ALLEGIANT TRAVEL COMPANY REPORTS FOURTH QUARTER, FULL YEAR 2009 FINANCIAL RESULTS
$3.76 Earnings Per Share, 21.9% Operating Margin in FY2009
Las Vegas, Nev., January 25, 2010 /PRNewswire/ – Allegiant Travel Company (NASDAQ: ALGT), parent company of Allegiant Air and Allegiant Vacations, today reported the following financial results for the fourth quarter and full year 2009 and comparisons to prior year equivalents:
Unaudited
4Q09
4Q08
Change
2009
2008
Change
Total operating revenue (millions)
$
134.7
$
122.4
10.0
%
$
557.9
$
504.0
10.7
%
Operating income (millions)
$
18.1
$
28.7
(37.1
)%
$
122.3
$
55.8
118.9
%
Operating margin
13.4
%
23.4
%
-10.0pp
21.9
%
11.1
%
10.8pp
Net income (millions)
$
10.5
$
18.2
(42.1
)%
$
76.3
$
35.4
115.6
%
Diluted earnings per share
$
0.52
$
0.88
(40.9
)%
$
3.76
$
1.73
117.3
%
Scheduled Service:
Average fare — scheduled service
$
75.81
$
83.03
(8.7
)%
$
70.38
$
84.98
(17.2
)%
Average fare — ancillary total
32.78
32.83
(0.2
)%
33.07
29.42
12.4
%
Average fare — total
$
108.59
$
115.86
(6.3
)%
$
103.45
$
114.40
(9.6
)%
Total revenue per ASM (cents)
10.46
11.60
(9.8
)%
10.28
11.46
(10.3
)%
Average passengers per departure
133
131
1.5
%
133
132
0.8
%
Load factor
90.2
%
89.7
%
0.5pp
90.4
%
89.9
%
0.5pp
Average stage length (miles)
919
878
4.7
%
891
882
1.0
%
Total System*:
Operating expense per passenger
$
95.62
$
92.27
3.6
%
$
81.77
$
104.25
(21.6
)%
Operating expense per passenger, excluding fuel
$
57.93
$
55.57
4.2
%
$
50.80
$
50.83
(0.1
)%
Average departures per aircraft per day
2.45
2.46
(0.4
)%
2.81
2.69
4.5
%
Average stage length (miles)
859
831
3.4
%
836
836
0.0
%
*Total system includes scheduled service, fixed-fee contract and non-revenue flying
Allegiant Travel Company also reported the following balance sheet information:
“We are pleased to announce a record annual profit of $76 million or $3.76 per share with an operating margin of 21.9% for 2009,” stated Maurice J. Gallagher, Jr., Chairman and CEO of Allegiant Travel Company. “Our fourth quarter results represent our 28th consecutive quarter of profitability. Given the difficult economic environment of the past year we are proud of our performance. We accomplished these excellent results while growing significantly (a 22% increase in departures versus the prior year) and despite a 17% decline in scheduled air fare (what I call our “selling fare”) to $70 from $85. However, during these difficult times, our 2009 total ancillary revenue per scheduled passenger grew 12% to approximately $33.
“We are particularly pleased with the trend in revenue growth during this past quarter. Our selling fare increased from $67 in October to $83 in December, the highest average fare for any month of 2009 and only slightly below the selling fare in December 2008 – the best year over year comparison for any month of 2009. Additionally, the total scheduled service average fare for December 2009 exceeded that of December 2008, although TRASM was down 2% in the same periods. Lastly, we achieved a $31 operating profit per passenger in December, our third best monthly result of the year in spite of fuel up over 40% from those earlier months.
“I couldn’t be more pleased with the evolution of our model,” Gallagher continued. “We achieved a 26.5% return on equity during the year. Further, on a per aircraft basis, our 2009 combined operating income and depreciation and amortization was roughly $3.5 million, approximating the amount we currently spend to add an aircraft to our operating fleet. The great efforts of our terrific team members were again critical to achieving our successful results in 2009.
“Looking forward, we currently see an improving pricing environment. While the economy is in the early stages of a recovery, our segment appears to be returning to revenue norms of past years. Our recently announced contract for additional aircraft should add 13 aircraft to our operating fleet and support our growth through 2011.
