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, 2022~~March 31, 2023

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

For the transition period from _______ to_______

Commission File Number 001-33166

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~~Global Select 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~~April 24, ~~2022,~~2023, the registrant had ~~18,398,569~~18,429,004 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	2021

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	3329

ITEM 4.	Controls and Procedures	3329

PART II.	OTHER INFORMATION

ITEM 1.	Legal Proceedings	3430

ITEM 1A.	Risk Factors	3430

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3430

ITEM 3.	Defaults Upon Senior Securities	3430

ITEM 4.	Mine Safety Disclosures	3430

ITEM 5.	Other Information	3430

ITEM 6.	Exhibits	3531

	Signatures	3632

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

ALLEGIANT TRAVEL COMPANY

CONSOLIDATED BALANCE SHEETS

(in thousands)


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
		(unaudited)					(unaudited)
CURRENT ASSETS	CURRENT ASSETS					CURRENT ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	240,528	$	363,378	Cash and cash equivalents	$	317,573	$	229,989
Restricted cash	Restricted cash	30,671		37,323		Restricted cash	17,157		15,457
Short-term investments	Short-term investments	761,362		819,478		Short-term investments	690,593		725,063
Accounts receivable	Accounts receivable	79,150		62,659		Accounts receivable	57,798		106,578
Expendable parts, supplies and fuel, net	Expendable parts, supplies and fuel, net	39,070		27,500		Expendable parts, supplies and fuel, net	35,086		35,546
Prepaid expenses and other current assets	Prepaid expenses and other current assets	46,772		28,073		Prepaid expenses and other current assets	181,893		161,636

TOTAL CURRENT ASSETS	TOTAL CURRENT ASSETS	1,197,553		1,338,411		TOTAL CURRENT ASSETS	1,300,100		1,274,269
Property and equipment, net	Property and equipment, net	2,738,516		2,259,507		Property and equipment, net	2,946,941		2,810,693
Long-term investments	Long-term investments	—		2,231		Long-term investments	68,801		63,318
Deferred major maintenance, net	Deferred major maintenance, net	148,719		146,850		Deferred major maintenance, net	162,221		157,410
Operating lease right-of-use assets, net	Operating lease right-of-use assets, net	116,471		130,087		Operating lease right-of-use assets, net	106,999		111,679
Deposits and other assets	Deposits and other assets	209,705		113,987		Deposits and other assets	95,359		93,928
TOTAL ASSETS:	TOTAL ASSETS:	$	4,410,964	$	3,991,073	TOTAL ASSETS:	$	4,680,421	$	4,511,297
CURRENT LIABILITIES	CURRENT LIABILITIES					CURRENT LIABILITIES
Accounts payable	Accounts payable	$	51,394	$	43,566	Accounts payable	$	65,936	$	58,335
Accrued liabilities	Accrued liabilities	256,429		162,892		Accrued liabilities	225,510		226,276
Current operating lease liabilities	Current operating lease liabilities	19,792		19,081		Current operating lease liabilities	20,200		19,973
Air traffic liability	Air traffic liability	429,924		307,453		Air traffic liability	479,530		379,459
Loyalty program liability						Loyalty program liability	36,417		32,888
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	152,550		130,053		Current maturities of long-term debt and finance lease obligations, net of related costs	289,669		152,900
TOTAL CURRENT LIABILITIES	TOTAL CURRENT LIABILITIES	910,089		663,045		TOTAL CURRENT LIABILITIES	1,117,262		869,831
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	1,840,000		1,612,486		Long-term debt and finance lease obligations, net of current maturities and related costs	1,816,151		1,944,078
Deferred income taxes	Deferred income taxes	332,506		346,137		Deferred income taxes	348,334		346,388
Noncurrent operating lease liabilities	Noncurrent operating lease liabilities	100,111		115,067		Noncurrent operating lease liabilities	89,903		94,972
Loyalty program liability						Loyalty program liability	23,216		23,612
Other noncurrent liabilities	Other noncurrent liabilities	39,285		30,786		Other noncurrent liabilities	14,158		11,718
TOTAL LIABILITIES:	TOTAL LIABILITIES:	3,221,991		2,767,521		TOTAL LIABILITIES:	3,409,024		3,290,599
SHAREHOLDERS' EQUITY	SHAREHOLDERS' EQUITY					SHAREHOLDERS' EQUITY
Common stock, par value $0.001	Common stock, par value $0.001	25		25		Common stock, par value $0.001	25		25
Treasury shares	Treasury shares	(633,332)		(638,057)		Treasury shares	(672,493)		(660,023)
Additional paid in capital	Additional paid in capital	703,633		692,053		Additional paid in capital	714,506		709,471
Accumulated other comprehensive income, net	Accumulated other comprehensive income, net	1,154		2,056		Accumulated other comprehensive income, net	3,242		1,257
Retained earnings	Retained earnings	1,117,493		1,167,475		Retained earnings	1,226,117		1,169,968
TOTAL EQUITY:	TOTAL EQUITY:	1,188,973		1,223,552		TOTAL EQUITY:	1,271,397		1,220,698
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY:	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY:	$	4,410,964	$	3,991,073	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY:	$	4,680,421	$	4,511,297

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 March 31,
		2022		2021		2022		2021			2023		2022
OPERATING REVENUES:	OPERATING REVENUES:									OPERATING REVENUES:
Passenger	Passenger	$	516,476	$	423,796	$	1,573,041	$	1,124,237	Passenger	$	609,277	$	463,961
Third party products	Third party products	27,132		24,541		77,399		61,164		Third party products	26,037		22,480
Fixed fee contracts	Fixed fee contracts	15,881		11,117		38,186		23,943		Fixed fee contracts	14,117		13,386
Other	Other	836		15		1,654		1,682		Other	256		282
Total operating revenues	Total operating revenues	560,325		459,469		1,690,280		1,211,026		Total operating revenues	649,687		500,109
OPERATING EXPENSES:	OPERATING EXPENSES:									OPERATING EXPENSES:
Aircraft fuel	Aircraft fuel	208,175		118,370		629,600		310,674		Aircraft fuel	189,546		164,137
Salaries and benefits	Salaries and benefits	137,336		125,799		411,027		365,655		Salaries and benefits	159,623		134,010
Station operations	Station operations	66,302		70,943		198,954		171,246		Station operations	61,520		65,744
Depreciation and amortization	Depreciation and amortization	50,092		46,399		145,618		134,095		Depreciation and amortization	54,680		46,343
Maintenance and repairs	Maintenance and repairs	32,177		30,451		91,120		76,419		Maintenance and repairs	26,442		27,820
Sales and marketing	Sales and marketing	25,815		22,047		75,462		51,288		Sales and marketing	26,928		22,350
Aircraft lease rental		5,905		5,670		17,489		15,507
Aircraft lease rentals										Aircraft lease rentals	7,092		6,132
Other	Other	30,292		22,379		83,137		55,655		Other	30,643		26,202
Payroll Support Programs grant recognition		—		(49,210)		—		(202,181)

Special charges	Special charges	35,142		332		35,426		2,924		Special charges	(1,612)		142
Total operating expenses	Total operating expenses	591,236		393,180		1,687,833		981,282		Total operating expenses	554,862		492,880
OPERATING INCOME (LOSS)		(30,911)		66,289		2,447		229,744
OPERATING INCOME										OPERATING INCOME	94,825		7,229
OTHER (INCOME) EXPENSES:	OTHER (INCOME) EXPENSES:									OTHER (INCOME) EXPENSES:
Interest expense	Interest expense	34,242		16,595		78,530		50,174		Interest expense	35,708		19,791
Capitalized interest	Capitalized interest	(4,296)		(401)		(7,594)		(401)		Capitalized interest	(5,180)		(1,216)
Interest income	Interest income	(4,918)		(375)		(7,909)		(1,338)		Interest income	(10,128)		(773)

Other, net	Other, net	223		239		318		(164)		Other, net	7		(6)
Total other expenses	Total other expenses	25,251		16,058		63,345		48,271		Total other expenses	20,407		17,796
INCOME (LOSS) BEFORE INCOME TAXES	INCOME (LOSS) BEFORE INCOME TAXES	(56,162)		50,231		(60,898)		181,473		INCOME (LOSS) BEFORE INCOME TAXES	74,418		(10,567)
INCOME TAX PROVISION (BENEFIT)	INCOME TAX PROVISION (BENEFIT)	(9,703)		10,977		(10,916)		40,323		INCOME TAX PROVISION (BENEFIT)	18,269		(2,686)
NET INCOME (LOSS)	NET INCOME (LOSS)	$	(46,459)	$	39,254	$	(49,982)	$	141,150	NET INCOME (LOSS)	$	56,149	$	(7,881)
Earnings (loss) per share to common shareholders:	Earnings (loss) per share to common shareholders:									Earnings (loss) per share to common shareholders:
Basic	Basic	$	(2.58)	$	2.18	$	(2.78)	$	8.18	Basic	$	3.09	$	(0.44)
Diluted	Diluted	$	(2.58)	$	2.18	$	(2.78)	$	8.18	Diluted	$	3.09	$	(0.44)
Shares used for computation:	Shares used for computation:									Shares used for computation:
Basic	Basic	18,014		17,766		17,985		17,005		Basic	17,766		17,954
Diluted	Diluted	18,014		17,767		17,985		17,015		Diluted	17,769		17,954

