ALGT - Earnings call transcript Q2 2020 | Allegiant Travel Company

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Q2 2020 Allegiant Travel Company Earnings Call. [Operator Instructions]. I would now like to introduce your host for this conference call, Ms. Sherry Wilson.

You may begin, ma'am.

Sherry Wilson

Kevin. you, Thank Allegiant the Second XXXX Quarter Welcome Travel Call. Earnings to Company's

to President; handful are with our Officer; and the company's EVP EVP and call DeAngelo, Anderson, the Wells, Officer; EVP Officer; Maury of Chief John Sheldon, and help Operating and Planning; me the Chief Executive On Drew our answer Chief and Revenue today Gallagher, questions. Chief VP Greg Officer; our others of and company's Redmond, a Scott Financial Scott our Chairman Marketing

that I'll that, free visit With the to over do update on this undertake earnings Relations rebroadcast feel may based or differ call, our from with will implied any at are cautions it release the We on not forward-looking and materially or our company otherwise. it cause to based Various We forward-looking today undue To ir.allegiantair.com. events and our not disclosed factors up risk new plans. to a some Any could publicly and future concerning view information start to commentary which will obligation forward-looking underlying then us no assumptions to as These are questions. with future available The the forward-looking expressed statements, information statements place to comments by more others strategic fully company's statements investors materialize. forward-looking factors the result as on well of open of filings performance of in and The those as turn actual these our SEC. statements, company's site today. reliance whether Maurice. events, Investor statements. risk the and results contain to statements assumptions be

Maurice Gallagher

Thank you, all Sherry, thank joining for you today. us and

our heard us our the of as repetitive way. I'm all of things done Day Bottom members, movie, you've team you all difficult Murray colleagues of find our during continue Bill will as and Each families economic our we we and all holidays the is the video the spouses likely their liked. managing repeating of COVID. hopes providing end days called the year the airline fast most his motion as to to future. will sure me in the where They've as over at guesses not these yeoman's way Today, I have the are today. awkward we let been their on same work. better, through and day ourselves best passengers thank itself putting adventures line, fly seems day That's these wind First, our times. my but slow repeating of would with own Many Each and industry we through get are and we in over. what be upcoming on have believe XXXX. happen Groundhog

let So ideas out few there. me throw a

as to August middle do soon. November slowest flow. proud full will and The get near-term how is of a particularly current it. have First a At minimum, up calendar -- of believe state believe present, plan the this it. of don't -- numbers an very some that the put work towards being we plan near-term on is In periods, norm. traditionally until in one we profit to go those just the XX won't not have form breakeven our allow -- September. will At operating we we be cash problem anytime back we we'll don't thought I have I made were shutdown. a back with And believe People of might back and we normalcy, we to June, to while foremost,

labor adjusting our breakeven in past seeing towards available, problems the than #X flow work are cash flow be cash even will our Given CARES assuming extension, more is difficult goal. costs as we no lever years, we

with October personnel XXX eliminate XX jobs those will one. on including X, a but jobs, We associated a difficult necessary task,

notified with in our of in savings the allow on team take the us peaks. personnel past, board To relief expense will other in on have unwilling and do to with the a financial peaks, intend payrolls. work pilots' contract our We We as as many accordingly. members, are many XXX management is. as our to our IBT these we the to we labor approach. we pilots, said generate to discussions late that need our that spread labor We to as of Unfortunately, members we've need leadership crew And result, possible to pain, coming the us to want up as stages as is the needed months. operating in advantage save keep to this this between of on furlough

-- valleys that to going both months us coming the discussed having to numbers XXXX. peaks the and we're and just While we these will optimize to into do in this, allow

more what today. shape, With know You'll in about Sheldon Scott liquidity, given we in good hear just moment. from we're to a this respect

Our XX% from the at QX up balance quarter, was $XXX our almost balance. cash million the of end

vagaries specifics. prospects of what to new also in industry that situations largest other had -- burn allowing airline us now and and its react the of in the We had industry avenues have the we flown CARES managed we the those the the with in Greg joked need of carried passengers the all share, past flexibility tourism had -- the how and state I'm the It will Once strategic areas, the I've an financial that continues to model is be and in of years our the over we go-to-market, carriers. asset industry including as continue market are operating a to scheduled best dictates. most if of our the us X allows important It to largest We we to results that you demand cash percentage to We've terrific we the very will historic us have we including capital compared now to feel around industry as almost the us Act, provided in near-term months. given other adjust extension with market to coming -- to open are with results. happy led of the we to months, has office through compared have allow overall. more the fill we our call near-term our negative of us percentage. the lead worst experience. of quickly best worst, the percentage our the again,

to the dilution allowed shareholders our us Our to period. during this financial also minimize strength has

said last As the convert not have to I no call, equity in or have our we go had and plans to. markets to

refunds plague. working tax find our death in Hopefully, NOLs near-term has to with equivalent years. term the frankly. there has near our or only quarters some dollars difficult is the are that rate to Many tax of will both cases. provide of of end on hard plus the million months be the given a the XX in ways experiencing relief in $XXX are better control virus we've tirelessly return and times, substantially. dropped been people good-sized paid profitability equity cases a increase slowdown of are this by to us times, believe These dollars news, terrible the from Perhaps will profits a NOL our and raise. Our of Those past from in

levels about Good. while We we begin receive about particularly about to is are as this. have the to one important News others of scale news people ability interact what of to on better, of testing. leisure But semblance cases with you to to if beneficial. the good the I'm yourself. we won't to know activities and our quarantine hearing reported any also need, day, This for it, industry since increased to the a you vaccines We're about they more takes to easy its used need congregating return involve testing it time close reassuring, believe to people normalcy concerned more And infected. to do, is Namely, does their results in end status. do have it's what with information become in quarters. the would be decline of at to

you're it ourselves everyone, type we We top future. my problem does Not infected. manage we When of event If the most you to information pandemic it? million the today's big allow but do it that said, meet the to in all in one How this be on do managing XXX Only ability is does the to any information. results, anytime said this almost conditions have I our environment, test that until get what? a government meantime, what to becomes and with than COVID information? is designed like will national last good you believe If or the people, to me thing and level at to person the next provide it of national approach I to perhaps In cause me continue your I results, getting call, nor the instant an can in impossible capacity good together it are negative, establishment, sure the about this about the the more plans my other next important ask it feeling flex I federal not I hope ask. As of important, an the of to I would offering information, but negative cannot test to the In the disruption there look is follow. with help this becomes not happy then want the want to as better task, medical one, us tells and others was opinion, need we one a carrier. develop this have performers.