“A major initiative in 2010 will be an upgrade to our IT systems including our database and hardware infrastructure. These upgrades will provide us with the necessary capacity to continue our growth as well as enhance our ability to offer industry leading web based products. Our control of our automation provides us the ability to develop our own, unique products and this is a substantial differentiator for us in the travel industry,” concluded Gallagher.
Andrew C. Levy, President and CFO, stated, “This quarter was difficult from a cost perspective, with the $2.07 per gallon fuel price the highest since 4Q08, and non-fuel expenses unusually high in the `Maintenance and Repairs’ and `Other’ expense areas. As we noted at our investor day in mid-November, we experienced a large quantity of very expensive airframe heavy maintenance events during the quarter. We expect maintenance expenses to return to more normal levels in 2010, to a range of $95,000 to $105,000 per aircraft per month.
“We also discussed our expectation that our `Other’ expense line would be high during fourth quarter 2009. This increase was driven by an approximate $1.5 million non-recurring write down of the value of engine parts we own for sale to others and an unusually large loss on the disposal of engines which had to be taken off wing prematurely and will be parted out. The loss on disposed items averaged just under $600,000 per quarter in the preceding seven quarters, but it was approximately $1.5 million during 4Q09. However, we believe the unusually high cost per passenger of $57.93 was driven by events unique to this quarter and our non-fuel expenses will revert to the more normal levels of approximately $50 per passenger starting in this first quarter of 2010.
“Our balance sheet continues to strengthen. We ended the quarter with unrestricted cash and short-term investments of $231.5 million, up from $222.4 million at the end of the prior quarter and $174.8 million at the end of the prior year. Excluding air traffic liability, cash increased to $140.9 million at December 31, 2009 from $138.1 million at the end of the prior quarter and $105.8 million at the end of the prior year. Total debt outstanding declined to $45.8 million from $54.8 million and $64.7 million over the same periods. Capital expenditures were $6.0 million during the fourth quarter and $31.7 million for the year.
“As previously announced, on February 1 we start service to our new base of Orlando International Airport. By March we will be flying to Orlando International from 10 of the 31 small city markets from which we currently fly to Orlando-Sanford International Airport. We undertook this initiative to improve our competitiveness in the Orlando market. The strength of these 10 markets has far exceeded our expectations and we see very positive trends continuing for our Orlando International service,” concluded Levy.
We purchased no shares in the fourth quarter of 2009 under the share repurchase program our Board of Directors approved in January 2009 and amended in July. In the first three quarters of 2009 the Company spent $24.4 million in open market transactions repurchasing a total of 637,902 shares at an average price of $38.26 per share. We currently have a total of $10.6 million in unused stock repurchase authority remaining under our current Common Stock repurchase plan.
Please note our 2009 Consolidated Statements of Income reflect certain presentation changes and reclassifications within operating revenue. We are now separately presenting two categories of ancillary revenue, breaking them into third-party products and air-related charges, which we think will provide investors with useful insight into this important revenue line. We have applied these presentation changes and reclassifications to our 2008 Consolidated Statements of Income to conform to the 2009 classifications. These changes have no effect on previously-reported Net Income. We will be separately filing an 8-K to provide historical perspective on this new way of viewing our revenues.
We are also now providing more detail into our third-party products business as presented in the table below, “Supplemental Ancillary Revenue Information.” Third party products consist of revenue from the sale of hotel rooms, ground transportation (rental cars and hotel shuttle products), attraction and show tickets, and fees we receive from other merchants selling products through our website. Ancillary revenue — third party products is gross revenues, minus cost of goods sold and transaction costs, which include both travel agent commissions (if applicable) and credit-card discount fees.
Supplemental Ancillary Revenue
Information (unaudited) (thousands)
4Q09
4Q08
Change
2009
2008
Change
Gross ancillary revenue — third party products
$16,478
$17,131
(3.8)%
$73,188
$72,982
4.5%
Cost of goods sold
($11,249
)
($11,722
)
4.2
%
($50,014
)
($50,143
)
0.3
%
Transaction costs (a)
($743
)
($771
)
3.8
%
($3,459
)
($3,733
)
7.9
%
Ancillary revenue — third party products
$
4,486
$
4,638
(3.3
)%
$
19,715
$
19,106
3.2
%
As percent of gross
27.2
%
27.1
%
0.1pp
26.9
%
26.2
%
0.7pp
(a) includes credit card fees and travel agency commissions
During the fourth quarter of 2009 we placed two owned aircraft in service, the final two deliveries to Allegiant of six MD-80s we acquired in 2008 that were on lease with a third party. As previously announced, we expect to place two more owned MD-80s in operation in the first quarter of 2010. At the start of the second quarter, we expect to permanently withdraw from service one of our four owned 130-seat MD-87 aircraft (which operate almost solely for our fixed-fee programs).
