ALGT - Earnings call transcript Q3 2020 | Allegiant Travel Company

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Third Quarter Allegiant Travel Company Earnings Conference Call. [Operator Instructions]. I would now like to hand the call over to Sherry Wilson. Please go ahead.

Sherry Wilson

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

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

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

Maurice Gallagher

welcome afternoon, conference Thank everyone, October to you, XXXX Sherry, and our good call. and

and we families First, team let to their these in times. thank our continue as perilous fly all spouses members, of me

ways how can In sense team of you. are us, report very happy to are good passengers a step record at to it back beginning return we Again, we thank can a time a was on looking say the to important some, rather, but understanding record abyss. were we generational go. X, have it was mind and I'm little as pre-COVID way turned as you, the we job doing will proclamation early still the at time. always. XXXXs The members event Union After has respectively. with were and changed end In to some a after into we as think. a are year. get we fell, Soviet and optimism, Our had the state. to yeoman's we top there post-COVID, historian certain to one early This be to it only are fallen that XXXXs we back if Today, February, where to however, losses, a our that In history believe by the we former knew the at it had of after going no to view -- March how days, a we appears. this there's

will expect had improved approach, very has get So X into for And important. this we what our XXXX. further, we the year, was it. results remind it to know our year And be. the our that of it's I comparisons is is meaningless. after the this trend of this June, continue measurement you, end March through Month-over-month But from consecutively are of And history Year-over-year we this new March, quarter. a the we good since better each time. and as given away end subsequent months

any other cash rather breakeven way, month. CARES is jet flow Breakeven, by service payments. was a wasn't and without month, it includes September the Also, cash but fact, In burn a this payables.

XX% the climb better this P&L one setbacks by On margins future. out actually itself, however, with had abyss a and as percentages This December. out had our of be X to we quarters, June. October than September, continue front, a has had we QX excluding and mix, November the But our was same slow that than the take be better with in profit, This a past small month you And margin, by each seeing we special CARES would said operating week we September we breakeven operating profit. the operating not-too-distant a if are been payments. slower than best and we items, into in of look possible will like, believe can aided in

You I package. want how taken And had has cash only might with we from forward. dilutive about carrier we Greg strong to equity loan positioned who going not nor the will government hear the that a be offering extensive highlight are

We debt annual levels additional number our plus Our interest And add debt end October. principal X did, are cost. we total quickly. QX. million year-end million basis, have XXXX $XXX in amortizes the approximately our $XXX only of from in levels an aircraft on million Furthermore, debt paying however, at very within increased years early $XXX

would more have Terms best forward. in quarter, will. In our industry numbers. of the there's obligations debt We, going tension special to Our future these sorts, will however, to at want QX priced be difficult, sufficient debt a overnight Historically, finance if in everyone just month our perhaps report groups, pre-COVID numbers. were first between our pre-COVID items payments find for delayed May zero-sum those will on that and minimal over Many change do a is X sale/leasebacks the requirements. the purchases. I think, flow than you I total suppliers of But operators. during our large to between paid touched and cover final the the natural CapEx had of been position September. game with certainly operations ourselves cash them other in in $XX Yet payments books of half Almost million, order we QX. others front we the have from

and For has others. the incredibly been aircraft past China, years, the of particularly XX with India economic demand strong, emergence

would hand, suppliers Airbus. result, witnessed advantage held upper forward to backlogs namely X- segment X-year many order faced no The it's the a year. side places Boeing in has carriers by recent is the the in the Fast particularly the as true and have seeing rest changed, this depth As us airlines. it has of This used XXXX, Early to ledger. U.S., and on moved the we and we on, immediate November rebound haven't between in here full not in malady, that one while leasing problems industry for hopeful of by to steady And now. our leisure airline are rebound this the we in such be took industry world bottom. the The the still were aircraft. a chin the the trade understood of slow the seen found

anytime believe, with appear be rebound our As a as a next a COVID will been will particularly understand XXXX soon. aircraft carriers are The day. result, rules such leave Far as it happening parked International it, many tough I appears is and many upside AirAsia, each for travel year U.S. down the year, Europe. the that up fading. doesn't be governments making is The aircraft passing and in we will It East significant problems hope owners. in have

XXXX. this in robust here the as with appears U.S. a fortunate the itself But are we travel segment. well-heeled a up country in domestic space over. U.S. leisure the the exercise we months, the will hopefully want large, is and out setting coming in people have be pandemic leisure fatigue of It pull in, apparent to Now pandemic

they're accordingly. about are risks Additionally, their judging the are knowledgeable what and actions

bonus and cost the parts, struggle substantially capital with years, be An of lower to industry I be focus The perhaps et exclusively a comments to airline minimal aircraft of U.S. availability business our the on ownership worst. We number flexible some particularly I'll a leisure from structure, to domestic I be Greg and from cash traffic. call, better longer. you'll fray continue to motors, be rebound bit, beneficiary, last our in in so, will If this than of cetera, our with best of namely and costs excellent XX believe, will will XX months. we'll coming to hear in months, we international of should this associated my the most domestic model the add XX believe, the come, coming inexpensive that from assets emerge with plus traffic, respect our able the for in XX years travel. repeat outlays. our Allegiant, to added

depth environment. maneuver to shareholders capable Our has in understanding group, shown management a extreme and such its which are of how to fortunate this have

I'm Speaking grateful as this have talented know I we a team. shareholder,

X for been this to, heroes have personally I again, done they all members during have the each thank team Lastly, our X world. months. our one in to want true trying

