ALLEGIANT TRAVEL COMPANY REPORTS SECOND QUARTER 2009 FINANCIAL RESULTS
SECOND QUARTER NET INCOME INCREASES NINE-FOLD, OPERATING & PRE-TAX MARGINS EXCEED 25%
BOARD OF DIRECTORS INCREASES COMMON STOCK REPURCHASE AUTHORITY BY $10 MILLION TO A TOTAL OF $35 MILLION
Las Vegas, Nev., July 21, 2009 /PRNewswire/ – Allegiant Travel Company (NASDAQ: ALGT), parent company of Allegiant Air and Allegiant Vacations, today reported the following financial results for the second quarter 2009 and comparisons to prior year equivalents:
Unaudited
2Q09
2Q08
Change
Total operating revenue (millions)
$
148.0
$
131.6
12.5
%
Operating income (millions)
$
37.8
$
4.7
708.2
%
Operating margin
25.5
%
3.6
%
21.9pp
Net income (millions)
$
23.9
$
2.6
801.4
%
Diluted earnings per share
$
1.17
$
0.13
800.0
%
Scheduled Service:
Average fare – scheduled service
$
65.16
$
83.56
(22.0
)%
Average fare – ancillary
32.36
27.75
16.6
%
Average fare – total
$
97.52
$
111.31
(12.4
)%
Total revenue per ASM (cents)
9.95
11.27
(11.7
)%
Average passengers per departure
133
133
—
Load factor
90.8
%
90.5
%
0.3pp
Average stage length (miles)
873
881
(0.9
)%
Total System*:
Operating expense per passenger
$
74.76
$
110.00
(32.0
)%
Operating expense per passenger, excluding fuel
$
46.38
$
47.52
(2.4
)%
Average departures per aircraft per day
3.10
2.84
9.2
%
Average stage length (miles)
828
838
(1.1
)%
*Total system includes scheduled service, fixed-fee contract and non-revenue flying
Allegiant Travel Company also reported the following balance sheet information:
“We had another very good quarter, our third highly-profitable quarter in a row,” stated Maurice J. Gallagher, Jr., CEO and President of Allegiant Travel Company. “In these extremely difficult times when our industry has substantially reduced its operations and seen record declines in unit revenue, we are pleased to report these quality numbers. We increased scheduled departures and ASMs by 30% year over year and still posted a 25% operating and pre-tax margin. Once again our people have been critical to our success. Their enthusiasm and efforts continue to provide our customers with safe, reliable and inexpensive journeys.”
“During the quarter we substantially increased the size of our nationwide footprint, including the successful start of 13 new routes to our new Southern California base in Los Angeles and an additional seven new routes across the network, ending the quarter at 134 routes between 71 cities. This further diversifies our exposure to regional economies and offers more protection to us in these uncertain times. Our Southern California routes are off to a great start, with July booked load factors now running ahead of our scheduled average.
“We achieved our second quarter results despite an almost 13% reduction in our average scheduled airfare from the first quarter of this year, a decline attributable to a softer economy, the introduction of new routes, and a 15% increase in year-over-year capacity on a “same-store sales” basis in existing markets. Moreover, for the first time in a number of years, our ancillary revenue per passenger declined sequentially, albeit slightly, to $32.36. An additional challenge relative to the first quarter was a 13% sequential increase in the price per gallon of fuel.
“During the quarter we saw a steady degradation of the revenue environment, year-over-year, from April through June. However, we are hopeful June may mark the bottom of revenue softness. Fares for July, including ancillary, are, thus far, trending slightly upwards, despite the large year-over-year capacity increase we have in this month. An improvement in the revenue environment as well as the recent moderation in fuel prices will help us to extend strong year-over-year earnings growth into the third quarter, historically the seasonally weakest of the year,” concluded Gallagher.