MD-80 Aircraft in Service
December 31, 2009
December 31, 2008
Owned (including capital leases)
42
36
Leased
4
2
Total
46
38
Allegiant Air started nine new routes in the fourth quarter, including five routes to Phoenix-Mesa, two to Orlando, and one each to Tampa Bay/St. Petersburg and Ft. Lauderdale. We expect to announce additional new service in the near future. In particular we expect to build on our successful Summer 2009 Myrtle Beach program and we will shortly announce an aircraft and crew base that is not a major leisure destination, similar to the successful base we operate in Bellingham, WA.
Network Summary*
December 31, 2009
December 31, 2008
Major leisure destinations
6
5
Other leisure destinations
5
4
Small cities served
58
52
Total cities served
69
61
Routes to Las Vegas
40
39
Routes to Orlando
31
29
Routes to Tampa Bay/St. Petersburg
20
20
Routes to Phoenix-Mesa
20
15
Routes to Southern California (Los Angeles)
11
0
Routes to Ft. Lauderdale
5
6
Other routes
9
4
Total routes
136
113
• 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:
•
First quarter 2010 year-over-year total system departure growth of approximately 7% and ASM growth of approximately 15%.
•
First quarter 2010 year-over-year scheduled departure growth of approximately 8% and scheduled ASM growth of approximately 17%.
•
First quarter fixed fee revenues expected to be flat relative to first quarter 2009.
•
Utilization of approximately 2.7 departures and 6.6 block hours per aircraft per day in the first quarter of 2010.
•
First quarter 2010 operating expense per passenger, excluding fuel to be approximately $50.
•
An operating fleet of 48 aircraft by the end of first quarter 2010 and an operating fleet of at least 52 aircraft by the end of 2010, including the scheduled retirement of one MD-87 at the end of the first quarter of 2010.
•
2010 capital expenditures of approximately $80 million.
At this time we have no fuel hedges in place.
Allegiant Travel Company will host a conference call with analysts at noon East Coast time tomorrow, January 26, 2010, to discuss its fourth quarter and full-year 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 the air travel price environment, industry prospects, future operating expense, maintenance expense per aircraft, 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”, “hope” or similar expressions.
Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in the forward-looking statements. Important risk factors that could cause our results to differ materially from those expressed in the forward-looking statements generally may be found in our periodic reports filed with the Securities and Exchange Commission at www.sec.gov. These risk factors include, without limitation, 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 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 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 December 31, 2009 and 2008 (in thousands, except per share amounts) (Unaudited)
Three months ended December 31,
Percent
2009
2008
change
OPERATING REVENUE:
Scheduled service revenue
$
85,240
$
77,794
9.6
Ancillary revenue:
Air-related charges
32,372
26,116
24.0
Third party products
4,486
4,638
(3.3
)
Total ancillary revenue
36,858
30,754
19.8
Fixed fee contract revenue
12,297
11,442
7.5
Other revenue
334
2,438
(86.3
)
Total operating revenue
134,729
122,428
10.0
OPERATING EXPENSES:
Aircraft fuel
45,988
37,283
23.3
Salary and benefits
20,661
20,449
1.0
Station operations
13,119
10,655
23.1
Maintenance and repairs
16,056
9,551
68.1
Sales and marketing