Cash dividends declared per share:	Cash dividends declared per share:	$	—	$	—	$	—	$	—	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 March 31,
		2022		2021		2022		2021			2023		2022
NET INCOME (LOSS)	NET INCOME (LOSS)	$	(46,459)	$	39,254	$	(49,982)	$	141,150	NET INCOME (LOSS)	$	56,149	$	(7,881)
Other comprehensive income:	Other comprehensive income:									Other comprehensive income:
Change in available for sale securities, net of tax	Change in available for sale securities, net of tax	(1,590)		774		(902)		676		Change in available for sale securities, net of tax	1,985		3,355

Total other comprehensive income (loss)	Total other comprehensive income (loss)	(1,590)		774		(902)		676		Total other comprehensive income (loss)	1,985		3,355
TOTAL COMPREHENSIVE INCOME (LOSS)	TOTAL COMPREHENSIVE INCOME (LOSS)	$	(48,049)	$	40,028	$	(50,884)	$	141,826	TOTAL COMPREHENSIVE INCOME (LOSS)	$	58,134	$	(4,526)

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


	Three Months Ended March 31, 2023
	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, 2022	18,128	$	25	$	709,471	$	1,257	$	1,169,968	$	(660,023)	$	1,220,698
Share-based compensation	(5)	—		5,035		—		—		—		5,035
Shares repurchased by the Company and held as treasury shares	(125)	—		—		—		—		(12,470)		(12,470)


Other comprehensive income	—	—		—		1,985		—		—		1,985

Net income	—	—		—		—		56,149		—		56,149
Balance at March 31, 2023	17,998	$	25	$	714,506	$	3,242	$	1,226,117	$	(672,493)	$	1,271,397

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 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


	Three Months Ended March 31, 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	8	—		3,270		—		—		—		3,270



Other comprehensive income	—	—		—		3,355		—		—		3,355

Net (loss)	—	—		—		—		(7,881)		—		(7,881)
Balance at March 31, 2022	18,119	$	25	$	695,323	$	5,411	$	1,159,594	$	(638,057)	$	1,222,296

ALLEGIANT TRAVEL COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021			2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income (loss)	Net income (loss)	$	(49,982)	$	141,150	Net income (loss)	$	56,149	$	(7,881)
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:					Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	145,618		134,095		Depreciation and amortization	54,680		46,343
Special charges	Special charges	35,426		2,924		Special charges	(1,835)		142
Other adjustments	Other adjustments	9,206		26,778		Other adjustments	1,592		6,155
Changes in certain assets and liabilities:	Changes in certain assets and liabilities:					Changes in certain assets and liabilities:
Air traffic liability	Air traffic liability	122,471		44,014		Air traffic liability	100,071		145,169

Other - net	Other - net	(40,917)		24,634		Other - net	4,743		(13,927)
Net cash provided by operating activities	Net cash provided by operating activities	221,822		373,595		Net cash provided by operating activities	215,400		176,001
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Purchase of investment securities	Purchase of investment securities	(968,064)		(1,028,481)		Purchase of investment securities	(251,937)		(302,161)
Proceeds from maturities of investment securities	Proceeds from maturities of investment securities	1,024,861		679,588		Proceeds from maturities of investment securities	288,591		311,332
Aircraft pre-delivery deposits	Aircraft pre-delivery deposits	(88,500)		(3,300)		Aircraft pre-delivery deposits	(33,516)		(46,694)
Purchase of property and equipment	Purchase of property and equipment	(304,956)		(163,202)		Purchase of property and equipment	(129,883)		(71,659)

Other investing activities	Other investing activities	1,037		2,062		Other investing activities	12,506		(572)
Net cash (used in) investing activities	Net cash (used in) investing activities	(335,622)		(513,333)		Net cash (used in) investing activities	(114,239)		(109,754)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:

Proceeds from the issuance of debt and finance lease obligations	Proceeds from the issuance of debt and finance lease obligations	745,800		106,657		Proceeds from the issuance of debt and finance lease obligations	59,516		—

Repurchase of common stock						Repurchase of common stock	(12,470)		—
Principal payments on debt and finance lease obligations	Principal payments on debt and finance lease obligations	(666,046)		(239,644)		Principal payments on debt and finance lease obligations	(51,492)		(37,335)
Debt issuance costs	Debt issuance costs	(12,681)		(705)		Debt issuance costs	(877)		(308)
Proceeds from issuance of common stock		—		335,139

Other financing activities	Other financing activities	(82,775)		3,936		Other financing activities	(6,554)		—
Net cash provided by (used in) by financing activities		(15,702)		205,383
Net cash (used in) financing activities						Net cash (used in) financing activities	(11,877)		(37,643)
NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(129,502)		65,645		NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	89,284		28,604
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD	400,701		170,319		CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD	245,446		400,701
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	$	271,199	$	235,964	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	$	334,730	$	429,305

CASH PAYMENTS (RECEIPTS) FOR:
CASH PAYMENTS FOR:						CASH PAYMENTS FOR:
Interest paid, net of amount capitalized	Interest paid, net of amount capitalized	$	60,452	$	30,739	Interest paid, net of amount capitalized	$	41,645	$	18,007
Income tax payments (refunds)		36		(12,762)
Income tax payments						Income tax payments	14		17
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:	SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:					SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:
Right-of-use (ROU) assets acquired		$	—	$	23,157

Flight equipment acquired under finance leases	Flight equipment acquired under finance leases	172,507		40,826		Flight equipment acquired under finance leases	—		68,211
Purchases of property and equipment in accrued liabilities	Purchases of property and equipment in accrued liabilities	82,359		12,727		Purchases of property and equipment in accrued liabilities	69,240		37,083

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, ~~2021~~2022 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.

The Company has reclassified certain prior period amounts to conform to the current period presentation. ~~Unless otherwise noted, all amounts disclosed are stated before consideration of income taxes.~~

Note 2 — ~~Hurricane Ian~~Sunseeker Special Charges

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. Additionally in the fourth quarter of 2022, there was another weather-related event and a fire that caused additional damage. Based on the Company’s assessment of these damages and the anticipated future restoration costs, an estimated loss of $52.1 million was recorded as a special charge in 2022.

~~Within days after~~During the ~~hurricane,~~quarter ended March 31, 2023, 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 damages and the costs to restore the Resort to its condition prior to the hurricane and determining the extent of construction interruption.

~~The Company has significant levels~~recorded $1.8 million of insurance ~~in place to cover~~recoveries. The recoveries are offset by $0.2 million of additional losses recorded during the ~~losses~~quarter, resulting ~~from Hurricane Ian including for physical damage due to a named windstorm or flood (storm surge), business interruption and an OCIP (owner-controlled insurance program).~~

~~The Company recognized~~in a special charge of ~~$35.0~~$(1.6) million. To date, the Company has recorded insurance recoveries of $19.9 million ~~during the quarter associated with the estimated loss incurred from~~related to Hurricane Ian ~~which charge also reduced the carrying amount of the Resort. The estimate is preliminary~~ and ~~subject to change as the damage assessment continues. The amount of the loss will be offset in future periods by amounts to be recovered from the Company’s~~subsequent insurance ~~policies.~~events.

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 March 31,
(in thousands)	(in thousands)	2022		2021		2022		2021		(in thousands)	2023		2022
Scheduled service	Scheduled service	$	254,545	$	195,225	$	775,740	$	552,765	Scheduled service	$	311,728	$	223,854
Ancillary air-related charges	Ancillary air-related charges	252,080		224,170		765,096		558,687		Ancillary air-related charges	283,902		229,464
Loyalty redemptions	Loyalty redemptions	9,851		4,401		32,205		12,785		Loyalty redemptions	13,647		10,643
Total passenger revenue	Total passenger revenue	$	516,476	$	423,796	$	1,573,041	$	1,124,237	Total passenger revenue	$	609,277	$	463,961

Sales of passenger tickets not yet flown are recorded in air traffic liability. Passenger revenue is recognized when transportation is provided. As of ~~September 30, 2022,~~March 31, 2023, the air traffic liability balance was ~~$429.9~~$479.5 million, of which approximately ~~$367.8~~$425.3 million was related to forward bookings, with the remaining ~~$62.1~~$54.2 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. Of the ~~$307.5~~$379.5 million that was recorded in the air traffic liability balance as of December 31, ~~2021,~~2022, approximately ~~75.1~~68.8 percent was recognized into passenger revenue during the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023.

In 2020, the Company announced that 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. Effective July 1, 2021, vouchers issued have an expiration date of one year from the original booking date.

The Company periodically evaluates the estimated amount of credit vouchers expected to 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 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.

Loyalty redemptions

In relation to the travel component of the Allways® Allegiant ~~World Mastercard®~~co-branded credit card contract with Bank of America, the Company has a performance obligation to provide cardholders with points to be used for future travel award redemptions. Therefore, consideration received from Bank of America related to the travel component is deferred based on its relative selling price and is recognized into passenger revenue when the points are redeemed and the ~~transportation~~underlying service 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 point liability for the periods indicated:


		Nine Months Ended September 30,					Three Months Ended March 31,
(in thousands)	(in thousands)	2022		2021		(in thousands)	2023		2022
Points balance at January 1	Points balance at January 1	$	40,490	$	21,841	Points balance at January 1	$	56,541	$	40,490
Points awarded (deferral of revenue)	Points awarded (deferral of revenue)	54,678		23,319		Points awarded (deferral of revenue)	16,739		16,957
Points redeemed (recognition of revenue)	Points redeemed (recognition of revenue)	(32,205)		(12,785)		Points redeemed (recognition of revenue)	(13,647)		(10,643)
Points balance at September 30		$	62,963	$	32,375
Points balance at March 31						Points balance at March 31	$	59,633	$	46,804

~~As of September 30, 2022 and 2021, $34.0 million and $15.9 million, respectively,~~The current portion of the ~~current points~~loyalty program 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.