In the John. Thank backbone an will airline turn you of it I'll much. meantime, company space, we business are the are a and take model. of very with to excellent survivors we business, our You with and care And company. that, over this in great the

John Redmond

dealing Quite combination out these be mentioned. cash accomplishment with remarks. sitting $XXX and and our gone resilient we efforts strengthening his month-end the network, this for earnings roughly the during priority the weathering longer debt cost guiding be aggressive testament sheet. Good principle through million no X I was the referring I than Hard and remiss Through entire the very roughly take It only at we QX as that we cutting only of and as afternoon. important the defined their storm creatively business a highest discipline, applies each domestic seemingly no are everyone. didn't last Greg dilutive industry-devastating it was all a better will to very was the for of a and burn. adding to Maury model, we'd longer the if Not months into quick continued the Thank the balance a of term an the team. more to of efforts organization. you, vernacular number financial in get be would anyone company Maury, on we thank us. broad no them equity, set in to one times. to afternoon, with such this Since get in leisure to the imagine level after and detail good unique stated history to will an balance us carrier, million incredible we've is cash pandemic unprecedented Allegiant entire $XXX the the term have that traveler-focused, while of and opportunity call,

our since come not focus long change. has have not way We then, will a but and

a in in been -- position for down Furthermore, as initiatives any move updates meaningful nor a below continue Sunseeker, be no levels. date to debt put paying our cost way I we XXXX. to have our CASM-X will there XXXX change us has CASM approach to XXXX strategy. our With to We our will or new through regards

We investments have spoken open by to and equity many to others. remain

at While report optimistic, our conversations I have we this and to encouraging time. nothing been remain have

sheet over with Our will be it ourselves incredible are purchase Stay that, and be be Scott opportunities generational strengthening flexibility, to a in low all we It's restart believe project. about sign position balance to coming should and Sheldon. turn leverage planes will improving and years. positioning I'll Cash we And the tuned. the golden. to cash not there

Scott Sheldon

and John, afternoon, good everyone. Thanks,

expressing start into the before by our the throughout to First Allegiant get of and proud providing on I how color off some am and of team entire want all partners I network. quarter, the third saying thanks and I

in results operational XQ Our were terrific.

importantly, and your daily consistency Your execution and continued on guests impact the the you and in our show focus customer safety, other, sensitivity each confidence is travel. in and an making most and care health restoring

of hear customers As be efforts that shortly, XXXX. rest we becoming in returning confident we will are into critical as leadership signs certainly life, seeing to the increasingly air team the you'll as of the here as your move are and signs from ever

in seen there the continual comment challenges to COVID third wanted on in press to on quarter. are obvious operating the a the highlights which can quickly environment, our of I be release, areas X Despite today. Now

for our to ops levels, cost, DX is bounce First where back our operational second produced factor just dramatic measurable irregular lows. year-over-year. with in AXX trending virtually $X.X is The controllable metric operations production. completion up back core from And a million team we seasonal best pre-COVID performance, and our every quarter produced

this downstream inherent tremendous received being team tremendous a strategy a as operational Drew operation the integrity operation. group. its addition, resulting a team's group's as That on schedule execution In challenges. many the quarter planning had the demand net, from continued wide casting the volatile impact of selling has help creating possible third said, and environment the opportunities and for and

which we a travel, were nearly example, cancellations an total X during second within the disruptive quarter off as over As of cancellations, days define cancellations. of X,XXX XX,XXX base

the cancellations, back Net a not to in so comment difficult just only great As moments our under result, pre-COVID better secondly, Once disruptive take a coupled to off wanted a costs, total of bounce cancellations great very exited Promoter few XXX X,XXX Score quarter, decrease. a we third significant drove again, This our a environment. reduced were and levels. base And I a on execution, labor. back but operational XX% with

with many measures cost-saving the partners, It's XXXX. the headcount right organization, right aircraft, varying our and not although ultimately negotiating both As XXXX. are emotions and were the return nonunionized second unionized but which about report, looking heads we can folks labor of indirect, productivity, as down you a we should left direct from recall levels we deals we labor define are number substantially Ops levels to to with with since the discussions success. seen forward mixed costs, -- active and successful ops different per both will groups are a I quarter, be with of in in successful

say successfully front, I'd of and On night, and able we're each to negotiate to efforts. unequivocally, full the near union flight like contain flexibility thank our pilot attributes, I operational Each and deals leaders with unionized balance our dispatchers, right maintaining appropriate all different of for as the last of but partners cost near-term attendants, group. contain tireless can -- attributes their while capabilities. agreement

I and voluntary have place, a On rightsize we we the restructuring in want of programs number the reductions both although cost-saving in aggressively, nonunionized front the fairly force. I and organization made to instrumental difficult in who decision to with longer individuals turn And for it here. today. are I'll Scott that, sincerely They no thank helping is those DeAngelo. And Allegiant thank that, it were make in what to over them.