3,690
3,258
13.3
Aircraft lease rentals
507
354
43.2
Depreciation and amortization
7,872
6,299
25.0
Other
8,785
5,887
49.2
Total operating expenses
116,678
93,736
24.5
OPERATING INCOME
18,051
28,692
(37.1
)
As a percent of total operating revenue
13.4
%
23.4
%
OTHER EXPENSE (INCOME):
Loss (earnings) from unconsolidated affiliates, net
146
(126
)
N/M
Interest income
(500
)
(1,092
)
(54.2
)
Interest expense
921
1,205
(23.6
)
Total other expense (income)
567
(13
)
N/M
INCOME BEFORE INCOME TAXES
17,484
28,705
(39.1
)
As a percent of total operating revenue
13.0
%
23.4
%
PROVISION FOR INCOME TAXES
6,943
10,506
(33.9
)
NET INCOME
$
10,541
$
18,199
(42.1
)
As a percent of total operating revenue
7.8
%
14.9
%
Earnings per share:
Basic
$
0.53
$
0.90
(41.1
)
Diluted
$
0.52
$
0.88
(40.9
)
Weighted average shares outstanding:
Basic
19,796
20,279
(2.4
)
Diluted
20,123
20,579
(2.2
)
2
Allegiant Travel Company Operating Statistics Three Months Ended December 31, 2009 and 2008 (Unaudited)
Three months ended December 31,
Percent
2009
2008
change*
OPERATING STATISTICS
Total system statistics
Passengers
1,220,275
1,015,938
20.1
Revenue passenger miles (RPMs) (thousands)
1,124,642
905,582
24.2
Available seat miles (ASMs) (thousands)
1,297,333
1,046,749
23.9
Load factor
86.7
%
86.5
%
0.2
Operating revenue per ASM (cents)
10.39
11.70
(11.2
)
Operating expense per ASM (CASM) (cents)
8.99
8.95
0.4
Fuel expense per ASM (cents)
3.54
3.56
(0.6
)
CASM, excluding fuel (cents)
5.45
5.39
1.1
Operating expense per passenger
$
95.62
$
92.27
3.6
Fuel expense per passenger
$
37.69
$
36.70
2.7
Operating expense per passenger, excluding fuel
$
57.93
$
55.57
4.2
Departures
10,129
8,478
19.5
Block hours
23,452
19,307
21.5
Average stage length (miles)
859
831
3.4
Average number of operating aircraft during period
45.0
37.4
20.3
Total aircraft in service end of period
46
38
21.1
Average departures per aircraft per day
2.45
2.46
(0.4
)
Average block hours per aircraft per day
5.7
5.6
1.8
Full-time equivalent employees at end of period
1,569
1,348
16.4
Fuel gallons consumed (thousands)
22,199
17,977
23.5
Average fuel cost per gallon
$
2.07
$
2.07
—
Scheduled service statistics
Passengers
1,124,449
936,867
20.0
Revenue passenger miles (RPMs) (thousands)
1,053,077
839,597
25.4
Available seat miles (ASMs) (thousands)
1,167,214
935,661
24.7
Load factor
90.2
%
89.7
%
0.5
Departures
8,470
7,135
18.7
Average passengers per departure
133
131
1.5
Block hours
20,706
17,017
21.7
Yield (cents)
8.09
9.27
(12.7
)
Scheduled service revenue per ASM (cents)
7.30
8.31
(12.2
)
Total ancillary revenue per ASM (cents)
3.16
3.29
(4.0
)
Total revenue per ASM (TRASM) (cents)
10.46
11.60
(9.8
)
Average fare — scheduled service
$
75.81
$
83.03
(8.7
)
Average fare — ancillary total
32.78
32.83
(0.2
)
Average fare — total
$
108.59
$
115.86
(6.3
)
Average stage length (miles)
919
878
4.7
Fuel gallons consumed (thousands)
19,493
15,826
23.2
Average fuel cost per gallon
$
2.22
$
2.18
1.8
Percent of sales through website during period
86.5
%
85.4
%
1.1
* except load factor and percent of sales through website, which is percentage point change
3
Allegiant Travel Company Consolidated Statements of Income Years Ended December 31, 2009 and 2008 (in thousands, except per share amounts) (Unaudited)
Years ended December 31,
Percent
2009
2008
change
OPERATING REVENUE:
Scheduled service revenue
$
346,222
$
330,969
4.6
Ancillary revenue:
Air-related charges
143,001
95,490
49.8
Third party products
19,715
19,106
3.2
Total ancillary revenue
162,716
114,596
42.0
