UNITED STATES

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 ended		September 30, ~~2021~~2022

ORor
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to _______ to_______

Commission File Number 001-33166

Allegiant Travel Company

(Exact Name of Registrant as Specified in Its Charter)


Nevada		20-4745737

(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

1201 North Town Center Drive
Las Vegas,	Nevada	89144
(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 class

Trading Symbol

Name of each exchange on which registered

Common stock, par value $0.001

ALGT

NASDAQ 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 ~~25, 2021,~~24, 2022, the registrant had ~~18,087,726~~18,398,569 shares of common stock, $0.001 par value per share, outstanding.

ALLEGIANT TRAVEL COMPANY

FORM 10-Q

TABLE OF CONTENTS


PART I.	FINANCIAL INFORMATION

ITEM 1.	Consolidated Financial Statements	3

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	3533

ITEM 4.	Controls and Procedures	3633

PART II.	OTHER INFORMATION

ITEM 1.	Legal Proceedings	3734

ITEM 1A.	Risk Factors	3834

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3934

ITEM 3.	Defaults Upon Senior Securities	4034

ITEM 4.	Mine Safety Disclosures	4134

ITEM 5.	Other Information	4234

ITEM 6.	Exhibits	4335

	Signatures	4436

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

ALLEGIANT TRAVEL COMPANY

CONSOLIDATED BALANCE SHEETS

(in thousands)


		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
		(unaudited)					(unaudited)
CURRENT ASSETS	CURRENT ASSETS					CURRENT ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	193,627	$	152,764	Cash and cash equivalents	$	240,528	$	363,378
Restricted cash	Restricted cash	42,337		17,555		Restricted cash	30,671		37,323
Short-term investments	Short-term investments	877,344		532,477		Short-term investments	761,362		819,478
Accounts receivable	Accounts receivable	147,407		192,215		Accounts receivable	79,150		62,659
Expendable parts, supplies and fuel, net	Expendable parts, supplies and fuel, net	28,424		24,006		Expendable parts, supplies and fuel, net	39,070		27,500
Prepaid expenses and other current assets	Prepaid expenses and other current assets	31,619		24,616		Prepaid expenses and other current assets	46,772		28,073

TOTAL CURRENT ASSETS	TOTAL CURRENT ASSETS	1,320,758		943,633		TOTAL CURRENT ASSETS	1,197,553		1,338,411
Property and equipment, net	Property and equipment, net	2,147,988		2,050,311		Property and equipment, net	2,738,516		2,259,507

Long-term investments						Long-term investments	—		2,231
Deferred major maintenance, net	Deferred major maintenance, net	146,563		127,463		Deferred major maintenance, net	148,719		146,850
Operating lease right-of-use assets, net	Operating lease right-of-use assets, net	124,297		115,911		Operating lease right-of-use assets, net	116,471		130,087
Deposits and other assets	Deposits and other assets	27,147		21,607		Deposits and other assets	209,705		113,987
TOTAL ASSETS:	TOTAL ASSETS:	$	3,766,753	$	3,258,925	TOTAL ASSETS:	$	4,410,964	$	3,991,073
CURRENT LIABILITIES	CURRENT LIABILITIES					CURRENT LIABILITIES
Accounts payable	Accounts payable	$	35,386	$	34,197	Accounts payable	$	51,394	$	43,566
Accrued liabilities	Accrued liabilities	148,634		116,093		Accrued liabilities	256,429		162,892
Current operating lease liabilities	Current operating lease liabilities	17,642		14,313		Current operating lease liabilities	19,792		19,081
Air traffic liability	Air traffic liability	351,522		307,508		Air traffic liability	429,924		307,453
Current maturities of long-term debt and finance lease obligations, net of related costs	Current maturities of long-term debt and finance lease obligations, net of related costs	139,590		217,234		Current maturities of long-term debt and finance lease obligations, net of related costs	152,550		130,053
TOTAL CURRENT LIABILITIES	TOTAL CURRENT LIABILITIES	692,774		689,345		TOTAL CURRENT LIABILITIES	910,089		663,045
Long-term debt and finance lease obligations, net of current maturities and related costs	Long-term debt and finance lease obligations, net of current maturities and related costs	1,434,614		1,441,777		Long-term debt and finance lease obligations, net of current maturities and related costs	1,840,000		1,612,486
Deferred income taxes	Deferred income taxes	310,952		301,763		Deferred income taxes	332,506		346,137
Noncurrent operating lease liabilities	Noncurrent operating lease liabilities	110,322		102,289		Noncurrent operating lease liabilities	100,111		115,067
Other noncurrent liabilities	Other noncurrent liabilities	27,027		24,388		Other noncurrent liabilities	39,285		30,786
TOTAL LIABILITIES:	TOTAL LIABILITIES:	2,575,689		2,559,562		TOTAL LIABILITIES:	3,221,991		2,767,521
SHAREHOLDERS' EQUITY	SHAREHOLDERS' EQUITY					SHAREHOLDERS' EQUITY
Common stock, par value $0.001	Common stock, par value $0.001	25		23		Common stock, par value $0.001	25		25
Treasury shares	Treasury shares	(642,177)		(646,008)		Treasury shares	(633,332)		(638,057)
Additional paid in capital	Additional paid in capital	675,795		329,753		Additional paid in capital	703,633		692,053
Accumulated other comprehensive income (loss), net		649		(27)
Accumulated other comprehensive income, net						Accumulated other comprehensive income, net	1,154		2,056
Retained earnings	Retained earnings	1,156,772		1,015,622		Retained earnings	1,117,493		1,167,475
TOTAL EQUITY:	TOTAL EQUITY:	1,191,064		699,363		TOTAL EQUITY:	1,188,973		1,223,552
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY:	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY:	$	3,766,753	$	3,258,925	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY:	$	4,410,964	$	3,991,073

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

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,
		2021		2020		2021		2020			2022		2021		2022		2021
OPERATING REVENUES:	OPERATING REVENUES:									OPERATING REVENUES:
Passenger	Passenger	$	423,796	$	181,916	$	1,124,237	$	677,347	Passenger	$	516,476	$	423,796	$	1,573,041	$	1,124,237
Third party products	Third party products	24,541		11,337		61,164		35,756		Third party products	27,132		24,541		77,399		61,164
Fixed fee contracts	Fixed fee contracts	11,117��		5,284		23,943		17,440		Fixed fee contracts	15,881		11,117		38,186		23,943
Other	Other	15		2,447		1,682		12,969		Other	836		15		1,654		1,682
Total operating revenues	Total operating revenues	459,469		200,984		1,211,026		743,512		Total operating revenues	560,325		459,469		1,690,280		1,211,026
OPERATING EXPENSES:	OPERATING EXPENSES:									OPERATING EXPENSES:
Salary and benefits		125,799		95,829		365,655		303,264
Aircraft fuel	Aircraft fuel	118,370		52,540		310,674		168,711		Aircraft fuel	208,175		118,370		629,600		310,674
Salaries and benefits										Salaries and benefits	137,336		125,799		411,027		365,655
Station operations	Station operations	70,943		39,954		171,246		108,359		Station operations	66,302		70,943		198,954		171,246
Depreciation and amortization	Depreciation and amortization	46,399		45,291		134,095		132,285		Depreciation and amortization	50,092		46,399		145,618		134,095
Maintenance and repairs	Maintenance and repairs	30,451		14,038		76,419		48,866		Maintenance and repairs	32,177		30,451		91,120		76,419
Sales and marketing	Sales and marketing	22,047		7,967		51,288		35,331		Sales and marketing	25,815		22,047		75,462		51,288
Aircraft lease rental	Aircraft lease rental	5,670		3,015		15,507		5,404		Aircraft lease rental	5,905		5,670		17,489		15,507
Other	Other	22,379		19,755		55,655		70,225		Other	30,292		22,379		83,137		55,655
Payroll Support Programs grant recognition	Payroll Support Programs grant recognition	(49,210)		(77,909)		(202,181)		(152,448)		Payroll Support Programs grant recognition	—		(49,210)		—		(202,181)
Special charges	Special charges	332		33,585		2,924		280,852		Special charges	35,142		332		35,426		2,924
Total operating expenses	Total operating expenses	393,180		234,065		981,282		1,000,849		Total operating expenses	591,236		393,180		1,687,833		981,282
OPERATING INCOME (LOSS)	OPERATING INCOME (LOSS)	66,289		(33,081)		229,744		(257,337)		OPERATING INCOME (LOSS)	(30,911)		66,289		2,447		229,744
OTHER (INCOME) EXPENSES:	OTHER (INCOME) EXPENSES:									OTHER (INCOME) EXPENSES:
Interest expense	Interest expense	16,595		11,943		50,103		44,149		Interest expense	34,242		16,595		78,530		50,174
Capitalized interest	Capitalized interest	(401)		—		(401)		(4,067)		Capitalized interest	(4,296)		(401)		(7,594)		(401)
Interest income	Interest income	(375)		(868)		(1,338)		(4,596)		Interest income	(4,918)		(375)		(7,909)		(1,338)
Loss on debt extinguishment		—		—		71		1,222
Special charges		—		—		—		26,632

Other, net	Other, net	239		552		(164)		1,173		Other, net	223		239		318		(164)
Total other expenses	Total other expenses	16,058		11,627		48,271		64,513		Total other expenses	25,251		16,058		63,345		48,271
INCOME (LOSS) BEFORE INCOME TAXES	INCOME (LOSS) BEFORE INCOME TAXES	50,231		(44,708)		181,473		(321,850)		INCOME (LOSS) BEFORE INCOME TAXES	(56,162)		50,231		(60,898)		181,473
INCOME TAX PROVISION (BENEFIT)	INCOME TAX PROVISION (BENEFIT)	10,977		(15,565)		40,323		(166,595)		INCOME TAX PROVISION (BENEFIT)	(9,703)		10,977		(10,916)		40,323
NET INCOME (LOSS)	NET INCOME (LOSS)	$	39,254	$	(29,143)	$	141,150	$	(155,255)	NET INCOME (LOSS)	$	(46,459)	$	39,254	$	(49,982)	$	141,150
Earnings (loss) per share to common shareholders:	Earnings (loss) per share to common shareholders:									Earnings (loss) per share to common shareholders:
Basic	Basic	$	2.18	$	(1.82)	$	8.18	$	(9.75)	Basic	$	(2.58)	$	2.18	$	(2.78)	$	8.18
Diluted	Diluted	$	2.18	$	(1.82)	$	8.18	$	(9.75)	Diluted	$	(2.58)	$	2.18	$	(2.78)	$	8.18
Shares used for computation:	Shares used for computation:									Shares used for computation:
Basic	Basic	17,766		16,006		17,005		15,953		Basic	18,014		17,766		17,985		17,005
Diluted	Diluted	17,767		16,006		17,015		15,953		Diluted	18,014		17,767		17,985		17,015

Cash dividends declared per share:	Cash dividends declared per share:	$	—	$	—	$	—	$	0.70	Cash dividends declared per share:	$	—	$	—	$	—	$	—

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

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,
		2021		2020		2021		2020			2022		2021		2022		2021
NET INCOME (LOSS)	NET INCOME (LOSS)	$	39,254	$	(29,143)	$	141,150	$	(155,255)	NET INCOME (LOSS)	$	(46,459)	$	39,254	$	(49,982)	$	141,150
Other comprehensive income (loss):
Other comprehensive income:										Other comprehensive income:
Change in available for sale securities, net of tax	Change in available for sale securities, net of tax	774		(292)		676		32		Change in available for sale securities, net of tax	(1,590)		774		(902)		676
Foreign currency translation adjustments		—		51		—		53

Total other comprehensive income (loss)	Total other comprehensive income (loss)	774		(241)		676		85		Total other comprehensive income (loss)	(1,590)		774		(902)		676
TOTAL COMPREHENSIVE INCOME (LOSS)	TOTAL COMPREHENSIVE INCOME (LOSS)	$	40,028	$	(29,384)	$	141,826	$	(155,170)	TOTAL COMPREHENSIVE INCOME (LOSS)	$	(48,049)	$	40,028	$	(50,884)	$	141,826

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

ALLEGIANT TRAVEL COMPANY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

(unaudited)


	Three Months Ended September 30, 2022
	Common stock outstanding	Par value		Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings		Treasury shares		Total shareholders' equity
Balance at June 30, 2022	18,180	$	25	$	698,982	$	2,744	$	1,163,952	$	(633,332)	$	1,232,371
Share-based compensation	122	—		4,651		—		—		—		4,651


Other comprehensive (loss)	—	—		—		(1,590)		—		—		(1,590)

Net (loss)	—	—		—		—		(46,459)		—		(46,459)
Balance at September 30, 2022	18,302	$	25	$	703,633	$	1,154	$	1,117,493	$	(633,332)	$	1,188,973


	Nine Months Ended September 30, 2022
	Common stock outstanding	Par value		Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings		Treasury shares		Total shareholders' equity
Balance at December 31, 2021	18,111	$	25	$	692,053	$	2,056	$	1,167,475	$	(638,057)	$	1,223,552
Share-based compensation	161	—		11,580		—		—		—		11,580

Stock issued under employee stock purchase plan	30	—		—		—		—		4,725		4,725
Other comprehensive income	—	—		—		(902)		—		—		(902)

Net (loss)	—	—		—		—		(49,982)		—		(49,982)
Balance at September 30, 2022	18,302	$	25	$	703,633	$	1,154	$	1,117,493	$	(633,332)	$	1,188,973


	Three Months Ended September 30, 2021
	Common stock outstanding	Par value		Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings		Treasury shares		Total shareholders' equity
Balance at June 30, 2021	17,986	$	25	$	671,893	$	(125)	$	1,117,518	$	(642,177)	$	1,147,134
Share-based compensation	59	—		3,902		—		—		—		3,902


Other comprehensive income	—	—		—		774		—		—		774

Net income	—	—		—		—		39,254		—		39,254
Balance at September 30, 2021	18,045	$	25	$	675,795	$	649	$	1,156,772	$	(642,177)	$	1,191,064