Andrew C. Levy, CFO & Managing Director – Planning, stated, “We had terrific cost management in the second quarter. Cost per passenger excluding fuel declined to $46.38 in the second quarter from $47.52 in the prior year and $49.62 in the first quarter. Moreover, these figures include bonus accrual, which has increased substantially in 2009 since it is tied to profitability and therefore disguises underlying cost improvement. Excluding bonus accrual, our cost per passenger excluding fuel declined to $43.84 in the second quarter from $47.26 a year ago and $46.23 in the first quarter.
“Our balance sheet continues to improve. We ended the quarter with unrestricted cash and short-term investments of $228.2 million, down from $236.4 million at the end of the prior quarter. Excluding air traffic liability, cash increased from $132.9 million to $138.3 million sequentially. Either measure is substantially in excess of quarter-end total debt of $60.7 million, up slightly from $59.3 million at year end 2008. During the quarter, we issued $7.0 million in debt at attractive rates, secured by two MD-80 aircraft, and made $5.6 million in principal repayment on existing debt. Note the seasonal reduction in our air traffic liability (representing a use of cash) during the second quarter of $13.5 million was actually less than that of the prior year, when it was $14.9 million.
“During the quarter, we had $7.8 million in capital expenditures mostly for the purchase of engines and improvements made to three aircraft prior to their induction into service. We now expect full year capital expenditures to be about $35 million, due to advancing the introduction of our 46th aircraft into the fourth quarter 2009 as well as a recently executed agreement with Japan Air Lines for the purchase of seven aircraft which will be parted-out to increase our engine and parts inventories. We purchased the first of these aircraft earlier this month and will close on the balance during the fourth quarter of 2009 and the first quarter 2010. We will continue to take advantage of favorable market conditions to opportunistically acquire aircraft, engines and parts.
“Lastly, our Board of Directors recently approved an increase of our existing $25 million authority in our Common Stock repurchase program by $10 million to a total of $35 million. Under the share repurchase program our Board of Directors approved in January 2009, we spent $10.5 million in open market transactions during the second quarter to acquire 255,350 shares of the Company’s Common Stock at an average price of $41.25 per share. Including open market transactions in the first two quarters of 2009, the Company has repurchased a total of 465,525 shares at an average price of $37.79 returning a total of $17.6 million to our shareholders. With the additional $10 million of authority to repurchase shares that we recently received from our Board of Directors, we currently have $17.4 million in unused authority remaining for open market purchases under our current Common Stock repurchase plan.”
MD-80 Aircraft in Service*
June 30, 2009
June 30, 2008
Owned (including capital leases)
39
33
Leased
4
4
Total
43
37
• Does not include three aircraft acquired but not placed in service as of June 30, 2009, two of which are currently leased to a third party.
During the second quarter of 2009, we placed two leased aircraft in service. Subsequent to the end of the second quarter, we placed an owned aircraft in service which was previously on lease to a third party. In the fourth quarter, we expect to place in service our final two owned aircraft which are currently on lease to a third party. We expect to continue to add high quality MD-80 aircraft to our fleet at attractive prices without the need for external financing.
In the second quarter, Allegiant Air successfully launched service to our new Southern California base at Los Angeles, with service from 13 small cities. We also inaugurated seasonal service to Myrtle Beach, SC with service from both Allentown, PA and Huntington, WV. Other routes we initiated during the quarter include Grand Rapids, MI and Bentonville, AR to Las Vegas, from Monterey, CA to San Diego and from Eugene, OR to Oakland.
In addition, during the second quarter, Allegiant Air initiated charter service under fixed-fee flying contracts with several different parties between Miami and four Cuban cities in support of the Cuban family charter program. As with all fixed fee flying, Allegiant Air is not exposed to fuel risk under this program.
Network Summary*
June 30, 2009
June 30, 2008
Major leisure destinations
6
5
Other leisure destinations
5
4
Small cities served
60
51
Total cities served
71
60
Routes to Las Vegas
41
38
Routes to Orlando
30
26
Routes to Tampa Bay/St. Petersburg
19
15
Routes to Phoenix-Mesa
15
9
Routes to Southern California (Los Angeles)
13
0
Routes to Ft. Lauderdale
7
8
Other routes
9
4
Total routes
134
100
• includes cities served seasonally
At this time, Allegiant Travel Company provides the following guidance to investors. All items are subject to revision:
•
Allegiant Air expects third quarter 2009 year-over-year departure growth of approximately 30% and ASM growth of approximately 35%.
