraft fuel expense. Aircraft fuel expense decreased $52.0increased $65.8 million, or 49.8125.3 percent, for the third quarter 20202021 compared to third quarter 2019, largely2020. This is primarily due to the recovery from the COVID-19 pandemic driving increased capacity resulting in a decrease35.3 percent increase in systemfuel gallons consumed on a 25.8 percent increase in departures and a 66.7 percent increase in average fuel cost per gallon of 38.9 percent year over year as fuel priceswhich was depressed during the pandemic.
22

declined dueWhen compared to lower worldwide demand causedthe same period in 2019, aircraft fuel expense increased by the pandemic. System13.2 percent as average fuel cost per gallon increased 1.9 percent, departures increased 10.7 percent, and fuel gallons consumed decreased by 17.9increased 11.2 percent.

Station operations expense. Station operations expense for the third quarter 2021 increased $31.0 million, or 77.6 percent on a 9.4 percent decreasecompared to the same period in ASMs as we reduced capacity in light of the pandemic. Fuel efficiency (measured as ASMs per gallon) increased 10.2 percent year over year2020 due to fuel saving initiatives, as well as less weight on manyincreased departures of our flights,25.8 percent and increased costs associated with irregular operations.

Compared to the same period in 2019, station operations expense increased by $27.4 million or 63.0 percent. This increase is due to an increase in departures of 10.7 percent, a 36.3 percentage point year-over-year decrease54 percent and 47 percent increase in load factor.airport and landing fees respectively, and increased costs associated with irregular operations.

Depreciation and amortization expense. Depreciation and amortization expense for the third quarter 20202021 increased $5.9 million, or 14.8by 2.4 percent year over year,as compared to the third quarter 2020 as the average number of aircraft owned and in service increased 3.58.9 percent year over year.

Accounting for a large portion of this increase, amortization of major maintenance costs was $9.5 million for the third quarter 2020 compared to $6.8 million for the third quarter 2019, due to an increase in the number of aircraft and related deferred maintenance costs associated with them. We expect these costs will continue to increase as our fleet ages.

Station operations expense. Station operations expense for the third quarter 2020 decreased $3.6 million, or 8.2 percent, on a 9.6 percent decrease in scheduled service departures as we reduced the number of flights offered due to reduced demand.

Maintenance and repairs expense. Maintenance and repairs expense for the third quarter 2020 decreased $10.72021 increased $16.4 million, or 43.3116.9 percent, compared to the same period in 2019.2020. Routine maintenance costs decreasedincreased as aircraft utilization was down 14.9up 11.1 percent for the quarter and the average number of aircraft in service increased 16.4 percent year over year. In addition, our maintenance expenses during the quarter.pandemic were unusually low due to reduced flying during that period.

Compared to the same period in 2019, maintenance and repairs expense increased by $5.7 million or 22.9 percent primarily due to a 20.5 percent increase in the average number of aircraft in service and a 10.7 percent increase in departures year over two year.

Sales and marketing expense. Sales and marketing expense for the third quarter 2020 decreased2021 increased by 54.7176.7 percent compared to the same period in 2019. There was a decrease2020, due to an increase in net credit card fees as a result of a 53.5133.0 percent decreaseincrease in passenger revenue year over year. Additionally,year-over-year as well as reduced advertising spend has been intentionally pulled back this yearin 2020 during the pandemic.

Compared to the same period in 2019, sales and marketing expense increased by 25.3 percent due to an 8.3 percent increase in passenger revenue compared to the pandemic.same period in 2019 as well as our entrance into new marketing agreements.

Other operating expense. Other expense decreased $7.2increased $2.6 million forcompared to the third quarter 2020 as increases in other operating expenses attributable to increases in service compared to third quarter 2019, mostly due to decreased activity2020 more than offset decreases in expenses in our non-airline subsidiaries.

CARES ActPayroll Support Programs grant recognition.recognition. We received a total of $176.9$203.9 million in funds during the second and third quarters 2020in 2021 through the Payroll Support Program Agreement (the “PSPA”) under the CARES Act.payroll support programs. Of the total, $152.4$202.2 million of these funds relate torepresent direct grants, and were recognized as a credit to operating expense on our statement of income, over the periods for which the funds were intended to compensate - second and third quarters 2020. Of this total amount, wecompensate. We recognized a $77.9$49.2 million creditas an offset to operating expense on our statement of income during the third quarter of 2020.2021.

During 2020, we received $176.9 million in funds through the payroll support program and recognized a $77.9 million offset to operating expense on our statement of income for the third quarter 2020.
Operating
Special charges. Special charges of $33.6$0.3 million were recorded within operating expenses for the third quarter 2020. We did not have any special charges2021 compared to $33.6 million for the same period in 2019.2020. The special charges relate to expenses that were unique and specific to COVID-19. These charges in 2021 include accelerated depreciation on airframes and engines resulting from an accelerated retirement plan, losses on the sale-leaseback transactions, a portion of salary and benefits expense, and losses within our non-airline subsidiaries.plan. See Note 2 of Notes to Consolidated Financial Statements (unaudited) for further information.
Non-operating Special charges

There were noinformation on the special charges recorded within non-operating expenses for the third quarterin 2020. We did not have any special charges for the same period in 2019.
26


Interest Expense

Interest expense for the quarter ended September 30, 2020 declined2021 increased by $7.6$4.7 million, or 38.839.0 percent as we were ableover third quarter 2020, due to reducenew fixed rate debt and finance lease transactions entered into during the interest rate on our Term Loan with a principal balance of approximately $542.7 million after we amended the Term Loan in February 2020 and as a result of declines in LIBOR impacting our variable rate debt.pandemic.