Nine Months Ended September 30, 2021
Common stock outstanding Par value Additional paid-in capital Accumulated other comprehensive income (loss) Retained earnings Treasury shares Total shareholders' equity
Balance at December 31, 2020 16,405 $ 23 $ 329,753 $ (27) 0 $ 1,015,622 $ (646,008) $ 699,363
Share-based compensation 71 — 10,800 — — — 10,800
Issuance of common stock, net of forfeitures 1,553 2 335,137 — — — 335,139
Stock issued under employee stock purchase plan 16 — — — — 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, 2021 18,045 $ 25 $ 675,795 $ 649 $ 1,156,772 $ (642,177) $ 1,191,064

Three Months Ended September 30, 2020
Common stock outstanding Par value Additional paid-in capital Accumulated other comprehensive income (loss) Retained earnings Treasury shares Total shareholders' equity
Balance at June 30, 2020 16,240 $ 23 $ 310,628 $ 424 $ 1,073,603 $ (648,118) $ 736,560
Share-based compensation 58 — 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, 2020 16,298 $ 23 $ 315,150 $ 183 $ 1,044,460 $ (648,118) $ 711,698


	Nine Months Ended September 30, 2021
	Common stock outstanding	Par value		Additional paid-in capital		Accumulated other comprehensive income		Retained earnings		Treasury shares		Total shareholders' equity
Balance at December 31, 2020	16,405	$	23	$	329,753	$	(27)	$	1,015,622	$	(646,008)	$	699,363
Share-based compensation	71	—		10,800		—		—		—		10,800
Issuance of common stock, net of forfeitures	1,553	2		335,137		—		—		—		335,139
Stock issued under employee stock purchase plan	16	—		—		—		—		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, 2021	18,045	$	25	$	675,795	$	649	$	1,156,772	$	(642,177)	$	1,191,064

Nine Months Ended September 30, 2020
Common stock outstanding Par value Additional paid-in capital Accumulated other comprehensive income Retained earnings Treasury shares Total shareholders' equity
Balance at December 31, 2019 16,303 $ 23 $ 289,933 $ 98 $ 1,211,076 $ (617,579) $ 883,551
Share-based compensation 171 — 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 plan 41 — — — — 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, 2020 16,298 $ 23 $ 315,150 $ 183 $ 1,044,460 $ (648,118) $ 711,698

ALLEGIANT TRAVEL COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2021		2020			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income (loss)	Net income (loss)	$	141,150	$	(155,255)	Net income (loss)	$	(49,982)	$	141,150
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income (loss) to net cash provided by operating activities:						Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	134,095		132,285		Depreciation and amortization	145,618		134,095
Special charges	Special charges	2,924		279,114		Special charges	35,426		2,924
Other adjustments	Other adjustments	26,778		89,342		Other adjustments	9,206		26,778
Changes in certain assets and liabilities:	Changes in certain assets and liabilities:					Changes in certain assets and liabilities:
Air traffic liability	Air traffic liability	44,014		84,111		Air traffic liability	122,471		44,014

Other - net	Other - net	24,634		(152,872)		Other - net	(40,917)		24,634
Net cash provided by operating activities	Net cash provided by operating activities	373,595		276,725		Net cash provided by operating activities	221,822		373,595
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Purchase of investment securities	Purchase of investment securities	(1,028,481)		(511,667)		Purchase of investment securities	(968,064)		(1,028,481)
Proceeds from maturities of investment securities	Proceeds from maturities of investment securities	679,588		421,658		Proceeds from maturities of investment securities	1,024,861		679,588
Aircraft pre-delivery deposits						Aircraft pre-delivery deposits	(88,500)		(3,300)
Purchase of property and equipment						Purchase of property and equipment	(304,956)		(163,202)

Purchase of property and equipment		(166,502)		(198,567)
Proceeds from sale-leaseback transactions		—		78,185
Other investing activities	Other investing activities	2,062		1,247		Other investing activities	1,037		2,062
Net cash used in investing activities		(513,333)		(209,144)
Net cash (used in) investing activities						Net cash (used in) investing activities	(335,622)		(513,333)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Cash dividends paid to shareholders		—		(11,361)

Proceeds from the issuance of debt and finance lease obligations	Proceeds from the issuance of debt and finance lease obligations	106,657		272,548		Proceeds from the issuance of debt and finance lease obligations	745,800		106,657
Repurchase of common stock		—		(33,773)

Principal payments on debt and finance lease obligations	Principal payments on debt and finance lease obligations	(239,644)		(146,416)		Principal payments on debt and finance lease obligations	(666,046)		(239,644)
Debt issuance costs	Debt issuance costs	(705)		(4,505)		Debt issuance costs	(12,681)		(705)
Proceeds from issuance of common stock	Proceeds from issuance of common stock	335,139		—		Proceeds from issuance of common stock	—		335,139
Other financing activities	Other financing activities	3,936		4,609		Other financing activities	(82,775)		3,936
Net cash provided by financing activities		205,383		81,102
Net cash provided by (used in) by financing activities						Net cash provided by (used in) by financing activities	(15,702)		205,383
NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	65,645		148,683		NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(129,502)		65,645
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD	170,319		136,785		CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD	400,701		170,319
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	$	235,964	$	285,468	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	$	271,199	$	235,964

CASH PAYMENTS (RECEIPTS) FOR:	CASH PAYMENTS (RECEIPTS) FOR:					CASH PAYMENTS (RECEIPTS) FOR:
Interest paid, net of amount capitalized	Interest paid, net of amount capitalized	$	30,739	$	36,801	Interest paid, net of amount capitalized	$	60,452	$	30,739
Income tax payments (refunds)	Income tax payments (refunds)	(12,762)		(95,258)		Income tax payments (refunds)	36		(12,762)
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:	SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:					SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:
Right-of-use (ROU) assets acquired	Right-of-use (ROU) assets acquired	$	23,157	$	103,499	Right-of-use (ROU) assets acquired	$	—	$	23,157
Flight equipment acquired under finance leases	Flight equipment acquired under finance leases	40,826		—		Flight equipment acquired under finance leases	172,507		40,826
Purchases of property and equipment in accrued liabilities	Purchases of property and equipment in accrued liabilities	12,727		19,294		Purchases of property and equipment in accrued liabilities	82,359		12,727

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

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 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, ~~2020~~2021 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 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 Accounting 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 ~~adopted this accounting standard prospectively as~~reclassified certain prior period amounts to conform to the current period presentation. Unless otherwise noted, all amounts disclosed are stated before consideration of ~~January 1, 2021, and it did not have a significant impact on the Company's consolidated financial statements.~~income taxes.

Note 2 — ~~Impact~~Hurricane Ian

As a result of Hurricane Ian's direct hit on the southwest coast of Florida on September 28, 2022, the construction site of Sunseeker Resort at Charlotte Harbor (the "Resort" or "Sunseeker Resort") was damaged.

Within days after the hurricane, the Company began to assess the damage to the Resort. Insurance claim adjustors representing the Company and the insurance carriers are assessing the extent of the ~~COVID-19 Pandemic~~damages and the costs to restore the Resort to its condition prior to the hurricane and determining the extent of construction interruption.

The ~~rapid spread~~Company has significant levels of ~~COVID-19~~insurance in place to cover the losses resulting from Hurricane Ian including for physical damage due to a named windstorm or flood (storm surge), business interruption 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. Demand has 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 vaccines. The Company is continuously reevaluating flight schedules and adjusting capacity based on demand trends.

~~On December 27, 2020, the Consolidated Appropriations Act, 2021 (the "Payroll Support Program Extension") was signed into law. This Payroll Support Program Extension provides~~ an additional $15.0 billion in support to the airline industry. On January 15, 2021, the Company through its airline operating subsidiary Allegiant Air, LLC entered into a Payroll Support Program Extension Agreement (the “PSP2”) with the Treasury and received $91.8 million under the Payroll Support Program Extension. The funds were used exclusively for wages, salaries and benefits.

In April 2021, the Company received $13.8 million in additional funds related to the PSP2 which included a loan of $1.7 million. In consideration for these additional funds, the Company issued additional warrants ( the "PSP2 Warrants") to the Treasury to acquire 924 shares of common stock at a price of $179.23 per share (based on the price of the Company's common stock on the Nasdaq Global Select Market on December 24, 2020)OCIP (owner-controlled insurance program).

In April 2021, the Company through its airline operating subsidiary Allegiant Air, LLC entered into a Payroll Support Program 3 Agreement (the "PSP3") with the Treasury under section 7301 of the American Rescue Plan Act of 2021 and received a total of $98.4 million. The funds were used exclusively for wages, salaries and benefits.

~~As of September 30, 2021, all Payroll Support Program funds have been fully utilized.~~

~~Special Charges~~

The ~~table below summarizes~~Company recognized a special ~~charges recorded~~charge of $35.0 million during the ~~three and nine months ended September 30, 2021, and 2020.~~

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2021 2020 2021 2020
Operating $ 332 $ 33,585 $ 2,924 $ 280,852
Non-operating — — — 26,632
Total special charges $ 332 $ 33,585 $ 2,924 $ 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~~quarter associated with the ~~Allegiant Nonstop family entertainment line~~estimated loss incurred from Hurricane Ian, which charge also reduced the carrying amount of ~~business.~~

~~Additional detail for~~ the ~~$307.5 million~~Resort. The estimate is preliminary and subject to change as the damage assessment continues. The amount of ~~total special charges (operating and non-operating) for~~ the ~~nine months ended September 30, 2020 appears below:~~

•~~$168.4 million~~loss will be offset in ~~impairment charges primarily in our non-airline subsidiaries~~

•~~$89.3 million resulting~~future periods by amounts to be recovered from the ~~accelerated retirement of 7 airframes and 5 engines, loss on sale leaseback transaction of 7 aircraft, and write-offs of other aircraft related assets~~

•$21.5 million 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

•$19.8 million accrual on termination of the loan agreement with Sixth Street Partners (formerly TSSP) intended to finance the development of Sunseeker Resorts Charlotte Harbor, which was paid in 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~~Company’s insurance policies.

109

Note 3 — Revenue Recognition

Passenger Revenue

Passenger revenue is the most significant category in the Company's reported operating 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)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Scheduled service	Scheduled service	$	195,225	$	79,464	$	552,765	$	325,404	Scheduled service	$	254,545	$	195,225	$	775,740	$	552,765
Ancillary air-related charges	Ancillary air-related charges	224,170		100,262		558,687		342,520		Ancillary air-related charges	252,080		224,170		765,096		558,687
Co-brand redemptions		4,401		2,190		12,785		9,423
Loyalty redemptions										Loyalty redemptions	9,851		4,401		32,205		12,785
Total passenger revenue	Total passenger revenue	$	423,796	$	181,916	$	1,124,237	$	677,347	Total passenger revenue	$	516,476	$	423,796	$	1,573,041	$	1,124,237

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.~~provided. As of September 30, ~~2021, approximately 69.8 percent of~~2022, the air traffic liability balance was $429.9 million, of which approximately $367.8 million was related to forward bookings, with the remaining ~~30.2 percent~~$62.1 million related to credit vouchers for future travel.

The normal contract term of passenger tickets is 12 months and passenger revenue associated with future travel will principally be recognized within this time frame. ~~$177.8 million of~~Of the $307.5 million that was recorded in the air traffic liability balance as of December 31, ~~2020~~2021, approximately 75.1 percent was recognized into passenger revenue during the nine months ended September 30, ~~2021.~~2022.

In 2020, the Company announced that ~~credits~~credit vouchers issued for canceled travel beginning in January 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~~Effective July 1, 2021, vouchers issued have an expiration date of one year from the ~~future breakage rate, which represents~~original booking date.

The Company periodically evaluates the ~~value~~estimated amount of credit vouchers ~~that are not~~ expected to ~~be redeemed prior to their contractual expiration date.~~expire unused and any adjustment is removed from air traffic liability and included in passenger revenue in the period in which the evaluation is complete. Estimates of passenger revenue to be recognized from air traffic liability for credit ~~vouchers~~voucher breakage 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~~Loyalty redemptions

In relation to the travel component of the ~~co-branded credit card~~Allways® Allegiant World Mastercard® 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. Similarly, in relation to the Allways Rewards program, points earned through the program are deferred based on the stand-alone selling price and recognized into passenger revenue when the points are redeemed and the underlying service has been provided.

The following table presents the activity of the ~~co-brand~~ point liability for the periods indicated:


		Nine Months Ended September 30,					Nine Months Ended September 30,
(in thousands)	(in thousands)	2021		2020		(in thousands)	2022		2021
Balance at January 1		$	21,841	$	15,613
Points balance at January 1						Points balance at January 1	$	40,490	$	21,841
Points awarded (deferral of revenue)	Points awarded (deferral of revenue)	23,319		15,018		Points awarded (deferral of revenue)	54,678		23,319
Points redeemed (recognition of revenue)	Points redeemed (recognition of revenue)	(12,785)		(9,510)		Points redeemed (recognition of revenue)	(32,205)		(12,785)
Balance at September 30		$	32,375	$	21,121
Points balance at September 30						Points balance at September 30	$	62,963	$	32,375

As of September 30, 2022 and 2021, ~~and 2020, $15.9~~$34.0 million and ~~$11.8~~$15.9 million, respectively, of the current points liability is reflected in accrued liabilities and represents the current estimate of revenue to be recognized in the next 12 months based on historical trends, with the remaining balance reflected in other noncurrent liabilities expected to be recognized into revenue in periods thereafter.