serve Our model to well. will continue us

team Lastly, months. personally us these they done our all I trying X members past for one of during want for thank to again have each

the You are care company. in In we of this take backbone the meantime, business. airline of the space, will

excellent company We are business a an John? great model. with survivors and

John Redmond

Maury, good afternoon, Thank everyone. and you very much,

minutes and most are they if craziest not and travel miles talking offset or you is a am I accumulated through accumulated substantially the are flyer uses lot to miles. populated The of all currency databases XXXX, families of accumulates since comments now a with deep sure business-related travel spend people about their business for the times. of and I card quick their lucrative free echo I travel. leisure space 'XX. use a those this. business travel through for course, miles into whose travel traveler members of the flying as of the incredible only are airlines business pay other team thought couple and made Of examples have this people Maury's other regarding company airlines, I'd from using leisure our here travel walking sacrifices of then leisure their these frequent On credit of

to reason a As result, individuals traveling little was no leisure. for there when for comparison shop to these

carriers fair of these when these for going who historically travel-only marketing own points. their As leisure pivot percentage imagine The using Will money? to is travel. people airline. on Allegiant burning used database, used some would their not people other have populated a accumulated to some are their after environment, the off own leisure the own hand, inception who I money they wallet have forward will people since of solely other their with shop the

accumulating over XX data on these cash-paying leisure customers We for e-mails years. have and been

longer all carrier. airlines that the for been options have domestic is environment. accident to in other performing an individuals any better leisure-only are pushing marketing the We other than than travel It we these not leisure-only

expand of Street Speaking leisure, Sixth with settlement further want $XX the on Partners. I to million

his million 'XX. an long $XXX comments. the required from expense an borrowings, to benefit with Greg partner or an relating in more will expand equity flexibility the in to As special COVID-XX section was and guarantee outright place, on invest date agreement that The dealing another additional settlement related gives were a sale, additional we will us with In the in December eliminations expand physician in as finding release, salary comments. of charges there and agreement his completion was of in much the Greg further project further equity of

reduce cash As as to the rightsize move and decision it difficult demonstrates the business quickly model. was, how burn we will

adjust we ourselves I'll we revenue it additional turn necessary, the On Going note, in. to forward, Scott. if to cost will over environment pull find that out, to

Scott Sheldon

Thank John, afternoon, and you, everyone. good

partners and our like I'd team network their outstanding thank First, for to X,XXX members plus across service. the

all great and challenging start restarting revising we X since efforts down the safety contemplated operations, health canceling we be have new carry sensitivity has be each from educating complexity operations, the strategies of. proud operation, all continues in policies onset cutting of been amazing schedules, ensuring will areas: priority. of have you've to has creating and of focus reason the all successful. pandemic The the this top ago, pandemic, and operation Your This have COVID immediate has our shown other aspects first we are deal the and the resulted consumers team's of the guests to From and been costs, our continue X had members. something we and and safety Allegiant couldn't our our team in and introduced of passengers be shutting to ways execution months was a the should

distance layers done safety an to drive for are additional long-term rolling journey, an campaign of leadership critical amazing experience initiatives job of guest a offering to the team and safety along consumer health with Allegiant's related our to confidence customer Our and members enhanced going emergency out center success. throughout program, command our educational have

operations Second X adjusting cost for our near a the recovery. was environment, positioning reflect rapidly our structure slow demand while daily to long-term operational

hear progress outsized we Unfortunately, for XQ crossroads strategy the somewhat close scenarios, on in additional to cycle a to of storage a we Much XX-day traditionally relative to ourselves you'll opportunities peers. cost-saving our managing recovery. has was And the we through management exit as Drew, in as cancellations an at what As performance X- resulted follow. third wide our footprint, selling more on summer of peak for our develop as into fleet our look to from industry we find quarter. program weakest aircraft potential our is that maintaining

As hotspot, how very of notice. the choppy induction, is, short pausing, we the had job of our half uncontrollable successful and state will than in all call, a this reopening reimposing our Despite plans, maintenance on it's hoped. outlook. teams provide in standing pandemic flare-ups, flexible tremendous program number we recognize a deep mentioned strategies clearly restrictions us going any really earlier on COVID June, fleet, longer last and that for engineering and to cases, to up allow many and quarantines, did year back a execute demand

cash into driving soft in now No labor relief, out move continued back As a the the focus have balance needed of selling of this year. has approach in do cost the base and the we and revenue with improving structure employees differently costs of costs down to how half going organization our environment, productivity, in by driving integrity flow labor organization. come maintaining our becomes of current approach of casting we continues if are doubt been we the while much wide months. year, to less particularly neutral end to net, our focus our shoulder doing goal so aspects more Therefore, and of all being be the

costs During quarter, both strides reducing made labor in and the second we nonunionized workgroups. unionized in

consolidate ways our productivity second headcount we These drive continue reductions programs. voluntary the eliminated approximately million which are event order in nonunionized early look In find ops annual attainable, working virtually through may line-level to Also reductions organization. $X teams we meet these confident of areas savings in goals. are savings. to we labor all within support or save of the XXX a are to company at feel home, the costs there from we in not retirement expected labor responsibility, round positions the On with more and front, to