Note 4 — Property and Equipment

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


(in thousands)	(in thousands)	September 30, 2022		December 31, 2021		(in thousands)	March 31, 2023		December 31, 2022
Flight equipment, including pre-delivery deposits	Flight equipment, including pre-delivery deposits	$	2,892,277	$	2,573,657	Flight equipment, including pre-delivery deposits	$	3,000,824	$	2,937,767
Computer hardware and software	Computer hardware and software	194,983		160,237		Computer hardware and software	230,034		209,808
Land and buildings/leasehold improvements	Land and buildings/leasehold improvements	60,036		59,735		Land and buildings/leasehold improvements	62,157		62,227
Other property and equipment	Other property and equipment	91,199		78,192		Other property and equipment	100,213		95,156
Sunseeker Resort	Sunseeker Resort	277,315		83,864		Sunseeker Resort	406,192		320,572
Total property and equipment	Total property and equipment	3,515,810		2,955,685		Total property and equipment	3,799,420		3,625,530
Less accumulated depreciation and amortization	Less accumulated depreciation and amortization	(777,294)		(696,178)		Less accumulated depreciation and amortization	(852,479)		(814,837)
Property and equipment, net	Property and equipment, net	$	2,738,516	$	2,259,507	Property and equipment, net	$	2,946,941	$	2,810,693

Accrued capital expenditures as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 were ~~$82.4~~$69.2 million and ~~$17.7~~$54.6 million, respectively.

Note 5 — Long-Term Debt

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


(in thousands)	(in thousands)	September 30, 2022		December 31, 2021		(in thousands)	March 31, 2023		December 31, 2022
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	Fixed-rate debt and finance lease obligations due through 2032	$	1,719,077	$	1,720,998
Variable-rate debt due through 2029	Variable-rate debt due through 2029	368,118		915,157		Variable-rate debt due through 2029	386,743		375,980
Total debt and finance lease obligations, net of related costs	Total debt and finance lease obligations, net of related costs	1,992,550		1,742,539		Total debt and finance lease obligations, net of related costs	2,105,820		2,096,978
Less current maturities, net of related costs	Less current maturities, net of related costs	152,550		130,053		Less current maturities, net of related costs	289,669		152,900
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	$	1,840,000	$	1,612,486	Long-term debt and finance lease obligations, net of current maturities and related costs	$	1,816,151	$	1,944,078

Weighted average fixed-interest rate on debt	Weighted average fixed-interest rate on debt	6.5%		5.8%		Weighted average fixed-interest rate on debt	6.4%		6.5%
Weighted average variable-interest rate on debt	Weighted average variable-interest rate on debt	4.5%		2.5%		Weighted average variable-interest rate on debt	6.6%		6.1%


				Interest Rate(s) Per Annum at				March 31, 2023		December 31, 2022
(in thousands)	Maturity Dates			March 31, 2023
Senior secured notes	2024	—	2027	7.25	%	—	8.50%	$	700,000	$	700,000
Consolidated variable interest entities	2024	—	2029	2.92	%	—	4.10%	103,966		79,453
Revolving credit facilities	2024	—	2027	7.32%				62,844		30,327
Debt secured by aircraft, engines, other equipment and real estate	2023	—	2029	1.87	%	—	7.45%	438,282		466,335
Finance leases	2028	—	2032	4.44	%	—	7.00%	473,339		494,328
Construction loan agreement	2028			5.75%				350,000		350,000

Total debt								$	2,128,431	$	2,120,443
Related costs								(22,611)		(23,465)
Total debt net of related costs								$	2,105,820	$	2,096,978

Maturities of ~~long-term~~long term debt ~~and finance lease obligations for the remainder~~as of ~~2022 and~~March 31, 2023, for the next ~~four~~five years and thereafter, in the aggregate, are: ~~remaining in 2022 - $34.2 million; 2023 - $152.5 million; 2024 - $299.8 million; 2025 - $145.2 million; 2026 - $138.8 million; and $1,222.0 million thereafter.~~


(in thousands)	As of March 31, 2023
Remaining in 2023	$	104,631
2024	365,058
2025	161,775
2026	155,579
2027	709,921
2028	278,929
Thereafter	329,927
Total debt and finance lease obligations, net of related costs	$	2,105,820

~~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 ~~Facilities~~Facility

In ~~August, 2022,~~February 2023, the Company, through a wholly owned subsidiary, entered into a credit agreement with ~~MUFG~~Credit Agricole Corporate and Investment Bank, ~~Ltd~~ under which the Company is entitled to borrow up to $100.0 million. This revolving credit facility replaced a revolving credit facility with the same lender which was to expire in March 2023. The revolving credit facility has a ~~term~~maturity date of ~~24 months~~March 31, 2026 and the borrowing ability is based on the value of aircraft and engines placed into the collateral pool. The notes under the facility bear interest at a floating rate based on SOFR. As of ~~September 30, 2022,~~March 31, 2023, the facility remains undrawn.

Consolidated Variable Interest Entities

In ~~August, 2022,~~February 2023, the Company, through a wholly owned subsidiary, entered into agreements with 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~~trust to borrow $27.0 million secured by ~~the same collateral that secures the Notes, has a term of 57 months and notes under the facility bear~~one Airbus A320 series aircraft. The trust was funded on inception. The borrowing bears interest at a ~~floating~~ rate ~~based on SOFR. As~~ of ~~September 30, 2022, the facility remains undrawn.~~

~~In September, 2022,~~2.92 percent and is payable in monthly installments through February 2029, at which time the Company ~~entered into~~will have 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 interestoption 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.~~fixed amount.

1213

Note 6 — Income Taxes

The Company recorded ~~a $9.7~~an $18.3 million income tax ~~benefit~~expense at an effective tax rate of ~~17.3~~24.5 percent and ~~an $11.0~~a $2.7 million income tax ~~expense~~benefit at a ~~21.9~~25.4 percent effective tax rate for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively. The effective tax rate for the three months ended ~~September 30, 2022~~March 31, 2023 differed from the statutory Federal income tax rate of 21.0 percent primarily due to state income taxes and the impact of permanent tax 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 effective tax rate for the nine months ended September 30, 2022 and 2021, respectively. The 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 the impact of permanent tax differences, none of which are individually significant.

1314

Note 7 — 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~~three months ended ~~September 30, 2022.~~March 31, 2023.

Financial instruments measured at fair value on a recurring basis:


		September 30, 2022						December 31, 2021							As of March 31, 2023						As of December 31, 2022
(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	$	49,106	$	49,106	$	—	$	25,019	$	25,019	$	—	Money market funds	$	105,574	$	105,574	$	—	$	88,073	$	88,073	$	—
Commercial Paper		70,450		—		70,450		179,455		—		179,455
Commercial paper														Commercial paper	70,727		—		70,727		50,791		—		50,791
Municipal debt securities	Municipal debt securities	16,398		—		16,398		63,875		—		63,875		Municipal debt securities	7,593		—		7,593		8,599		—		8,599

Total cash equivalents	Total cash equivalents	135,954		49,106		86,848		268,349		25,019		243,330		Total cash equivalents	183,894		105,574		78,320		147,463		88,073		59,390
Short-term	Short-term													Short-term
Commercial paper	Commercial paper	450,529		—		450,529		419,469		—		419,469		Commercial paper	373,285		—		373,285		421,279		—		421,279

US Treasury Bonds														US Treasury Bonds	23,457		—		23,457		—		—		—
Corporate debt securities	Corporate debt securities	196,962		—		196,962		234,436		—		234,436		Corporate debt securities	133,273		—		133,273		166,136		—		166,136
Municipal debt securities	Municipal debt securities	20,965		—		20,965		165,573		—		165,573		Municipal debt securities	12,157		—		12,157		30,426		—		30,426
Federal agency debt securities	Federal agency debt securities	92,906		—		92,906		—		—		—		Federal agency debt securities	148,421		—		148,421		107,222		—		107,222
Total short-term	Total short-term	761,362		—		761,362		819,478		—		819,478		Total short-term	690,593		—		690,593		725,063		—		725,063
Long-term	Long-term													Long-term

Federal agency debt securities														Federal agency debt securities	38,261		—		38,261		20,050		—		20,050
Corporate debt securities														Corporate debt securities	22,904		—		22,904		35,688		—		35,688

Municipal debt securities	Municipal debt securities	—		—		—		2,231		—		2,231		Municipal debt securities	7,636		—		7,636		7,580		—		7,580

Total long-term	Total long-term	—		—		—		2,231		—		2,231		Total long-term	68,801		—		68,801		63,318		—		63,318
Total financial instruments	Total financial instruments	$	897,316	$	49,106	$	848,210	$	1,090,058	$	25,019	$	1,065,039	Total financial instruments	$	943,288	$	105,574	$	837,714	$	935,844	$	88,073	$	847,771

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, 2022				December 31, 2021						As of March 31, 2023				As of December 31, 2022
(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	$	1,538,638	$	1,457,343	$	1,447,462	$	1,261,170	3	Non-publicly held debt	$	1,655,092	$	1,636,067	$	1,626,114	$	1,561,939	3