1110

Note 4 — Property and Equipment

The following table summarizes the Company's property and equipment as of the dates indicated:

(in thousands) September 30, 2021 December 31, 2020
Flight equipment, including pre-delivery deposits $ 2,474,650 $ 2,331,499
Computer hardware and software 157,334 149,727
Land and buildings/leasehold improvements (1)
87,657 87,030
Other property and equipment 97,965 80,601
Total property and equipment 2,817,606 2,648,857
Less accumulated depreciation and amortization (669,618) (598,546)
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.~~


(in thousands)	September 30, 2022		December 31, 2021
Flight equipment, including pre-delivery deposits	$	2,892,277	$	2,573,657
Computer hardware and software	194,983		160,237
Land and buildings/leasehold improvements	60,036		59,735
Other property and equipment	91,199		78,192
Sunseeker Resort	277,315		83,864
Total property and equipment	3,515,810		2,955,685
Less accumulated depreciation and amortization	(777,294)		(696,178)
Property and equipment, net	$	2,738,516	$	2,259,507

Accrued capital expenditures as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021 were ~~$12.7~~$82.4 million and ~~$16.9~~$17.7 million, respectively.

1211

Note 5 — Long-Term Debt

The following table summarizes the Company's ~~Long-term~~long-term debt and finance lease obligations as of the dates indicated:


(in thousands)	(in thousands)	September 30, 2021		December 31, 2020		(in thousands)	September 30, 2022		December 31, 2021
Fixed-rate debt and finance lease obligations due through 2030		$	634,761	$	525,240
Fixed-rate debt and finance lease obligations due through 2032						Fixed-rate debt and finance lease obligations due through 2032	$	1,624,432	$	827,382
Variable-rate debt due through 2029	Variable-rate debt due through 2029	939,443		1,133,771		Variable-rate debt due through 2029	368,118		915,157
Total debt and finance lease obligations, net of related costs	Total debt and finance lease obligations, net of related costs	1,574,204		1,659,011		Total debt and finance lease obligations, net of related costs	1,992,550		1,742,539
Less current maturities, net of related costs	Less current maturities, net of related costs	139,590		217,234		Less current maturities, net of related costs	152,550		130,053
Long-term debt and finance lease obligations, net of current maturities and related costs	Long-term debt and finance lease obligations, net of current maturities and related costs	$	1,434,614	$	1,441,777	Long-term debt and finance lease obligations, net of current maturities and related costs	$	1,840,000	$	1,612,486

Weighted average fixed-interest rate on debt	Weighted average fixed-interest rate on debt	5.7%		5.7%		Weighted average fixed-interest rate on debt	6.5%		5.8%
Weighted average variable-interest rate on debt	Weighted average variable-interest rate on debt	2.4%		2.4%		Weighted average variable-interest rate on debt	4.5%		2.5%

Maturities of long-term debt and finance lease obligations for the remainder of ~~2021~~2022 and for the next four years and thereafter, in the aggregate, are: remaining in ~~2021 - $38.3 million;~~ 2022 - ~~$133.3~~$34.2 million; 2023 - ~~$133.9~~$152.5 million; 2024 - ~~$803.9~~$299.8 million; 2025 - ~~$87.1~~$145.2 million; 2026 - $138.8 million; and ~~$377.7~~$1,222.0 million thereafter.

Senior Secured Notes

In August, 2022, the Company issued $550.0 million in aggregate principal amount of its 7.250% Senior Secured Notes due 2027 (the “Notes”) pursuant to an Indenture, dated as of August 17, 2022. The Notes are secured by first priority security interests in, subject to permitted liens, substantially all of the property and assets of the Company and its subsidiaries (other than Sunseeker Resort and its subsidiaries) (excluding aircraft, aircraft engines, real property and certain other assets). The collateral also secures the Company’s existing $150.0 million 8.500% Senior Secured Notes due 2024 and the Company’s new revolving credit facility through Barclays Bank, PLC (described below), on a pari passu basis. The Notes bear interest at a fixed rate of 7.25 percent per annum, payable in cash on February 15 and August 15 of each year, beginning February 15, 2023. The Notes will mature on August 15, 2027.

The Notes contain certain covenants that limit the ability of the Company to, among other things: (i) make restricted payments; (ii) incur indebtedness or issue preferred stock; (iii) create or incur certain liens; (iv) dispose of loyalty program or brand intellectual property collateral; (v) merge, consolidate or sell all or substantially all assets and (vi) enter into certain transactions with affiliates.

The Notes also require the Company to comply with certain affirmative covenants, including to maintain a minimum aggregate amount of liquidity of $300.0 million. If the Company fails to satisfy the minimum liquidity requirement, then the Company will be required to pay additional interest on all outstanding Notes in an amount equal to 2.0% per annum of the principal amount of such Notes until the Company demonstrates compliance with the liquidity requirement.

The Company used the net proceeds from the sale of the Notes to repay the Company’s Term Loan B, which had an outstanding principal amount of $533.0 million, and to pay costs and expenses of the transaction.

Senior Secured Revolving Credit ~~Facility~~Facilities

In ~~March 2021,~~August, 2022, the Company entered into a ~~new revolving~~ credit ~~facility~~agreement with MUFG Bank, Ltd under which itthe Company is entitled to borrow up to ~~$50.0~~$100.0 million. The revolving credit facility has a term of 24 months and the borrowing ability is based on the value of ~~the Airbus A320 series~~ aircraft and engines placed into the collateral pool. The notes ~~for amounts borrowed~~ under the facility bear interest at a floating rate based on ~~LIBOR and are due in March 2023.~~SOFR. As of September 30, ~~2021, no aircraft collateral had been added to the collateral pool and~~2022, the facility ~~was~~remains undrawn.

In August, 2022, the Company entered into a credit agreement with certain lenders and Barclays Bank PLC as administrative agent and lead arranger that provides a senior secured revolving loan facility of $75.0 million. The facility is secured by the same collateral that secures the Notes, has a term of 57 months and notes under the facility bear interest at a floating rate based on SOFR. As of September 30, 2022, the facility remains undrawn.

In September, 2022, the Company entered into a credit agreement with Norddeutsche Landesbank Girozentrale (acting through its New York branch) and Landesbank Hessen-Thüringen Girozentrale (the "Lenders") under which the Company is entitled to borrow up to $300.0 million. The revolving credit facility has a term of 24 months and the borrowing ability is based on the amount of pre-delivery deposits paid with respect to up to twenty (20) 737-MAX aircraft, the purchase rights for which the Company may choose to place in the collateral pool. The Facility is secured by the purchase rights for the applicable aircraft. The commitment amount at the time of signing is $200.0 million and the facility may be increased to $300.0 million subject to agreement between the Company and the Lenders. Any notes under the Facility will bear interest at a floating rate based on SOFR and all borrowings will be due no later than December 31, 2024 or upon delivery of the applicable aircraft. As of September 30, 2022, the facility remains undrawn.

Note 6 — Income Taxes

The Company recorded a $9.7 million income tax benefit at an effective tax rate of 17.3 percent and an $11.0 million income tax expense at a 21.9 percent ~~and 34.8 percent~~effective tax rate for the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The effective tax rate for the three months ended September 30, ~~2021~~2022 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~~permanent 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 allowed the Company to carryback the 2020 net operating loss at the 35.0 percent rate applicable in earlier years.differences. 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 $10.9 million income tax benefit at an effective tax rate of 17.9 percent and a $40.3 million income tax expense at a 22.2 percent ~~and 51.8 percent~~effective tax rate for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The effective tax rate for the nine months ended September 30, ~~2021~~2022 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 51.8 percent effective~~permanent tax ~~rate for the nine months ended September 30, 2020 differed from the statutory federal income tax rate~~differences, none of ~~21.0 percent primarily due to the tax accounting impact of the CARES Act~~ which included 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.are individually significant.

1413

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) Classification on the Balance Sheet September 30, 2021 December 31, 2020
Assets
Operating lease assets(1)
Operating lease right-of-use assets $ 124,297 $ 115,911
Finance lease assets(2)
Property and equipment, net 235,759 133,175
Total lease assets $ 360,056 $ 249,086
Liabilities
Current
Operating(1)
Current operating lease liabilities $ 17,642 $ 14,313
Finance(2)
Current maturities of long-term debt and finance lease obligations 14,951 9,767
Noncurrent
Operating(1)
Noncurrent operating lease liabilities 110,322 102,289
Finance(2)
Long-term debt and finance lease obligations 247,035 117,060
Total lease liabilities $ 389,950 $ 243,429

~~(1) The September 30, 2021 number represents assets and liabilities of 16 aircraft, office equipment, certain airport and terminal facilities, and other assets under operating leases~~

~~(2) The September 30, 2021 number represents assets and liabilities of 12 aircraft under finance leases~~

~~Sale-Leaseback Transaction~~

During the nine months ended September 30, 2021, the Company entered into a sale-leaseback transaction involving 3 aircraft and generating $105.0 million of proceeds. The lease was classified as a finance lease and as a result, the transaction did not qualify as a sale. The aircraft were not removed from property and equipment in the Company's balance sheet and the Company recorded a financial liability in the amount of $105.0 million. The proceeds from this transaction are treated as cash inflows from finance lease obligations and reported in financing activities on the statement of cash flows.

~~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, ~~2021.~~2022.

Financial instruments measured at fair value on a recurring basis:


		September 30, 2021						December 31, 2020							September 30, 2022						December 31, 2021
(in thousands)	(in thousands)	Total		Level 1		Level 2		Total		Level 1		Level 2		(in thousands)	Total		Level 1		Level 2		Total		Level 1		Level 2
Cash equivalents	Cash equivalents													Cash equivalents
Money market funds	Money market funds	$	100,965	$	100,965	$	—	$	5,340	$	5,340	$	—	Money market funds	$	49,106	$	49,106	$	—	$	25,019	$	25,019	$	—
Commercial Paper	Commercial Paper	25,199		—		25,199		48,908		—		48,908		Commercial Paper	70,450		—		70,450		179,455		—		179,455
Municipal debt securities	Municipal debt securities	16,674		—		16,674		34,338		—		34,338		Municipal debt securities	16,398		—		16,398		63,875		—		63,875

Federal agency debt securities		—		—		—		51,400		—		51,400

Total cash equivalents	Total cash equivalents	142,838		100,965		41,873		139,986		5,340		134,646		Total cash equivalents	135,954		49,106		86,848		268,349		25,019		243,330
Short-term	Short-term													Short-term
Commercial paper	Commercial paper	387,044		—		387,044		229,821		—		229,821		Commercial paper	450,529		—		450,529		419,469		—		419,469

Corporate debt securities	Corporate debt securities	267,821		—		267,821		166,768		—		166,768		Corporate debt securities	196,962		—		196,962		234,436		—		234,436
Municipal debt securities	Municipal debt securities	219,479		—		219,479		87,290		—		87,290		Municipal debt securities	20,965		—		20,965		165,573		—		165,573
Federal agency debt securities	Federal agency debt securities	3,000		—		3,000		48,598		—		48,598		Federal agency debt securities	92,906		—		92,906		—		—		—
Total short-term	Total short-term	877,344		—		877,344		532,477		—		532,477		Total short-term	761,362		—		761,362		819,478		—		819,478
Long-term														Long-term

Municipal debt securities														Municipal debt securities	—		—		—		2,231		—		2,231

Total long-term														Total long-term	—		—		—		2,231		—		2,231
Total financial instruments	Total financial instruments	$	1,020,182	$	100,965	$	919,217	$	672,463	$	5,340	$	667,123	Total financial instruments	$	897,316	$	49,106	$	848,210	$	1,090,058	$	25,019	$	1,065,039

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, excluding finance leases, including current maturities and without reduction for related costs, are as follows:


		September 30, 2021				December 31, 2020						September 30, 2022				December 31, 2021
(in thousands)	(in thousands)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value		Hierarchy Level	(in thousands)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value		Hierarchy Level
Non-publicly held debt	Non-publicly held debt	$	1,329,907	$	1,157,257	$	1,555,637	$	1,191,008	3	Non-publicly held debt	$	1,538,638	$	1,457,343	$	1,447,462	$	1,261,170	3

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

1614

Note 98 — 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 months and nine months ended September 30, ~~2021,~~2022, basic and diluted income (loss) per share are the ~~second method was used~~same because ~~it was more dilutive than~~of the ~~first method.~~(loss) position.

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,
		2021		2020		2021		2020			2022		2021		2022		2021
Basic:	Basic:									Basic:
Net income (loss)	Net income (loss)	$	39,254	$	(29,143)	$	141,150	$	(155,255)	Net income (loss)	$	(46,459)	$	39,254	$	(49,982)	$	141,150
Less income allocated to participating securities	Less income allocated to participating securities	(573)		—		(2,028)		(236)		Less income allocated to participating securities	—		(573)		—		(2,028)
Net income (loss) attributable to common stock	Net income (loss) attributable to common stock	$	38,681	$	(29,143)	$	139,122	$	(155,491)	Net income (loss) attributable to common stock	$	(46,459)	$	38,681	$	(49,982)	$	139,122
Earnings (loss) per share, basic	Earnings (loss) per share, basic	$	2.18	$	(1.82)	$	8.18	$	(9.75)	Earnings (loss) per share, basic	$	(2.58)	$	2.18	$	(2.78)	$	8.18
Weighted-average shares outstanding	Weighted-average shares outstanding	17,766		16,006		17,005		15,953		Weighted-average shares outstanding	18,014		17,766		17,985		17,005
Diluted:	Diluted:									Diluted:
Net income (loss)	Net income (loss)	$	39,254	$	(29,143)	$	141,150	$	(155,255)	Net income (loss)	$	(46,459)	$	39,254	$	(49,982)	$	141,150
Less income allocated to participating securities	Less income allocated to participating securities	(573)		—		(2,027)		(236)		Less income allocated to participating securities	—		(573)		—		(2,027)
Net income (loss) attributable to common stock	Net income (loss) attributable to common stock	$	38,681	$	(29,143)	$	139,123	$	(155,491)	Net income (loss) attributable to common stock	$	(46,459)	$	38,681	$	(49,982)	$	139,123
Earnings (loss) per share, diluted	Earnings (loss) per share, diluted	$	2.18	$	(1.82)	$	8.18	$	(9.75)	Earnings (loss) per share, diluted	$	(2.58)	$	2.18	$	(2.78)	$	8.18
Weighted-average shares outstanding	Weighted-average shares outstanding	17,766		16,006		17,005		15,953		Weighted-average shares outstanding	18,014		17,766		17,985		17,005
Dilutive effect of stock options and restricted stock	Dilutive effect of stock options and restricted stock	103		—		121		—		Dilutive effect of stock options and restricted stock	—		103		—		121
Adjusted weighted-average shares outstanding under treasury stock method	Adjusted weighted-average shares outstanding under treasury stock method	17,869		16,006		17,126		15,953		Adjusted weighted-average shares outstanding under treasury stock method	18,014		17,869		17,985		17,126
Participating securities excluded under two-class method	Participating securities excluded under two-class method	(102)		—		(111)		—		Participating securities excluded under two-class method	—		(102)		—		(111)
Adjusted weighted-average shares outstanding under two-class method	Adjusted weighted-average shares outstanding under two-class method	17,767		16,006		17,015		15,953		Adjusted weighted-average shares outstanding under two-class method	18,014		17,767		17,985		17,015

1715

Note 109 — 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.