Income Tax Expense

We recorded a $15.6 million tax benefit (34.8 percentOur effective tax rate) compared to a $13.0 million tax provision (22.8rate was 21.9 percent effective tax rate)and 34.8 percent for the three months ended September 30, 20202021 and 2019,2020, respectively. The effective tax rate for the three months ended September 30, 20202021 differed from the statutory federal income tax rate of 21.0 percent primarily due to state income taxes and the impact of ASU 2016-09 related to share-based payments. The effective tax rate for the three months ended September 30, 2020 was primarily due to the tax accounting impact of the CARES Act which allowsallowed us to carryback the 2020 net operating loss at the 35.0 percent tax rate applicable in earlier years.

Sunseeker and Other Non-airline expenses

Non-airline expenses are included in the various line items discussed above, as appropriate. The non-airline expenses include those from our Other non-Airline Segment (our Teesnap golf management business and Allegiant Nonstop family entertainment centers), and operating expenses attributable to Sunseeker Resort and Kingsway Golf Course (most of the Sunseeker Resort expenses were capitalized during the construction period). As of September 30, 2020, nearly all non-airline spend has been suspended.

2327

Comparison of nine months ended September 30, 20202021 to nine months ended September 30, 20192020

Operations during the nine months ended September 30, 2020 consisted of two months of pre-pandemic activity and the period from March 2020 through September 2020 which was substantially impacted by the pandemic. The comparisons below of the results for the nine month periods ended September 30, 2021 and September 30, 2020 should be read with this in mind.

As comparisons of our 2021 results to periods during 2020 reflect disproportionate changes due to the impact of the pandemic on air travel, we have also provided analysis of certain revenue and expense line items to 2019 results where helpful to understand trends in our performance.

Operating Revenue

Passenger revenue. For the nine months ended September 30, 2020,2021, passenger revenue decreased 46.5increased 66.0 percent compared with the same period in 2020. The increase is primarily attributable to the effects of COVID-19 in 2020, where a significant decline in passenger demand impacted operations from March to September 2020. Scheduled service passengers and average base fares in the current period are up 53.1 percent and 10.3 percent, respectively, over the same period in 2020.
As compared to the same period in 2019, due topassenger revenue decreased by 11.2 percent, as the impact of a 43.2 percent16.4 percentage point decline in scheduled service passengers from a 24.5 percent decrease in load factor. These declines are attributable to a substantial decline in passenger demand and government travel restrictions and quarantine requirements related to COVID-19, since March 2020. Average total fare per passenger decreasedfactor was partially offset by 5.8 percent, during the nine month period as a 3.4an 8.0 percent increase in capacity.
Air ancillary average air-related ancillary revenue per passenger partially offsetfare for the nine months ended September 30, 2021 increased by 6.5 percent when compared to 2020 and 10.1 percent when compared to 2019, the increase over 2019 more than offsetting a 13.74.8 percent decreasedecline in scheduled service average base fare. Increases in our customer baggage fees and convenience fee contributed to thefares. The increase in air-related ancillary revenue to $53.32 per passenger.is primarily driven by an increased take rate on bundled products.
Third party products revenue. Third party products revenue for the nine months ended September 30, 2020 decreased 33.22021 increased 71.1 percent over the same period in 2020 and 14.2 percent when compared to 2019. ThisThe increase from 2020 is primarily due to decreased net revenue from boththe result of greater travel demand for rental cars and hotels as a resultthan the early part of substantially fewer passengers as well as reduced hotel room inventory, particularlythe pandemic. The increase from 2019 is attributable to growth in the Las Vegas market. The decline in revenue from rental cars and hotels was slightly offset by a 1.3 percent increase in third-party revenue from our co-branded credit card program during the nine months ended September 30, 2020 compared to the same periodrevenues, which more than offset declines in 2019.rental car days and hotel room nights.

Fixed fee contract revenue. Fixed fee contract revenue for the nine months ended September 30, 2020 decreased 59.32021 increased 37.3 percent compared with the same period in 2019,2020. This is primarily due to decrease in demand resulting in a 45.628 percent decreaseincrease in related departures. The decrease in departures is mainly due to a significant drop in ad hocincreased charter opportunitiesactivity. During the nine months ended September 30, 2021, ad-hoc charters increased by 246.9 percent over 2020 levels and the cancellation of events such as the NCAAwe benefited from March Madness basketball tournament during 2020flying which did not occur in the prior year due to COVID-19.the pandemic.

Fixed fee contract revenue for the nine months ended September 30, 2021 as compared to the same period in 2019 decreased by 44.1 percent due to continuing depressed demand for group charters compared to pre-pandemic periods.

Other revenue. Other revenue decreased by 25.987.0 percent for the nine months ended September 30, 20202021, when compared to the same period in 2019.2020. The decrease is primarily driven by decreasesdue to decreased activity in subsidiary revenue through the third quarter 2020. As a resultnon-airline subsidiaries, including the closure of the COVID-19 pandemic, we temporarily closed our family entertainment center in Warren, Michigancenters and permanently discontinued all activity for our locations in Utah. We also temporarily closed Kingsway Golf Course, initially for renovation but now the renovation has been delayed as a resultsale of our cash conservation efforts.Teesnap golf management business in the second quarter 2021.