knowing to through We funds now. to X, off would CARES an Well, emergency fact drove town closely at October approximately we cooperation scheduling and through Despite the we point leadership in better specifically roll our halls guarantees combination disruptions. On faced out the drive organization. which agreements challenges line involvement as weekly million contractual cooperation the we the we savings to if are with unfortunately $XX crew support able meetings We of and flight eliminate labor pandemic start to unionized that minimums. network we very and need transparent of lay strategy, some essentially additional educational labor their front, were point. is practices, time work level want the on from down as union need off the

all to mentioned We COVID the reality. best have with taken is remain costs in our maximum costs, to to and push of to strategy. substantial with turn intention to and unpredictable to hope Unfortunately, We've reduce plan appetite and confident accordingly. in focused here is but on labor, the on. It's been ready have Maury Scott our it execute this discussions shortly. much periods. the As forward demand have drive act, I'll team discussions approach, if XXX current talks. are relying balancing pilots. organization leadership report that, up sort to within challenge. is outlook what And we All most we've in necessary there Therefore, of be. his maintaining noticed over We can to we furlough progress with to for stay. little being namely the some in unionized with DeAngelo. something our stable solutions a need on up structuring is creative we're for come we needed off-peak a but remarks, of flexibility labor while opening plan I'm focused made difficult solution, to creative Reducing IBT optimistic. our modify and all, step controllable labor to isn't in groups the workgroups to In said, to appears IBT closing, leadership our engage first be remain constructive to That

Scott DeAngelo

you, Scott. Thank

providing to which during model at uncertain of on while speak, third-party routes, safety QX, well focus customers and enables beyond helped for in direct-to-consumer to and And avoid and punch the as our the crowded hubs, returns. nonstop value remains our customers above commercial distribution, so weight, products, selling our and position approach sales marketing us sell enable to all aircraft times. to and to business Our all which us these focused going on to unique costs industry-low distance health market us demand continue flexibility

challenging year. During share U.S. saw traffic the had And versus higher load Xx nearly was total second quarter, factor was web second environment, quarter demand the and Maury mentioned, last the in our passengers despite industry. of relative during highs as Allegiant it than the

XX%. digital our and In addition, predictive us on per partners, reduce airports marketing getting many marketing There's support in there to more that great does the than silver along a costs of generating bullet no time but the sales more and destination across at a enabled effective is demand co-op precise like to from and we funding serve. cost efficient our increasingly with a exist by approach, capturing lining at booking our markets silver basis demand this, and

finances travel. they altogether. our been year. situation. of through continue an not say to air traveling it to customers their tell X/X by which It tracking their to continue our do X/X mobility closely feel the at X to weekly We or restaurants the travel, us comes of travel primarily have leading that their Only currently or plan have the monitoring comfortable a shopping eating situation finances half that been they months travel somewhat our since on negatively We're our March. they impacted willingness become delaying COVID-XX said end customers planned. close customer About centers sentiment indicator simply to where to customers certainly booking they're building Most of impacted. have next report sorts negatively When as that weekly that been of personal has so our of to planned of and stay personal finding survey, are X/X to customers, everyday for by live. the plans actually before only the say going And we've X/X nearly additional before more customers than helps in the

addressing family QX, For To working that on the rental. X/X our to see remotely partners be vigilant part vacation who and residents engaging across end, us to We're just were customers for more And or normal. vacation nation or hotel visiting under our vacation for relative. continue create the hotel were also at or Allegiant. to those primary were and between XX% a even during trends X/X we're flying economics with customers we home. their next flew a stronger value emerge of beginning by with as second

Casino example, opportunities resort working. working with capture For presented operator remote the by are we a Las Vegas to in rise top

on falls. Allegiant's And Lauderdale maybe the Los way Oakland vacations own referenced National individual reverse As over Angeles, the to strong from way Phoenix and Drew what now Revenue Yellowstone corporate relatively been work I'll most last, Niagara Head or East, as is paying crowded people it John Tampa, become Orlando a of like traveler ability home. Smoky and and card, their And away less West earlier, have Fort to like has to traveler, the destination cities, business in that, remote, like Wells. but notable, the to Park, paying the but travel giving to Mt. in trend Mountains from the larger natural, their turn Planning. serve with more Rushmore, has unique and increasingly planned

Drew Wells

and Scott, you, this joining everyone for afternoon. us to thanks Thank Great.

X% figure. off-peak on load mentioned, been the peak was many throughput We growing points X factor in approach our exceedingly and quarter, operating accomplished the both cadence versus TSA as to on quarter. a second increasing expectation in XX.X% match on capitalize of We the We than our month ASMs through our the roughly maintaining schedule. a unparalleled June supply saw well Our in previous enabled year-over-year percentage virtually deep pre-COVID-XX of ability wide the days. year roughly the share In week. while higher revenue every demand flight us believe with that of and prior of increased per while Tuesdays week turn, demand footprint to Wednesdays, is our XX% our recorded throughout from selling cuts expected flying has

products demand June per help improved third-party for strengthening month and for new was passenger many partners the versus and reopened, that Auto led by teams and ourselves from creating also the great with prior work the not destinations flying, Scott of relationships the hotel opportunities. differentiate just further industry. but in year, As higher

Our closing through reviewing to resulted minimal June cancellations date window, in XX-day strategy of and in X- to flights the July. in

However, and to demand we is continue to review monitor schedule the are we for rightsized ensure seeing. the

below mid-August Our or normal and range the better rough a as September be will our winter flexible and Xx than a revenues to per This period kick It COVID-XX, currently will at as slope definitely have schedule fall be for XX% in potential seasonal any have be we is certainly prior too case still The is schedule after welcome. shake it year. wide but where operate variance we slope start we call July. the look positive the the precipitously to every any Even week. think departures departures. and will than weeks shallower out month, does of continue less This to slightly certainly when is the will XX% recovery make only in routes be. experienced, over initial to few to results, Bookings drops almost X,XXX was daily will July's of to on where scheduled last to the approach. operate early over of scheduled trended are

extreme schedule possible April incredible between. we a and we flexibility. in team have of relentlessly to our With in over throughout I'd done schedule push to operating and members it and as a all without skeleton of you members Thank structured anything Greg. and the near-full that, did We continued the to forward business to like a This have that reacting would through turn comfortable as the to not model summer, around be stops are all team starts.