Note 10 — 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 two operating segments: Airline and Sunseeker Resort.

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.

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 renovation of Aileron Golf Course (formerly known as Kingsway Golf Course). Plans for the resort include a 500-room hotel and two towers offering more than 180 one, two and three-bedroom suites, bar and restaurant options, and other amenities. The golf course is a short drive from the resort site and is considered, from a planning and strategic perspective, to be an additional resort amenity. The construction of Sunseeker Resort is an extension of the Company's leisure travel focus and it is expected that many customers flying to Southwest Florida on Allegiant will elect to stay at this resort and enjoy its amenities.

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


(in thousands)	Airline		Sunseeker Resort (1)		Consolidated
Three Months Ended September 30, 2022
Operating revenue:
Passenger	$	516,476	$	—	$	516,476
Third party products	27,132		—		27,132
Fixed fee contract	15,881		—		15,881
Other	836		—		836
Operating income (loss)	6,844		(37,755)		(30,911)
Interest expense, net	18,882		1,134		20,016
Depreciation and amortization	50,064		28		50,092
Capital expenditures	165,814		91,076		256,890
Three Months Ended September 30, 2021
Operating revenue:
Passenger	$	423,796	$	—	$	423,796
Third party products	24,541		—		24,541
Fixed fee contract	11,117		—		11,117
Other	15		—		15
Operating income (loss)	68,641		(2,352)		66,289
Interest expense, net	16,220		(401)		15,819
Depreciation and amortization	46,363		36		46,399
Capital expenditures	54,032		12,622		66,654

(1)Includes $35.0 million special charge in the third quarter 2022 relating to Hurricane Ian damage to Sunseeker Resort.The amount of the loss will be offset in future periods by amounts to be recovered under the Company’s insurance policies.


(in thousands)	Airline		Sunseeker Resort (1)		Consolidated
Nine Months Ended September 30, 2022
Operating revenue:
Passenger	$	1,573,041	$	—	$	1,573,041
Third party products	77,399		—		77,399
Fixed fee contract	38,186		—		38,186
Other	1,654		—		1,654
Operating income (loss)	44,902		(42,455)		2,447
Interest expense, net	52,111		5,904		58,015
Depreciation and amortization	145,573		45		145,618
Capital expenditures	404,015		228,452		632,467
Nine Months Ended September 30, 2021
Operating revenue:
Passenger	$	1,124,237	$	—	$	1,124,237
Third party products	61,164		—		61,164
Fixed fee contract	23,943		—		23,943
Other	1,682		—		1,682
Operating income (loss)	235,340		(5,596)		229,744
Interest expense, net	48,765		(401)		48,364
Depreciation and amortization	133,984		111		134,095
Capital expenditures	192,747		12,622		205,369

Total assets were as follows as of the dates indicated:


(in thousands)	As of September 30, 2022		As of December 31, 2021
Airline	$	4,012,922	$	3,872,041
Sunseeker Resort	398,042		119,032

Consolidated	$	4,410,964	$	3,991,073

Note 11 — Subsequent Events

In October 2022, the lender funded an additional $87.5 million into the construction disbursement account for the Sunseeker ~~Resort~~

~~On October 13, 2021, Sunseeker Florida, Inc. (“SFI”), a wholly-owned subsidiary of~~project and the Company ~~entered into~~received a ~~Credit Agreement pursuant to~~disbursement of $87.5 million from the account. After these transactions, the construction disbursement account has a balance of approximately $117.5 million, 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~~is recorded as a deposit on the remaining construction of the initial phases of Sunseeker Resorts at Charlotte Harbor (the “Project”). The Company expects $175.0 million of the loan to be advanced before the end of October with the remainingCompany's balance ~~to be received in 2 tranches scheduled for April and October 2022.~~sheet.

The ~~Loan~~Company has a $50.0 million loan to Viva Aerobus in deposits and other assets on the balance sheet which is ~~secured by the Project. All~~to convert to equity upon approval 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.

~~To support the credit, the Company has guaranteed the full amount of the debt and has agreed to guarantee completion of the Project in accordance with approved plans and specifications.~~

The Credit Agreement contains various events of default and upon 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 Loan to fund the construction of the Project.

~~Federal Income Tax Refund~~

~~In October 2021, the Company received $115.8 million in federal income tax refunds related to 2020 net 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 effectivejoint alliance from the ~~date of ratification -~~Mexican Federal Economic Competition Commission. This approval was obtained on 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.6, 2022.

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, ~~2021~~2022 and ~~2020.~~2021. Also discussed is our financial position as of September 30, ~~2021~~2022 and December 31, ~~2020.~~2021. 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, ~~2020.~~2021. 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.

Third Quarter ~~2021~~2022 Review

Highlights:

–~~Diluted earnings per share of $2.18~~

–Total operating revenue was ~~$459.5~~$560.3 million, up ~~5.3~~28.4 percent ~~when compared with~~year over three-year

–Total average fare of $125.95 up 15.5% from the third quarter 2019.

–Total average fare - air-related charges of $58.40, up 16.7 percent from 2019, driven predominantly by strength in bundled ancillary

–Total average fare - third party products of $6.29, up 29.7 percent year over three-year driven by Allways Allegiant World Mastercard strength

–Load factor of 88.5 percent, a 2.5 percentage point increase from 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~~Acquired 38 thousand new Allways Allegiant World Mastercard holders during the quarter, ~~down only 5.9 percent year over two-year on scheduled service capacity increases of 17.0 percent~~the strongest third quarter acquisition since the program's inception

–Allegiant World ~~Mastercard~~Mastercard® and Allegiant Allways Rewards® were voted as the No. 1 Best Airline Credit Card and Best Frequent Flyer Program in USA ~~Today~~Today's 10 Best 2022 Loyalty/Rewards Readers' Choice ~~Best Airline Co-Branded Credit Card~~Awards

–In October, named to Newsweek's Top 100 Most Loved Workplaces® list for the ~~third~~second consecutive year

–~~Launched~~Donated $100,000 to the ~~Allways Rewards program during~~American Red Cross for critical disaster relief to communities in the ~~quarter with over 13 million active members~~aftermath of Hurricane Ian

AIRCRAFT

The following table sets forth the aircraft in service and operated by us as of the dates indicated:


		September 30, 2021	December 31, 2020		September 30, 2022	December 31, 2021
A319	A319	35	34	A319	35	35
A320(1)	A320(1)	71	61	A320(1)	81	73
Total	Total	106	95	Total	116	108

(1)Does not include ~~seven~~ten aircraft of which we have taken delivery as of September 30, ~~2021,~~2022, but were not yet in service as of that date.

As of September 30, 2022, we are party to forward purchase agreements for 52 aircraft with five aircraft scheduled for delivery in 2023 and the remainder under contract thereafter. Additionally, we are party to a finance lease for one aircraft which has now been delivered in October 2022.

NETWORK

As of September 30, ~~2021,~~2022, we were selling ~~598~~583 routes versus ~~520~~598 as of the same date in ~~2020~~2021 and 466 as of September 30, 2019, which represents a ~~15.0~~2.5 percent decrease and ~~28.3~~25.1 percent increase, respectively. Our total active number of origination cities and leisure destinations were 9694 and ~~31,~~32, respectively, as of September 30, ~~2021.~~2022.

Our unique model is predicated around expanding and contracting capacity to meet seasonal travel demands. ~~We maintained a broad network and selling presence during the pandemic and have grown our network as air travel is recovering. We consistently monitor flights to assess for cash profitability.~~

TRENDS

COVID-19

The COVID-19 pandemic ~~has~~ significantly impacted our operating results ~~for~~in 2020 and 2021 and we suffered numerous cancellations due to the ~~three and nine months ending September 30, 2021 and~~effect of the Omicron variant on flight crews into first quarter 2022. COVID-19 may continue to ~~do so~~impact our operations into the future. ~~Our load factors are down as a result. We cannot predict when air travel will return to pre-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~~could fluctuate in response to fluctuations in COVID-19 cases, variants of the virus, hospitalizations, deaths, treatment efficacy, the availability of vaccines, CDC recommendations, and government restrictions.

~~Despite the pandemic and airline industry challenges, since the beginning of 2021 and through September 30, 2021, we have announced service on 120 new routes and to nine new cities, i~~n~~cluding seasonal and temporary routes. We will continue to manage capacity to meet demand, which we believe is a core strength of our business model.~~

~~Operations~~Strong Demand Momentum

~~Noncontrollable~~

As concerns over COVID-19 have declined, we have seen significant increases in load factors and ~~controllable factors have contributed to a higher than normal level of cancellations~~average total fare per passenger beginning in ~~second quarter 2021~~March 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 relatecontinuing through the year 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.

We are investing incrementally in our operations in an attempt to improve performance and this may put pressure on unit costs in the near term and into 2022. However, if these problems persist, we may suffer reputational damage and incur higher costs for irregular operations.

~~Growth~~

We 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 the success of our growth initiatives.date.

Aircraft 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~~The cost per gallon of fuel began to increase significantly in 2021 and the increases were exacerbated by the geopolitical impact of the war in Ukraine. As a result, the average fuel cost per gallon increased by 75.0 percent in third quarter 2022 over third quarter 2021 and 78.2 percent over third quarter 2019. We expect high fuel costs will continue to impact our total costs and operating results.

Boeing Agreement

In December 2021, we signed an agreement with The Boeing Company to purchase 50 newly manufactured 737MAX aircraft scheduled to be delivered in 2023 to 2025 with options to purchase an additional 50 737’s. We believe this new aircraft purchase is complimentary with our low cost strategy based on our intent to retain ownership of the aircraft, the longer useful life for depreciation purposes, expected fuel savings and operational reliability from the use of these new aircraft.

Operations

Staffing challenges continue to impact our operations and costs and we have pulled back some of our planned growth for fourth quarter 2022 and into 2023 as a result. 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 compensate passengers for their inconvenience in addition to the ticket price, not generally done in the airline industry.

We are investing incrementally in our employee hiring and retention and our operations in an attempt to improve performance and this may put pressure on unit costs in the near term. However, if these problems persist, we may suffer reputational damage and incur higher costs for irregular operations.

Union Negotiations

The collective bargaining agreement with our pilots is currently amendable and the parties have begun to discuss the terms of a new labor agreement for this work group. We are also in the process of negotiating a new contract with the union representing our flight attendants. The terms of any new collective bargaining agreement will impact our costs over the term of the contract.

Pilot Scarcity

The supply of pilots necessary for airline industry growth may be a limiting factor. The pandemic resulted in more than 3,000 early pilot retirements across U.S. mainline and cargo carriers and the pipeline for new pilots does not appear at the present time to be sufficiently robust to replace retired pilots and to allow for projected industry growth. The ability to hire and retain pilots will be critical to our and the industry’s growth.

Engagement of Schneider Electric as ESG Consultant

We have ~~recommenced the construction of our Sunseeker Resort in Southwest Florida in August 2021. In October 2021, we~~ entered into a ~~credit~~three-year partnership with Schneider Electric to help us develop an Environmental, Social and Governance (ESG) program including:

–Identifying and prioritizing relevant ESG topics through a materiality assessment

–Establishing ESG goals and environmental goal achievement plans

–Developing an inaugural ESG report referencing the Global Reporting Initiative (GRI) and Sustainability Accounting Standards Board (SASB) frameworks

–Providing ongoing carbon emissions reporting of Scope 1, 2 and 3 greenhouse gas (GHG) emissions

–Supporting the communications efforts around our ESG program

VivaAerobus Alliance

In December 2021, we announced plans for a fully-integrated commercial alliance agreement with ~~affiliates~~VivaAerobus, designed to expand options for nonstop leisure air travel between our markets in the United States and Mexico. We and VivaAerobus have submitted a joint application to the DOT requesting approval of ~~Castlelake L.P.~~and antitrust immunity for the alliance. VivaAerobus has received approval from the Mexican Federal Economic Competition Commission to ~~finance up~~proceed with the alliance.

We and VivaAerobus currently expect to ~~$350 million~~offer new routes under the alliance beginning in the first half of 2023, pending U.S. governmental approval of the ~~remaining construction cost. With this funding, we expect~~applications and the return of Mexico to ~~complete the Project by early 2023.~~Category 1.

Sunseeker Resort

2421

Near the end of September 2022, Hurricane Ian cut a destructive path through Florida and Charlotte County, in particular. Sunseeker Resort suffered damage from the Hurricane, to a large extent attributable to subcontractor cranes which fell onto the buildings.

We have begun and will continue to evaluate damage caused by the Hurricane and have engaged outside specialists, including structural engineers, to evaluate the damage and advise as to the course of action to assure the safe completion of the Resort. We maintain robust insurance coverage against damage from hurricanes and business interruption insurance and are pursuing claims to recover losses.

The Resort was previously selling rooms for as early as May 2023. Realizing there will be some delays caused by the Hurricane, the Resort has now pushed back the selling date to September 2023. As the extent of the damage is not yet known nor can the Company predict how quickly resources will be available to complete the construction, it is too early to tell whether the delays will be longer or shorter.