Operating Expenses

We primarily evaluate our expense management by comparing our costs per ASM across different periods, which enables us to assess trends in each expense category. The following table presents airline-only unit costs on a per ASM basis, ordefined as Operating CASM, for the indicated periods. Excluding fuel on a per ASM basis provides management and investors the ability to measure and monitor our cost performance absent fuel price volatility. Both the cost and availability of fuel are subject to many economic and political factors beyond our control.
 Nine Months Ended September 30,Percent
Airline only unitized costs (in cents)20202019Change
Salary and benefits3.01 2.68 12.3 %
Depreciation and amortization1.33 0.90 47.8 
Station operations1.10 1.05 4.8 
Maintenance and repairs0.50 0.56 (10.7)
Sales and marketing0.36 0.47 (23.4)
Aircraft lease rentals0.06 — NM
Other0.58 0.47 23.4 
CARES Act grant recognition(1.55)— NM
Operating Special charges1.20 — NM
Airline CASM, excluding fuel6.59 6.13 7.5 
Aircraft fuel1.72 2.65 (35.1)
Airline CASM8.31 8.78 (5.4)
NM - Not meaningfulperiods:    
 Nine Months Ended September 30,Percent Change
Unitized costs (in cents)202120202019YoYYo2Y
Salary and benefits2.80 3.09 2.78 (9.4)%0.7 %
Aircraft fuel2.38 1.72 2.65 38.4 (10.2)
Station operations1.31 1.10 1.05 19.1 24.8 
Depreciation and amortization1.03 1.35 0.93 (23.7)10.8 
Maintenance and repairs0.59 0.50 0.56 18.0 5.4 
Sales and marketing0.39 0.36 0.48 8.3 (18.8)
Aircraft lease rentals0.12 0.06 — 100.0 NM
Other0.43 0.71 0.60 (39.4)(28.3)
Payroll Support Programs grant recognition(1.55)(1.55)— — NM
Operating Special charges0.02 2.86 — (99.3)NM
CASM7.52 10.20 9.05 (26.3)(16.9)
Operating CASM, excluding fuel5.14 8.48 6.40 (39.4)(19.7)

Salary and benefits expense. Salary and benefits expense decreased $37.3increased $62.4 million, or 11.020.6 percent, for the nine months ended September 30, 20202021 compared to the same period in 2019.2020. Although the average number of full-time equivalent employees was
28

remained relatively flat year over year, expense increased due to temporary voluntary leave programs offered to employees, voluntary pay reductions, and suspension of the bonus accrual that were in effect during the year resulted in decreased expenses. Additionally, a large portion of the $9.5 million special charges specific to COVID-19 during the first quarter of 2020 consisted of salary and benefits expense.nine months ended September 30, 2020.


Salary and benefits expense increased by $25.1 million or 7.4 percent as compared to the nine months ended September 30, 2019. Although the average number of full time equivalent employees remained relatively flat, overall expense increased primarily due to annual increases in crew pay.
24

Aircraft fuel expense. Aircraft fuel expense decreased $155.5increased $142.0 million, or 48.084.1 percent, for the nine months ended September 30, 20202021 compared to the same period in 2019 largely2020. This is primarily due to the recovery from the COVID-19 pandemic as departures increased by 33.6 percent resulting in an increase of 36.2 percent in fuel gallons consumed. The increase is also driven by a 35.1 percent increase in average fuel cost per gallon.
Aircraft fuel expense decreased by $13.6 million or 4.2 percent for the nine months ended September 30, 2021 compared to the same period in 2019. This is primarily driven by a decrease in system average fuel cost per gallon of 30.76.4 percent, year over year as fuel prices declined due to lower worldwide demand causedoffset by a 4.1 percent improvement in available seat miles per gallon.
Station operations expense. Station operations expense for the pandemic. Additionally, system fuel gallons consumed decreased 24.9nine months ended September 30, 2021 increased $62.9 million or 58.0 percent on a 19.9 percent decrease in ASMs as we reduced capacity in light of the pandemic. Fuel efficiency (measured as ASMs per gallon) increased 6.6 percent year over year due to fuel saving initiatives as well as less weight on many of our flights,primarily due to a 24.5 percentage point year-over-year decrease33.6 percent increase in load factor.departures, increased costs associated with irregular operations, and increased airport and landing fees.

As compared to the nine month period ended September 30, 2019, station operations expense increased by $42.9 million or 33.4 percent due to a 5.3 percent increase in departures, increased costs associated with irregular operations and airport fees.

Depreciation and amortization expense. Depreciation and amortization expense for the nine months ended September 30, 20202021 increased $18.2$1.8 million or 15.91.4 percent as compared to the same period in 2019. The2020 due to an increase of 7.9 percent in the average number of owned aircraft in service.

When compared to the nine months ended September 30, 2019, depreciation and amortization expense increased 17.5 percent as the average number of aircraft in service during the period increased 9.5 percent year over year.
Amortization of major maintenance costs was $28.3 million for the nine months ended September 30, 2020 compared to $17.7 million for the same period in 2019. We expect these costs will continue to increase as our fleet ages.

Station operations expense. Station operations expense for the nine months ended September 30, 2020 decreased 15.6 percent on a 20.3 percent decrease in scheduled service departures compared to the same period in 2019 as we reduced the number of flights offered due to reduced demand.20.8 percent.

Maintenance and repairs expense. Maintenance and repairs expense for the nine months ended September 30, 2020 decreased 28.62021 increased by $27.6 million or 56.4 percent compared to the same period in 2019 mostly2020. This is primarily due to a 10.3 percent increase in the average number of aircraft in service and a 22.4 percent increase in utilization year over year.

As compared to the nine months ended September 30, 2019, maintenance and repairs expense increased by $7.9 million or 11.6 percent as the number of aircraft in service increased by 20.8 percent, offset by the effect of a 13.4 percent decrease in both major and routine maintenance costs as aircraft utilization was down 29.3 percent as we flew fewer ASMs and departures during the period.year over two year.