•
Allegiant Air expects fourth quarter 2009 year-over-year departure and ASM growth of approximately 20%.
•
Allegiant Air expects full-year 2009 departure and ASM growth of at least 20% over 2008.
•
Allegiant Air expects to operate 46 aircraft by the end of 2009.
At this time we have no fuel hedges in place.
Allegiant Travel Company will host a conference call with analysts at 1 pm East Coast time tomorrow, July 22, 2009, to discuss its second quarter 2009 financial results. A live broadcast of the conference call will be available via the Company’s Investor Relations website homepage at http://ir.allegiantair.com. The webcast will also be archived in the “Events & Presentations” section of the website.
About the Company Las Vegas-based Allegiant Travel Company (NASDAQ: ALGT) is focused on linking travelers in small cities to major leisure destinations such as Las Vegas, Orlando, Fla., Tampa/St. Petersburg, Fla., Phoenix-Mesa, Los Angeles and Fort Lauderdale, Fla. Through its subsidiary, Allegiant Air, the Company operates a low-cost, high-efficiency, all-jet passenger airline offering air travel both on a stand-alone basis and bundled with hotel rooms, rental cars and other travel related services.ALGT/G
Media Inquiries: Tyri Squyres +1-702-851-7370 mediarelations@allegiantair.com
Investor Inquiries: Robert Ashcroft +1-702-430-3275 ir@allegiantair.com
Under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, statements in this press release that are not historical facts are forward-looking statements. These forward-looking statements are only estimates or predictions based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include our statements regarding future earnings, ASM growth, departure growth, fleet growth and expected capital expenditures, 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” or similar expressions.
Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in the forward-looking statements. Important risk factors that could cause our results to differ materially from those expressed in the forward-looking statements generally may be found in our periodic reports filed with the Securities and Exchange Commission at www.sec.gov. These risk factors include, without limitation, the effect of the economic downturn on leisure travel, increases in fuel prices, terrorist attacks, risks inherent to airlines, demand for air services to our leisure destinations from the markets served by us, our ability to implement our growth strategy, possible unionization efforts, our fixed obligations, our dependence on our leisure destination markets, our ability to add, renew or replace gate leases, our competitive environment, problems with our aircraft, dependence on fixed fee customers, our reliance on our automated systems, economic and other conditions in markets in which we operate, governmental regulation, increases in maintenance costs and insurance premiums and cyclical and seasonal fluctuations in our operating results.
Any forward-looking statements are based on information available to us today and we undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise.
Detailed financial information follows:
1
Allegiant Travel Company Consolidated Statements of Income Three Months Ended June 30, 2009 and 2008 (in thousands, except per share amounts) (Unaudited)
Three months ended June 30,
Percent
2009
2008
change
OPERATING REVENUE:
Scheduled service revenue
$
89,711
$
87,643
2.4
Fixed fee contract revenue