RESULTS OF OPERATIONS

Comparison of three months ended September 30, ~~2021~~2022 to three months ended September 30, ~~2020~~2021

As comparisons of our ~~2021~~2022 results to periods during ~~2020~~2021 reflect disproportionate changes due to the continued impact of the pandemic on air travel during 2021, 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 ~~2021,~~2022, passenger revenue increased ~~133.0~~21.9 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~~2021 as scheduled service passengers were up ~~91.4~~12.5 percent ~~and~~due to stronger passenger demand. In addition, stronger passenger demand resulted in a 17.7 percent increase in scheduled service average base ~~fare~~fare. We reduced the number of departures year-over-year to support operational reliability. Capacity was ~~up 27.7 percent.~~flat year-over-year as an increase in the average stage length and a slight increase in average seats per departure offset the reduction in departures.

Passenger revenue for the third quarter ~~2021,~~2022, as compared to third quarter 2019, increased by ~~8.3~~32.0 percent, as passengers increased by ~~2.2~~15.0 percent on a 17.0 percent increase in capacity and average stage length increased by 4.4 percent, resulting in a ~~9.4~~2.5 percentage point ~~decrease~~increase in load factor. Average total fare per scheduled service ~~fares~~passenger increased by ~~6.0~~15.5 percent over the same period in 2019 as a result of a ~~16.8~~16.7 percent increase in ~~air~~ ancillary air-related revenue per passenger and a 29.7 percent increase in ancillary third party revenue per passenger.

The increase in ~~air~~ ancillary air-related revenue per passenger over the same period in 2019 was primarily driven by increased revenue from the sale of~~a higher take rate on~~ bundled products. as bundled products were not offered during the same period in 2019.

Third party products revenue. Third party products revenue for the third quarter ~~2021~~2022 increased ~~116.5~~10.6 percent compared to the third quarter ~~2020~~2021 and ~~34.8~~49.0 percent compared to the third quarter 2019. The increase from ~~2020~~2021 is primarily the result of greater travel demand for hotels over the same period and increased Allways® Rewards Program revenues. Increased rental ~~cars~~car and ~~hotels than during~~hotel rates also contributed to the ~~early part of the pandemic.~~ increase over 2021.

The substantial increase from 2019 is attributable to increased rental car rates (which more than offset the impact of fewer rental car days) and growth in our ~~co-branded credit card~~Allways® Rewards Program revenues.

Fixed fee contract revenue. Fixed fee contract revenue for the third quarter ~~2021~~2022 increased ~~110.4~~42.9 percent compared to the same period in ~~2020~~2021 as a result of ~~a 57.0~~an 8.1 percent increase in ~~related~~fixed fee departures ~~due~~when compared to lower charter activity during the 2021 quarter impacted by the pandemic. In addition, fuel per gallon pass throughs (which are accounted for as fixed fee contract revenue) increased 75.0 percent as compared to 2021.

Fixed fee contract revenue for the third quarter ~~2021,~~2022, as compared to 2019, decreased by ~~43.8~~19.8 percent ~~due to continuing depressed demand for group charters compared to pre-pandemic periods.~~

~~Other~~as a result of a 28.5 percent decrease in fixed fee revenue departures partially offset by an increase in fuel pass throughs treated as revenue. ~~Other revenue decreased 99.4 percent for the third quarter 2021 from the same period in 2020. The decrease was due to decreased activity in the non-airline subsidiaries.~~

Operating Expenses

We primarily evaluate our expense management by comparing our costs per available seat mile (ASM) across different periods, which enables us to assess trends in each expense category. The following table presents unit costs on a per ASM basis, or CASM, for the indicated ~~periods.~~periods, 2019 being included as a more representative pre-pandemic third quarter comparison. 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 Change
Unitized costs (in cents) 2021 2020 2019 YoY Yo2Y
Salary and benefits 2.83 2.72 2.77 4.0 % 2.2 %
Aircraft fuel 2.67 1.49 2.69 79.2 (0.7)
Station operations 1.60 1.13 1.12 41.6 42.9
Depreciation and amortization 1.04 1.29 1.01 (19.4) 3.0
Maintenance and repairs 0.69 0.40 0.64 72.5 7.8
Sales and marketing 0.50 0.23 0.45 117.4 11.1
Aircraft lease rentals 0.13 0.09 — 44.4 NM
Other 0.50 0.56 0.69 (10.7) (27.5)
Payroll Support Programs grant recognition (1.12) (2.21) — (49.3) NM
Operating special charges 0.01 0.95 — (98.9) NM
CASM 8.85 6.65 9.37 33.1 (5.5)
Operating CASM, excluding fuel 6.18 5.16 6.68 19.8 (7.5)

~~NM - Not meaningful~~

2523


	Three Months Ended September 30,						Percent Change
Unitized costs (in cents)	2022		2021		2019		YoY		Yo3Y
Aircraft fuel	4.68	¢	2.67	¢	2.69	¢	75.3	%	74.0	%
Salaries and benefits	3.09		2.83		2.77		9.2		11.6
Station operations	1.49		1.60		1.12		(6.9)		33.0
Depreciation and amortization	1.13		1.04		1.01		8.7		11.9
Maintenance and repairs	0.72		0.69		0.64		4.3		12.5
Sales and marketing	0.58		0.50		0.45		16.0		28.9
Aircraft lease rentals	0.13		0.13		—		—		NM
Other	0.67		0.50		0.69		34.0		(2.9)
Payroll Support Programs grant recognition	—		(1.12)		—		NM		NM
Special charges	0.79		0.01		—		NM		NM
CASM	13.28	¢	8.85	¢	9.37	¢	50.1		41.7
Operating CASM, excluding fuel	8.60	¢	6.18	¢	6.68	¢	39.2		28.7
Sunseeker Resort CASM	0.85		0.05		0.04		NM		NM
Operating CASM, excluding fuel and Sunseeker Resort activity	7.75	¢	6.13	¢	6.64	¢	26.4		16.7

NM - Not meaningful

~~Salary and benefits~~Aircraft fuel expense. ~~Salary and benefits~~Aircraft fuel expense increased ~~$30.0~~$89.8 million, or ~~31.3~~75.9 percent, for the third quarter ~~2021~~2022 compared to third quarter 2021. This is primarily due to a 75.0 percent increase in average fuel cost per gallon.

When compared to the same period in 2019, aircraft fuel expense increased by 99.1 percent as average fuel cost per gallon increased 78.2 percent and fuel gallons consumed increased 11.6 percent on a 14.5 percent increase in capacity.

Salaries and benefits expense. Salaries and benefits expense increased $11.5 million, or 9.2 percent, for the third quarter 2022 when compared to the same period in ~~2020. Although~~2021. The increase is primarily due to a 24.2 percent increase in the ~~average~~ number of full time equivalent employees remained relatively flat year over year, overall expense increased due to temporary voluntary leave programs offered to employees, voluntary pay reductions, and suspension of the bonus accrual that were in effect duringfrom the third quarter ~~2020.~~2021.

When compared to the same period in 2019, salaries and benefits expense increased by ~~$18.2~~$29.8 million or ~~16.9~~27.7 percent on a ~~relatively flat~~24.1 percent increase in the number of full time equivalent employees year over ~~two year.~~three-year. On a per ASM basis, ~~salary~~salaries and benefits expense increased ~~only 2.2~~11.6 percent. The cost increases primarily relate to ~~annual~~ increases in crew pay and increased salaries and benefit costs associated with irregular operations.

~~Aircraft fuel expense.~~ Aircraft fuel expense increased $65.8 million, or 125.3 percent, for the third quarter 2021 compared to third quarter 2020. This is primarily due to the recovery from the COVID-19 pandemic driving increased capacity resulting in a 35.3 percent increase in fuel gallons consumed on a 25.8 percent increase in departures and a 66.7 percent increase in average fuel cost per gallon which was depressed during the pandemic.

When compared to the same period in 2019, aircraft fuel expense increased by 13.2 percent as average fuel cost per gallon increased 1.9 percent, departures increased 10.7 percent, and fuel gallons consumed increased 11.2 percent.

Station operations expense. Station operations expense for the third quarter ~~2021 increased $31.0~~2022 decreased $4.6 million, or ~~77.6~~6.5 percent compared to the same period in ~~2020~~2021 due to ~~increased~~decreased departures of ~~25.8 percent and increased costs associated with irregular operations.~~4.0 percent.

~~Compared~~As compared to the same period in 2019, station operations expense increased by ~~$27.4~~$22.8 million or ~~63.0 percent. This increase is~~52.3 percent due to ~~an increase in departures of 10.7 percent,~~ a ~~54 percent and 47~~6.2 percent increase in ~~airport and landing fees respectively, and~~departures, increased costs associated with irregular ~~operations.~~operations and increased airport fees.

Depreciation and amortization expense. Depreciation and amortization expense for the third quarter ~~2021~~2022 increased by ~~2.4~~8.0 percent as compared to the third quarter ~~2020~~2021 as the average number of aircraft owned and in service increased ~~8.9~~6.6 percent ~~year over year.~~year-over-year.

Compared to the same period in 2019, depreciation and amortization expense increased $10.7 million or 27.0 percent as the average number of aircraft owned and in service increased 17.3 percent and our deferred major maintenance balance increased 49.4 percent for the period ended September 30, 2022 as compared to September 30, 2019.

Maintenance and repairs expense. Maintenance and repairs expense for the third quarter ~~2021~~2022 increased ~~$16.4~~$1.7 million, or ~~116.9~~5.7 percent, compared to the same period in ~~2020.~~2021. Routine maintenance costs increased as ~~aircraft utilization was up 11.1 percent for the quarter and~~ the average number of aircraft in service increased ~~16.4~~9.0 percent ~~year over year. In addition,~~year-over-year and as a result of increased costs related to outsourced labor in 2022 (largely attributable to our ~~maintenance expenses during the pandemic were unusually low due to reduced flying during that period.~~smaller bases and outstations).

Compared to the same period in 2019, maintenance and repairs expense increased by ~~$5.7~~$7.4 million or ~~22.9~~29.9 percent primarily due to a ~~20.5~~31.4 percent increase in the average number of aircraft in service and as a ~~10.7 percent increase~~result of increased costs related to outsourced labor in ~~departures year over two year.~~2022.

Sales and marketing expense. Sales and marketing expense for the third quarter ~~2021~~2022 increased by ~~176.7~~17.1 percent compared to the same period in ~~2020,~~2021, due to an increase in net credit card fees as a result of a ~~133.0~~21.9 percent increase in passenger revenue ~~year-over-year as well as reduced advertising spend in 2020 during the pandemic.~~year-over-year.

Compared to the same period in 2019, sales and marketing expense increased by ~~25.3~~46.8 percent primarily due to an ~~8.3~~increase in net credit card fees as a result of a 32.0 percent increase in passenger revenue compared to the same period in 2019 as well as our entrance into new marketing agreements.

Other operating expense. Other expense increased ~~$2.6~~$7.9 million or 35.4 percent for the third quarter 2022 compared to the third quarter ~~2020 as~~2021 attributable to incremental increases in ~~other operating expenses attributable to increases in service compared to 2020 more than offset decreases in expenses in~~ our ~~non-airline subsidiaries.~~employee training activity.

Payroll Support Programs grant recognition. WeDuring 2021, we received ~~a total of~~ $203.9 million in funds ~~in 2021~~ through the payroll support ~~programs. Of the total, $202.2 million of these funds represent direct grants,~~programs 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. We~~ recognized $49.2 million as an offset to operating expense on our statement of income during the third quarter of 2021.

~~During 2020, we~~ The funds were fully utilized in 2021. There were no such funds 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.~~2022.

Special charges. Special charges of ~~$0.3~~$35.1 million were recorded within operating expenses for the third quarter ~~2021~~2022 compared to ~~$33.6~~$0.3 million for the same period ~~in 2020.~~2021. The special charges in 2022 relate to ~~expenses that were unique and specific~~an estimated loss incurred from the impact of Hurricane Ian. The amount of the loss will be offset in future periods by amounts to ~~COVID-19. These~~be recovered under our insurance policies. The charges in 2021 include accelerated depreciation on ~~airframes and engines~~an airframe resulting from an accelerated retirement plan. See Note 2 of Notes to Consolidated Financial Statements (unaudited) for further information on the special ~~charges~~charge recorded in ~~2020.~~2022 related to Hurricane Ian.

Interest Expense

Interest expense for the quarter ended September 30, ~~2021~~2022 increased by ~~$4.7~~$17.6 million, or ~~39.0~~106.3 percent over third quarter ~~2020,~~2021, due to new fixed rate debt and finance lease transactions entered into ~~during~~since third quarter 2021 as well as a 2.1 percentage point increase in the ~~pandemic.~~weighted average variable interest rate year-over-year as general interest rates have risen. During the third quarter 2022, we recognized a loss on debt extinguishment of $5.0 million in relation to the prepayment of our Term Loan B.

Income Tax Expense

~~Our~~We recorded a $9.7 million income tax benefit at an effective tax rate ~~was~~of 17.3 percent and an $11.0 million income tax expense at a 21.9 percent ~~and 34.8 percent~~effective tax rate for the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The effective tax rate for the three months ended September 30, ~~2021~~2022 differed from the statutory ~~federal~~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~~permanent tax rate for the three months ended September 30, 2020 was primarily due to the tax accounting impact of the CARES Act which allowed us to carryback the 2020 net operating loss at the 35.0 percent rate applicable in earlier years.

differences.

2725

Comparison of nine months ended September 30, ~~2021~~2022 to nine months ended September 30, ~~2020~~

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.~~

Operating Revenue

Passenger revenue. For the nine months ended September 30, ~~2021,~~2022, passenger revenue increased ~~66.0~~39.9 percent compared with the same period in ~~2020. The~~2021 as scheduled service passengers were up 29.5 percent due to stronger passenger demand in general and when compared to lower passenger demand related to COVID-19 during the first nine months of 2021. In addition, stronger passenger demand resulted in a 10.4 percent increase ~~is primarily attributable~~in scheduled service average base fare.