Gregory Anderson

thank Thank joining today. you, and everyone, you, for us Drew,

put, $XXX COVID-XX, million roughly burn. $XXX For the impact on and burn, the of share. our recorded the benefit million $XXX the Act CARES adjusted XXXX, quarter balance Simply by and by and special or to to of to $X.XX pertaining remains items improved million $XX we reduced response and $XX payroll an revenues of quick cash cash offset particularly we cash ended our liquidity Thanks This total charges. support, reducing second with declined million net of nearly loss of quarter our by of liquidity excludes increased XX%, of focus million cash. per

burn, from our second our daily cash produced fact, slightly estimate cash the for inflow. of down positive burn quarter $XXX,XXX, day. And $X.X of Regarding average cash daily was original per month we a in million June,

refund. of received our and Also payments payroll cash is the we aircraft from as operations, As carryback second benefits installment our burn from It and cash a reminder, the CapEx. NOL defined debt financings daily rent cash new less Act. and million XXXX/'XX quarter, excludes tax $XXX acquisitions, first funds during CARES between support in our

million raised very the remaining to at aircraft we the low a $XX aircraft in $XX and nearly sale-leaseback X aircraft secured $XX of which million loan of interest by of financings, a addition, X In pertains rate. million

a receive refund will second we've million. support carryback our installment NOL remaining of our received During the and million, July, $XX or already funds $XX XX% of payroll nearly we of

up receive sources to million. the along carryback. $XXX we just an the available a and a under NOL to value far, we Beyond of with liquidity access with by an to Furthermore, we Act, market $XXX assets loan thus additional through have CARES mid-XXXX million expect cash a have $XXX our of unencumbered tapped option million refund XXXX through

liquidity most our still burn However, strategy. managing remains cash effective

booking of us As a per in million third through have cash cash based is October July day the our quarter third the do ahead, improve be highlight $X our the we we XXXX approximately duration from Managing for have just per rightsize our trends average X further be we quarter the helps trends not remain year, to assuming the reduction cost current on of as quarter's If we highest ability gross burn cash expect look years. burn many to refined structure. burn would for bookings over and booking model XX% on flat the booking day, of the over levels. our thus the represents This far quarter. of $X effectively flexibility any of and million moving forward

than In fact, to from said, back instantaneously done one's lowering Maury's each cost. principle years later, the and by fare that be efficient part true. prices. what is hard "It's an words be core everyday makes is Gallagher of be best almost in and Mr. The every That's here fare, and this work Allegiant one more the XXXX's model annual of team structure low an cost can XX success." low insurance to That is commitment our letter members, More us. our and couldn't bid low being for easy

believe cost the adjust low-cost demand utilization, Allegiant the in environment. we allows the built low to to variable capacity continue nimbly airline us carrier We which remains industry. the around most structure to have match

to recent As demand. second the reacted adjust shifting during a quarter, quickly we due example, capacity to

During capacity as by May, respectively. April and we and pulled back as XX%, XX% much

ASMs fewer operating year adjusted by take strength. but expenses XX% the other a XX% we the in flight roughly relative was in capacity was and This on volume-related expense decrease same XX% expense down a However, operating in fuel of second flexibility advantage period our demand to also reduced expenses. driven quarter, the versus only demand in during illustrate, not only direct XX% reductions in further allowed due the ago. largely full This and to back May. June, To pulled June, by April Allegiant stronger

who labor to with airline increase helped labor contribute year-over-year even and/or team many roughly by total were in XX.X% total their cost part crew of in XX%. an members our down FTEs larger of leave. pay despite were voluntary in XX%, members by nearly volunteered reducing increase an taking large costs reductions These Additionally,

every Sincerest and each goes one out Our thanks to of them.

by quick. the by real the is Since debt time, debt flat points, to expense than billion Turning the period debt, second reduced year to in with versus is this quarter ago. We in more period cost interest total average that our reduction a quarter reduction basis and $X.X than compared same XXX ended evidenced nearly more in XX% of same XXXX.

and we cash $XXX quickly to amortizes sector. reminder, Defending in as for payments aircraft one this the rapid stand sheet payments average debt other X very Where today, of we included results debt fluid over with our And XX% outstanding balance another financial within roughly relates environment. stronger we principal top of our an than believe well are just the positioned are in our a in balance more Additionally, to this the of crisis paydown of definition. burn priority sheets annual us as million. has years. these we side on been navigate emerge secured This of