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

1415

Note 8 — 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,~~March 31, 2022, basic and diluted ~~income (loss)~~loss per share are the same because of the ~~(loss)~~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 March 31,
		2022		2021		2022		2021			2023		2022
Basic:	Basic:									Basic:
Net income (loss)	Net income (loss)	$	(46,459)	$	39,254	$	(49,982)	$	141,150	Net income (loss)	$	56,149	$	(7,881)
Less income allocated to participating securities	Less income allocated to participating securities	—		(573)		—		(2,028)		Less income allocated to participating securities	(1,254)		—
Net income (loss) attributable to common stock	Net income (loss) attributable to common stock	$	(46,459)	$	38,681	$	(49,982)	$	139,122	Net income (loss) attributable to common stock	$	54,895	$	(7,881)
Earnings (loss) per share, basic	Earnings (loss) per share, basic	$	(2.58)	$	2.18	$	(2.78)	$	8.18	Earnings (loss) per share, basic	$	3.09	$	(0.44)
Weighted-average shares outstanding	Weighted-average shares outstanding	18,014		17,766		17,985		17,005		Weighted-average shares outstanding	17,766		17,954
Diluted:	Diluted:									Diluted:
Net income (loss)	Net income (loss)	$	(46,459)	$	39,254	$	(49,982)	$	141,150	Net income (loss)	$	56,149	$	(7,881)
Less income allocated to participating securities	Less income allocated to participating securities	—		(573)		—		(2,027)		Less income allocated to participating securities	(1,254)		—
Net income (loss) attributable to common stock	Net income (loss) attributable to common stock	$	(46,459)	$	38,681	$	(49,982)	$	139,123	Net income (loss) attributable to common stock	$	54,895	$	(7,881)
Earnings (loss) per share, diluted	Earnings (loss) per share, diluted	$	(2.58)	$	2.18	$	(2.78)	$	8.18	Earnings (loss) per share, diluted	$	3.09	$	(0.44)
Weighted-average shares outstanding	Weighted-average shares outstanding	18,014		17,766		17,985		17,005		Weighted-average shares outstanding	17,766		17,954
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	104		—
Adjusted weighted-average shares outstanding under treasury stock method	Adjusted weighted-average shares outstanding under treasury stock method	18,014		17,869		17,985		17,126		Adjusted weighted-average shares outstanding under treasury stock method	17,870		17,954
Participating securities excluded under two-class method	Participating securities excluded under two-class method	—		(102)		—		(111)		Participating securities excluded under two-class method	(101)		—
Adjusted weighted-average shares outstanding under two-class method	Adjusted weighted-average shares outstanding under two-class method	18,014		17,767		17,985		17,015		Adjusted weighted-average shares outstanding under two-class method	17,769		17,954

1516

Note 9 — 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.

1617

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)	(in thousands)	Airline		Sunseeker Resort (1)		Consolidated		(in thousands)	Airline		Sunseeker Resort		Consolidated
Three Months Ended September 30, 2022
Three Months Ended March 31, 2023								Three Months Ended March 31, 2023
Operating revenue:	Operating revenue:							Operating revenue:
Passenger	Passenger	$	516,476	$	—	$	516,476	Passenger	$	609,277	$	—	$	609,277
Third party products	Third party products	27,132		—		27,132		Third party products	26,037		—		26,037
Fixed fee contract		15,881		—		15,881
Fixed fee contracts								Fixed fee contracts	14,117		—		14,117
Other	Other	836		—		836		Other	251		5		256
Operating income (loss)	Operating income (loss)	6,844		(37,755)		(30,911)		Operating income (loss)	97,574		(2,749)		94,825
Interest expense, net	Interest expense, net	18,882		1,134		20,016		Interest expense, net	18,741		1,695		20,436
Depreciation and amortization	Depreciation and amortization	50,064		28		50,092		Depreciation and amortization	54,622		58		54,680
Capital expenditures	Capital expenditures	165,814		91,076		256,890		Capital expenditures	92,432		85,620		178,052
Three Months Ended September 30, 2021
Three Months Ended March 31, 2022								Three Months Ended March 31, 2022
Operating revenue:	Operating revenue:							Operating revenue:
Passenger	Passenger	$	423,796	$	—	$	423,796	Passenger	$	463,961	$	—	$	463,961
Third party products	Third party products	24,541		—		24,541		Third party products	22,480		—		22,480
Fixed fee contract		11,117		—		11,117
Fixed fee contracts								Fixed fee contracts	13,386		—		13,386
Other	Other	15		—		15		Other	281		1		282
Operating income (loss)	Operating income (loss)	68,641		(2,352)		66,289		Operating income (loss)	10,176		(2,947)		7,229
Interest expense, net	Interest expense, net	16,220		(401)		15,819		Interest expense, net	15,828		1,974		17,802
Depreciation and amortization	Depreciation and amortization	46,363		36		46,399		Depreciation and amortization	46,341		2		46,343
Capital expenditures	Capital expenditures	54,032		12,622		66,654		Capital expenditures	142,178		63,781		205,959

~~(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.

1718

(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

~~(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.

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


(in thousands)	As of March 31, 2023		As of December 31, 2022
Airline	$	4,130,023	$	4,047,134
Sunseeker Resort	550,398		464,163

Consolidated	$	4,680,421	$	4,511,297

1819

Note 11 — Subsequent Events

In ~~October 2022, the lender funded an additional $87.5 million into the construction disbursement account for the Sunseeker project and~~April, 2023, the Company received ~~a disbursement~~advances of ~~$87.5~~$55.9 million ~~from~~under the ~~account. After these transactions, the construction disbursement account has a balance of approximately $117.5~~$200 million ~~which is recorded as a deposit on~~credit facility used to fund pre-delivery deposits for the Company's ~~balance sheet.~~

The Company has a $50.0 million loan to Viva Aerobus in deposits and other assets on the balance sheet which is to convert to equity upon approval of the joint alliance from the Mexican Federal Economic Competition Commission. This approval was obtained on October 6, 2022.Boeing order.

1920

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, 2022~~March 31, 2023 and ~~2021.~~2022. Also discussed is our financial position as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022. 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, ~~2021.~~2022. 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~~First Quarter ~~2022~~2023 Review

~~Highlights:~~First quarter 2023 highlights include:

–Earnings per share of $3.09

–Operating income of $94.8 million, yielding an operating margin of 14.6 percent

–Total operating revenue was ~~$560.3~~$649.7 million, up ~~28.4~~29.9 percent ~~year~~ over ~~three-year~~prior year

–Total fixed fee contracts revenue of $14.1 million, the highest first-quarter total in company history

–Total revenue per available seat mile or TRASM of 13.89 cents, up 28.8 percent year-over-year

–Load factor of 85.8 percent, a 6.9 point improvement year-over-year

–Total average fare of ~~$125.95~~$154.12, up ~~15.5% from~~17.5 percent year-over-year, the ~~third quarter 2019.~~highest quarterly average fare in company history

–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 -~~ revenue per passenger, including third party products, of ~~$6.29,~~$75.19, up ~~29.7~~10.7 percent ~~year over three-year~~as compared to first quarter 2022 driven by ~~Allways~~overall strength in core products and the Allegiant ~~World Mastercard strength~~

–~~Load factor of 88.5 percent, a 2.5 percentage point increase from the third quarter of 2019~~Extra rollout

–Acquired 38over 46 thousand new Allways ~~Allegiant World Mastercard~~rewards credit card holders during the quarter, the ~~strongest third~~highest quarterly acquisition in program history

–Received $28 million in remuneration from the co-branded credit card during the quarter ~~acquisition since the program's inception~~

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

–~~In October,~~recently named to the Forbes' America's Best Midsize Employers for 2023, Newsweek's ~~Top 100~~America's Greatest Workplaces for Diversity 2023, and Fortune's America's Most ~~Loved Workplaces® list for the second consecutive year~~

–~~Donated $100,000 to the American Red Cross for critical disaster relief to communities in the aftermath of Hurricane Ian~~Innovative Companies 2023 lists

AIRCRAFT

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


		September 30, 2022	December 31, 2021		March 31, 2023	December 31, 2022
A319	A319	35	35	A319	35	35
A320(1)	A320(1)	81	73	A320(1)	89	86
Total	Total	116	108	Total	124	121

(1)Does not include ~~ten~~two aircraft of which we have taken delivery as of ~~September 30, 2022,~~March 31, 2023, but were not yet in service as of that date.

As of ~~September 30, 2022,~~March 31, 2023, we are party to forward purchase agreements for 5253 aircraft with five deliveries expected in 2023, 24 in 2024 and the remainder thereafter. Two of the aircraft scheduled for delivery in 2023 ~~and~~are the ~~remainder~~initial aircraft under our Boeing contract, ~~thereafter. Additionally, we~~which are ~~party~~scheduled to ~~a finance lease for one aircraft which has now been~~be delivered in ~~October 2022.~~fourth quarter 2023.

NETWORK

As of ~~September 30, 2022,~~March 31, 2023, we were selling ~~583~~574 routes versus ~~598~~617 as of the same date in ~~2021~~2022. As discussed below, overall capacity and ~~466~~the number of routes served have been reduced to preserve systemwide operational reliability. We expect route count to remain below 2022 levels throughout the year as we focus on our core markets during our busiest travel periods. We have identified 1,400 incremental routes as opportunities for future network growth, of ~~September 30, 2019,~~ which ~~represents a 2.5 percent decrease and 25.1 percent increase, respectively.~~over 80% currently have no current non-stop service. Our total active number of origination cities and leisure destinations were 9493 and 32, respectively, as of ~~September 30, 2022.~~March 31, 2023.

Our unique model is predicated around expanding and contracting capacity to meet seasonal travel demands.