Passenger revenue for the first nine months of 2022, as compared to the ~~effects~~first nine months of ~~COVID-19 in 2020, where a significant decline in passenger demand impacted operations from March to September 2020. Scheduled~~2019 increased by 24.3 percent, as scheduled service passengers increased by 12.6 percent on a 16.2 percent increase in capacity and average ~~base fares~~stage length increased by 3.3 percent, resulting in ~~the current period are up 53.1~~a 0.5 percentage point increase in load factor. Average total fare per scheduled service passenger increased by 11.0 percent ~~and 10.3 percent, respectively,~~ over the same period in ~~2020.~~2019 primarily driven by a 16.5 percent increase in ancillary air related revenue per passenger and a 28.3 percent increase in ancillary third party revenue per passenger.

~~As compared to~~The increase in ancillary air related revenue per passenger over the same period in 2019 ~~passenger revenue decreased by 11.2 percent, as the impact of a 16.4 percentage point decline in scheduled service load factor~~ was ~~partially offset by an 8.0 percent increase in capacity.~~

Air ancillary average fare 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 4.8 percent decline in average base fares. The increase is primarily driven by an increased ~~take rate on~~revenue from the sale of bundled ~~products.~~products as bundled products were not offered in the 2019 period.

Third party products revenue. Third party products revenue for the nine months ended September 30, ~~2021~~2022 increased ~~71.1~~26.5 percent over the same period in ~~2020~~2021 and ~~14.2~~44.5 percent when compared to 2019. The increase from ~~2020~~2021 is primarily the result of greater travel demand for rental cars and hotels ~~than~~and increased Allways® Rewards Program revenues. Increased rental car and hotel rates combined with a 11.0 percent increase in rental car days sold and a 13.7 percent increase in room nights sold contributed to the ~~early part of the pandemic.~~ substantial increase over 2021.

The increase from 2019 is attributable to ~~growth in our co-branded credit card revenues, which~~increased rental car and hotel room rates (which more than offset ~~declines in~~the impact of fewer rental car days and hotel room ~~nights.~~nights) and substantial growth in our Allways® Rewards Program revenues.

Fixed fee contract revenue. Fixed fee contract revenue for the nine months ended September 30, ~~2021~~2022 increased ~~37.3~~59.5 percent compared ~~with~~to the same period in ~~2020. This is primarily due to~~2021 as a 28result of an 11.1 percent increase in ~~related~~fixed fee departures largely due to ~~increased~~lower charter ~~activity. During~~activity during the ~~nine months ended September 30, 2021, ad-hoc charters increased by 246.9 percent over 2020 levels and we benefited from March Madness flying which did not occur~~pandemic in the ~~prior year due~~same period of 2021. In addition, fuel per gallon pass throughs (which are accounted for as fixed fee contract revenue) increased 84.8 percent as compared to the ~~pandemic.~~same period in 2021.

Fixed fee contract revenue for the nine months ended September 30, ~~2021~~2022, as compared to ~~the same period in~~ 2019, decreased by ~~44.1~~10.9 percent ~~due to continuing depressed demand for group charters compared to pre-pandemic periods.~~

~~Other revenue.~~ ~~Other revenue decreased~~as a result of a 22.7 percent decrease in fixed fee departures, partially offset by 87.0 percent for the nine months ended September 30, 2021, when compared to the same period in 2020. The decrease is due to decreased activity in the non-airline subsidiaries, including the closure of the family entertainment centershigher charter rates and ~~the sale of our Teesnap golf management business in the second quarter 2021.~~higher fuel cost pass throughs.

Operating Expenses

The following table presents unit costs on a per ASM basis, defined as Operating CASM, for the indicated periods:
Nine Months Ended September 30, Percent Change
Unitized costs (in cents) 2021 2020 2019 YoY Yo2Y
Salary and benefits 2.80 3.09 2.78 (9.4) % 0.7 %
Aircraft fuel 2.38 1.72 2.65 38.4 (10.2)
Station operations 1.31 1.10 1.05 19.1 24.8
Depreciation and amortization 1.03 1.35 0.93 (23.7) 10.8
Maintenance and repairs 0.59 0.50 0.56 18.0 5.4
Sales and marketing 0.39 0.36 0.48 8.3 (18.8)
Aircraft lease rentals 0.12 0.06 — 100.0 NM
Other 0.43 0.71 0.60 (39.4) (28.3)
Payroll Support Programs grant recognition (1.55) (1.55) — — NM
Operating Special charges 0.02 2.86 — (99.3) NM
CASM 7.52 10.20 9.05 (26.3) (16.9)
Operating CASM, excluding fuel 5.14 8.48 6.40 (39.4) (19.7)


	Nine Months Ended September 30,						Percent Change
Unitized costs (in cents)	2022		2021		2019		YoY		Yo3Y
Aircraft fuel	4.48	¢	2.38	¢	2.65	¢	88.2	%	69.1	%
Salaries and benefits	2.92		2.80		2.78		4.3		5.0
Station operations	1.41		1.31		1.05		7.6		34.3
Depreciation and amortization	1.04		1.03		0.93		1.0		11.8
Maintenance and repairs	0.65		0.59		0.56		10.2		16.1
Sales and marketing	0.54		0.39		0.48		38.5		12.5
Aircraft lease rentals	0.12		0.12		—		—		NM
Other	0.59		0.43		0.60		37.2		(1.7)
Payroll Support Programs grant recognition	—		(1.55)		—		NM		NM
Special charges	0.25		0.02		—		NM		NM
CASM	12.00	¢	7.52	¢	9.05	¢	59.6		32.6
Operating CASM, excluding fuel (2)	7.52	¢	5.14	¢	6.40	¢	46.3		17.5
Sunseeker Resort CASM	0.30		0.04		0.05		NM		NM
Operating CASM, excluding fuel and Sunseeker Resort activity	7.22	¢	5.10	¢	6.35	¢	41.6		13.7

~~Salary and benefits expense.~~ Salary and benefits expense increased $62.4 million, or 20.6 percent, for the nine months ended September 30, 2021 compared to the same period in 2020. Although the average number of full-time equivalent employees

2826

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 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.

Aircraft fuel expense. Aircraft fuel expense increased ~~$142.0~~$318.9 million, or ~~84.1~~102.7 percent, for the nine months ended September 30, ~~2021~~2022 compared to the same period in ~~2020.~~2021. 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~~84.8 percent increase in average fuel cost per gallon. In addition, ASMs increased by 7.7 percent contributing to a 9.6 percent increase in fuel gallons consumed.

Aircraft fuel expense ~~decreased~~increased by ~~$13.6~~$305.3 million or ~~4.2~~94.2 percent for the nine months ended September 30, ~~2021~~2022 compared to the same period in 2019. This is primarily driven by ~~a decrease~~an increase in average fuel cost per gallon of ~~6.4~~72.9 percent in addition to a 14.8 percent increase in ASMs resulting in a 12.1 percent increase in fuel gallons consumed.

Salaries and benefits expense. Salaries and benefits expense increased $45.4 million, or 12.4 percent, for the nine months ended September 30, 2022 compared to the same period in 2021. The increase is primarily due to a 24.2 percent increase in the number of full time equivalent employees from the same period in 2021, offset by the employee retention tax credit recognized in the first quarter of 2022.

Salaries and benefits expense for the nine months ended September 30, 2022 increased by $70.4 million or 20.7 percent as compared to the same period in 2019. The increase is primarily due to a ~~4.1~~24.1 percent ~~improvement~~increase in ~~available seat miles~~the number of full time equivalent employees from same period in 2019, offset by the employee retention tax credit recognized in the first quarter of 2022. On a per ~~gallon.~~ASM basis, salaries and benefits expense increased 5.0 percent. The cost increases primarily relate to increases in crew pay and increased salaries and benefits costs associated with irregular operations.

Station operations expense. Station operations expense for the nine months ended September 30, ~~2021~~2022 increased ~~$62.9~~$27.7 million or ~~58.0~~16.2 percent ~~primarily~~ due to a ~~33.6~~2.5 percent increase in 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~~$70.6 million or ~~33.4~~55.0 percent due to a ~~5.3~~7.9 percent increase in departures, increased costs associated with irregular operations and increased airport fees.

Irregular operations costs in 2022 were significantly attributable to COVID absences due to the Omicron variant in January and February. These absences resulted in numerous flight cancellations. Higher than usual cancellations continued into the third quarter as a result of staffing challenges and other factors. The amount of irregular operations costs is significantly impacted by our decision to compensate impacted passengers for their inconvenience in addition to the ticket price.

Depreciation and amortization expense. Depreciation and amortization expense for the nine months ended September 30, ~~2021~~2022 increased ~~$1.8~~$11.5 million or ~~1.4~~8.6 percent as compared to the same period in ~~2020~~2021 due to ana 7.6 percent increase ~~of 7.9 percent~~ in the average number of aircraft owned ~~aircraft~~and in service.

When compared to the nine months ended September 30, 2019, depreciation and amortization expense increased ~~17.5~~27.6 percent as the average number of aircraft owned and in service ~~during the period~~ increased ~~20.8~~20.3 percent and our deferred major maintenance balance increased 61.6 percent.

Maintenance and repairs expense. Maintenance and repairs expense for the nine months ended September 30, ~~2021~~2022 increased by ~~$27.6~~$14.7 million or ~~56.4~~19.2 percent compared to the same period in ~~2020. This is primarily due to a 10.3 percent increase in~~2021. Routine maintenance costs increased as the average number of aircraft in service increased 10.9 percent year-over-year and as a ~~22.4 percent increase~~result of increased costs related to outsourced labor in ~~utilization year over year.~~2022.

As compared to the nine months ended September 30, 2019, maintenance and repairs expense increased by ~~$7.9~~$22.7 million or ~~11.6~~33.1 percent as the number of aircraft in service increased by ~~20.8~~34.0 percent ~~offset by the effect of a 13.4 percent decrease~~and increased costs related to outsourced labor in ~~utilization year over two year.~~2022 (largely attributable to our smaller bases and outstations).

Sales and marketing expense. Sales and marketing expense for the nine months ended September 30, ~~2021~~2022 increased ~~45.2~~47.1 percent compared to the same period in ~~2020. In 2020, advertising spend was intentionally pulled back beginning in March~~2021, 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~~39.9 percent increase in passenger revenue ~~year over year.~~year-over-year.

~~As compared~~Compared to the nine months ended September 30, 2019, sales and marketing expense ~~decreased by 13.2~~increased 27.8 percent due to ~~our efforts to more adeptly deploy advertising spend.~~an increase in net credit card fees as a result of a 24.3 percent increase in passenger revenue.

Other expense. Other expense ~~decreased~~for the nine months ended September 30, 2022 increased by ~~$14.6~~$27.5 million or ~~20.7~~49.4 percent ~~year over year,~~year-over-year, due to increased service, incremental increases in our employee training activity and offset by decreased activity in our non-airline ~~subsidiaries.~~subsidiaries due to the sale of Teesnap in the second quarter of 2021.

Payroll Support Programs grant recognition. ~~We received a total of $203.9 million during the nine months ended September 30,~~During 2021, ~~through the payroll support programs. The direct grants were recognized as a credit to operating expense on our statement of income, over the periods for which the funds were intended to compensate.~~

~~During the first nine months of 2020,~~ we received ~~$176.9~~$203.9 million in funds through the payroll support ~~program~~programs and recognized ~~a $152.4~~$202.2 million as an offset to operating expense on our income statement ~~of income~~ for the nine ~~months ended~~month period ending September 30, ~~2020.~~2021. The funds were fully utilized in 2021. There were no such funds received in 2022.

Special charges. Special charges of ~~$2.9~~$35.4 million were recorded within operating expenses for the nine months ended September 30, ~~2021~~2022 compared to ~~$280.9~~$2.9 million for the same period in ~~2020.~~2021. The special charges in 2022 relate to ~~expenses that were unique and specific~~the estimated

loss incurred from the impact of of Hurricane Ian. The amount of the loss will be offset in future periods by amounts to ~~COVID-19. These~~be recovered under our insurance policies. The charges in 2021 include accelerated retirements of 5five airframes and 8eight engines and an impairment loss on a building associated with the Allegiant Nonstop ~~familiy~~family entertainment line of business. Special charges recorded in the first nine months of 2020 included accelerated retirements of aircraft and airframes, a loss on the sale-leaseback transaction we would not likely have transacted absent cash conservation efforts as a result of COVID, salary and benefits expense, and other various expenses during the nine months ended September 30, 2020. See Note 2 of the Notes to Consolidated Financial Statement (unaudited) for further ~~information.~~

~~Non-operating~~information on the special ~~charges.~~ ~~Special charges of $26.6 million were~~charge 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 ~~2021. Of these special charges in 2020, $19.8 million~~2022 related 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 related to impairment charges for Sunseeker Resort during the first quarter 2020. These charges were reclassified from operating special charges to non-operating special charges for the nine months ended September 30, 2020.

Hurricane Ian.

Income Tax Expense

We recorded a $10.9 million income tax benefit at an effective rate of 17.9 percent compared to a $40.3 million tax expense ~~(22.2~~at a 22.2 percent effective tax ~~rate) compared to a ($166.6 million) tax benefit (51.8 percent effective tax rate)~~rate for the nine months ended September 30, 2022 and 2021, respectively. The 17.9 percent effective tax rate for the nine months ended September 30, 2022 differed from the statutory federal income tax rate of 21.0 percent primarily due to state income taxes and ~~2020 respectively.~~the impact of permanent tax differences. 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 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 a 35.0 percent rate applicable in earlier years.