CapEx. to Looking

XXXX, the of CFM million to X engines. $XXX $XXX million, X and roughly For X aircraft CapEx of expect to of months we remaining total relates be acquisition spare which the AXXX

be these of acquisitions expect to financed. all We

$XXX to We our year full CapEx $XXX approximately initial plan expect be approximately of million. compared to million

anticipate committed total year million We airline aircraft. Currently, have And be reduced around million. our total over to we we CapEx year. $XXX the and only million full from levels CapEx by XXXX $XXX $XXX X total for have planned by to CapEx XXXX, looking

to fleet. Looking over

Our critical has and Allegiant's to always continues flexibility here business today. been that model,

retirement up and early the aircraft there identified to either in defer order rightsize for recall maintenance-related may XX storage fleet. or You costs to that were to

fleet our limited cash demand aircraft projected factors, and growth go to position, to, us Adjusting business gives make current decisions status based but and our opportunities trends, we in year-end Fortunately, on nimble demand the the a ability for market when returns. variety as flexible including, of manner. a used model of not

would XX remaining of retire made total team fleet X each forward. for good other scheduled Retirement X with entered For fleet with XXXX fit in maintain flexibility aircraft. XXXX. their the to respective said, early are aircraft dates utilize to Conversely on we year-end XXXX the further will through 'XX, fleet assets. maintain used now, respectively. we that identified improvements with through for events, these aircraft, and passenger these market the our time we us in should demand, that least due at -- Airbus the X We our counts maintenance green XX around aircraft would In see be aircraft and fleet planning this decision by take has identified we X our currently retire storage to place event, our been the in heavy need aircraft. upcoming has to though, allows demand, be continued several and in moving status, will flexibility reduce that weak a to And

expected the accrued Sunseeker quarter to the being year. the to mentioned, evidenced with quarter, Sixth the of willingness approximately retirement million offset The of During accelerated to $XX John largely aircraft, other Partners. million quarter, expense appreciate with noncash retirement coupled of just related in year. on to Street, throughout quarters storage, be have the in-service loss this the -- book remaining of is with million third bringing support related million yield write-offs expected project, the their team in us our this be commitment our expectation charges during paid X and of The fee $XX X their the of special remainder noncash we are $XX on the recognized XX and additional sale-leaseback assets. by the to aircraft of good and partners, been Street will terminate And loan by recognized their note, to as aircraft booked $XX inductions aircraft expense and aircraft-related the we extension Also retirements the at that on to of $XX on subsequent work at the aircraft of fee they X roughly regards commitment. the year, with minimum an Sixth the fleet count year-end. the as associated million during In of the depreciation of with continued to

when this the sight we their However, at forward parties without resume path be agreed time of of can would constructions, loan line best to terminate clear commitment. both

for to strategic continue Sunseeker. various We explore options

the the NOL finally, John believe all significant the later table construction we there. as our road. and in down on there's quarter in on value consistent best and are mentioned, And options many the It's resume moving for annually These million for us from corporate are XXX talented, difficult retirements. company costs. early positions approximately of see and/or management Act, voluntary save $XX support We Allegiant. so land, with very value our many the reduced our if As to labor to optimize CARES from members much in the to we which and on were value expected hard-working ways possible reductions look we investment during the second team teams,

greatly for over for Our it be their over tireless questions. efforts that, the to They we operator sincere years. will turn with missed. And our thanks will

Operator

[Operator Instructions].

Becker comes Helane from Cowen. with question first The

Helane Becker

and that almost network looks I'm wondering talk thousand versus focus Vegas if way now. data, versus there Las cities? XXX-ish looked other went Vegas it just million just the about right the the thinking passengers Las through the I'm and million So Because about carried the And Las about could reported you quarter carrying. Orlando like you that -- were on based in Vegas X.XX that X.X you it

just the kind like So in I'm wondering September or network will of maybe. what like look looks

Drew Wells

this kick Drew. I'll is off. Certainly, this one

company. bit since every Much anticipate we impacted the by Vegas, we network have which look stays like has. it to a more how the inception more bit the in swings pull the really to We'll Obviously, flat. of So September. is year, similar is going always a in seasonal back Florida very

demand kind the Vegas be think for exacerbated year pent-up more with earlier year. this given that I will this of shutdowns

capacity also that fair My limited the it's step reopening parks capacity is, theme to Orlando were we of impression expected that say down really theme parks of there. never got think the large allowing, change have hard the given I has a therefore, obviously more if with generate reservation, having new travel that create one and, created very room a down you to was different, having opportunities. new being the already the area. elevating to and it didn't Vegas

hold up a than certainly September Vegas think for has through up better, better Orlando reasons. held to I few So and we'll continue

Helane Becker

the just wanted then on And be that. my to I count. follow-up on for head clear Okay. question

You I'm announced Should not guess I XXX, pilots. including we and the think confused. more I little -- about think, a

that talked I not filling? jobs, open a that about Sorry, there. October mean there on XX Or other XXX eliminating You people Does I little got later X. get that jobs terminated? on are but are just guess there people you're confused

Gregory Anderson

No, is and question it good we a should one clarify.

say of there's that Helane. I asking would those left, that, from for XXX through -- positions positions total let's Yes, were thanks June. individuals April of some So those say,

are part positions weren't corporate those and backfill we we And function all are So the we particular were some -- as admin are are those of roles. that XX. going open on notified a we XX then day. individuals just The the what counting not to remaining and

side the all. So labor no, that lever wasn't on at a

for more thanks helps the -- but hopefully, that with there. a color So question, that little

Helane Becker

it. appreciate I helpful. very is that Yes,

Maurice Gallagher

Thanks, Helane.

Operator

with Our next Mike Deutsche Linenberg question from Bank. comes

Michael Linenberg

much here. $XX the that you just Q, in the million September Greg, the does actually that quick -- indicated of accrual accrual? What how over I guess sub quarter? million $X day ones a the two that, -- include per portion million runs of burn through

Gregory Anderson

We what Street year. folks, it just the is haven't think and purposes, rest -- way of take Sixth that to a that for with perhaps finalized I it the straight do the amortize yet over modeling Michael. But

Michael Linenberg

Okay.

on then million. And -- Okay. your $XXX That's traffic helpful. were air liability at you XXX

your Or are months? beyond number XX actually you the months? short-term for vouchers XX only there? extended a that that is have, you they have refunds are Or Now -- good that

Gregory Anderson

We X extended I to No, years. We did. it think Yes. you're right.

bit million the And roughly are $XXX is in think we're so That's April. what seeing -- when I credit the of today of we Kind ATL. from reported XX% little down vouchers. a