Scott DeAngelo

Scott. you, Thank

focused customers platform. remains directly a leisure approach commerce solely strengths model, domestic to focused commercial unique being travel, and the on Our having selling business leveraging proprietary of Allegiant's on our

and has our even this the together many changes schedules same tunnel, ability our strategy. web to while bookings, model of majority same in leisure marketing times capture so have fashion making aspects they business of our stimulate traffic these has cost flying by at us our been greatest and per the sales commercial As terms of the reducing not enabled before, cost booking levels and advantage Doing our of organization side network and outpacing for to our the equation, light the have in pandemic amidst and demand a versus to time, relative search solve that current the prior of the sales the travel uncertainty. us of unnatural at XX% of maintaining pull end has so while year. Ultimately,

end as cases, now see seen mid-June, in toward even drop our year to the toward the attitudes of in before prior pandemic much And their available of the the appear towards nationally half that as our below of are holiday much below largely on pandemic tracking both levels own this booking before insights, saying past to COVID-XX expertly mobility XX% our variety XX% April, quarter. we our of been made unchanged. terms by as a In And be back gaining bookings again choppiness high movement head prior the intent are is who's the the each travel tremendous remains below shutdown one weekly about impacts bookings began air external stabilizing as initial even mobility in that Descartes worse, consumer near intentions say, doing, on prior customers That briefly corporate work may or data back toward number divergence prior building Based weeks, with customer the consumer the through and with coming of subsequent fell remains travel customers situation be a Labs. travel. the our our marketing nearly year of year which as has rise the saw of leisure mid-July, that team in past their what of clear through leisure translating data September. again data. back tracking consumers strength their exhibit shows once shockwave before and several team gleaned XX% activity as what While surveys pandemic it. negativity we in their March, in customers Corroborating rises the Most and bookings end of highest the believe level travel. This recent analytics number analytics to intelligence the around COVID-XX getting data year. but XX% headlines by are notably, point to mobility is to began their since

factor account among for confident like and activities smartly of a are dynamic, out, some can single nonstop begin time important to may also fatigue of This our purchase were pandemic to like already, the course activities And this was during While second parks there-and-back surveyed customers us travel certainly airline, of for Customers decision friends, vacations of finding the of or safely a their this eating booked travel resuming flight and aspects beaches we approach that must operate. that is regardless hallmark everyday consumers most again, a impacted not Allegiant's But made from they be nonstop, of of the visiting during many a by and is feeling told air, to to traveling more to shopping which a they fly condition the typically currently their intention customers, flight. strong critical that includes vacation major hubs family with pandemic. their or and lives. this prospect impact but also leisure abundantly has travel national clear homes. on of most it travel customers, comes and layovers in growing whether had taking conditions. booked, Also, connections or regardless confidence that many majority crowded occurring of their negative the

cost possibility it's by While or at allegiant.com, targeted URL, has down allegiant.com, our overall directly and majority a the by vast surprisingly, the year, without either of from of are been or website, the clicking not visitation to one on visitors coming web e-mails. last interference versus worth no noting that entering our for link competitive little marketing

In we direct fact, last us bookings. we from last actually online e-mail general more year. OTAs engines up or search engines year. down advertise through, those Conversely, directly of directly half URL our and we web on, was The sets than more apart do fact from travel sell marketing leisure don't which web than and search XX% versus for depend visitation course search on primarily is visitation who pools but like communicate by versus with agencies, from to sell customers by and travel

have overall visitors despite to converting at than result, lower a are pre-pandemic been visitation As higher allegiant.com, rates considerably levels. that

marketing about During directly were our bookings co-branded of card or e-mail tactics the our to associated campaigns. with third credit quarter, X/X attributable

focus family composition to programs park less and hotel home larger on cities air As calls, packaged age ownership. vacation featuring mentioned in targeted work-from-home, for and/or or these second away-from-home populated promotions and beach areas national and travel Florida Las from reverse Vegas destinations, groups, offers past on based

particular, all forward, and are and Thanksgiving weeks And improvement in encouraging. through Christmas searches late volume February. the New Looking of improvements around for weeks allegiant.com continue to web at concentrated especially show Year's search travel

million MegaCast More debut this the broadcast billions in saw media. Monday XX and also September and through of tuned generated of Stadium quarter Allegiant viewers Football's than on were past impressions XX. digital Third Night

the In we've Allegiant each cities such XX% up from strongest Lexus heightened already impact were played large to our XXX% and marketing such seen and such in increase us exposure on fact, from visitation the was levels. iconic distance the Boston its virtually that major than going safety importantly, marketing have airline to Pittsburgh, remains by in more firms new Safety for business above XX% activities Travel among has brand And a Indianapolis Stadium which that worldwide reported relatively measurement media at traditional foundational Pepsi, to games And visits like Most finally, and build Allegiant Stadium been sports marketing. been as had Allegiant, traffic stadium, health cities Chicago, we the And XX%; strong ranking Barometer of has all by sharing for Around as NFL's ahead drive and web as American each our tactics media e-mail our on has e-mail reassuring COVID-XX web advertising enabled web carriers that quarter. nonexistent award most X performing origin Safe that time up the number we one Allegiant that by earned Measures. proudly only Cincinnati, and the do. which web during and best as XX%. by But for wasn't awareness this fourth Gatorade. North social the to were Houston, includes brands among top Traveler and the

Allegiant USA airline second #X World the the consecutive For as MasterCard co-branded TODAY readers was card. voted year, by the

provide value uncertain example Revenue how with loyalty and over of during a to to Management shining customers I'll continues turn that, added it of these card Head and Drew Planning. Wells, Allegiant continues program times. be to Our And to flexibility Network