3028

Comparative Consolidated Operating Statistics

The following tables set forth our operating statistics for the periods indicated:


		Three Months Ended September 30,						Percent Change (1)					Three Months Ended September 30,									Percent Change (1)
		2021		2020		2019		YoY		Yo2Y			2022			2021			2019			YoY		Yo3Y
Operating statistics (unaudited):	Operating statistics (unaudited):											Operating statistics (unaudited):
Total system statistics:	Total system statistics:											Total system statistics:
Passengers	Passengers	3,872,651		2,016,241		3,806,369		92.1	%	1.7	%	Passengers	4,359,417			3,872,651			3,806,369			12.6	%	14.5	%

Available seat miles (ASMs) (thousands)	Available seat miles (ASMs) (thousands)	4,441,201		3,521,508		3,888,400		26.1		14.2		Available seat miles (ASMs) (thousands)	4,450,595			4,441,201			3,888,400			0.2		14.5

Operating expense per ASM (CASM) (cents)	Operating expense per ASM (CASM) (cents)	8.85		6.65		9.37		33.1		(5.5)		Operating expense per ASM (CASM) (cents)	13.28		¢	8.85		¢	9.37		¢	50.1		41.7
Fuel expense per ASM (cents)	Fuel expense per ASM (cents)	2.67		1.49		2.69		79.2		(0.7)		Fuel expense per ASM (cents)	4.68		¢	2.67		¢	2.69		¢	75.3		74.0

Operating CASM, excluding fuel (cents)	Operating CASM, excluding fuel (cents)	6.19		5.15		6.68		20.2		(7.3)		Operating CASM, excluding fuel (cents)	8.60		¢	6.18		¢	6.68		¢	39.2		28.7

Sunseeker Resort CASM (cents)(2)												Sunseeker Resort CASM (cents)(2)	0.85		¢	0.05		¢	0.04		¢	NM		NM
Operating CASM, excluding fuel and Sunseeker Resort activity (cents)												Operating CASM, excluding fuel and Sunseeker Resort activity (cents)	7.75		¢	6.13		¢	6.64		¢	26.4		16.7
ASMs per gallon of fuel	ASMs per gallon of fuel	82.5		88.5		80.3		(6.8)		2.7		ASMs per gallon of fuel	82.4			82.5			80.3			(0.1)		2.6
Departures	Departures	30,663		24,365		27,707		25.8		10.7		Departures	29,432			30,663			27,707			(4.0)		6.2
Block hours	Block hours	67,398		52,238		59,678		29.0		12.9		Block hours	67,277			67,398			59,678			(0.2)		12.7
Average stage length (miles)	Average stage length (miles)	829		834		823		(0.6)		0.7		Average stage length (miles)	857			829			823			3.4		4.1
Average number of operating aircraft during period	Average number of operating aircraft during period	105.6		90.7		87.6		16.4		20.5		Average number of operating aircraft during period	115.1			105.6			87.6			9.0		31.4
Average block hours per aircraft per day	Average block hours per aircraft per day	7.0		6.3		7.4		11.1		(5.4)		Average block hours per aircraft per day	6.4			7.0			7.4			(8.6)		(13.5)
Full-time equivalent employees at end of period	Full-time equivalent employees at end of period	4,246		4,275		4,267		(0.7)		(0.5)		Full-time equivalent employees at end of period	5,294			4,261			4,267			24.2		24.1
Fuel gallons consumed (thousands)	Fuel gallons consumed (thousands)	53,850		39,786		48,443		35.3		11.2		Fuel gallons consumed (thousands)	54,044			53,850			48,443			0.4		11.6
Average fuel cost per gallon	Average fuel cost per gallon	$	2.20	$	1.32	$	2.16	66.7		1.9		Average fuel cost per gallon	$	3.85		$	2.20		$	2.16		75.0		78.2


Scheduled service statistics:	Scheduled service statistics:												Scheduled service statistics:
Passengers	Passengers	3,834,956			2,003,648			3,753,611			91.4	2.2	Passengers	4,316,163			3,834,956			3,753,611			12.5	15.0
Revenue passenger miles (RPMs) (thousands)	Revenue passenger miles (RPMs) (thousands)	3,302,519			1,714,622			3,170,826			92.6	4.2	Revenue passenger miles (RPMs) (thousands)	3,820,339			3,302,519			3,170,826			15.7	20.5
Available seat miles (ASMs) (thousands)	Available seat miles (ASMs) (thousands)	4,312,893			3,449,339			3,687,473			25.0	17.0	Available seat miles (ASMs) (thousands)	4,315,984			4,312,893			3,687,473			0.1	17.0
Load factor	Load factor	76.6		%	49.7		%	86.0		%	26.9	(9.4)	Load factor	88.5		%	76.6		%	86.0		%	11.9	2.5
Departures	Departures	29,593			23,710			26,238			24.8	12.8	Departures	28,436			29,593			26,238			(3.9)	8.4
Block hours	Block hours	65,296			51,057			56,576			27.9	15.4	Block hours	65,182			65,296			56,576			(0.2)	15.2
Average seats per departure	Average seats per departure	174.3			173.2			170.8			0.6	2.0	Average seats per departure	175.8			174.3			170.8			0.9	2.9
Yield (cents) ~~(2)~~(3)	Yield (cents) ~~(2)~~(3)	6.04			4.76			6.42			26.9	(5.9)	Yield (cents) ~~(2)~~(3)	6.92		¢	6.04		¢	6.42		¢	14.6	7.8
Total passenger revenue per ASM (TRASM) (cents)~~(3)~~(4)	Total passenger revenue per ASM (TRASM) (cents)~~(3)~~(4)	10.40			5.60			11.10			85.7	(6.3)	Total passenger revenue per ASM (TRASM) (cents)~~(3)~~(4)	12.60		¢	10.40		¢	11.10		¢	21.2	13.5
Average fare - scheduled service~~(4)~~(5)	Average fare - scheduled service~~(4)~~(5)	$	52.05		$	40.75		$	54.20		27.7	(4.0)	Average fare - scheduled service~~(4)~~(5)	$	61.26		$	52.05		$	54.20		17.7	13.0
Average fare - air-related charges~~(4)~~(5)	Average fare - air-related charges~~(4)~~(5)	$	58.45		$	50.04		$	50.03		16.8	16.8	Average fare - air-related charges~~(4)~~(5)	$	58.40		$	58.45		$	50.03		(0.1)	16.7
Average fare - third party products	Average fare - third party products	$	6.40		$	5.66		$	4.85		13.1	32.0	Average fare - third party products	$	6.29		$	6.40		$	4.85		(1.7)	29.7
Average fare - total	Average fare - total	$	116.91		$	96.45		$	109.08		21.2	7.2	Average fare - total	$	125.95		$	116.91		$	109.08		7.7	15.5
Average stage length (miles)	Average stage length (miles)	834			839			824			(0.6)	1.2	Average stage length (miles)	860			834			824			3.1	4.4
Fuel gallons consumed (thousands)	Fuel gallons consumed (thousands)	52,249			38,853			46,038			34.5	13.5	Fuel gallons consumed (thousands)	52,491			52,249			46,038			0.5	14.0
Average fuel cost per gallon	Average fuel cost per gallon	$	2.20		$	1.32		$	2.17		66.7	1.4	Average fuel cost per gallon	$	3.84		$	2.19		$	2.17		75.3	77.0
Rental car days sold	Rental car days sold	366,407			255,800			482,944			43.2	(24.1)	Rental car days sold	364,481			366,407			482,944			(0.5)	(24.5)
Hotel room nights sold	Hotel room nights sold	66,626			44,655			99,991			49.2	(33.4)	Hotel room nights sold	71,205			66,626			99,991			6.9	(28.8)
Percent of sales through website during period	Percent of sales through website during period	95.4		%	92.3		%	93.1		%	3.1	2.3	Percent of sales through website during period	96.1		%	95.4		%	93.1		%	0.7	3.0

(1)Except load factor and percent of sales through website during period, which are presented as a percentage point change.

(2)Includes a $35.0 million special charge in the third quarter 2022 relating to Hurricane Ian damage to Sunseeker Resort.The amount of the loss will be offset in future periods by amounts to be recovered under our insurance policies.

(3)Defined as scheduled service revenue divided by revenue passenger miles.

~~(3)~~ (4)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.

~~(4)~~ (5)Reflects division of passenger revenue between scheduled service (base fare) and air-related charges in our booking path.

3129

Comparative Consolidated Operating Statistics

The following tables set forth our operating statistics for the periods indicated:


		Nine Months Ended September 30,						Percent Change (1)					Nine Months Ended September 30,									Percent Change (1)
		2021		2020		2019		YoY		Yo2Y			2022			2021			2019			YoY		Yo3Y
Operating statistics (unaudited):	Operating statistics (unaudited):											Operating statistics (unaudited):
Total system statistics:	Total system statistics:											Total system statistics:
Passengers	Passengers	9,906,371		6,464,949		11,426,183		53.2	%	(13.3)	%	Passengers	12,834,078			9,906,371			11,426,183			29.6	%	12.3	%

Available seat miles (ASMs) (thousands)	Available seat miles (ASMs) (thousands)	13,049,732		9,809,934		12,245,704		33.0		6.6		Available seat miles (ASMs) (thousands)	14,060,825			13,049,732			12,245,704			7.7		14.8

Operating expense per ASM (CASM) (cents)	Operating expense per ASM (CASM) (cents)	7.52		10.20		9.05		(26.3)		(16.9)		Operating expense per ASM (CASM) (cents)	12.00		¢	7.52		¢	9.05		¢	59.6		32.6
Fuel expense per ASM (cents)	Fuel expense per ASM (cents)	2.38		1.72		2.65		38.4		(10.2)		Fuel expense per ASM (cents)	4.48		¢	2.38		¢	2.65		¢	88.2		69.1
Operating CASM, excluding fuel (cents)	Operating CASM, excluding fuel (cents)	5.14		8.48		6.41		(39.4)		(19.8)		Operating CASM, excluding fuel (cents)	7.52		¢	5.14		¢	6.40		¢	46.3		17.5

Sunseeker Resort CASM (cents)(2)												Sunseeker Resort CASM (cents)(2)	0.30		¢	0.04		¢	0.05		¢	NM		NM
Operating CASM, excluding fuel and Sunseeker Resort activity (cents)												Operating CASM, excluding fuel and Sunseeker Resort activity (cents)	7.22		¢	5.10		¢	6.35		¢	41.6		13.7
ASMs per gallon of fuel	ASMs per gallon of fuel	85.6		87.6		82.2		(2.3)		4.1		ASMs per gallon of fuel	84.2			85.6			82.2			(1.6)		2.4
Departures	Departures	87,854		65,766		83,454		33.6		5.3		Departures	90,064			87,854			83,454			2.5		7.9
Block hours	Block hours	197,581		147,350		187,829		34.1		5.2		Block hours	212,403			197,581			187,829			7.5		13.1
Average stage length (miles)	Average stage length (miles)	852		862		858		(1.2)		(0.7)		Average stage length (miles)	885			852			858			3.9		3.1
Average number of operating aircraft during period	Average number of operating aircraft during period	101.6		92.1		84.1		10.3		20.8		Average number of operating aircraft during period	112.7			101.6			84.1			10.9		34.0
Average block hours per aircraft per day	Average block hours per aircraft per day	7.1		5.8		8.2		22.4		(13.4)		Average block hours per aircraft per day	6.9			7.1			8.2			(2.8)		(15.9)
Full-time equivalent employees at end of period	Full-time equivalent employees at end of period	4,261		4,275		4,267		(0.3)		(0.1)		Full-time equivalent employees at end of period	5,294			4,261			4,267			24.2		24.1
Fuel gallons consumed (thousands)	Fuel gallons consumed (thousands)	152,464		111,929		148,980		36.2		2.3		Fuel gallons consumed (thousands)	167,070			152,464			148,980			9.6		12.1
Average fuel cost per gallon	Average fuel cost per gallon	$	2.04	$	1.51	$	2.18	35.1		(6.4)		Average fuel cost per gallon	$	3.77		$	2.04		$	2.18		84.8		72.9


Scheduled service statistics:	Scheduled service statistics:												Scheduled service statistics:
Passengers	Passengers	9,838,512			6,424,331			11,307,004			53.1	(13.0)	Passengers	12,736,268			9,838,512			11,307,004			29.5	12.6
Revenue passenger miles (RPMs) (thousands)	Revenue passenger miles (RPMs) (thousands)	8,657,151			5,747,639			9,964,948			50.6	(13.1)	Revenue passenger miles (RPMs) (thousands)	11,646,212			8,657,151			9,964,948			34.5	16.9
Available seat miles (ASMs) (thousands)	Available seat miles (ASMs) (thousands)	12,739,769			9,588,031			11,800,788			32.9	8.0	Available seat miles (ASMs) (thousands)	13,716,838			12,739,769			11,800,788			7.7	16.2
Load factor	Load factor	68.0		%	59.9		%	84.4		%	8.1	(16.4)	Load factor	84.9		%	68.0		%	84.4		%	16.9	0.5
Departures	Departures	85,303			63,877			80,149			33.5	6.4	Departures	87,475			85,303			80,149			2.5	9.1
Block hours	Block hours	192,481			143,651			180,674			34.0	6.5	Block hours	206,868			192,481			180,674			7.5	14.5
Average seats per departure	Average seats per departure	173.8			172.7			171.0			0.6	1.6	Average seats per departure	175.7			173.8			171.0			1.1	2.7
Yield (cents) ~~(2)~~(3)	Yield (cents) ~~(2)~~(3)	6.53			5.83			6.85			12.0	(4.7)	Yield (cents) ~~(2)~~(3)	6.94		¢	6.53		¢	6.85		¢	6.3	1.3
Total passenger revenue per ASM (TRASM) (cents)~~(3)~~(4)	Total passenger revenue per ASM (TRASM) (cents)~~(3)~~(4)	9.30			7.44			11.18			26.9	(16.8)	Total passenger revenue per ASM (TRASM) (cents)~~(3)~~(4)	12.03		¢	9.30		¢	11.18		¢	29.4	7.6
Average fare - scheduled service~~(4)~~(5)	Average fare - scheduled service~~(4)~~(5)	$	57.48		$	52.12		$	60.40		10.3	(4.8)	Average fare - scheduled service~~(4)~~(5)	$	63.44		$	57.48		$	60.40		10.4	5.0
Average fare - air-related charges~~(4)~~(5)	Average fare - air-related charges~~(4)~~(5)	$	56.79		$	53.32		$	51.56		6.5	10.1	Average fare - air-related charges~~(4)~~(5)	$	60.07		$	56.79		$	51.56		5.8	16.5
Average fare - third party products	Average fare - third party products	$	6.22		$	5.57		$	4.74		11.7	31.2	Average fare - third party products	$	6.08		$	6.22		$	4.74		(2.3)	28.3
Average fare - total	Average fare - total	$	120.49		$	111.00		$	116.70		8.5	3.2	Average fare - total	$	129.59		$	120.49		$	116.70		7.6	11.0
Average stage length (miles)	Average stage length (miles)	857			867			861			(1.2)	(0.5)	Average stage length (miles)	889			857			861			3.7	3.3
Fuel gallons consumed (thousands)	Fuel gallons consumed (thousands)	148,578			109,082			143,433			36.2	3.6	Fuel gallons consumed (thousands)	162,933			148,578			143,433			9.7	13.6
Average fuel cost per gallon	Average fuel cost per gallon	$	2.01		$	1.50		$	2.17		34.0	(7.4)	Average fuel cost per gallon	$	3.77		$	2.03		$	2.17		85.7	73.7
Rental car days sold	Rental car days sold	1,046,751			872,382			1,495,502			20.0	(30.0)	Rental car days sold	1,161,579			1,046,751			1,495,502			11.0	(22.3)
Hotel room nights sold	Hotel room nights sold	195,535			149,431			319,197			30.9	(38.7)	Hotel room nights sold	222,334			195,535			319,197			13.7	(30.3)
Percent of sales through website during period	Percent of sales through website during period	93.8		%	93.2		%	93.4		%	0.6	0.4	Percent of sales through website during period	96.2		%	94.3		%	93.4		%	1.9	2.8

(1)Except load factor and percent of sales through website during period, which are presented as a percentage point change.