TRENDS

COVID-19

The COVID-19 pandemic significantly impacted our operating results in 2020 and 2021 and we suffered numerous cancellations due to the effect of the Omicron variant on flight crews into first quarter 2022. Although legislation has been passed to end the national emergency from the pandemic, future outbreaks of COVID-19 or other similar diseases may ~~continue to~~ impact our operations into the future. We believe that demand in the foreseeable future could ~~fluctuate~~vary 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.

Strong Demand Momentum

As concerns over COVID-19 have declined, we have seen significant increases in load factors and average total fare per passenger beginning in March 2022, and continuing ~~through the year~~ to 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.

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~~11.4 percent in ~~third~~first quarter 2023 over first quarter 2022. Fuel prices reached a peak in the second quarter of 2022, and have declined by approximately 22 percent since that time as we have seen refinery costs decline by 15 percent year over ~~third quarter 2021 and 78.2 percent over third quarter 2019.~~year. Fuel costs remain significantly higher than prior periods. 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~~complementary 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~~Delays for aircraft in heavy maintenance, pilot constraints, airport construction disruption and air traffic control delays in certain markets continue to impact our operations and ~~costs and~~ we have further pulled back some of our ~~planned growth for fourth quarter 2022 and into~~capacity in 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~~jointly requested the involvement of the National Mediation Board ("NMB") to ~~discuss~~assist with the ~~terms of a new labor agreement for this work group.~~negotiations. The mediation process with the NMB has begun. We are also in the process of negotiating a new contract with the union representing our flight attendants. Further, we have reached a tentative agreement with the union for our flight dispatchers which will increase pay rates and extend the term of that collective bargaining agreement by two years.

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 entered into a three-year~~are continuing our partnership with Schneider Electric to help us develop anour Environmental, Social and Governance (ESG) ~~program including:~~

–~~Identifying and prioritizing relevant ESG topics through a materiality assessment~~

–~~Establishing~~program. During 2023, we expect to establish 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~~will continue to provide carbon emissions reporting of Scope 1, 2, and 3 greenhouse gas (GHG) ~~emissions~~

–~~Supporting the communications efforts around our ESG program~~emissions.

VivaAerobus Alliance

In December 2021, we announced plans for a fully-integrated commercial alliance agreement with VivaAerobus, designed to expand options for nonstop leisure air travel on transborder flights between ~~our markets in the~~ United States and Mexico. We and VivaAerobus have submitted a joint application to the DOT requesting approval of and antitrust immunity for the alliance. In January 2023, the DOT declared our application substantially complete, but we have yet to receive a final ruling from the DOT. Allegiant and VivaAerobus ~~has~~have received approval from the Mexican Federal Economic Competition Commission to proceed with the alliance.

We and VivaAerobus currently expect to offer new routes under the alliance ~~beginning~~ in ~~the first half of~~late 2023, pending U.S. governmental approval of the applications and the return of Mexico to a Category 1.1 status under the FAA’s International Aviation Safety Assessment (“IASA”) program. The Category 1 status allows foreign airlines to expand their services to U.S. destinations and enter into codeshare partnerships with U.S. airlines. The FAA and Mexican Authorities currently anticipate an upgrade to Category 1 this summer pending successful completion of the final steps of the process.

Sunseeker Resort

~~Near the end~~Construction of ~~September 2022, Hurricane Ian cut a destructive path through Florida and Charlotte County, in particular.~~ Sunseeker Resort ~~suffered damage from~~Charlotte Harbor is continuing and we expect to open 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~~resort in October 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.

2223

RESULTS OF OPERATIONS

Comparison of three months ended ~~September 30, 2022~~March 31, 2023 to three months ended ~~September 30, 2021~~March 31, 2022

As comparisons of our ~~2022~~first quarter 2023 results to ~~periods during 2021~~the first quarter of 2022 reflect ~~disproportionate~~ changes due to the continued impact of the COVID-19 pandemic on air travel during ~~2021, we have also provided analysis~~the first quarter of ~~certain revenue and expense line items to 2019 results where helpful to understand trends in our performance.~~2022, year-over-year comparisons below are not necessarily indicative of expected full year-over-year results.

Operating Revenue

Passenger revenue. For the ~~third~~first quarter ~~2022,~~2023, passenger revenue increased ~~21.9~~31.3 percent compared to the same period in ~~2021 as~~2022 on relatively flat capacity year over year, with scheduled service ~~passengers were up 12.5 percent due to stronger passenger demand. In addition, stronger~~available seat miles (ASMs) increasing by 1.4 percent. Stronger passenger demand ~~resulted~~drove a 24.8 percent increase in average base fare and a ~~17.7 percent~~6.9 percentage point increase in scheduled service average base fare. We reduced the number of departures year-over-year to support operational reliability. Capacity was 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 2022, as compared to third quarter 2019, increased by 32.0 percent, as passengers increased by 15.0 percent on a 17.0 percent increase in capacity and average stage length increased by 4.4 percent, resulting in a 2.5 percentage point increase in load factor. ~~Average total fare per scheduled service passenger increased by 15.5 percent over the same period in 2019 as a result of a 16.7~~An 11.3 percent increase in ancillary air-related revenue per passenger, ~~and a 29.7 percent~~excluding third party products, also contributed to the increase in ~~ancillary third party revenue per passenger.~~passenger revenue.

The increase in ancillary air-related revenue per passenger over the same period in ~~2019~~2022 was primarily driven by ~~increased revenue from~~overall strength in core products and the ~~sale of~~ ~~bundled products as bundled products were not offered during the same period in 2019.~~Allegiant Extra rollout.

Third party products revenue. Third party products revenue for the ~~third~~first quarter ~~2022~~2023 increased ~~10.6~~15.8 percent compared to the ~~third~~first quarter ~~2021 and 49.0 percent compared to the third quarter 2019.~~2022. The increase from ~~2021~~2022 is primarily the result of ~~greater travel demand for hotels over~~a $2.8 million, or 23.6 percent, increase in the ~~same period and increased Allways® Rewards Program~~marketing component of co-branded credit card revenues. ~~Increased rental car and hotel rates also contributed to the 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 Allways® Rewards Program revenues.~~

Fixed fee contract revenue. Fixed fee contract revenue for the ~~third~~first quarter ~~2022~~2023 increased ~~42.9~~5.5 percent compared to the same period in ~~2021 as a result of an 8.1 percent~~2022 on stronger than expected performance during March Madness.The increase ~~in fixed fee departures when compared to lower charter activity during the 2021 quarter impacted~~was also driven by ~~the pandemic. In addition,~~increased fuel per gallon pass throughs, ~~(which~~which are accounted for as fixed fee contract ~~revenue) increased 75.0 percent as compared to 2021.~~

revenue. Fixed fee ~~contract revenue for the third quarter 2022, as compared to 2019, decreased by 19.8 percent 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.~~were relatively flat year over year.

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, 2019 being included as a more representative pre-pandemic third quarter comparison.~~periods. Excluding fuel on a per ASM basis provides management and investors the ability to measure and monitor our cost performance absent fuel price volatility. Both the cost and availability of fuel are subject to many economic and political factors beyond our control.


		Three Months Ended September 30,						Percent Change					Three Months Ended March 31,				Percent Change
Unitized costs (in cents)	Unitized costs (in cents)	2022		2021		2019		YoY		Yo3Y		Unitized costs (in cents)	2023		2022			YoY
Aircraft fuel	Aircraft fuel	4.68	¢	2.67	¢	2.69	¢	75.3	%	74.0	%	Aircraft fuel	4.05	¢	3.55	¢		14.1	%
Salaries and benefits	Salaries and benefits	3.09		2.83		2.77		9.2		11.6		Salaries and benefits	3.41		2.90			17.6
Station operations	Station operations	1.49		1.60		1.12		(6.9)		33.0		Station operations	1.32		1.42			(7.0)
Depreciation and amortization	Depreciation and amortization	1.13		1.04		1.01		8.7		11.9		Depreciation and amortization	1.17		1.00			17.0
Maintenance and repairs	Maintenance and repairs	0.72		0.69		0.64		4.3		12.5		Maintenance and repairs	0.57		0.60			(5.0)
Sales and marketing	Sales and marketing	0.58		0.50		0.45		16.0		28.9		Sales and marketing	0.58		0.48			20.8
Aircraft lease rentals	Aircraft lease rentals	0.13		0.13		—		—		NM		Aircraft lease rentals	0.15		0.13			15.4
Other	Other	0.67		0.50		0.69		34.0		(2.9)		Other	0.64		0.59			8.5
Payroll Support Programs grant recognition		—		(1.12)		—		NM		NM

Special charges	Special charges	0.79		0.01		—		NM		NM		Special charges	(0.03)		—			NM
CASM	CASM	13.28	¢	8.85	¢	9.37	¢	50.1		41.7		CASM	11.86	¢	10.67	¢		11.2
Operating CASM, excluding fuel	Operating CASM, excluding fuel	8.60	¢	6.18	¢	6.68	¢	39.2		28.7		Operating CASM, excluding fuel	7.81	¢	7.12	¢		9.7
Sunseeker Resort CASM	Sunseeker Resort CASM	0.85		0.05		0.04		NM		NM		Sunseeker Resort CASM	0.06		0.06			—
Operating CASM, excluding fuel and Sunseeker Resort activity	Operating CASM, excluding fuel and Sunseeker Resort activity	7.75	¢	6.13	¢	6.64	¢	26.4		16.7		Operating CASM, excluding fuel and Sunseeker Resort activity	7.75	¢	7.06	¢		9.8

NM - Not meaningful

Aircraft fuel expense. Aircraft fuel expense increased ~~$89.8~~$25.4 million, or ~~75.9~~15.5 percent, for the ~~third~~first quarter ~~2022~~2023 compared to ~~third~~first quarter ~~2021.~~2022. This is primarily due to ~~a 75.0~~an 11.4 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~~3.7 percent increase in ~~capacity.~~gallons consumed.

