Allegiant reports net income of $88.5 million in the second quarter

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Allegiant Air Airbus A320-214 WL N247NV (msn 7704) LAS (Jay Selman). Image: 404293.

Allegiant Travel Company (Allegiant Air) reported the following financial results for the second quarter 2023, as well as comparisons to the prior year:

Consolidated	Three Months Ended June 30,		Percent Change
(unaudited) (in millions, except per share amounts)	2023	2022	YoY
Total operating revenue	$ 683.8	$ 629.8	8.6 %
Total operating expense	550.4	603.7	(8.8) %
Operating income	133.4	26.1	411.1 %
Income before income taxes	116.3	5.8	NM
Net income	88.5	4.4	NM
Diluted earnings per share	4.80	0.24	NM
Sunseeker special charges, net of recovery⁽⁵⁾	(11.2)	—	NM
Diluted earnings per share excluding recovery of Sunseeker special charges^(1)(4)(5)	4.35	0.24	NM

Airline only	Three Months Ended June 30,		Percent Change⁽²⁾
(unaudited) (in millions, except per share amounts)	2023	2022	YoY
Airline operating revenue ⁽¹⁾	$ 683.8	$ 629.8	8.6 %
Airline operating expense ⁽¹⁾	556.3	602.0	(7.6) %
Airline operating income ⁽¹⁾	127.5	27.9	357.0 %
Airline income before income taxes ⁽¹⁾	110.4	10.4	961.5 %
Airline net income ⁽¹⁾⁽³⁾	84.2	7.7	993.5 %
Airline operating margin	18.6 %	4.4 %	14.2 %
Airline diluted earnings per share⁽¹⁾	4.57	0.43	962.8 %

Consolidated	Six Months Ended June 30,		Percent Change
(unaudited) (in millions, except per share amounts)	2023	2022	YoY
Total operating revenue	$ 1,333.5	$ 1,130.0	18.0 %
Total operating expense	1,105.2	1,096.6	0.8
Operating income	228.3	33.4	583.5
Income (loss) before income taxes	190.8	(4.7)	NM
Net income (loss)	144.6	(3.5)	NM
Diluted earnings (loss) per share	7.84	(0.20)	NM
Sunseeker special charges, net of recovery⁽⁵⁾	(12.8)	—	NM
Diluted earnings per share excluding recovery of Sunseeker special charges^(1)(4)(5)	7.35	(0.20)	NM

Airline only	Six Months Ended June 30,		Percent Change⁽²⁾
(unaudited) (in millions, except per share amounts)	2023	2022	YoY
Airline operating revenue ⁽¹⁾	$ 1,333.5	$ 1,130.0	18.0 %
Airline operating expense ⁽¹⁾	1,108.4	1,091.9	1.5
Airline operating income ⁽¹⁾	225.1	38.1	490.8
Airline income before income taxes ⁽¹⁾	189.2	4.7	NM
Airline net income ⁽¹⁾⁽³⁾	144.2	3.7	NM
Airline operating margin	16.9 %	3.4 %	13.5
Airline diluted earnings per share⁽¹⁾	7.81	0.20	NM


⁽¹⁾	Denotes a non-GAAP financial measure. Refer to the Non-GAAP Presentation section within this document for further information and for calculation of per share figures.
⁽²⁾	Except Airline Operating Margin, which is percentage point change.
⁽³⁾	Utilizing an effective tax rate of 23.7% and 23.8% for quarter-to-date and year-to-date 2023 and 25.4% and 21.4% for quarter-to-date and year-to-date 2022, respectively.
⁽⁴⁾	Adjusted to exclude insurance recoveries from property damage to Sunseeker Resort.
⁽⁵⁾	In 2022, we recognized the full amount of estimated property damage to Sunseeker Resort due to Hurricane Ian and other insured events less the amount of recognized insurance recoveries through the end of the applicable period. The negative amount of special charges we are reporting in 2023 reflects further insurance recoveries either received or determined to be probable of collection. We sometimes refer to this negative amount as “specials” in this earnings release.
^NM	Not meaningful