Sales and marketing expense. Sales and marketing expense for the nine months ended September 30, 2020 decreased $23.7 million2021 increased 45.2 percent compared to the same period in 2019. There was a decrease in net credit card fees as a result of a 46.5 percent decrease in passenger revenue year over year. Additionally2020. In 2020, advertising spend was intentionally pulled back after the onset of the pandemicbeginning in March 2020.due to the pandemic. There was also an increase in net credit card fees in the current year as a result of a 66.0 percent increase in passenger revenue year over year.

As compared to the nine months ended September 30, 2019, sales and marketing expense decreased by 13.2 percent due to our efforts to more adeptly deploy advertising spend.

Other operating expense. Other expense decreased $3.5by $14.6 million or 20.7 percent year over year, mostly due to a decreasedecreased activity in our non-airline related expenses and other various expenses.subsidiaries.

CARES ActPayroll Support Programs grant recognition. We received a total of $176.9$203.9 million in funds during the second and third quarters 2020nine months ended September 30, 2021 through the Payroll Support Program Agreement under the CARES Act. We recognized $152.4 million, the amount relating topayroll support programs. The direct grants were recognized as a credit to operating expense on our statement of income, duringover the periods for which the funds were intended to compensate.

During the first nine months of 2020, we received $176.9 million in funds through the payroll support program and recognized a $152.4 million offset to operating expense on our statement of income for the nine months ended September 30, 2020.

Operating Special charges. Special charges of $280.9$2.9 million were recorded within operating expenses for the nine months ended September 30, 2020. We did not have any special charges2021 compared to $280.9 million for the same period in 2019.2020. The special charges relate to expenses that were unique and specific to COVID-19, andCOVID-19. These charges in 2021 include impairment charges, accelerated depreciation on sevenretirements of 5 airframes and five8 engines resulting fromand an impairment loss on a building associated with the Allegiant Nonstop familiy entertainment line of business. Special charges recorded in the first nine months of 2020 included accelerated retirement plan, lossesretirements of aircraft and airframes, a loss on the sale-leaseback transactions,transaction we would not likely have transacted absent cash conservation efforts as a portionresult of COVID, salary and benefits expense, and other various expenses.expenses during the nine months ended September 30, 2020. See Note 2 of the Notes to Consolidated Financial StatementsStatement (unaudited) for further information.
29

Non-operating Special charges

Non-operating special charges. Special charges of $26.6 million were recorded within non-operating expenses for the nine months ended September 30, 2020. We did not have any non-operating special charges for the same period in 2019.2021. Of these special charges in 2020, $19.8 million relatesrelated to the termination of the loan agreement with Sixth Street Partners (formerly TSSP) intended to finance the development of Sunseeker Resorts Charlotte Harbor. The remaining $6.8 million relatesrelated to impairment charges for Sunseeker Resort during the first quarter 2020.

Interest Expense

Interest expense These charges were reclassified from operating special charges to non-operating special charges for the nine months ended September 30, 2020 declined by $14.4 million, or 24.6 percent, as we were able to reduce the interest rate on our Term Loan with a principal balance of approximately $542.7 million after we amended the Term Loan in February 2020 and as a result of declines in LIBOR impacting our variable rate debt.2020.

Income Tax Expense

We recorded a $166.6$40.3 million tax benefit (51.8expense (22.2 percent effective tax rate) compared to a $51.0 million($166.6 million) tax provision (22.9benefit (51.8 percent effective tax rate) for the nine months ended September 30, 2021 and 2020 respectively. The 22.2 percent effective tax rate for the nine months ended September 30, 2021 differed from the statutory federal income tax rate of 21.0 percent primarily due to state income taxes and 2019, respectively.the impact of ASU 2016-09 related to share-based payments. The 51.8 percent effective tax rate for the nine months ended September 30, 2020 differed from the statutory federal income tax rate of 21.0 percent primarily due to the tax accounting impact of the CARES Act which includes a $40.9 million discrete federal income tax benefit related to the full utilization of 2018 and 2019 net operating losses as well as the ability to carryback the 2020 net operating loss at thea 35.0 percent tax rate applicable in earlier years. The effective tax rate was also impacted by the remeasurement of deferred taxes and state taxes. 
25


Sunseeker and Other Non-airline expenses

Non-airline expenses are included in the various line items discussed above, as appropriate. The non-airline expenses include those from our Other non-Airline Segment (our Teesnap golf management business and Allegiant Nonstop family entertainment centers), and operating expenses attributable to Sunseeker Resort and Kingsway Golf Course (most of the Sunseeker Resort expenses were capitalized during the construction period).