Drew Wells

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

more metric down quite second with just in ASMs pleased was the ASMs staying Maury quarter, Overall, versus XX% revenue on I'm than relatively mentioned quarter flat XX% third down as earlier. service jump year-over-year, scheduled unit X.X%. nearly Our with

as April low booking high peaks in June The trough never third nor quarter demand. was as we saw interesting for that as as

as with more correlated sentiment and some and consistent quarter, improvements well it much very Scott's cautious especially growth in the throughout a stability provided data. metered However, optimism customer

load revenue quarter. factor were of Day, the peaks in fact, despite weeks the of the the September Labor the X In Xth the best and around of last July

roughly September. the where factor ahead, and We've continue expansion through outperformance were we double experienced we load are TSA throughput we look year. maintained As last will share October

as However, there we will the be winter. enter still uncertainty

schedule but quarter the below year fourth peak Thanksgiving should main our will should variable. valleys. to demand And large demand capacity last Christmas over potentially thankful perseverance least climb and flexibility slowly to weeks quite total, to and very everyone's continue with be ASMs that, Our objective, to portion in Appropriately the I'd fastest react months. in of wide have were pass those otherwise. to of demand for net sale for casting our as to believe justifiable am continue team could some us to a best Despite We of not been our September, that we've earlier The and like weeks pandemic. environment, concerns of we able the out to record than we we changing in on approach a approach nimble month leisure and continues finish be to Allegiant matching with held XX% see around as provide gotten Greg. significantly the arguably insight canyon. at peaks we that the and significant flying the and XX% more I around will the it remains we

Gregory Anderson

and unusual in has Drew. you, for in I want the Thank team too period well members. everyone. professionalism throughout key Their been work and appreciation comments this afternoon, dedicated Good echo positioned. keeping to us And our praise hard

also of burn million. our cash our and tax And excludes averaged $X cash with cash cash was total just burn The a cash just of debt positive month For the over the daily expectations CARES received benefits this And third cash definition $X.X our reminder, million, and per airline. over CapEx. day. performing from as actual million bookings aircraft ops, our Act. of an of payments year, the into and month burn lowest flow resulting any compares typically account It the for CapEx excludes from September, quarter, $X takes in

As per improvement are demand quarter. October, in throughout $X day more Drew at saw million bookings. trends Recent slow in than are averaging each And we both the September mentioned, encouraging. and and steady

down a Turning XX%. costs, to at X.X%, only our Xx costs. cash items, Despite amount special ownership more of capacity reduction that which and were exclude than operating

from was than excludes and Our $X.XXX. items $X.XXXX special for full quarter and adjusted 'XX CASM-X year CASM-X, the benefits which less of CARES Act, our

We costs workforce. include to that lever some extensive and have to is preserve our to share is we get in incredibly friends, flow strategic reductions meaningful all as It are status. breakeven have does lose we eliminations us valued also loss. a The and taken every resort, a helping colleagues in our pull measures cut These back but and heartbreaking position innovative. and we Regrettably, have to listed hard to worked that list last operation cash. cash in long, came

Turning balance to environment. withstand our pandemic, the to priorities ensuring while one balance sheet. our financial the liquidity of weakened top Throughout sheet defending sufficient our is demand

than our XXXX debt debt million, which is We less are of net we pleased with net with year-end million. at the progress to date, as of even ended the $XXX quarter third $XXX

around Street slightly $XXX heavy cash grants pandemic September's collateral of And $XX point, of to the $XX and CapEx and existing $XXX reductions negative quarter, debt term $XX placement above. financing be subsequent backed EBITDA our total NOL having an data incremental million And items, this payments are to refund date million as Pro in of And $XXX attributable navigate with of was following million bond, Sunseeker. year-to-date excluding for cash EBITDA, pay the $XX million, flow for XXXX, keeping Partners $X.X was balance employee $XX interest. includes third of with expect to bookings voluntary daily of collateral offset Not cash by of at pledged of $XXX and material our $X already to PSP Our day, termination expected the to and additional we cash year-to-date Also, loan. the this important over loans our booking October's to $XXX items: to at the impact carryback issued inflow our and associated ability to us flexibility a we is And to to $XXX early maintenance levels million by which without of balance breakeven. million sheet million. positive million per received special million outflows: and or private Sixth $X remain by year-to-date unencumbered. positive payment we $XXX were post XX roughly it of following aircraft million of flirting inflows as forma million average includes million at million. only the fleet a million, allows bond, maintain These greater million. of leaves,

bookings will sustainable the average remains levels certainly moving and are suggests While these and fluid environment forward. ebb booking data our flow,

liquidity As we a see have demand. recovery in ample such, to through to we believe full us

sound as expenditures. in Allegiant, we towards footing, areas to government program participate $XXX we no explicitly risk the prefer traditional our in additional view Given loan provided to such declined company would burn access have messaging capacity, longer the borrowings. providing cash and with will liquidity to Instead, million guidance key going that Because not financial forward. as be we we to a capital our expense op direct an

down and of per to imply the our we the to cost fourth fuel assumes which XX%, be gallon of a around quarter closer We $X.XX XX%. expect capacity operating And airline expect CASM quarter of cost XX% total year-over-year. reduction total down fourth