“Second quarter diluted earnings per share, excluding special items was $4.35, a more than six-fold improvement over the second quarter of 2022,” stated John Redmond, CEO of Allegiant Travel Company. “These outstanding results are attributable to the hard work of our team members during this peak summer travel period. The team delivered industry-leading operational performance with a controllable completion of 99.7 percent for the quarter.”We recognized a record $684 million in total operating revenue for the second quarter, evidence of a robust leisure demand environment. Capacity increased slightly, up 1.3 percent year-over-year, with TRASM increasing 7.5 percent over the second quarter of 2022. During the second quarter, total ancillary per passenger was $71.75, an 8.6 percent increase over the prior year. This strength is driven by early success with the Allegiant Extra product and sustained growth with our Allegiant Allways cobrand credit card. Our direct-to-consumer approach helps underpin our ability to enhance revenues.”As we head into the second half of the year, our focus remains on three primary objectives. First, we will make progress on outstanding labor contracts that our team members are proud to support. Second, we will continue delivering a solid operation. Finally, we are only a few short months from the long awaited opening of our world-class, Sunseeker Resort, in Port Charlotte, Florida. Construction is entering the final stages, and the operations teams are beginning to hire personnel in earnest. We remain on track to open the property mid-October.”I could not be happier with the success the team delivered this quarter. Achieving industry-leading operational performance in the backdrop of a challenging operational environment is admirable. This operational success has been the catalyst for the strong financial performance delivered year-to-date.”Second Quarter 2023 Results and Highlights

Income before income tax, excluding specials⁽¹⁾⁽³⁾ of $105.1 million, yielding a pre-tax margin of 15.4 percent
- Airline-only income before income tax⁽¹⁾of $110.4 million, yielding a pre-tax margin of 16.1 percent
Operating income, excluding specials⁽¹⁾⁽³⁾ of $122.2 million, yielding an operating margin of 17.9 percent
- Airline-only operating income⁽¹⁾of $127.5 million, yielding an airline-only operating margin of 18.6 percent
Consolidated EBITDA, excluding specials⁽¹⁾⁽³⁾ of $176.1 million, yielding an EBITDA margin of 25.8 percent
- Airline-only EBITDA⁽¹⁾ of $181.3 million, a 26.5 percent margin
Total operating revenue was $683.8 million, up 8.6 percent over the prior year and the highest quarterly total in company history
- Total fixed fee contracts revenue of $11.7 million, up 31.6 percent year-over-year
- TRASM⁽²⁾ of 13.64 cents, up 7.5 percent year-over-year on scheduled service capacity increase of 0.7 percent year-over-year
Total average fare of $142.31, up 8.1 percent year-over-year
- Total average ancillary fare of $71.75, up 8.6 percent year-over-year
Surpassed 600 thousand Allways rewards credit card holders during the quarter
- Received $29 million in remuneration during the quarter
- Transitioning our cobrand credit card network from Mastercard to Visa
  - Core program and benefits will remain the same, but this transition is expected to boost program revenue through higher levels of new cardholders and increased cardholder spend
Allways Rewards program enrolled 570 thousand new members during the quarter, bringing total members to 16.5 million
Paid out over $12 million to our airline team members in profit share for the first half of the year
Airline-only Operating CASM, excluding fuel, of 7.79 cents, up 12.9 percent year-over-year
- Includes $12 million in incremental cost related to pilot retention bonuses
Allegiant flight dispatchers ratified contract with International Brotherhood of Teamsters, extending the contract through May 31, 2026
In early July, expanded the network by announcing six new routes
Pledged $1 million to Boys & Girls Clubs of America to develop and launch a new program that will inspire children to choose future careers in aviation

⁽¹⁾	Denotes a non-GAAP financial measure. Refer to the Non-GAAP Presentation section within this document for further information and for calculation of per share figures.
⁽²⁾	TRASM represents total passenger revenue per scheduled service available seat mile.
⁽³⁾	In 2022, we recognized the full amount of estimated property damage to Sunseeker Resort due to Hurricane Ian and other insured events less the amount of recognized insurance recoveries through the end of the applicable period. The negative amount of special charges we are reporting in 2023 reflects further insurance recoveries either received or determined to be probable of collection. We sometimes refer to this negative amount as “specials” in this earnings release.