9,485
12,577
(24.6
)
Ancillary revenue
44,545
29,108
53.0
Other revenue
4,246
2,230
90.4
Total operating revenue
147,987
131,558
12.5
OPERATING EXPENSES:
Aircraft fuel
41,837
72,068
(41.9
)
Salary and benefits
23,631
17,160
37.7
Station operations
13,866
10,493
32.1
Maintenance and repairs
12,765
11,362
12.3
Sales and marketing
4,394
3,670
19.7
Aircraft lease rentals
507
936
(45.8
)
Depreciation and amortization
7,251
5,956
21.7
Other
5,952
5,238
13.6
Total operating expenses
110,203
126,883
(13.1
)
OPERATING INCOME
37,784
4,675
708.2
As a percent of total operating revenue
25.5
%
3.6
%
OTHER EXPENSE:
(Earnings) loss from unconsolidated affiliates, net
(91
)
53
N/M
Interest income
(680
)
(1,028
)
(33.9
)
Interest expense
1,017
1,489
(31.7
)
Total other expense
246
514
(52.1
)
INCOME BEFORE INCOME TAXES
37,538
4,161
802.1
As a percent of total operating revenue
25.4
%
3.2
%
PROVISION FOR INCOME TAXES
13,686
1,515
803.4
NET INCOME
$
23,852
$
2,646
801.4
As a percent of total operating revenue
16.1
%
2.0
%
Earnings per share:
Basic
$
1.19
$
0.13
815.4
Diluted
$
1.17
$
0.13
800.0
Weighted average shares outstanding:
Basic
20,057
20,192
(0.7
)
Diluted
20,344
20,413
(0.3
)
2
Allegiant Travel Company Operating Statistics Three Months Ended June 30, 2009 and 2008 (Unaudited)
Three months ended June 30,
Percent
2009
2008
change*
OPERATING STATISTICS
Total system statistics
Passengers
1,474,146
1,153,500
27.8
Revenue passenger miles (RPMs) (thousands)
1,296,956
1,037,351
25.0
Available seat miles (ASMs) (thousands)
1,469,788
1,179,101
24.7
Load factor
88.2
%
88.0
%
0.2
Operating revenue per ASM (cents)
10.07
11.16
(9.8
)
Operating expense per ASM (CASM) (cents)
7.50
10.76
(30.3
)
Fuel expense per ASM (cents)
2.85
6.11
(53.4
)
CASM, excluding fuel (cents)
4.65
4.65
-
Operating expense per passenger
$
74.76
$
110.00
(32.0
)
Fuel expense per passenger
$
28.38
$
62.48
(54.6
)
Operating expense per passenger, excluding fuel
$
46.38
$
47.52
(2.4
)
Departures
11,925
9,504
25.5
Block hours
26,544
21,518
23.4
Average stage length (miles)
828
838
(1.1
)
Average number of operating aircraft during period
42.3
36.7
15.3
Total aircraft in service end of period
43
37
16.2
Average departures per aircraft per day
3.10
2.84
9.2
Full-time equivalent employees at end of period
1,485
1,299
14.3
Fuel gallons consumed (thousands)
25,194
20,460
23.1
Average fuel cost per gallon
$
1.66
$
3.52
(52.8
)
Scheduled service statistics
Passengers
1,376,746 1,048,870 31.3
Revenue passenger miles (RPMs) (thousands) 1,226,282 937,923 30.7
Available seat miles (ASMs) (thousands) 1,349,958 1,036,293 30.3
Load factor
90.8
%
90.5% 0.3
Departures
10,323 7,899 30.7
Average passengers per departure 133
133 -
Block hours
23,941 18,667 28.3
Yield (cents)
7.32
9.34 (21.6
)
Scheduled service revenue per ASM (cents) 6.65
8.46 (21.4
)
Ancillary revenue per ASM (cents) 3.30
2.81 17.4
Total revenue per ASM (cents) 9.95 11.27 (11.7)
Average fare — scheduled service $65.16 $83.56 (22.0)
Average fare — ancillary 32.36 27.75 16.6
Average fare — total
$97.52 $111.31 (12.4)
Average stage length (miles) 873
881 (0.9
)
Percent of sales through website during period 85.2%
85.6% (0.4
)
* except load factor and percent of sales through website, which is percentage point change
3
Allegiant Travel Company Consolidated Statements of Income Six Months Ended June 30, 2009 and 2008 (in thousands, except per share amounts) (Unaudited)
Six months ended June 30,
Percent
2009
2008
change