And part those, advanced of some for for remainder But a so yes, -- point, on and would be then the that. -- extended the of X have your credit been years. to vouchers bookings,

Operator

Duane The from next Evercore ISI. question comes Pfennigwerth with

Duane Pfennigwerth

can, and is as the know Allegiant fly as as it the think much much demand And there. speak you're will the there this demand some if something it. you're at Can not not high, a past were talk when was the flexibility to I up when the flexibility about So clearly, as is possibly in demand and there that able it, and to to but don't seeking? point or you is incremental carrier, super fly when which about I you gave that support the margins

Maurice Gallagher

ever Well, I in. given don't that up. chime I'll just that know we've

in more. back a up, the year March, kind of half And our starting low peak in shows January off way to year. which peak July, to work year graph, very again peaking going decade following in go at repeated can And noticeably famous You falling June, end the almost back graph April, September. is with or more of that for then its after

have the plan? certainly, much the this than higher in would. As been who they be what's what peaks been one Drew we otherwise knows how far But lower September will although have Drew, historically, -- as or

Drew Wells

Sure.

and the the we into that of while able is significantly about of talked to the maintaining level exacerbated July, utilization actually September. were same past of Airbus March One things same coming in So in roughly MD-XX -- more out valleys, we've fly and the and in peaks right? the

stretched So out. that we of kind

to provide still as up, is given Maury, think may All So can right echo I of fly communicate do much don't we're we demand anything to to we all the we're trying trying we maintain rightsize now -- as what ability we've the believe I when demand entirety the come. exists. to as is to and for trying see that we're match where it to organization and optionality the

Maurice Gallagher

attendants bit, Scott were lot in we and more but into were with the at of can much, is thing ups of are on when into we than we otherwise looking -- and other cash component we days and do a this optimize little a lot couple like how touch particularly think, flight save dug much really scheduling, the with crews. -- to with efficient, carefully even a I we Scott, we we're weren't this that that how think scheduling deal I things to had [indiscernible], downs, so we a of crews canceling coming able early

Scott Sheldon

Yes.

contain buildup anywhere our our and sizes, at to you're if so base which labor, X, they're of kind look bases, down flight X they cost-effective about aircraft medium to the of look at you crews. from small less you half of If efficient, inherently but kind of

do something a times, XX%, all there's structures you through to you're getting is that reduce you're flying, the pulling And but why how we're when and a But still maybe got footprint hours which for, in for a economics do, relief that hard so negotiations, during look good get XX,XXX-plus which built substantial is take and get call at the you he it, into needs, would but specific in periods. to to block built off-peak start to base reasonable savings, you that like in we down, trying point really not that's really manner. costs active

Duane Pfennigwerth

helpful. super super that's helpful. Yes, That's

saves Just cash know decline sort on outlining, cost of level don't revenue you you're you would can that decline I what flow the reductions if you but cost breakeven? post what these do achieve of of say, level revenue think

Gregory Anderson

Greg. is this Duane, Sure,

If to the these bake some quarter. excuse into you of fourth levers, particularly in pull, anticipating we're me, that

XX% further get mean, I to think to this such expanding point. if year-over-year consolidating you'd as is I -- flow -- get down we on to there, as that the could way have you the you'd I'm we do take bookings just cost point have breakeven and to cash breakeven that. at down suggesting and XX%. they're think not of roughly are above Scott's I If get to elevated kind bases like things reductions, like that,

the for burn I business but can. than on be lower the will regardless low fourth quarter. we're the just flexibility going we and going we front, the manage in cash And believe be quarter, think we're significantly rather I in to are the to third best

sure this every the And decisions. Gallagher, Maury making he's an right we're Now asked questions to he's day. owner we us, have here next looking making and the at

short look down continue and near But breakeven. and nimbly on that, quarter, long labor I the bit think to a story and as So fourth we'd able front in yes, react the pull flexibly try quite be we to as just to get can. we'll

Maurice Gallagher

margins, as comment, an interesting looking it's didn't was we at at in candidly, asking really I another we XX%. XX% you're We group. factor. never When load breakeven looked XXXX, question. know Duane, the the operating averaged

out selling in New $X. York of think got somebody vagaries trip unit I and you and Michael schedule, looked because course, was revenue, I Atlanta a Of has revenue an for the

making pieces can The we're going as on that things can But model as piles anybody away just it think But third-party anybody We coming is see the cash best I to one revenue is don't you're revenue are June. to everybody responsive as -- pretty unit to price new. no still a knows in is I'm how of to money take breakeven. all say exceptional fight revenue to that unit think strong. it's So our a quite as and forward. going we're because I all lot can to going going some We've do getting to And problematic. stuff. back have flow bullish be the in hell.

Operator

Our with next Raymond from Savi comes Syth question James.

Savanthi Syth

loan the program, On the loan program. Act CARES

had this you of has wondering what to that? what that Just might that? of -- for still need on kind be you Or discussion of into might kind tap And a changed? -- are is stance collateral have kind not you that used

Gregory Anderson

for Savi, the Yes. question. It's thanks Greg.

their we could the about say we just an find to that B.J. So eligible the are. advisers, it. and on of also team, I, We, it, as still a still LOI with an Allegiant, going the undecided, it. signed far we're not tidbit take as having whether Main Street qualify if certainly haven't bank team program, we're not we're or for into, that's read kind that. I and to great that wouldn't treasury We though, we for the interesting lending support PJT loan, discussions

that potentially and tap and going about So we've saying we're we're program, to been talking that banks with not some either. treasury

that program you looking just is else doesn't similar. to answer of they've pretty responsive to as collateral, pretty collateral. the just with is terms that require compared kind and it do will. of I at other warrants on what possible the and Just think benefit everything loan in can is then question, Act options, And CARES if to that But we been

be unencumbered prime of qualify will. the the collateral, we you We engines. would also however, aircraft have for unsecured. if kind Those and But

the the on loan for unsecured. Act If CARES requirements you look at

again, available if ready make we're And to program. that we But we not to time. in to us raise to under so that have my can point I ability with up that pull at -- decide that we saying the is point lever, to this call think the liquidity should