Balance Sheet, Cash and Liquidity

Total available liquidity at June 30, 2023 was $1.4 billion, which included $1.0 billion in cash and investments, and $356.2 million in undrawn revolving credit facilities and PDP facilities
$131.2 million in cash from operations during the second quarter 2023
Total debt at June 30, 2023 was $2.2 billion
- Net debt at June 30, 2023 was $1.1 billion
Debt principal payments of $97.9 million during the second quarter
- Includes $61 million prepayment of an aircraft-secured facility during the quarter
Declared annual cash dividend in the amount of $2.40 per share payable $0.60 per quarter with the first dividend to be paid September 1, 2023 to shareholders of record on August 15, 2023
Air traffic liability at June 30, 2023 was $411.1 million

Airline Capital Expenditures

Second quarter capital expenditures of $176 million, which included $147 million for aircraft purchases and inductions, pre-delivery deposits, and other related costs, and $29 million in other airline capital expenditures
- Second quarter deferred heavy maintenance spend was $22 million

Sunseeker Resort Charlotte Harbor

Total capital expenditures⁽¹⁾as of June 30, 2023 were $611 million
- Second quarter capital expenditures⁽¹⁾ were $92 million
Previously recorded special charges were reduced by $11.3 million for recognized insurance recoveries related to outstanding insurance claims at Sunseeker Resort


⁽¹⁾	Total capital expenditures is inclusive of Sunseeker Resort, Aileron Golf Club, remediation work related to insurance events, accrued expenditures not yet paid and spend included as part of the COVID impairment. Capitalized interest, operating expenses, special charges related to COVID, and estimated losses related to insurance events have been excluded from this total.

Guidance, subject to revision

*Full-year 2023 guidance*	Previous	Current

System ASMs – year over year change	0 to 3%	0 to 3%
Scheduled service ASMs – year over year change	0 to 3%	0 to 3%

Fuel cost per gallon	$ 3.00	$ 2.90
Available seat miles (ASMs)/gallon	~84	~84
Depreciation expense (millions)	$230 to $240	$230 to $235
Interest expense (millions)	$150 to $160	$145 to $150
Capitalized interest⁽¹⁾ (millions)	($35) to ($45)	($30) to ($35)
Interest income (millions)	$35 to $45	$40 to $45
Earnings per share – airline only⁽²⁾	$9.00 – $13.00	$10.50 – $13.00
Loss per share – Sunseeker ⁽³⁾	~($1.25)	~($1.25)

*Airline CAPEX*
Aircraft, engines, induction costs, and pre-delivery deposits (millions)⁽⁴⁾	$550 to $570	$490 to $500
Capitalized deferred heavy maintenance (millions)	$50 to $60	$60 to $70
Other airline capital expenditures (millions)	$130 to $150	$140 to $145

Recurring principal payments (millions)⁽⁵⁾	$175 to $185	$210 to $215
*Sunseeker Resort Charlotte Harbor Project (millions)*
Total projected capital expenditures ⁽⁶⁾	$695	$695
Capital expenditures funded or expected to be funded by Allegiant		$345
Project debt incurred through June 30, 2023		$350


⁽¹⁾	^{Includes capitalized interest related to Sunseeker as well as on pre-delivery deposits on new aircraft.}
⁽²⁾	^{Earnings per share calculation is airline only. It includes accruals for increases in pilot and flight attendant compensation beginning in May. Actual results will differ based on economic terms agreed upon and the timing of the collective bargaining agreements. These differences may be material.}
⁽³⁾	^{Excludes recoveries that may be received related to business interruption insurance claim.}
⁽⁴⁾	^{Excludes capitalized interest related to pre-delivery deposits on new aircraft.}
⁽⁵⁾	^{Includes $61 million related to aircraft debt prepayment.}
⁽⁶⁾	^{Total projected capital expenditures does not reflect the impairment or special charges related to COVID or insurance claims. Excludes amounts to remediate physical damage to the property resulting from Hurricane Ian, or other subsequent insurance events.}

Aircraft Fleet Plan by End of Period



Aircraft – (seats per AC)	1Q23	2Q23	3Q23	YE23
A319 (156 seats)	35	35	35	35
A320 (177 seats)	19	19	19	19
A320 (180-186 seats)	70	72	73	73
Total	124	126	127	127

The table above is provided based on the company’s current plans and is subject to change. The numbers exclude aircraft expected to be delivered before the end of 2023 for revenue service beginning in 2024.

Top Copyright Photo: Allegiant Air Airbus A320-214 WL N247NV (msn 7704) LAS (Jay Selman). Image: 404293.

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