OPERATING REVENUE:
Scheduled service revenue
$
179,907
$
179,379
0.3
Fixed fee contract revenue
19,612
26,834
(26.9
)
Ancillary revenue
85,865
56,255
52.6
Other revenue
4,722
2,230
111.7
Total operating revenue
290,106
264,698
9.6
OPERATING EXPENSES:
Aircraft fuel
75,235
135,562
(44.5
)
Salary and benefits
47,040
34,286
37.2
Station operations
26,999
22,512
19.9
Maintenance and repairs
23,897
21,815
9.5
Sales and marketing
8,861
8,004
10.7
Aircraft lease rentals
912
1,944
(53.1
)
Depreciation and amortization
14,133
10,971
28.8
Other
10,767
10,565
1.9
Total operating expenses
207,844
245,659
(15.4
)
OPERATING INCOME
82,262
19,039
332.1
As a percent of total operating revenue
28.4
%
7.2
%
OTHER EXPENSE:
Loss on fuel derivatives, net
—
11
N/M
(Earnings) loss from unconsolidated affiliates, net
(84
)
43
N/M
Interest income
(1,381
)
(2,760
)
(50.0
)
Interest expense
2,118
2,904
(27.1
)
Total other expense
653
198
229.8
INCOME BEFORE INCOME TAXES
81,609
18,841
333.1
As a percent of total operating revenue
28.1
%
7.1
%
PROVISION FOR INCOME TAXES
29,595
6,523
353.7
NET INCOME
$
52,014
$
12,318
322.3
As a percent of total operating revenue
17.9
%
4.7
%
Earnings per share:
Basic
$
2.58
$
0.61
323.0
Diluted
$
2.54
$
0.60
323.3
Weighted average shares outstanding:
Basic
20,137
20,331
(1.0
)
Diluted
20,452
20,554
(0.5
)
4
Allegiant Travel Company Operating Statistics Six Months Ended June 30, 2009 and 2008 (Unaudited)
Six months ended June 30,
Percent
2009
2008
change*
OPERATING STATISTICS
Total system statistics
Passengers
2,768,754
2,308,210
20.0
Revenue passenger miles (RPMs) (thousands)
2,463,937
2,099,815
17.3
Available seat miles (ASMs) (thousands)
2,801,745
2,449,348
14.4
Load factor
87.9
%
85.7
%
2.2
Operating revenue per ASM (cents)
10.35
10.81
(4.3
)
Operating expense per ASM (CASM) (cents)
7.42
10.03
(26.0
)
Fuel expense per ASM (cents)
2.69
5.53
(51.4
)
CASM, excluding fuel (cents)
4.73
4.49
5.3
Operating expense per passenger
$
75.07
$
106.43
(29.5
)
Fuel expense per passenger
$
27.17
$
58.73
(53.7
)
Operating expense per passenger, excluding fuel
$
47.89
$
47.70
0.4
Departures
22,549
19,526
15.5
Block hours
50,952
44,931
13.4
Average stage length (miles)
835
846
(1.3
)
Average number of operating aircraft during period
40.9
35.6
14.9
Total aircraft in service end of period
43
37
16.2
Average departures per aircraft per day
3.05
3.01
1.3
Full-time equivalent employees at end of period
1,485
1,299
14.3
Fuel gallons consumed (thousands)
47,977
42,488
12.9
Average fuel cost per gallon
$
1.57
$
3.19
(50.8
)
Scheduled service statistics
Passengers
2,587,071
2,103,268
23.0
Revenue passenger miles (RPMs) (thousands)
2,328,751
1,911,171
21.8
Available seat miles (ASMs) (thousands)
2,564,789
2,156,305
18.9
Load factor
90.8
%
88.6
%
2.2
Departures
19,464
16,190
20.2
Average passengers per departure
133
130
2.3
Block hours
45,808
39,013
17.4
Yield (cents)
7.73
9.39
(17.7
)
Scheduled service revenue per ASM (cents)
7.01
8.32
(15.7
)
Ancillary revenue per ASM (cents)
3.35
2.61
28.4
Total revenue per ASM (cents)
10.36
10.93
(5.2
)
Average fare — scheduled service
$
69.54
$
85.28
(18.5
)
Average fare — ancillary
33.19
26.75
24.1
Average fare — total
$
102.73
$
112.03
(8.3
)
Average stage length (miles)
880
894
(1.7
)
Percent of sales through website during period
86.5
%
86.8
%
(0.3
)
* except load factor and percent of sales through website, which is percentage point change
5
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