Savanthi Syth

know of have just And on your I'm follow-up Sunseeker some place. if might wondering, in I there? the decision I just so a a team comments. line making time what's you for

made to have you XX Or certain just Just decisions how of of the when kind about have taken kind about steps should that? we bought months? XX you've think be to

John Redmond

call, anything we last have close to all. staff if or working thinking X down, the don't Again, for We months, people have going couple construction touch other reductions we they're weren't a XX individuals, that of any anything of pay. and on we operating will. do Savi, And hasn't to in you changed at significant through said and than speak

everything to people. saw and it's when When you parking It's like wind So construction have process, you airplane. these to you the need payables not down in an have else. process

significant working there's still just that So cuts. remaining, a of that -- people will handful are still all on pay

burn project that very with at our associated levels. So is minimum

Savanthi Syth

be months, but no -- time XX such on a when a of decisions to of kind the start alternative spin movement strategic continue off it line? do so there is again, made? -- kind you need if to with And time construction the from to line is there is you're there taking of those kind no versus want Or if a of

John Redmond

a don't stated. committed we've regarding art of what line get call week a time said probably already I any the possible the is. what have We that, beyond Having

JV all there's at are waiting I entertaining months. whether and opportunity that's left entire for outright in we're or that whether amount mean for and nothing beyond exploring built, the sale, sitting comments, table look the an these in bring my partner the an So an of there's it to that equity I or to borrowing and be XX made are on options opportunity doing options another to

So we are exploring those.

haven't out. anything We ruled

come everything. think is I to out of are we takeaway the should that's here open

seeing when conversations that we're do the like saying to options the not We this we're had reached have a before settlement or we going we're call But -- we going say now wide weeks before TSSP. do open. of with we last not or arguably them, couple with that. that had this it's are not this, to to So

have no limitation. We

Operator

DeNardi Stifel. from comes Joseph question next Our with

Joseph DeNardi

you just demand exactly Maybe, period in absolute of Drew, period quality a pretty release for Can just price up isn't Were the why being the revenues take that of mean? point, terms maybe just bookings talk a point? does what year-over-year. that about And of bullish or about kind in commentary for June bookings? up that the a

Drew Wells

Sure, Yes. Joe.

things changed tickets segment So count, a time few again. just those not revenue. the a and of at buying before it certainly so for the was was traveling, bullish days looking people number It

wouldn't kind I the year far read rest from But was at when that to could looking into really back point and week that of high heard you've else. of June when So were everyone what down our it. yes, we the turned of fourth about be it the -- third, before that forward

was that distant point. this at So memory a

Scott DeAngelo

online, some shortly there key Studios, I there Disney would coming Vegas world Universal Las simply right? June was that. was after thing key catalysts, Walt add, the There were X.

can already and/or kind now pulled open. will. at we catalyst they obvious what we face, us that you kind reopening, There's the Drew like was exist, nothing in And a a switch since ceiling for mentioned, like just kind June. had So as push an quasi lack if least of through obvious back since there grand of had then, currently in and we've early flip, of the staring reopened

Joseph DeNardi

Okay. That's Scott helpful. Sheldon. then maybe And Greg or

the in all And that that plan thinking June the aircraft. how shrink was are by how think that would fleet have you did you last I maybe XX Like the inform decision? now? quarter about to recovery

Gregory Anderson

course, or off. if to it, of And Scott to kick Joe. it I'll anybody wants Sure. add

coming what in down of is, again. hard goes and would the optimistic, shortly And we to be July, a just And but position June, think it in in fortunately, I I nimble with in we're our of lot saw flexibility. a cautiously say remain -- flexibility here that fleet. in Allegiant past we work bookings because fleet we we can back

compared to the that accordingly. that more evaluate this nature, to X of of And me, these their their react go-forward those, storage, and in -- point rest reliability, remaining then excuse investments on number We're going save as add that's a just decided to for We retire we is perhaps about determined to cash of over their flexibility, in compare down aircraft and to we to to X side. think to number ability we we'll aircraft particularly on with just -- age, else, turning one sense we heavy today approach. things the before aircraft as on retire cost X thing generate And to basis down additional at day and continue And we the that may time. lot us up still their flexibility XX try changed. road, to of flexible that because so storage, of those were that put on have so still And are as the hasn't evaluate we'll a last wait-and-see good the have kind on future. or made aircraft I speak, and that's in continue and and it by a -- recently. We in taking maintenance then be the somebody XX day,

Operator

comes Wisniewski with question next Our Matthew from Barclays.

Matthew Wisniewski

So Any incremental I costs them thinking back. appreciated. and profitability would incremental taking Are managing or just the type as factors? to or flights to covering adding managing capacity how wanted to load the of is management idea you're adding come kind variable Or thoughts some out? -- back you level be of you about there the or

Drew Wells

as but Maury capacity, make that much very this costs. will it is flight thinking And thinking lot focused about start as or of, we're is a that in to that's where day easier to we're basis, were load not here. drives profitability sprinkle kind one right. markets peak flying that, variable is more about factor or We're becomes exactly a There's cash your we on and more gain whether money, required. still Yes, cash Drew necessarily latter point not as stated. Sure. necessitates And margin

Matthew Wisniewski

you as the Can rate stayed up can going ticket I'm passenger keep pressures. the skewing term? is that, that relatively forward? set something Okay. ancillaries And a of year-over-year. you I wrong, pretty near competitive of that pricing intact some well side per if that guess kind Or there in Because face does