Fixed fee contract revenue
43,162
52,499
(17.8
)
Other revenue
5,840
5,948
(1.8
)
Total operating revenue
557,940
504,012
10.7
OPERATING EXPENSES:
Aircraft fuel
165,000
229,640
(28.1
)
Salary and benefits
90,006
72,007
25.0
Station operations
53,993
43,476
24.2
Maintenance and repairs
52,938
41,465
27.7
Sales and marketing
16,458
14,361
14.6
Aircraft lease rentals
1,926
2,815
(31.6
)
Depreciation and amortization
29,638
23,489
26.2
Other
25,728
20,911
23.0
Total operating expenses
435,687
448,164
(2.8
)
OPERATING INCOME
122,253
55,848
118.9
As a percent of total operating revenue
21.9
%
11.1
%
OTHER EXPENSE:
Loss on fuel derivatives, net
—
11
N/M
Loss (earnings) from unconsolidated affiliates, net
84
(96
)
N/M
Interest income
(2,474
)
(4,730
)
(47.7
)
Interest expense
4,079
5,411
(24.6
)
Total other expense
1,689
596
183.4
INCOME BEFORE INCOME TAXES
120,564
55,252
118.2
As a percent of total operating revenue
21.6
%
11.0
%
PROVISION FOR INCOME TAXES
44,233
19,845
122.9
NET INCOME
$
76,331
$
35,407
115.6
As a percent of total operating revenue
13.7
%
7.0
%
Earnings per share:
Basic
$
3.82
$
1.75
118.3
Diluted
$
3.76
$
1.73
117.3
Weighted average shares outstanding:
Basic
19,982
20,289
(1.5
)
Diluted
20,278
20,500
(1.1
)
4
Allegiant Travel Company Operating Statistics Years Ended December 31, 2009 and 2008 (Unaudited)
Years ended December 31,
Percent
2009
2008
change*
OPERATING STATISTICS
Total system statistics
Passengers
5,328,436
4,298,748
24.0
Revenue passenger miles (RPMs) (thousands)
4,762,410
3,863,497
23.3
Available seat miles (ASMs) (thousands)
5,449,363
4,442,463
22.7
Load factor
87.4
%
87.0
%
0.4
Operating revenue per ASM (cents)
10.24
11.35
(9.8
)
Operating expense per ASM (CASM) (cents)
8.00
10.09
(20.7
)
Fuel expense per ASM (cents)
3.03
5.17
(41.4
)
CASM, excluding fuel (cents)
4.97
4.92
1.0
Operating expense per passenger
$
81.77
$
104.25
(21.6
)
Fuel expense per passenger
$
30.97
$
53.42
(42.0
)
Operating expense per passenger, excluding fuel
$
50.80
$
50.83
(0.1
)
Departures
43,795
35,839
22.2
Block hours
98,760
81,390
21.3
Average stage length (miles)
836
836
—
Average number of operating aircraft during period
42.7
36.4
17.3
Total aircraft in service end of period
46
38
21.1
Average departures per aircraft per day
2.81
2.69
4.5
Average block hours per aircraft per day
6.3
6.1
3.3
Full-time equivalent employees at end of period
1,569
1,348
16.4
Fuel gallons consumed (thousands)
93,521
76,972
21.5
Average fuel cost per gallon
$
1.76
$
2.98
(40.9
)
Scheduled service statistics
Passengers
4,919,826
3,894,968
26.3
Revenue passenger miles (RPMs) (thousands)
4,477,119
3,495,956
28.1
Available seat miles (ASMs) (thousands)
4,950,954
3,886,696
27.4
Load factor
90.4
%
89.9
%
0.5
Departures
37,115
29,548
25.6
Average passengers per departure
133
132
0.8
Block hours
87,939
70,239
25.2
Yield (cents)
7.73
9.47
(18.4
)
Scheduled service revenue per ASM (cents)
6.99
8.51
(17.9
)
Total ancillary revenue per ASM (cents)
3.29
2.95
11.5
Total revenue per ASM (TRASM) (cents)
10.28
11.46
(10.3
)
Average fare — scheduled service
$
70.38
$
84.98
(17.2
)
Average fare — ancillary total
33.07
29.42
12.4
Average fare — total
$
103.45
$
114.40
(9.6
)
Average stage length (miles)
891
882
1.0
Fuel gallons consumed (thousands)
83,047
66,291
25.3
Average fuel cost per gallon
$
1.90
$
3.22
(41.0
)
Percent of sales through website during period
86.3
%
86.4
%
(0.1
)
* except load factor and percent of sales through website, which is percentage point change
5
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