Salaries and benefits expense. Salaries and benefits expense increased ~~$11.5~~$25.6 million, or ~~9.2~~19.1 percent, for the ~~third~~first quarter ~~2022~~2023 when compared to the same period in ~~2021.~~2022. The increase is primarily due to a ~~24.2~~17.1 percent increase in the number of full time equivalent employees from the ~~third~~first quarter ~~2021.~~2022.

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

Station operations expense. Station operations expense for the ~~third~~first quarter ~~2022~~2023 decreased ~~$4.6~~$4.2 million, or ~~6.5~~6.4 percent compared to the same period in ~~2021~~2022 due to ~~decreased departures of 4.0 percent.~~

~~As compared~~an 86.5 percent decrease in customer compensation related to ~~the same period in 2019, station~~irregular operations ~~expense increased~~offset by ~~$22.8 million or 52.3 percent due to~~ a ~~6.2~~2.3 percent increase in departures ~~increased costs associated with irregular operations~~ and ~~increased airport fees.~~continued inflationary pressures on landing fees, ground handling, and other stations related expense.

Depreciation and amortization expense. Depreciation and amortization expense for the ~~third~~first quarter ~~2022~~2023 increased by ~~8.0~~18.0 percent as compared to the ~~third~~first quarter ~~2021 as~~2022 driven by a 12.1 percent increase in the average number of aircraft owned and in service ~~increased 6.6 percent year-over-year.~~

~~Compared to~~as well as an increase in 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.~~costs.

Maintenance and repairs expense. Maintenance and repairs expense for the ~~third~~first quarter ~~2022 increased $1.7~~2023 decreased $1.4 million, or ~~5.7~~5.0 percent, compared to the same period in ~~2021. Routine maintenance costs increased as the average number of aircraft in service increased 9.0 percent year-over-year and as a result of increased costs related to outsourced labor in~~ 2022, ~~(largely attributable to our smaller bases and outstations).~~

~~Compared to the same period in 2019, maintenance and repairs expense increased by $7.4 million or 29.9 percent~~ primarily due to a ~~31.4 percent increase~~higher volume of repairs in the ~~average number of aircraft in service and as a result of increased costs related to outsourced labor in 2022.~~prior year quarter.

Sales and marketing expense. Sales and marketing expense for the ~~third~~first quarter ~~2022~~2023 increased by ~~17.1~~20.5 percent compared to the same period in ~~2021,~~2022, primarily due to an increase in ~~net~~ credit card fees as a result of a ~~21.9~~31.3 percent increase in passenger revenue year-over-year.

Compared to the same period in 2019, sales and marketing expense increased by 46.8 percent primarily due to an 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 operating expense increased ~~$7.9~~$4.4 million or ~~35.4~~16.9 percent for the ~~third~~first quarter ~~2022~~2023 compared to the ~~third~~first quarter ~~2021~~2022 attributable to incremental increases in ~~our employee training activity.~~

~~Payroll Support Programs grant recognition. During 2021, we received $203.9 million in funds through the payroll~~outsourced labor and software support programs and recognized $49.2 million as an offset to operating expense on our statement of income during the third quarter of 2021. The funds were fully utilized in 2021. There were no such funds received in 2022.associated with ongoing IT initiatives.

Special charges. ~~Special charges~~During first quarter 2023, we recorded $(1.6) million of ~~$35.1 million were recorded within operating expenses for the third quarter 2022 compared to $0.3 million for the same period 2021. The~~ special charges ~~in 2022 relate to an estimated loss incurred from~~as recognition of $1.8 million of insurance recoveries were offset by $0.2 million of additional charges during the impact of Hurricane Ian. The amount of the loss will be offset in future periods by amounts to be recovered under our insurance policies. The charges in 2021 include accelerated depreciation on an airframe resulting from an accelerated retirement plan. See Note 2 of Notes to Consolidated Financial Statements (unaudited) for further information on the special charge recorded in 2022 related to Hurricane Ian.quarter.

Interest Expense and Income

Interest expense for the quarter ended ~~September 30, 2022~~March 31, 2023 increased by ~~$17.6~~$15.9 million, or ~~106.3~~80.4 percent over ~~third~~first quarter ~~2021,~~2022, due to new fixed rate debt and finance lease transactions entered into since ~~third~~first quarter ~~2021~~2022 as well as a ~~2.1~~3.5 percentage point increase in the weighted average variable interest rate year-over-year ~~as general~~due to increases in the indexes. The increase in interest ~~rates have risen. During the third~~expense was partially offset by a $9.4 million increase in interest income compared to first quarter 2022, ~~we recognized a loss~~due to higher yields on investments in debt ~~extinguishment of $5.0 million in relation to the prepayment of our Term Loan B.~~securities.

Income Tax Expense

We recorded ~~a $9.7~~an $18.3 million income tax ~~benefit~~expense at an effective tax rate of ~~17.3~~24.5 percent and ~~an $11.0~~a $2.7 million income tax ~~expense~~benefit at a ~~21.9~~25.4 percent effective tax rate for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively. The effective tax rate for the three months ended ~~September 30, 2022~~March 31, 2023 differed from the statutory Federal income tax rate of 21.0 percent primarily due to state income taxes and the impact of permanent tax differences.

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

As comparisons of our 2022 results to periods during 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 nine months ended September 30, 2022, passenger revenue increased 39.9 percent compared with the same period in 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 in scheduled service average base fare.

Passenger revenue for the first nine months of 2022, as compared to the first nine months of 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 stage length increased by 3.3 percent, resulting in a 0.5 percentage point increase in load factor. Average total fare per scheduled service passenger increased by 11.0 percent over the same period in 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.

~~The increase in ancillary air related revenue per passenger over the same period in 2019 was primarily driven by increased revenue from the sale of~~ ~~bundled 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, 2022 increased 26.5 percent over the same period in 2021 and 44.5 percent when compared to 2019. The increase from 2021 is primarily the result of greater travel demand for rental cars and hotels 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 substantial increase over 2021.

The increase from 2019 is attributable to increased rental car and hotel room rates (which more than offset the impact of fewer rental car days and hotel room 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, 2022 increased 59.5 percent compared to the same period in 2021 as a result of an 11.1 percent increase in fixed fee departures largely due to lower charter activity during the pandemic in the 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 same period in 2021.

Fixed fee contract revenue for the nine months ended September 30, 2022, as compared to 2019, decreased by 10.9 percent as a result of a 22.7 percent decrease in fixed fee departures, partially offset by higher charter rates and 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) 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

~~Aircraft fuel expense.~~ Aircraft fuel expense increased $318.9 million, or 102.7 percent, for the nine months ended September 30, 2022 compared to the same period in 2021. This is primarily driven by a 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 increased by $305.3 million or 94.2 percent for the nine months ended September 30, 2022 compared to the same period in 2019. This is primarily driven by an increase in average fuel cost per gallon of 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 24.1 percent increase in 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 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, 2022 increased $27.7 million or 16.2 percent due to a 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 $70.6 million or 55.0 percent due to a 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, 2022 increased $11.5 million or 8.6 percent as compared to the same period in 2021 due to a 7.6 percent increase in the average number of aircraft owned and in service.

When compared to the nine months ended September 30, 2019, depreciation and amortization expense increased 27.6 percent as the average number of aircraft owned and in service increased 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, 2022 increased by $14.7 million or 19.2 percent compared to the same period in 2021. Routine maintenance costs increased as the average number of aircraft in service increased 10.9 percent year-over-year and as a result of increased costs related to outsourced labor in 2022.

As compared to the nine months ended September 30, 2019, maintenance and repairs expense increased by $22.7 million or 33.1 percent as the number of aircraft in service increased by 34.0 percent and increased costs related to outsourced labor in 2022 (largely attributable to our smaller bases and outstations).

~~Sales and marketing expense.~~ Sales and marketing expense for the nine months ended September 30, 2022 increased 47.1 percent compared to the same period in 2021, due to an increase in net credit card fees as a result of a 39.9 percent increase in passenger revenue year-over-year.

Compared to the nine months ended September 30, 2019, sales and marketing expense increased 27.8 percent due to an increase in net credit card fees as a result of a 24.3 percent increase in passenger revenue.

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

~~Payroll Support Programs grant recognition.~~ During 2021, we received $203.9 million in funds through the payroll support programs and recognized $202.2 million as an offset to operating expense on our income statement for the nine month period ending September 30, 2021. The funds were fully utilized in 2021. There were no such funds received in 2022.

~~Special charges.~~ Special charges of $35.4 million were recorded within operating expenses for the nine months ended September 30, 2022 compared to $2.9 million for the same period in 2021. The special charges in 2022 relate to 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 be recovered under our insurance policies. The charges in 2021 include accelerated retirements of five airframes and eight engines and an impairment loss on a building associated with the Allegiant Nonstop family entertainment line of business. See Note 2 of the Notes to Consolidated Financial Statement (unaudited) for further information on the special charge recorded in 2022 related to 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 at a 22.2 percent effective tax 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 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.