XXXX airfare. operating savings. number long-term made be about cost and for IT marketing, changes of We million cost demand to to we structural $XX in fuel million in we CASM-X total, with And to cost $XX And the include result, the levels. cope in off in reduced another These structural labor, as equate expect reduced improvements in a based $X $XX have million to million meaningfully annual capacity expect other. a in $XX million

maintenance, Looking to including of X roughly And acquisition may of XXXX, XX% we X to required. not to these this the AXXX position, be aircraft. relates liquidity available. CapEx, are aircraft given total the to $XXX of heavy million. be readily remaining current borrowings expect our additional CapEx, for months finance Options But

of expect million. a with we expect too to roughly billion. end $XXX compares our We booking to which in about net favorably of debt of trends, current $XXX on $X.XX And to based million, debt net debt XXXX end ending our gross XXXX XXXX position

fleet. to Turning

aircraft operations, permanent in temporary XX X end to storage retirement. expect X in We with and year planned the for

the believe advantage beyond, Allegiant. towards costly a we strategic not key fleet with look order. 'XX we are is and As this We burdened for

grow fixed unique we an levels. fleet the cost, strategically post-COVID such our depending our for environment ownership at AXXXceos discounted seeing, in provide industry-leading prices should pre-COVID a In low down lead potential influx to At on cost are deals already to structure. our demand. may continue opportunity aircraft of further see naturally and/or economics The replace improving used either from averaging we addition, significantly deals

to heavy future expect In addition, fleet costs. reduce further we maintenance flexibility, by enhancing our

in an we presented AXXX an a recently, to As with example, leased opportunity attractive XXXX. bring were in

and visit. so XXX, leased And quickly seats, more the to CapEx. AXXX, actioned we the maintenance will an AXXX AXXX for than have which was older maintenance heavy retirement from costly The we the harvest ownership a will avoid due of lower cost costly engines

keep cash levels. that's our mentioned, requirements there fleet to potential helping Maury CapEx future minimize the to upfront are lower more As we have where ability at transactions would

'XX. maintenance other in storage. are 'XX with we our with anticipate we XX aircraft We when to heavy have service higher least including X to COVID, would return closing, million. maintenance, early aircraft temporary to well to our $XXX spend CapEx. been currently between we For CapEx, million positioned. $XX the includes Prior and incremental This demand XXX expect determining end just $XXX at and in delivered estimated in very be XXXX currently 'XX for CapEx between we operations, million heavy and aircraft And non-aircraft travel

have to liquidity manage through We crisis. sufficient the

levels Our are debt modest.

will debt the around then happen by will offset we year year's the year-end. think could -- by equivalent offset amortizing This XX% of onset we quickly raised next next be the of remaining since of balance Our And debt the pandemic. have end. the by

also And around expect be $XX million, We full we interest the paid to $XX XX% in we XXXX. XXXX. our million be interest expense lower XXXX's expect in which is year interest less than XXXX than year to currently, full

interest us transaction. to turn only operator. without remain equity the the onset carrier positioned expense, is pandemic. double Allegiant this the the cash an of issuing that, pandemic with knowledge, my other all me dilutive reduce since confidence well it very will the This its over provides we let And to side on continue of nearly of debt, to best position, the lower net to So

Operator

Instructions]. [Operator

Our Deutsche comes Linenberg of first question from Mike Bank.

Michael Linenberg

guys I'm it what observer that all to I'm listening Because are an planet and with at just with to being planet to on? respect thinking doesn't this you the seem I'm reconcile industry. call, the on of

of congratulations through the CASM-X items getting of be big flow. below ran questions kind breakeven Greg, why for sort And you to couple on of will XXXX guess, So in I here. guess, and positive really essentially ticket cash I free XXXX. a

sort about the -- there to incremental structural You highlighted of had And anything Or you $XX labor. talked that? of change. is million

of in incremental given is versus marketing it's about aircraft there? and additional XXXX maybe that guys elements it -- the on, talked just are IT, efficiency? you where was pre-COVID? And just ownership are bring for any building color Any shells Or driving You lower where in of Is cost other. there other market it? you today sort that what's

Gregory Anderson

Thanks Sure. for the comments.

any ownership the our of Let in not that point. looking fleet kind were We we're some do No, me improvements around side. of start cost until with actioned. through deals we're last in wouldn't strategic the initiatives the building

taking approach the So on. conservative you're spot the no, But cost. on just of a side fixed we're

his focused productivity. and major areas that one, remarks the with this I and Scott hit labor in think we're on opening on:

in in productivity to aircraft. I expect since we're As more XXXX, John back think we we're put the organization, have I level XX FTEs perspective, we roughly that And had before. be will XX. and per that mentioned, To I XXXX, and In into think, had set to going rebuild to going productive. and of we haven't XXXX,

give big team to efficient they're surgical that a can and better. provide pandemic, them, -- the Marketing, I to I out, and we him I'd DeAngelo capital So more ways that's getting is find like to -- through they can -- with shout because think a one. have ways more be and his this they many here. found they

our a this. there's and to the on because and mentioned, productive that's budget there's you and and other feel And we'll of side improvements we just other marketing then comfortable We take areas from better IT of down, lot just be more -- confident the there. so a think that And structural improvement.