Drew Wells

for this Yes. ancillary. test certainly largest has Well, been our the

much always that for ancillary, for that third-party available Our shown months. And co-brand more open thesis We're sell third be air air has and still the things we've to ancillary XX been bolstering than resorts has sticky the been and will party, credit card a that as such per there. well. component. And are auto phenomenal few is the I think in passenger last over the over

So to that continue levels seeing I remain today. at ancillary the can have confidence we're and sticky

Operator

with comes Research. next from question Hunter Wolfe Our Keay

Hunter Keay

Sunseeker on some and price, what relinquished conditions than of of Maury, sale John, project? the other a where are portion of control of scenario you But or the some

Maurice Gallagher

Oh -- a talk about zero see got got today's take like or there's and it's involved get so this in must it offer. to the really at to it's get to we TRASM, the Today, or that if that offer -- the are much or to with is wouldn't other the it stuff. management in. in world, but even coming because opportunities across probably gosh, John that reasonable Again, good stay John's cash just do -- on much, us I'd still But we it's gets pretty focus don't airline. now than just the hard logged Hunter, that associated occasional call

John Redmond

leverage I price Well, you what Hunter, of call. earnings we if kind about negotiating accept think, can appreciate, lose the over we had we some talked

of go I there kind opportunity. a won't to we regarding of the is earlier willingness any and So as kind guess I any those have have that mentioned, conversation But that is conversations far. takeaway,

as least one. a We're an I -- interesting the -- allusion any say, and made had on but have call So to have I dialogue. phone any restrictions I some you get think at open that, have I don't I call we anything. and a phone that's to having And week. all tomorrow, one

open be to there. tuned. it's any options out but one don't out. play we Stay And -- how are So is yet those it's That numerous going to of know to We just stories. written. that are story

Maurice Gallagher

The in, could big that XX is solid for year Hunter, here. that. just we We've and a sound on We've third-party picture statement. strategy sold year we make years. money revenues on proven that out embarked

at in got they're areas they it this history. are It's of and the going If Coast You of country, all the by is and the the affected people look less this, West that's Florida. probably older strongest among have a strength and because continue. there the going to tremendous money

are strong. of can where that, we bread to the So from markers all we basket, the it the bring fly, the feed combination incredibly

point put that with industry. it the time, what start as any we're we're that in to And a head longer is not diversification think got going term, strategy, asset. capital while this I to great that's we've none So embarked in second a into a on at

continue So we certainly involved in to revenues. want feed ourselves enhance to and stay some to fashion third-party

overview. strategic good a that's So

Hunter Keay

second mentioned. does really talked cooperating thereof then with I a that that impact And assume importantly, on potential factor was then you Or of just that lack talk extension? I -- your more vision want that you the support early not appreciate Maury. TSSP your how But That's that, about facilitating great. to in? you or out. voluntary does disagreement Bill, to IBC I

Gregory Anderson

Yes.

I really strategy, a out had at you look there. if so schedule think we right, the wide

First canceled off. back intact. XX% June May, was a lot but half in a July of of ton May. We more down down, the maybe? Departures. was half flew year-over-year we was it relatively

a start bumpy. what's What's it just Scott got back have D. We're the you and of just on for expectation surface, to schedules. be see spikes, to the full And mentioned, year? is looks going that like the everything half as vision? the then flying So workforce But the flare-ups it's assume you to good. you

otherwise; so or that's a, of option. what which let's which go mean, our this. is folks and consolidate. was wide Early how so we we're I educating And kind on is b, on, position Option

the ground -- there's the couldn't July bodies we flying such we What of relatively And and I a we're so because healthy had schedule. is Because we really are middle grant lot leads. in a there. needed think we issue short-term a

just is protect off-peaks. to the this so And

and these two, to we here. to have through, proposed like. have change guys what look and As like is down kind does of that different said, that if in to round of creative far that's We hit, snapback number obviously, doesn't the if these flex as we're would There give going to solution the flex up ways provisions come that order discussions. clarity on discussions. a -- But pivot I still want a

period. said, just And I assume so very the everything a and for tough, just it's soft, is just great, like off-peak on they preparing we're surface,

Maurice Gallagher

peaks valleys for consistently and years. we've Hunter, managed

and -- that peak potential. applies our of of periods a want days X terms. money long that's carry week, Same to around operating the you peak like you other more your profit in up the for income make historic those is because ago, can to the is important XX% where XX%, our March than you discovered days on those seats idea I've So the Sunday we you to us of do X -- time analogy

expense So that spread forward. need the bottom end, cash is XXX. in we management cost do this what less to But period, during flying. we get That's type that our going ask that you and bodies of the now

and that's our most ask getting people the of it. are So

what we status just you're That's what top saying bottom don't the people manage. leave the that call. or taken want the care get are going and in of guys, to group quo, is to furloughs to Some they -- guys that's and And happens their care their basically industry.

philosophies different different for people. anyway, So

Gregory Anderson

Yes. And footprint. XXX, the kind I really of the number mean the around that maintains

end day, to a different the painful. above there. a which of be warrant at If is longer going that, That's then term, the it going strategy. might basis, there's But consolidation you go of

of is this at kind first our pass it. So

start technically, I real. folks, pushing think it's until notices rosters and you impacted of not

about at you day, a million of $XX And from folks see But $XX standpoint. configuration worth end the so million to give we'll these upside the how that's folks, up XXX payroll. the But in network respond.

Operator

turn Q&A the remarks. back Ladies you. to and like concludes portion Gallagher gentlemen, call the for closing of Thank over Maury the to conference. this I'd

Maurice Gallagher

in Thank in safe XX We'll Thank you all for next Stay you. the October. days. you talk to Appreciate time. it. your

Operator

and does conclude Ladies today's gentlemen, presentation. this

day. may You wonderful now a disconnect, and have

Allegiant Travel (ALGT) 30 Jul 202020 Q2 Earnings call transcript