Comparative ~~Consolidated~~Airline-Only Operating Statistics

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


		Three Months Ended September 30,									Percent Change (1)					Three Months Ended March 31,						Percent Change (1)
		2022			2021			2019			YoY		Yo3Y			2023			2022				YoY
Operating statistics (unaudited):
Airline operating statistics (unaudited):															Airline operating statistics (unaudited):
Total system statistics:	Total system statistics:														Total system statistics:
Passengers	Passengers	4,359,417			3,872,651			3,806,369			12.6	%	14.5	%	Passengers	4,148,453			3,734,262				11.1	%
Available seat miles (ASMs) (thousands)	Available seat miles (ASMs) (thousands)	4,450,595			4,441,201			3,888,400			0.2		14.5		Available seat miles (ASMs) (thousands)	4,677,622			4,620,144				1.2
Airline operating expense per ASM (CASM) (cents)															Airline operating expense per ASM (CASM) (cents)	11.80		¢	10.61		¢		11.2

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)	4.68		¢	2.67		¢	2.69		¢	75.3		74.0		Fuel expense per ASM (cents)	4.05		¢	3.55		¢		14.1
Airline operating CASM, excluding fuel (cents)															Airline operating CASM, excluding fuel (cents)	7.75		¢	7.06		¢		9.8

Operating CASM, excluding fuel (cents)		8.60		¢	6.18		¢	6.68		¢	39.2		28.7
Sunseeker Resort CASM (cents)(2)		0.85		¢	0.05		¢	0.04		¢	NM		NM
Operating CASM, excluding fuel and Sunseeker Resort activity (cents)		7.75		¢	6.13		¢	6.64		¢	26.4		16.7
ASMs per gallon of fuel		82.4			82.5			80.3			(0.1)		2.6

Departures	Departures	29,432			30,663			27,707			(4.0)		6.2		Departures	29,145			28,494				2.3
Block hours	Block hours	67,277			67,398			59,678			(0.2)		12.7		Block hours	71,790			69,655				3.1
Average stage length (miles)	Average stage length (miles)	857			829			823			3.4		4.1		Average stage length (miles)	908			920				(1.3)
Average number of operating aircraft during period	Average number of operating aircraft during period	115.1			105.6			87.6			9.0		31.4		Average number of operating aircraft during period	122.7			109.5				12.1
Average block hours per aircraft per day	Average block hours per aircraft per day	6.4			7.0			7.4			(8.6)		(13.5)		Average block hours per aircraft per day	6.5			7.1				(8.5)
Full-time equivalent employees at end of period	Full-time equivalent employees at end of period	5,294			4,261			4,267			24.2		24.1		Full-time equivalent employees at end of period	5,318			4,692				13.3
Fuel gallons consumed (thousands)	Fuel gallons consumed (thousands)	54,044			53,850			48,443			0.4		11.6		Fuel gallons consumed (thousands)	55,434			53,438				3.7
ASMs per gallon of fuel															ASMs per gallon of fuel	84.4			86.5				(2.4)
Average fuel cost per gallon	Average fuel cost per gallon	$	3.85		$	2.20		$	2.16		75.0		78.2		Average fuel cost per gallon	$	3.42		$	3.07			11.4


Scheduled service statistics:	Scheduled service statistics:												Scheduled service statistics:
Passengers	Passengers	4,316,163			3,834,956			3,753,611			12.5	15.0	Passengers	4,122,196			3,709,104			11.1
Revenue passenger miles (RPMs) (thousands)	Revenue passenger miles (RPMs) (thousands)	3,820,339			3,302,519			3,170,826			15.7	20.5	Revenue passenger miles (RPMs) (thousands)	3,925,362			3,558,045			10.3
Available seat miles (ASMs) (thousands)	Available seat miles (ASMs) (thousands)	4,315,984			4,312,893			3,687,473			0.1	17.0	Available seat miles (ASMs) (thousands)	4,573,766			4,512,315			1.4
Load factor	Load factor	88.5		%	76.6		%	86.0		%	11.9	2.5	Load factor	85.8		%	78.9		%	6.9
Departures	Departures	28,436			29,593			26,238			(3.9)	8.4	Departures	28,273			27,637			2.3
Block hours	Block hours	65,182			65,296			56,576			(0.2)	15.2	Block hours	70,009			67,829			3.2
Average seats per departure	Average seats per departure	175.8			174.3			170.8			0.9	2.9	Average seats per departure	176.0			175.6			0.2
Yield (cents) ~~(3)~~(2)	Yield (cents) ~~(3)~~(2)	6.92		¢	6.04		¢	6.42		¢	14.6	7.8	Yield (cents) ~~(3)~~(2)	8.29		¢	6.59		¢	25.8
Total passenger revenue per ASM (TRASM) (cents)~~(4)~~(3)	Total passenger revenue per ASM (TRASM) (cents)~~(4)~~(3)	12.60		¢	10.40		¢	11.10		¢	21.2	13.5	Total passenger revenue per ASM (TRASM) (cents)~~(4)~~(3)	13.89		¢	10.78		¢	28.8
Average fare - scheduled service~~(5)~~(4)	Average fare - scheduled service~~(5)~~(4)	$	61.26		$	52.05		$	54.20		17.7	13.0	Average fare - scheduled service~~(5)~~(4)	$	78.93		$	63.22		24.8
Average fare - air-related charges~~(5)~~(4)	Average fare - air-related charges~~(5)~~(4)	$	58.40		$	58.45		$	50.03		(0.1)	16.7	Average fare - air-related charges~~(5)~~(4)	$	68.87		$	61.87		11.3
Average fare - third party products	Average fare - third party products	$	6.29		$	6.40		$	4.85		(1.7)	29.7	Average fare - third party products	$	6.32		$	6.06		4.3
Average fare - total	Average fare - total	$	125.95		$	116.91		$	109.08		7.7	15.5	Average fare - total	$	154.12		$	131.15		17.5
Average stage length (miles)	Average stage length (miles)	860			834			824			3.1	4.4	Average stage length (miles)	915			926			(1.2)
Fuel gallons consumed (thousands)	Fuel gallons consumed (thousands)	52,491			52,249			46,038			0.5	14.0	Fuel gallons consumed (thousands)	54,145			52,110			3.9
Average fuel cost per gallon	Average fuel cost per gallon	$	3.84		$	2.19		$	2.17		75.3	77.0	Average fuel cost per gallon	$	3.42		$	3.01		13.6
Rental car days sold	Rental car days sold	364,481			366,407			482,944			(0.5)	(24.5)	Rental car days sold	354,426			367,094			(3.5)
Hotel room nights sold	Hotel room nights sold	71,205			66,626			99,991			6.9	(28.8)	Hotel room nights sold	68,939			72,539			(5.0)
Percent of sales through website during period	Percent of sales through website during period	96.1		%	95.4		%	93.1		%	0.7	3.0	Percent of sales through website during period	95.6		%	96.0		%	(0.4)

(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.

~~(4)~~(3)Various components of this measure do not have a direct correlation to ASMs. This measure is provided on a per ASM basis so as to facilitate comparison with airlines reporting revenues on a per ASM basis.

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

~~Comparative Consolidated Operating Statistics~~

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

Nine Months Ended September 30,
Percent Change (1)
2022 2021 2019 YoY Yo3Y
Operating statistics (unaudited):
Total system statistics:
Passengers 12,834,078 9,906,371 11,426,183 29.6 % 12.3 %
Available seat miles (ASMs) (thousands) 14,060,825 13,049,732 12,245,704 7.7 14.8
Operating expense per ASM (CASM) (cents) 12.00 ¢ 7.52 ¢ 9.05 ¢ 59.6 32.6
Fuel expense per ASM (cents) 4.48 ¢ 2.38 ¢ 2.65 ¢ 88.2 69.1
Operating CASM, excluding fuel (cents) 7.52 ¢ 5.14 ¢ 6.40 ¢ 46.3 17.5
Sunseeker Resort CASM (cents)(2)
0.30 ¢ 0.04 ¢ 0.05 ¢ NM NM
Operating CASM, excluding fuel and Sunseeker Resort activity (cents) 7.22 ¢ 5.10 ¢ 6.35 ¢ 41.6 13.7
ASMs per gallon of fuel 84.2 85.6 82.2 (1.6) 2.4
Departures 90,064 87,854 83,454 2.5 7.9
Block hours 212,403 197,581 187,829 7.5 13.1
Average stage length (miles) 885 852 858 3.9 3.1
Average number of operating aircraft during period 112.7 101.6 84.1 10.9 34.0
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 5,294 4,261 4,267 24.2 24.1
Fuel gallons consumed (thousands) 167,070 152,464 148,980 9.6 12.1
Average fuel cost per gallon $ 3.77 $ 2.04 $ 2.18 84.8 72.9

Scheduled service statistics:
Passengers 12,736,268 9,838,512 11,307,004 29.5 12.6
Revenue passenger miles (RPMs) (thousands) 11,646,212 8,657,151 9,964,948 34.5 16.9
Available seat miles (ASMs) (thousands) 13,716,838 12,739,769 11,800,788 7.7 16.2
Load factor 84.9 % 68.0 % 84.4 % 16.9 0.5
Departures 87,475 85,303 80,149 2.5 9.1
Block hours 206,868 192,481 180,674 7.5 14.5
Average seats per departure 175.7 173.8 171.0 1.1 2.7
Yield (cents) (3)
6.94 ¢ 6.53 ¢ 6.85 ¢ 6.3 1.3
Total passenger revenue per ASM (TRASM) (cents)(4)
12.03 ¢ 9.30 ¢ 11.18 ¢ 29.4 7.6
Average fare - scheduled service(5)
$ 63.44 $ 57.48 $ 60.40 10.4 5.0
Average fare - air-related charges(5)
$ 60.07 $ 56.79 $ 51.56 5.8 16.5
Average fare - third party products $ 6.08 $ 6.22 $ 4.74 (2.3) 28.3
Average fare - total $ 129.59 $ 120.49 $ 116.70 7.6 11.0
Average stage length (miles) 889 857 861 3.7 3.3
Fuel gallons consumed (thousands) 162,933 148,578 143,433 9.7 13.6
Average fuel cost per gallon $ 3.77 $ 2.03 $ 2.17 85.7 73.7
Rental car days sold 1,161,579 1,046,751 1,495,502 11.0 (22.3)
Hotel room nights sold 222,334 195,535 319,197 13.7 (30.3)
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)~~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.