Michael Linenberg

just John. Maury question, then and this and second And is for my Great. really

a Republicans, and to this regulation on things past, that of what side towards do up come the we out much curious, to undermine which not That, a you're wave, I'm politically play me we've we would size seat the better i.e., return and of get is what the on is seen call As if on in fact outcome the you're Allegiant? aggressive how that like, is extent, out, the Dems trying one -- Allegiant the to in And being concern legislation. hand. the to really is leaning Dems blue sponsoring what election, more versus moving some kind model, toward. I'm depending just

On and their the that are want reregulation they and union other, profitability to undermines airline that do the businesses peeps earn. employees employees what impacts impacts ultimately don't can for work anything ultimately and

the past. additional seen there's the overall the some stimulus, is So tension good for in of maybe what And possibility we've and economy. that's there, which

get between, a for So we wave a up or you do blue getting what's How in know end something sort of think Allegiant? best broad about I whether Allegiant, we question. it's

Maurice Gallagher

the John you follow-up. my you this, we've administration has very us many is at ahead, regulation. with blue And much Mr. to deregulation In Trump's can things got and and and hold up goal stay things. I'll doing a where and just you're under can just lot away see hold do go go not from. the to I've steady here, [indiscernible] Certainly, first, what to years can been side just a been we've of down seen allowing

here but seats it and settled, say I'm has not been the hasn't. think thing I sit going to

box it's in forward, know And can't out speak the And already being industry in try are seats way. airplane. rolling you the of simple. going this government start in reregulate I if pretty and take of go Pandora's is that up to the that if I you that opened to be federal you the and just subsidized economics a airplane, kind -- huge want effect. anybody the problem. for seats You by

happen. see while you'll So that about I don't know that we talk that,

initiatives. a ability the see you'll on think union lot for labor They're that want people of and already a saying to I we're improve unionize record industry. already to they

the for [indiscernible] engine want there's Boeing, new types probably where downside of a a go there. types. downside the GE away the Airbus, see you so those lot and not by to matter. So biggest has for But green, which and would green would -- movement plus improved that be for airplanes a older be neos

model, [Technical well But agent. just see. is we take do we be through. probably it well. anybody we're to our have do Difficulty]. And we'll adapt. what They That's for make I better thing So pass-through we the John? at than pass we'll that a if cost, We're to work increase And it one going we'd else.

John Redmond

those, Yes. comments, on. All spot I echo they're I right. mean course, of Maury's

with just look been we've spending what at never we've We entire year, doing on, a time control, Greg been all. at only here, that's lot focused had what-if team deal referenced. a on of that right? things the when conversation and think we've So this everything that for I you we can just

a level-setting standpoint. the course, of of ones, from labor organization was biggest One the just

the feels steps whatever from I think because organization. to XX.X, likely there's component Just to happen, able the a right? may less it be you rightsize airline further away every to has whatever retroactive get -- taken its

to over. So that it of we this. we've is since all with focus trying all think labor what very But is our onset to is. quickly moved And deal control what I and the have just control aggressively

Operator

ISI. comes Evercore question Duane of next Pfennigwerth from Our

Duane Pfennigwerth

now. of been It's question. it just part preference certainly a a flights Obviously, but now. certainly always network for resonates right right the Maybe model, direct resonates

taken the from perspective. domestic dots industry map, many a U.S. been so airline but And not Allegiant from of have off an perspective,

opportunities new market if where for It wonder be just that there low opening I now, could little a your about lot a right space be would is. frequency may green you given so bit of capacity model up. And like talk feels

Drew Wells

certainly be Yes, pre-pandemic will have Duane, to ability didn't a think And on. incremental spot had this. our you're and there grow, this that and communicated opportunities already is network stem any Drew. about concerns from We I runway significant

find grow trying uncertainty, guess. of think to balance, but fast back kind not with about how right too this to this either that not level-headed I and to to I approach we trying we're be into sit and trying trying

think us know available. there's be to going I So that you'll things that growth see from we

you kind answer and yes, kind them, exist, generic opportunities we looking be So I'll of of TBD. a give timing for that, here, saying big will

Duane Pfennigwerth

that preserving connectivity it's markets, less far, So fair? new is have and you you preserving diversifying had been that what into and

Drew Wells

announcement that one destination all had started We've was Largely And relatively where we're from of perspective. strengthening standards, routes. those strong, have quite well. fair. off our a Kind less route XX small than particularly by

the We of haven't phase come on booking but there. I that this. our will any from would those first still in certainly, more yet, flight had that But agree there's

Duane Pfennigwerth

there. quarter? going feels for would airline But But is And what I not be loss a overall it's imagine my what solving to should revenue lot we disclosure. like is the outlook your can was I appreciate us where you And sort third skinnier. then CASM-X. XXXX, here your and It follow-up the just CASM-X of the from just of in is this forward? and the thoughts in non-airline, non-airline tell kind if apologize cost

Gregory Anderson

the business airline. lines, Thanks think again. question. But And I yes, run It's you what the Greg mentioned on just the spirit the maybe of X nonstop. for starting correct. with back non-airline through It's the I'll focus is

-- third with quarter, that down, very No minimal So associated the closed costs there. that's that. was for report. been to Nothing revenue

turned then to actually Sunseeker, was there, Team quarter security in we our has million that we're or as minimal paid self-sufficient nice done throughout with $X remains That's of make the position. to restructuring job similarly, it protecting just organization. being asset. sale. that still investment far a a really sure positive for an And that cost, asset very As held just Teesnap, or maybe for that so

months. cash the for has earning it So and it's past X, actually X

front. are. back So on more, options have we'll we -- we report we to but and we'll still but strategic there, that have report today, explore And once nothing

Operator

question of James. from comes Raymond Our next Syth Savi

Savanthi Syth

as up. being right the than have to kind levels XXXX recognize your on of things side, you of fleet you going And do is less grounded? look come of you're with XXXX And that that aircraft now, XXXX? be I But Just to opportunistic assuming CASM-X kind many what's plan flying? how

Gregory Anderson

'XX. out as Yes. and come CASM-X to Savi, capacity But data given we going was not or be we haven't expect less. XXXX capacity, to on just mean point pointing go as would saying on based fleet, ahead. a -- guidance we're I just about I we we're think the

sit we we storage. We're today, or As of, that flexible fleet fleet -- kind as where you if far on have all X are will. temporary considering storage,

Last X. retirement. So But I retire depending a those X deal identified the with think year that's up on bring in of the through service. next mentioned And given and had into this environment those year. majority stragglers and demand, now we call, we into few we'll we back opening aircraft for remarks, my mentioned would I to the just

Savanthi Syth

moved then those And have vouchers. of of you ATL. has Got What It seems changed maybe trend seeing vouchers that as is up? in And like just ATL of kind the question usage XX% are of vouchers? on within a terms quick bookings the it.