(2)Includes $35.0 million special charge in the third quarter 2022 relating to Hurricane Ian damage to Sunseeker Resort.The amount of the loss will be offset in future periods by amounts to be recovered under our insurance policies.

(3)Defined as scheduled service revenue divided by revenue passenger miles.

~~(4)~~ (5)Reflects division of passenger revenue between scheduled service (base fare) and air-related charges in our booking path.

3230

LIQUIDITY AND CAPITAL RESOURCES

Current liquidity

Cash, cash equivalents and investment securities (short-term and long-term) ~~increased~~decreased to ~~$1.1~~$1.00 billion at September 30, ~~2021,~~2022, from ~~$685.2 million~~$1.19 billion at December 31, ~~2020.~~2021. Investment securities represent highly liquid marketable securities which are available-for-sale.

Restricted cash represents escrowed funds under fixed fee contracts, escrowed airport 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.

~~During the nine months ended September 30, 2021, we received a total of $203.9 million in assistance through the payroll support programs.~~

We suspended share repurchases and our quarterly cash dividend, as part of cash conservation 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, 2022.

We believe we have more than adequate liquidity resources through our cash balances, operating cash flows ~~borrowings~~ and ~~expected tax refunds,~~borrowings 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, ~~decreased~~increased from ~~$1.68~~$1.77 billion as of December 31, ~~2020~~2021 to ~~$1.59~~$2.02 billion as of September 30, ~~2021.~~2022. During the nine months ended September 30, ~~2021,~~2022, we ~~borrowed $149.1~~entered into debt and finance leases for $918.3 million ~~and~~including debt of $550.0 million to refinance our term loan due 2024. During this period, we made principal payments of ~~$239.6~~$666.0 million, including ~~$53.9~~a $531.7 million onprepayment of our ~~senior secured revolving credit facility that matured on March 31, 2021~~term loan due 2024, $24.7 million prepayment of our payroll support program loans and ~~a $57.0~~$1.7 million prepayment of debt secured by aircraft.

~~Despite lower revenues and profitability caused by the pandemic compared to pre-pandemic periods,~~As of September 30, 2022, approximately 82 percent of our ~~total~~ debt and finance lease obligations ~~declined by 5.4 percent from December 31, 2020 to September 30, 2021.~~are fixed-rate.

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, ~~2021,~~2022, our operating activities provided ~~$373.6~~$221.8 million of cash compared to ~~$276.7~~$373.6 million during the same period ~~of 2020.~~2021. This change is mostly attributable to a ~~$296.4~~$191.1 million ~~increase~~decrease in net income offset by ~~the impact of special charges in 2020 and~~ changes in current assets and liability accounts.

Investing Activities. Cash used infor investing activities was ~~$513.3~~$335.6 million during the nine months ended September 30, ~~2021~~2022 compared to ~~$209.1~~$513.3 million used for investing activities during the same period in ~~2020.~~2021. The change is due to ana $405.7 million increase ~~of $258.9 million~~in proceeds from maturities, net 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 no such transactions~~2022 as proceeds from maturities exceeded purchases of investment securities in the nine months ended September 30, 2022 but not in the same period of 2021. ~~Purchases~~This was offset by a $227.0 million increase in purchases of property and equipment, ~~were $32.1~~including $88.5 million ~~less in~~related to aircraft pre-delivery deposits during the ~~current year.~~nine months ended September 30, 2022.

Financing Activities. Cash ~~provided by~~used for financing activities for the nine months ended September 30, ~~2021~~2022 was ~~$205.4~~$15.7 million, compared to ~~$81.1~~$205.4 million cash provided by financing activities for the same period in ~~2020.~~2021. The ~~year-over-year~~ change ~~is mostly due to the equity offering completed on May 10, 2021 which~~ resulted ~~in the receipt of~~from $335.1 million ~~in cash. This was offset by~~of proceeds from the ~~net effect~~issuance of debt activity, as principal payments and debt issuance costs exceeded debt proceeds by $133.7 million during the nine months ended September 30, 2021, compared to $121.6 million of debt proceeds (net of related costs) in excess of principal payments during the same period in 2020. Additionally, there were no share repurchases or dividends paidcommon stock in the first nine months of 2021 ~~where there was $33.8~~offset by an increase in proceeds from debt issuance in excess of principal payments and debt issuance costs of $200.8 million compared to the same period in 2021 as debt proceeds exceeded principal payments and ~~$11.4 million of such activity, respectively,~~debt issuance costs in the nine months ended September 30, 2022 but not in the same period of ~~2020.~~

2021. The $82.8 million in other financing activities is largely attributable to the deposit of $87.5 million of loan proceeds into a construction disbursement account and as such, is a direct offset to $87.5 million of proceeds from the issuance of debt obligations for Sunseeker Resort.

3331

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, the ~~development~~timing of aircraft deliveries and ~~financing~~retirements, the implementation of a joint alliance with VivaAerobus, the development of 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 the effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words "believe," "expect," "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. These risk factors include, without limitation, the impact of Hurricane Ian on our Florida markets and on completion of Sunseeker Resort, 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 ~~Payroll Support Programs,~~government 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, the ability to obtain necessary government approvals to implement the announced alliance with VivaAerobus and to otherwise prepare to offer international service, 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, ~~2021.~~2022. For information regarding our critical accounting policies and estimates, see disclosures in the Consolidated Financial Statements and accompanying notes contained in our ~~2020~~2021 Form 10-K, and in Note 1 of Notes to Consolidated Financial Statements (unaudited).

3432

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. Aircraft fuel expense for the nine months ended September 30, ~~2021~~2022 represented ~~31.7~~37.3 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, ~~2021,~~2022, a hypothetical ten percent increase in the average price per gallon of fuel would have increased fuel expense by approximately ~~$11.9 million and $30.8 million respectively.~~$63.7 million. We have not hedged fuel price risk for many years.

Interest Rates

As of September 30, ~~2021,~~2022, we had ~~$0.95 billion~~$371.7 million of variable-rate debt, including current maturities and without reduction for ~~$13.8~~$3.6 million in related costs. A hypothetical 100 basis point change in interest rates would have affected interest expense on variable rate debt by approximately ~~$7.7~~$6.1 million for the nine months ended September 30, ~~2021.~~2022 as the amount of our variable rate debt during the year was much higher prior to the prepayment of our term loan in August 2022.

Item 4. Controls and Procedures

As of September 30, ~~2021,~~2022, 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, ~~2021,~~2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

3633

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.

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 for the year ended December 31, ~~2020~~2021 and filed with the Commission on March 1, ~~2021.~~2022 other than to include the following risk factor:

38The damage caused by Hurricane Ian may impact air traffic to those areas of Florida impacted by the storm and the damage to our Sunseeker Resort may result in delays and additional costs.

Near the end of September 2022, Hurricane Ian struck Southwest Florida and moved across the State of Florida causing substantial damage in its wake. All airports in the affected areas were closed for a period of time, but have now reopened. Particular areas in Southwest Florida suffered damage which may take years to restore. These areas include the tourist destinations of Fort Myers Beach, Sanibel Island and Captiva Island among others, to which many of our customers travel when flying on our network. There is no assurance that passenger travel to our leisure destinations in Punta Gorda, Sarasota and Key West will not be impacted, or to what extent, as a result of the lingering effects of the damage and recovery from Hurricane Ian.

Hurricane Ian also caused significant damage to our Sunseeker Resort. We are in the process of evaluating the extent of the damage and our insurance coverages. While we do not at this time believe the delay to the completion of the Resort will be longer than a few months, this will depend on the availability of workers and materials and other factors which are beyond our control.

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

Our Repurchases of Equity Securities

(a) ~~Not applicable~~During third quarter 2022, we issued 17,876 shares of restricted stock to Scott Sheldon, our president and chief operating Officer, 16,812 shares of restricted stock to Gregory Anderson, our president and chief financial officer, 9,949 shares to Scott DeAngelo, our executive vice president and chief marketing officer, and 11,244 shares to Rob Wilson, our executive vice president and chief information officer under their respective employment agreements. These shares of restricted stock represent the base equity grant for the period under their employment agreements and vest over three years. All of these shares were issued in reliance upon an exemption from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, on the basis that the issuance did not involve a public offering.

(b)Not applicable

(c)We did not repurchase any common stock during the third quarter ~~2021.~~2022.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

None

4234

Item 6. Exhibits


3.1			Articles of Incorporation ~~(1)~~of Allegiant Travel Company. (Incorporated by reference to Exhibit 3.1 to Registration Statement No. 333-134145 filed with the Commission on July 6, 2006).
3.2			Bylaws of ~~the~~Allegiant Travel Company as amended on October 18, ~~2021 (2)~~2021. (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, filed with the Commission on July 28, 2022.
1210.1			~~Calculation~~Employment Agreement dated as of ~~Ratio~~August 1, 2022 between the Company and Scott Sheldon.
10.2			Employment Agreement dated as of ~~Earnings~~August 1, 2022 between the Company and Gregory Anderson.
10.3			Employment Agreement dated as of August 1, 2022 between the Company and Scott DeAngelo.
10.4			Employment Agreement dated as of August 1, 2022 between the Company and Robert Wilson, III.
10.5			PDP Credit Agreement dated as of September 30, 2022 among Allegiant Air, LLC, Norddeutsche Landesbank Girozentrale (acting through its New York branch) and Landesbank Hessen-Thüringen Girozentrale as Original Lenders and Bank of Utah as security trustee. (1)
10.6			Purchase Agreement Assignment and Security Agreement dated as of September 30, 2022, between Allegiant Air, LLC and Bank of Utah as security trustee. (1)
10.7			Definitions Relating to ~~Fixed Charges~~the PDP Credit Agreement and the Security Agreement referenced in items 10.5 and 10.6. (1)
10.8			Allegiant Guarantee Agreement dated as of ~~Allegiant Travel~~September 30, 2022 between the Company and Bank of Utah as security trustee.
31.1			Rule 13a - 14(a) / 15d - 14(a) Certification of Principal Executive Officer
31.2			Rule 13a - 14(a) / 15d - 14(a) Certification of Principal Financial Officer
32			Section 1350 Certifications
101.SCH			XBRL Taxonomy Extension Schema Document
101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document
101.LAB			XBRL Taxonomy Extension Labels Linkbase Document
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document

(1) ~~Incorporated by reference to Exhibit filed with Registration Statement #333-134145 filed by the Company with the Commission~~Certain confidential information in this agreement has been omitted because it (i) is not material and ~~amendments thereto.~~

~~(2) Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the Commission on October 18, 2021.~~

(ii) would be competitively harmful if publicly disclosed.

4335

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:	~~October 28, 2021~~November 3, 2022	By:	/s/ Gregory Anderson
		Gregory Anderson, as duly authorized officer of the Company ~~(Chief~~(President and Chief Financial Officer) and as Principal Financial Officer

4436


	Three Months Ended September 30, 2020
	Common stock outstanding	Par value		Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings		Treasury shares		Total shareholders' equity
Balance at June 30, 2020	16,240	$	23	$	310,628	$	424	$	1,073,603	$	(648,118)	$	736,560
Share-based compensation	58	—		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, 2020	16,298	$	23	$	315,150	$	183	$	1,044,460	$	(648,118)	$	711,698


	Nine Months Ended September 30, 2020
	Common stock outstanding	Par value		Additional paid-in capital		Accumulated other comprehensive income		Retained earnings		Treasury shares		Total shareholders' equity
Balance at December 31, 2019	16,303	$	23	$	289,933	$	98	$	1,211,076	$	(617,579)	$	883,551
Share-based compensation	171	—		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 plan	41	—		—		—		—		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, 2020	16,298	$	23	$	315,150	$	183	$	1,044,460	$	(648,118)	$	711,698


(in thousands)	Classification on the Balance Sheet	September 30, 2021		December 31, 2020
Assets
Operating lease assets(1)	Operating lease right-of-use assets	$	124,297	$	115,911
Finance lease assets(2)	Property and equipment, net	235,759		133,175
Total lease assets		$	360,056	$	249,086

Liabilities
Current
Operating(1)	Current operating lease liabilities	$	17,642	$	14,313
Finance(2)	Current maturities of long-term debt and finance lease obligations	14,951		9,767
Noncurrent
Operating(1)	Noncurrent operating lease liabilities	110,322		102,289
Finance(2)	Long-term debt and finance lease obligations	247,035		117,060
Total lease liabilities		$	389,950	$	243,429