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

3026

LIQUIDITY AND CAPITAL RESOURCES

Current liquidity

Cash, cash equivalents and investment securities (short-term and long-term) ~~decreased~~increased to ~~$1.00~~$1.08 billion at ~~September 30, 2022,~~March 31, 2023, from ~~$1.19~~$1.02 billion at December 31, ~~2021.~~2022. 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.

We believe we have more than adequate liquidity resources through our cash balances, operating cash flows, availability under revolving credit facilities, and 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, increased slightly from ~~$1.77~~$2.12 billion as of December 31, ~~2021~~2022 to ~~$2.02~~$2.13 billion as of ~~September 30,~~March 31, 2023. Net debt (total debt less unrestricted cash, cash equivalents, and investments) as of March 31, 2023 was $1.03 billion, a decrease of $49.8 million from December 31, 2022. During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, we exercised a $15.2 million purchase option on one Airbus A320 finance leased aircraft and subsequently refinanced the same aircraft for $27.0 million. We also entered into ~~debt and finance leases for $918.3~~a revolving credit facility to borrow up to $100 million ~~including debt of $550.0 million to refinance our term loan due 2024.~~which remains undrawn. During this period, we made principal payments on debt of ~~$666.0 million, including a $531.7 million prepayment of our term loan due 2024, $24.7 million prepayment of our payroll support program loans and $1.7 million prepayment of debt secured by aircraft.~~$51.5 million.

As of ~~September 30, 2022,~~March 31, 2023, approximately 82 percent of our debt and finance lease obligations 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~~three months ended ~~September 30, 2022,~~March 31, 2023, our operating activities provided ~~$221.8~~$215.4 million of cash compared to ~~$373.6~~$176.0 million during the same period ~~2021.~~2022. This change is mostly attributable to a ~~$191.1~~$64.0 million ~~decrease~~increase in net income offset by changes in current assets and liability accounts.

Investing Activities. Cash used for investing activities was ~~$335.6~~$114.2 million during the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 compared to ~~$513.3~~$109.8 million used for investing activities during the same period in ~~2021.~~2022. The change is due to a ~~$405.7~~$58.2 millionincrease in purchases of property and equipment, offset by a decrease of $13.2 million in aircraft pre-delivery deposits and a $27.5 million increase in proceeds from maturities, net of purchases, of investment securities ~~during~~compared to the ~~nine~~three months ended September 30, 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. This was offset by a $227.0 million increase in purchases of property and equipment, including $88.5 million related to aircraft pre-delivery deposits during the nine months ended September 30,March 31, 2022.

Financing Activities. Cash used for financing activities for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 was ~~$15.7~~$11.9 million, compared to ~~$205.4~~$37.6 million ~~cash provided by financing activities~~ for the same period in ~~2021.~~2022. The change ~~resulted from $335.1~~was the result of $59.5 million ofin proceeds from debt and finance lease obligations in the ~~issuance~~three months ended March 31, 2023, compared to none in the prior year quarter, which was offset by $12.5 million used for repurchases of common stock in the ~~first nine~~three months ~~of 2021 offset~~ended March 31, 2023, compared to none in the prior year quarter and by ana $14.2 million 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 debt issuance costs in the nine months ended September 30, 2022 but not in the same period of 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.~~and finance lease obligations.

3127

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 the number of contracted aircraft to be placed in service in the future, the timing of aircraft deliveries and retirements, the implementation of a joint alliance with VivaAerobus, the ~~development of~~opening date for 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 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 impact of government regulations on the airline industry, 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 impact of management changes and the possible loss of key personnel, economic and other conditions in markets in which we operate, the ability to successfully develop a resort in Southwest Florida, ~~governmental regulation,~~ increases in maintenance ~~costs and~~cost, cyclical and seasonal fluctuations in our operating ~~results.~~results and the perceived acceptability of our environmental, social, and governance efforts.

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~~three months ended ~~September 30, 2022.~~March 31, 2023. For information regarding our critical accounting policies and estimates, see disclosures in the Consolidated Financial Statements and accompanying notes contained in our ~~2021~~2022 Form 10-K, and in Note 1 of Notes to Consolidated Financial Statements (unaudited).

3228

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~~three months ended ~~September 30, 2022~~March 31, 2023 represented ~~37.3~~34.2 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 ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, a hypothetical ten percent increase in the average price per gallon of fuel would have increased fuel expense by approximately ~~$63.7~~$18.9 million. We have not hedged fuel price risk for many years.

Interest Rates

As of ~~September 30, 2022,~~March 31, 2023, we had ~~$371.7~~$391.6 million of variable-rate debt, including current maturities and without reduction for ~~$3.6~~$4.9 million in related costs. A hypothetical 100 basis point change in interest rates would have affected interest expense on variable rate debt by approximately ~~$6.1~~$0.9 million for the ~~nine~~three months ended ~~September 30, 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.~~March 31, 2023.

Item 4. Controls and Procedures

As of ~~September 30, 2022,~~March 31, 2023, 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, 2022,~~March 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

3329

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, ~~2021~~2022 and filed with the Commission on ~~March 1, 2022 other than to include the following risk factor:~~

~~The 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.February 27, 2023.

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

Our Repurchases of Equity Securities

~~(a)During third~~The following table reflects the repurchases of our common stock during the first 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.2023:


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of our Publicly Announced Plan	Approximate Dollar Value of Shares that May yet be Purchased Under the Plans or Programs (in thousands) (2)
January	7,028	$	86.02	None
February	84,010	$	98.94	83,973
March	34,431	$	103.29	33,681
Total	125,469	$	99.41	117,654	$	88,196

~~(b)~~(1)~~Not applicable~~Includes shares repurchased from employees who vested a portion of their restricted stock grants. These share repurchases were made at the election of each employee pursuant to an offer to repurchase by us. In each case, the shares repurchased constituted a portion of vested shares necessary to satisfy income tax withholding requirements.

~~(c)~~(2)~~We did not repurchase any~~Represents the remaining dollar amount of open market purchases of our common stock ~~during the third quarter 2022.~~which has been authorized by our board under a share repurchase program.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

None

3430

Item 6. Exhibits


3.1			Articles of Incorporation 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 Allegiant Travel Company as amended on October 18, 2021. (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, filed with the Commission on July 28, ~~2022.~~2022 ).
10.1			~~Employment~~Separation Agreement ~~dated as~~and Mutual Release of ~~August 1, 2022~~All Claims between the Company and Scott ~~Sheldon.~~
~~10.2~~			~~Employment Agreement~~Sheldon dated ~~as of 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 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 September 30, 2022 between the Company and Bank of Utah as security trustee.~~January 27, 2023.
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)Certain confidential information in this agreement has been omitted because it (i) is not material and (ii) would be competitively harmful if publicly disclosed.~~

3531

SIGNATURES

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


		ALLEGIANT TRAVEL COMPANY


Date:	~~November 3, 2022~~May 8, 2023	By:	/s/ ~~Gregory Anderson~~Robert J. Neal
		~~Gregory Anderson,~~Robert J. Neal, as duly authorized officer of the Company ~~(President~~(Senior Vice President and Chief Financial Officer) and as Principal Financial Officer

3632


	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


	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


(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


Scheduled service statistics:
Passengers	12,736,268			9,838,512			11,307,004			29.5	12.6
Revenue passenger miles (RPMs) (thousands)	11,646,212			8,657,151			9,964,948			34.5	16.9
Available seat miles (ASMs) (thousands)	13,716,838			12,739,769			11,800,788			7.7	16.2
Load factor	84.9		%	68.0		%	84.4		%	16.9	0.5
Departures	87,475			85,303			80,149			2.5	9.1
Block hours	206,868			192,481			180,674			7.5	14.5
Average seats per departure	175.7			173.8			171.0			1.1	2.7
Yield (cents) (3)	6.94		¢	6.53		¢	6.85		¢	6.3	1.3
Total passenger revenue per ASM (TRASM) (cents)(4)	12.03		¢	9.30		¢	11.18		¢	29.4	7.6
Average fare - scheduled service(5)	$	63.44		$	57.48		$	60.40		10.4	5.0
Average fare - air-related charges(5)	$	60.07		$	56.79		$	51.56		5.8	16.5
Average fare - third party products	$	6.08		$	6.22		$	4.74		(2.3)	28.3
Average fare - total	$	129.59		$	120.49		$	116.70		7.6	11.0
Average stage length (miles)	889			857			861			3.7	3.3
Fuel gallons consumed (thousands)	162,933			148,578			143,433			9.7	13.6
Average fuel cost per gallon	$	3.77		$	2.03		$	2.17		85.7	73.7
Rental car days sold	1,161,579			1,046,751			1,495,502			11.0	(22.3)
Hotel room nights sold	222,334			195,535			319,197			13.7	(30.3)
Percent of sales through website during period	96.2		%	94.3		%	93.4		%	1.9	2.8