2630

Comparative Consolidated Operating Statistics

The following tables set forth our operating statistics for the periods indicated:
Three Months Ended September 30,PercentThree Months Ended September 30,
Percent Change (1)
20202019
Change(1)
202120202019YoYYo2Y
Operating statistics (unaudited):Operating statistics (unaudited):   Operating statistics (unaudited):   
Total system statistics:Total system statistics:   Total system statistics:   
PassengersPassengers2,016,241 3,806,369 (47.0)Passengers3,872,651 2,016,241 3,806,369 92.1 %1.7 %
Available seat miles (ASMs) (thousands)Available seat miles (ASMs) (thousands)3,521,508 3,888,400 (9.4)Available seat miles (ASMs) (thousands)4,441,201 3,521,508 3,888,400 26.1 14.2 
Airline operating expense per ASM (CASM) (cents)
6.45 9.09 (29.0)
Operating expense per ASM (CASM) (cents)Operating expense per ASM (CASM) (cents)8.85 6.65 9.37 33.1 (5.5)
Fuel expense per ASM (cents)Fuel expense per ASM (cents)1.49 2.69 (44.6)Fuel expense per ASM (cents)2.67 1.49 2.69 79.2 (0.7)
Airline operating CASM, excluding fuel (cents)4.96 6.40 (22.5)
Operating CASM, excluding fuel (cents)Operating CASM, excluding fuel (cents)6.19 5.15 6.68 20.2 (7.3)
ASMs per gallon of fuelASMs per gallon of fuel88.5 80.3 10.2 ASMs per gallon of fuel82.5 88.5 80.3 (6.8)2.7 
DeparturesDepartures24,365 27,707 (12.1)Departures30,663 24,365 27,707 25.8 10.7 
Block hoursBlock hours52,238 59,678 (12.5)Block hours67,398 52,238 59,678 29.0 12.9 
Average stage length (miles)Average stage length (miles)834 823 1.3 Average stage length (miles)829 834 823 (0.6)0.7 
Average number of operating aircraft during periodAverage number of operating aircraft during period90.7 87.6 3.5 Average number of operating aircraft during period105.6 90.7 87.6 16.4 20.5 
Average block hours per aircraft per dayAverage block hours per aircraft per day6.3 7.4 (14.9)Average block hours per aircraft per day7.0 6.3 7.4 11.1 (5.4)
Full-time equivalent employees at end of periodFull-time equivalent employees at end of period4,275 4,267 0.2 Full-time equivalent employees at end of period4,246 4,275 4,267 (0.7)(0.5)
Fuel gallons consumed (thousands)Fuel gallons consumed (thousands)39,786 48,443 (17.9)Fuel gallons consumed (thousands)53,850 39,786 48,443 35.3 11.2 
Average fuel cost per gallonAverage fuel cost per gallon$1.32 $2.16 (38.9)Average fuel cost per gallon$2.20 $1.32 $2.16 66.7 1.9 
Scheduled service statistics:Scheduled service statistics:  Scheduled service statistics:  
PassengersPassengers2,003,648 3,753,611 (46.6)Passengers3,834,956 2,003,648 3,753,611 91.4 2.2 
Revenue passenger miles (RPMs) (thousands)Revenue passenger miles (RPMs) (thousands)1,714,622 3,170,826 (45.9)Revenue passenger miles (RPMs) (thousands)3,302,519 1,714,622 3,170,826 92.6 4.2 
Available seat miles (ASMs) (thousands)Available seat miles (ASMs) (thousands)3,449,339 3,687,473 (6.5)Available seat miles (ASMs) (thousands)4,312,893 3,449,339 3,687,473 25.0 17.0 
Load factorLoad factor49.7 %86.0 %(36.3)Load factor76.6 %49.7 %86.0 %26.9 (9.4)
DeparturesDepartures23,710 26,238 (9.6)Departures29,593 23,710 26,238 24.8 12.8 
Block hoursBlock hours51,057 56,576 (9.8)Block hours65,296 51,057 56,576 27.9 15.4 
Total passenger revenue per ASM (TRASM) (cents)(2)
5.60 11.10 (49.5)
Average fare - scheduled service(3)
$40.75 $54.20 (24.8)
Average fare - air-related charges(3)
$50.04 $50.03 — 
Average seats per departureAverage seats per departure174.3 173.2 170.8 0.6 2.0 
Yield (cents) (2)
Yield (cents) (2)
6.04 4.76 6.42 26.9 (5.9)
Total passenger revenue per ASM (TRASM) (cents)(3)
Total passenger revenue per ASM (TRASM) (cents)(3)
10.40 5.60 11.10 85.7 (6.3)
Average fare - scheduled service(4)
Average fare - scheduled service(4)
$52.05 $40.75 $54.20 27.7 (4.0)
Average fare - air-related charges(4)
Average fare - air-related charges(4)
$58.45 $50.04 $50.03 16.8 16.8 
Average fare - third party productsAverage fare - third party products$5.66 $4.85 16.7 Average fare - third party products$6.40 $5.66 $4.85 13.1 32.0 
Average fare - totalAverage fare - total$96.45 $109.08 (11.6)Average fare - total$116.91 $96.45 $109.08 21.2 7.2 
Average stage length (miles)Average stage length (miles)839 824 1.8 Average stage length (miles)834 839 824 (0.6)1.2 
Fuel gallons consumed (thousands)Fuel gallons consumed (thousands)38,853 46,038 (15.6)Fuel gallons consumed (thousands)52,249 38,853 46,038 34.5 13.5 
Average fuel cost per gallonAverage fuel cost per gallon$1.32 $2.17 (39.2)Average fuel cost per gallon$2.20 $1.32 $2.17 66.7 1.4 
Rental car days soldRental car days sold255,800 482,944 (47.0)Rental car days sold366,407 255,800 482,944 43.2 (24.1)
Hotel room nights soldHotel room nights sold44,655 99,991 (55.3)Hotel room nights sold66,626 44,655 99,991 49.2 (33.4)
Percent of sales through website during periodPercent of sales through website during period92.3 %93.1 %(0.8)Percent of sales through website during period95.4 %92.3 %93.1 %3.1 2.3 
(1) Except load factor and percent of sales through website during period, which are presented as a percentage point change.
(2) Defined as scheduled service revenue divided by revenue passenger miles.
(3) Various components of this measure do not have a direct correlation to ASMs. This measure is provided on a per ASM basis so as to facilitate comparison with airlines reporting revenues on a per ASM basis.
(3)(4) Reflects division of passenger revenue between scheduled service (base fare) and air-related charges in our booking path.