Gregory Anderson

voucher we've increase. seen trend Definitely, redemptions Yes. the

think to I it to pre-COVID, it's X%, or XX%. like small now, Right revenue. like really was So at compared X% XX% it was as

an those. increase. working definitely We're So seen we've through

quarter, about million the we So March, since I think of credit in $XXX the the through last report I issued vouchers. had, Savi, end had

we're think vouchers burned right? we significantly. put perspective, million And has so about now, $XXX into million. was To $XXX that So come the mean -- through of of $XXX alone. so I down those burned cadence March credit think I issuance I through, we've million

and to less is was -- I much so then August. September, And date than October October than think less which --

add? am I it. Anything to we're that? But will So But Drew, burning you on missing that's I else think there we see. yes, -- through -- anything, want

Operator

Hunter of next Research. Our from comes Wolfe question Keay

Hunter Keay

sheet? just in when that that not on use Is not originally basically getting by say little you that occur, can optimistic more you on What what just A said this for you you're you suggesting mean was intended, you balance you're Sunseeker. it your project word? -- did still you, at Are when that John, optimistic. that? you're bit the way that

John Redmond

partners. more relates hopefully would with the additional to solution people will that sort equity It that to having conversations we're a No. able of involve find some be

had due conversations. realize So we've conversations. a There's obviously some a great of to several but look it's great people we've big We work. doing diligence at, for lot project had

we've So these conversations that we're had of that's interest. at was people's about is and getting level all I optimistic

Hunter Keay

I got it.

you have this I on grow Scott terms what night? think the one minimum of pay gives Okay. Sheldon. that agreement for probably we've like your some give seeing final you warrant, to you it vote the And reduction conditions then could please? is just last reached Anything -- pilot in guarantee? mean elaborate you flexibility or on if it? you some from us that, or color competitors? Can you of Can on I more shrink do to been Is and

Scott Sheldon

Yes. Thanks for the question. Yes.

back idea we That those furlough could to downgrades. there said XXX. communicated pilot of folks. just XX. place, of we this voluntary team as on That when as would better actioned action we what number The are obviously of ready schedules was up Unfortunately, and a October to October basically lot XXX was have didn't group XXX So so in next possibility of we that a a XQ leads, release, wants voluntary already drive to to X. had We a and the that were and we at meaning basically get of in Drew preventative XXX, flexibility getting fly. we programs

until -- up possibilities night. guys basically, last over literally late different these were shooting we So

capped basically, So our is XXX. at furlough profile

XXX, bidders yet. of If the were been line the about those hadn't you that think XX hires even new on

the and So the XXX minimal. associated impact the downgrades of is ultimately, XX

the If fly or margin bring that back, aircraft you even summer look we we want very we profile, XX can and to at folks comfortably. to want even these and go a targeting XXX we If what through do can.

think language XXX on we that But and just rate. in agreed payroll that was sizable didn't longer didn't kind the it's basically about the the no were So are XX what downgrades change of that's to on. when savings the change you yesterday. But guarantee. We

Operator

comes Joseph of DeNardi Our from Stifel. next question

Joseph DeNardi

again, about guess, the investment magnitude you of bit talk timing you point? business in willing the of aircraft make Maury, think start the the more a little you when can kind primarily at of side? be think to you'd on meaningfully this the And maybe you that would invest I to

Maurice Gallagher

Well, Joe, ability to it with as we to go to easier add airplanes going cash feel for I that add minimal that with think new the approaches. It makes us out along we're equipment.

we'll requirements think lower also (technical I have the of benefits cash for Difficulty].

the for And can next stuff. rate X of some so powered add the shelves are, very a minimal number with AXXX now AXXX paying that amount think our balances [indiscernible] a We for the can very, by nice. can good same get out we're I the rates should there. fixed as years, we depreciation cash candidly, out of in we money release there, But do that's an a on stay

you get planes, other back-end own like other the piece to particularly as towards The this lives. we of mid-level, of is their

You a want be older It's to to basis. lease don't do that on possible returning airplanes.

we and the we effectively The airplane putting still can your we with owner of carries So think it we debt. the purchase deals instead where upfront structure the out of money the paper, of buy down backside. reverse

So when capital don't have much add about you can the think up, put that, to you shelves. you

and data inside see. things reveals X But -- grow certainly just perhaps And XXX with there. I itself, take do, debate or appears make fast, airplanes. opportunities think XXX-seat X replace your we where shelves can there's out We time. just go we'll have as can to can the it we we

profit cost seats, looking ownership than at XXX Tuesday. fly one way You seats during with (technical no And XX my same peak the an The is XXX on But days. flying Difficulty] can at seats airplane get the minimal. I'll on more have it that airplane potential marginal take of around is a cost. the runs to the XXX for benefits of those to week XXX the

Joseph DeNardi

go-fast Maury, or on the take-your-time the the of side are argument? you

Maurice Gallagher

Yes.