2731

Nine Months Ended September 30,Percent
20202019
Change(1)
Operating statistics (unaudited):   
Total system statistics:   
Passengers6,464,949 11,426,183 (43.4)
Available seat miles (ASMs) (thousands)9,809,934 12,245,704 (19.9)
Airline operating expense per ASM (CASM) (cents)
8.31 8.78 (5.4)
Fuel expense per ASM (cents)1.72 2.65 (35.1)
Airline operating CASM, excluding fuel (cents)6.59 6.13 7.5 
ASMs per gallon of fuel87.6 82.2 6.6 
Departures65,766 83,454 (21.2)
Block hours147,350 187,829 (21.6)
Average stage length (miles)862 858 0.5 
Average number of operating aircraft during period92.1 84.1 9.5 
Average block hours per aircraft per day5.8 8.2 (29.3)
Full-time equivalent employees at end of period4,275 4,267 0.2 
Fuel gallons consumed (thousands)111,929 148,980 (24.9)
Average fuel cost per gallon$1.51 $2.18 (30.7)
Comparative Consolidated Operating Statistics
Scheduled service statistics:  
Passengers6,424,331 11,307,004 (43.2)
Revenue passenger miles (RPMs) (thousands)5,747,639 9,964,948 (42.3)
Available seat miles (ASMs) (thousands)9,588,031 11,800,788 (18.8)
Load factor59.9 %84.4 %(24.5)
Departures63,877 80,149 (20.3)
Block hours143,651 180,674 (20.5)
Total passenger revenue per ASM (TRASM) (cents)(2)
7.44 11.18 (33.5)
Average fare - scheduled service(3)
$52.12 $60.40 (13.7)
Average fare - air-related charges(3)
$53.32 $51.56 3.4 
Average fare - third party products$5.57 $4.74 17.5 
Average fare - total$111.00 $116.70 (4.9)
Average stage length (miles)867 861 0.7 
Fuel gallons consumed (thousands)109,082 143,433 (23.9)
Average fuel cost per gallon$1.50 $2.17 (30.9)
Rental car days sold872,382 1,495,502 (41.7)
Hotel room nights sold149,431 319,197 (53.2)
Percent of sales through website during period93.2 %93.4 %(0.2)

The following tables set forth our operating statistics for the periods indicated:
Nine Months Ended September 30,
Percent Change (1)
202120202019YoYYo2Y
Operating statistics (unaudited):   
Total system statistics:   
Passengers9,906,371 6,464,949 11,426,183 53.2 %(13.3)%
Available seat miles (ASMs) (thousands)13,049,732 9,809,934 12,245,704 33.0 6.6 
Operating expense per ASM (CASM) (cents)7.52 10.20 9.05 (26.3)(16.9)
Fuel expense per ASM (cents)2.38 1.72 2.65 38.4 (10.2)
Operating CASM, excluding fuel (cents)5.14 8.48 6.41 (39.4)(19.8)
ASMs per gallon of fuel85.6 87.6 82.2 (2.3)4.1 
Departures87,854 65,766 83,454 33.6 5.3 
Block hours197,581 147,350 187,829 34.1 5.2 
Average stage length (miles)852 862 858 (1.2)(0.7)
Average number of operating aircraft during period101.6 92.1 84.1 10.3 20.8 
Average block hours per aircraft per day7.1 5.8 8.2 22.4 (13.4)
Full-time equivalent employees at end of period4,261 4,275 4,267 (0.3)(0.1)
Fuel gallons consumed (thousands)152,464 111,929 148,980 36.2 2.3 
Average fuel cost per gallon$2.04 $1.51 $2.18 35.1 (6.4)
Scheduled service statistics:  
Passengers9,838,512 6,424,331 11,307,004 53.1 (13.0)
Revenue passenger miles (RPMs) (thousands)8,657,151 5,747,639 9,964,948 50.6 (13.1)
Available seat miles (ASMs) (thousands)12,739,769 9,588,031 11,800,788 32.9 8.0 
Load factor68.0 %59.9 %84.4 %8.1 (16.4)
Departures85,303 63,877 80,149 33.5 6.4 
Block hours192,481 143,651 180,674 34.0 6.5 
Average seats per departure173.8 172.7 171.0 0.6 1.6 
Yield (cents) (2)
6.53 5.83 6.85 12.0 (4.7)
Total passenger revenue per ASM (TRASM) (cents)(3)
9.30 7.44 11.18 26.9 (16.8)
Average fare - scheduled service(4)
$57.48 $52.12 $60.40 10.3 (4.8)
Average fare - air-related charges(4)
$56.79 $53.32 $51.56 6.5 10.1 
Average fare - third party products$6.22 $5.57 $4.74 11.7 31.2 
Average fare - total$120.49 $111.00 $116.70 8.5 3.2 
Average stage length (miles)857 867 861 (1.2)(0.5)
Fuel gallons consumed (thousands)148,578 109,082 143,433 36.2 3.6 
Average fuel cost per gallon$2.01 $1.50 $2.17 34.0 (7.4)
Rental car days sold1,046,751 872,382 1,495,502 20.0 (30.0)
Hotel room nights sold195,535 149,431 319,197 30.9 (38.7)
Percent of sales through website during period93.8 %93.2 %93.4 %0.6 0.4 
(1) Except load factor and percent of sales through website during period, which are presented as a percentage point change.
(2) Defined as scheduled service revenue divided by revenue passenger miles.
(3) Various components of this measure do not have a direct correlation to ASMs. This measure is provided on a per ASM basis so as to facilitate comparison with airlines reporting revenues on a per ASM basis.
(3)(4) Reflects division of passenger revenue between scheduled service (base fare) and air-related charges in our booking path.

2832

LIQUIDITY AND CAPITAL RESOURCES

Current liquidity

Cash, cash equivalents and investment securities (short-term and long-term) increased to $709.8 million$1.1 billion at September 30, 2020,2021, from $473.4$685.2 million at December 31, 2019.2020. Investment securities represent highly liquid marketable securities which are available-for-sale.

Restricted cash represents escrowed funds under fixed fee contracts, escrowed project funds and cash collateral against letters of credit required by hotel properties for guaranteed room availability, airports and certain other parties. Under our fixed fee flying contracts, we require our customers to prepay for flights to be provided by us. The prepayments are escrowed until the flight is completed and are recorded as restricted cash with a corresponding amount reflected as air traffic liability.

WeDuring the nine months ended September 30, 2021, we received a total of $176.9$203.9 million in assistance through the payroll support program under the CARES Act. The funds were paid in installments, and we received $154.7 million during the second quarter 2020 and the remaining $22.2 million in the third quarter 2020.

Due to changes in the net operating loss carryback period under the CARES Act, we received a federal income tax refund of $45.6 million in May 2020 and an additional refund of $48.7 million in July 2020, both of which related to 2018 and 2019 net operating loss carrybacks. In the first half of 2021, we expect to receive under current law a federal income tax refund in excess of $125 million related to a 2020 net operating loss carryback. We received a $13 million federal excise tax refund related to net customer refunds issued for the first quarter 2020. We are also anticipating an additional $16 million in federal excise tax refunds in the first half of 2021.
In September 2020, we received proceeds of $84.0 million from a financing secured by two aircraft and eight spare engines. As of September 30, 2020, we had 21 unencumbered aircraft and two unencumbered spare engines.

In September 2020, we received $30.0 million of proceeds through a sale-leaseback transaction on three aircraft and a fourth closed in October for an additional $10.0 million.programs.

We have suspended share repurchases and our quarterly cash dividend, as part of cash preservationconservation efforts in response to the effects of COVID-19 on our business. In connection with our receipt of financial support under the payroll support program, we agreed not to repurchase shares or pay cash dividends through September 30, 2021. We have also suspended all non-airline capital expenditures and have reduced airline capital expenditures.2022.

We believe we have more than adequate liquidity resources through our cash balances, operating cash flows, borrowings and expected tax refunds, to meet our future contractual obligations. We will continue to consider raising funds through debt financing on an opportunistic basis.

Debt

Our debt and finance lease obligations balance, without reduction for related issuance costs, increaseddecreased from $1.4$1.68 billion as of December 31, 20192020 to $1.5$1.59 billion as of September 30, 2020.2021. During the third quarter of 2020,nine months ended September 30, 2021, we borrowed a net amount$149.1 million and we made principal payments of $90.7$239.6 million, including additional$53.9 million on our senior secured revolving credit facility that matured on March 31, 2021 and a $57.0 million prepayment of debt of $84.0 million secured by aircraft, and an additional $6.7 million of debt related to the PSP Note under the CARES Act Payroll Support Program. We also received an advance of $6.2 million from the pre-purchase of credit card points related to our amended co-branded credit card contract, which is recorded within debt on our balance sheet.aircraft.

Despite net losseslower revenues and substantially lower revenuesprofitability caused by the pandemic compared to pre-pandemic periods, our nettotal debt (total debt less cash, cash equivalents and investment securities)finance lease obligations declined by $108.5 million5.4 percent from December 31, 2019 until2020 to September 30, 2020.

In October 2020, We closed on a private offering of $150.0 million principal amount of 8.5 percent Senior Secured Notes due 2024. The Notes and related guarantees are secured by first priority security interests in substantially all of our property and assets (excluding aircraft, aircraft engines, the Sunseeker development, and certain other assets).2021.

Sources and Uses of Cash

Operating Activities. Operating cash inflows are primarily derived from providing air transportation and related ancillary products and services to customers. During the nine months ended September 30, 2020,2021, our operating activities provided $276.7$373.6 million of cash compared to $321.4$276.7 million during the same period of 2019. Although2020. This change is mostly attributable to a $296.4 million increase in net income for the nine months ended September 30, 2020 decreased by $326.9 million compared to 2019, the cash effect of this fluctuation was largely offset by the non-cash natureimpact of $279.1 million in special charges during the nine months ended September 30, 2020.in 2020 and changes in current assets and liability accounts.

Investing Activities. Cash used in investing activities was $513.3 million during the nine months ended September 30, 2021 compared to $209.1 million for the same period in 2020. The change is due to an increase of $258.9 million of purchases of investment securities, net of maturities, and $78.2 million related to proceeds from sale-leaseback transactions during the nine months ended September 30, 2020 compared to $324.0 million for the same periodno such transactions in 2019. The decrease in cash used is due to a $151.6 million year-over-year decrease in cash outlays for the purchase2021. Purchases of property and equipment and $78.2were $32.1 million in proceeds received from sale-leaseback
29

transactions. These decreasesless in the use of cash were partially offset by a $105.5 million increase in cash used for investment security activity, as purchases of investment securities (net of maturities) were $90.0 million for the nine months ended September 30, 2020, compared to $15.5 million in proceeds from investment security maturities (net of purchases) for the same period in 2019.current year.

Financing Activities. Cash provided by financing activities for the nine months ended September 30, 20202021 was $81.1$205.4 million, compared to $15.3$81.1 million for the same period in 2019.2020. The year-over-year increasechange is mostly due to the equity offering completed on May 10, 2021 which resulted in the receipt of $335.1 million in cash. This was offset by the net effect of debt activity, as debt proceeds net of principal payments and debt issuance cost payments were $121.6costs exceeded debt proceeds by $133.7 million during the nine months ended September 30, 2020,2021, compared to $67.7$121.6 million of debt proceeds (net of related costs) in excess of principal payments during the same period in 2019.2020. Additionally, there was an increase inwere no share repurchases which were $33.8 millionor dividends paid in the first quarter of 2020 (before the share repurchase program was suspended) compared to $18.5 million during the first nine months of 2019. Dividends paid decreased by $22.92021, where there was $33.8 million year-over-year as dividend payments were also suspended due toand $11.4 million of such activity, respectively, in the pandemic.same period of 2020.