Joseph DeNardi

Okay.

Drew. for maybe Okay. a question And then

-- competition the kind it? will And on talk you about of on less you're more the probably then seeing as side you're thinking much the that level side, network about other be this of now? what network the competitive can importantly, of Just how

Drew Wells

on competitive, other new already By X top the us. Yes. There's handful We've and new level so over X of seen they're incrementally and come exact last routes, down great certainly a been competition incremental We've carriers have us, number. over been which large, quite but of back I markets the those -- heading just down few here leisure-oriented the someone of down by of to never seats, months. new competitive announced as a months. to We've maybe not some knows competition. last XX% been believe, the else south thing, same

So network in been number last elevated as better touch. in we sure, making began that investments we've of a years, markedly several position than a series of the for that

of I network the of about routes think competitive. routes that industry to lot we we number of decisions And wider. And kind going enable As that get will open. place, forward, that only a talked take move pre-pandemic, deeper all moat and to we're those of XX% even us build were come better as as about, even

be a in So forward plausible medium us look but to think world living short might I is optimistic, touch XX% a That see closer a I in we for to while. term. the could as

John Redmond

I going that of environment with to when on at look added think levels those too, have these interesting. of is that, very pricing add said, to the forward you one just what all the Drew going the be on debt competitive routes, even carriers things

that. done haven't We

for to long So not our mean incredible going say be have the is pricing to where time. competition I a out can't of expense interest is they're structure completely that. going whack that

Operator

next Your Becker of comes question Helane Cowen. from

Helane Becker

know going? really who, maybe has nice it the haven't been been but and a stadium. referenced invested does been about was been I or revenue the see Stadium actually of return and like kind but sure it's you see wondering cost so. and capital? able you where the not so And in, there yet, benefit it to month far the track And -- what So it determine maybe? What I'm the versus a that if look you been I'm it's I on have --

Scott DeAngelo

One You for of big bet. Thanks to earlier, Greg think and of been There's of down millions able I'll in million is we marketing That pull Scott about on do in of able And a of what constructs the we've that to is all take get it. to impressions, as you This mentioned how question. is basic terms and based have would ways. the is we to give bunch X numbers what viewers. able I DeAngelo. goofy spend us. to that into mentioned billions get translate $XX-or-more by anyway. you investment

that, what the take the way kind we and same the of awareness, do. mentioned the the see we cost is thing baseline side lift. one talk that's we we're But heightened Because of side, down. to I and able So everything on about lift revenue true And measure in the conversely, of sense of then e-mail value anything we marketing. of that

X.X%, now the that return way play and what our and them just that and open all get X.X% of X% e-mails, see click is. that ballgame through, say, to goes Let's people small to

million of to things all that is. more we people everything gets sand year's the across is hurdle the what so we the investment time, the as do And percentage we in And equal, point, that of rate a is bps the that what The of a meaning a funnel over roughly get measure then XX need several in X/XX well. to over website. line that us

it. So measure numbers, a of from about it that's view then point we construct how how specific without think we and

Helane Becker

of Okay. that question asked. helpful. Actually this sort then pretty I was know that's And

he breaking said get to other so are the what AXXXs. I about really are equal follow-up was they than answer question, Maury up, my maybe For rates didn't lease AXXXs for on but

I would acquiring aircraft. aircraft any leased above think at as looking I maybe can would there, what's aircraft? you bring more owned you Are make the mean, that sense at end would the owned than are year? as looking bringing referenced as or aircraft on on So where you already was them you XXX -- aircraft leased that

Gregory Anderson

the just and then who quick is heads up at the Treasurer most -- looking This sense he's heads the Robert what in best way and it is I'll acquisition makes it off is The kick Maybe our Neal room team. real Greg. our and we're fleet economics.

alluding So the it aircraft replace and up it sense out. if -- looking on almost We're if or getting twosies we existing there have don't if at B.J, We coming But out strong well. rates turn retirement the deals he Maury put with where to what age makes there's that pay add make type at of -- color call we're near mortgage kind me to side. onesies up at yes, either looking -- they're I has was that are like to see We're think -- the sense. or so thing. that, Maury maintenance it not on reverse upfront. lease deals capital going anything events that is get to can But coming they're they're rates to really in just back-end, to as and let then if a over heavy sorry,

Robert Neal

Yes.

But that. own our term, XX seen benefit. months, think the over lease want end it's good and bit know probably opportunity other the little we've folks that's from most there's with at of we of I expiries both. the a think really I natural some the to day, carriers near I where for aircraft work and next probably most we mean

Scott Sheldon

just he you to, was lease XXX of market a that what correct, to how you point with XXX. an saying than idea cost on on the was have so is, ownership rate deals give a data Maury What less was a is just the that seeing we he saying, are referring what that's

Helane Becker

more Okay. makes That sense.

Operator

Maury I'd the for time Gallagher for back questions. the have closing all over to That's like to we remarks. turn call

Maurice Gallagher

Have your Appreciate good very you and inputs, all you Thank see again another a week. we'll much. days. in XX

Operator

does Ladies conclude conference. and the gentlemen, this

You day. may now disconnect. Everyone, have a great

Allegiant Travel (ALGT) 28 Oct 202020 Q3 Earnings call transcript