33

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

We have made forward-looking statements in this quarterly report on Form 10-Q, and in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” that are based on our management’s beliefs and assumptions, and on information currently available to our management. Forward-looking statements include our statements regarding number of contracted aircraft to be placed in service in the future, airline operationsthe development and capacity, the efficacyfinancing of cost saving measures, future expenditures, aircraft financings, the timing of aircraft acquisitions and retirements, expected capital expenditures,our Sunseeker Resort, 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 industry environment.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,"believe," "expect," "anticipate," "intend," "plan," "estimate," “project,” “expect,” “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 may be found in our periodic reports filed with the Securities and Exchange Commission at www.sec.gov.www.sec.gov. These risk factors include, without limitation, the impact and duration of the COVID-19 pandemic on airline travel and the economy, liquidity issues resulting from the effect of the COVID-19 pandemic on our business, restrictions imposed on us a result of accepting government grants under the CARES Act,Payroll Support Programs, an accident involving, or problems with, our aircraft, public perception of our safety, our reliance on our automated systems, our reliance on third parties to deliver aircraft under contract to us on a timely basis, 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 to be acquired, 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, the ability to successfully develop and finance a resort in Southwest Florida, 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 publicly update any forward-looking statements, whether as a result of future events, new information or otherwise.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There have been no material changes to our critical accounting estimates during the nine months ended September 30, 2020.2021. For information regarding our critical accounting policies and estimates, see disclosures in the Consolidated Financial Statements and accompanying notes contained in our 20192020 Form 10-K, and in Note 1 of Notes to Consolidated Financial Statements (unaudited).

34

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are subject to certain market risks, including commodity prices (specifically aircraft fuel). The adverse effects of changes in these markets could pose potential losses as discussed below. The sensitivity analysis provided does not consider the effects that such adverse changes may have on overall economic activity, nor does it consider additional actions we may take to mitigate our exposure to such changes. Actual results may differ.

Aircraft Fuel

Our results of operations can be significantly impacted by changes in the price and availability of aircraft fuel, as aircraftfuel. Aircraft fuel expense represented 16.9 percent of our operating expenses for the nine months ended September 30, 2020.2021 represented 31.7 percent of our total operating expenses. Increases in fuel prices, or a shortage of supply, could have a material impact on our operations and operating results. Based on our fuel consumption for the three and nine months ended September 30, 2020,2021, a hypothetical ten percent increase in the average price per gallon of fuel would have increased fuel expense by approximately $5.2$11.9 million and $17.1$30.8 million respectively. We have not hedged fuel price risk for many years.

30

Interest Rates

As of September 30, 2020,2021, we had $1.2$0.95 billion inof variable-rate debt, including current maturities and without reduction for $13.8 million in related costs. A hypothetical 100 basis point increasechange in market interest rates would have affected interest expense on variable rate debt by approximately $7.7 million for the three and nine months ended September 30, 2020 would have affected interest expense by approximately $3.1 million and $9.4 million, respectively.2021.

As of September 30, 2020, we had $255.2 million of fixed-rate debt, including current maturities and without reduction for related costs.
35

Item 4. Controls and Procedures

As of September 30, 2020,2021, under the supervision and with the participation of our management, including our chief executive officer ("CEO") and chief financial officer (“CFO”), we evaluated the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, or the “Exchange Act”) as of the end of the period covered by this report. Based on that evaluation, management, including our CEO and CFO, has concluded that our disclosure controls and procedures are designed, and are effective, to give reasonable assurance that the information we are required to disclose is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management, including the CEO and the CFO, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting that occurred during the quarter ending September 30, 2020,2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

36

 PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are subject to certain legal and administrative actions we consider routine to our business activities. We believe the ultimate outcome of any pending legal or administrative matters will not have a material adverse impact on our financial position, liquidity or results of operations.

37

Item 1A.  Risk Factors

We have evaluated our risk factors and determined there are no changes to those set forth in Part I, Item 1A of our Annual Report on Form 10-K and those additional Risk Factors disclosed in our Quarterly Report on Form 10-Q for the quarteryear ended June 30,December 31, 2020 and filed with the Commission on August 4, 2020.March 1, 2021.

38

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Our Repurchases of Equity Securities

(a) As previously disclosed, in connection with funding that we have received under the CARES Act, we have issued to the Treasury warrants to purchase up to 27,681 shares of our common stock since April 2020 under an exemption from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended. Of these warrants, warrants to purchase 19,700 shares were issued on or prior to June 30, 2020 and warrants for an additional 7,981 shares were issued in third quarter 2020. For additional information regarding the Warrants, see Note 2 of the Notes to Consolidated Financial Statements (unaudited).Not applicable

(b) Not applicable

(c) We did not repurchase any common stock during the third quarter 2020.2021.

39

Item 3. Defaults Upon Senior Securities

None

40

Item 4. Mine Safety Disclosures

Not applicable

41

Item 5. Other Information

None
3142

Item 6. Exhibits
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Labels Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
(1) Incorporated by reference to Exhibit filed with Registration Statement #333-134145 filed by the Company with the Commission and amendments thereto.
(2) Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the Commission on May 12, 2020.
(3) Incorporated by reference to respective Exhibit to the Current Report on Form 8-K filed with the Commission on October 7, 2020.18, 2021.



3243

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ALLEGIANT TRAVEL COMPANY
Date:November 5, 2020October 28, 2021By:/s/ Gregory Anderson
Gregory Anderson, as duly authorized officer of the Company (Chief Financial Officer) and as Principal Financial Officer
3344