Allegiant Airlines sees rise in 2Q profit

By Richard N. Velotta (contact)

Published Tuesday, July 21, 2009 | 7:07 p.m.

Updated Tuesday, July 21, 2009 | 7:56 p.m.

+ By passenger volume, Allegiant is the No. 7 carrier at McCarran International Airport.

+ Allegiant opened a new leisure operation on May 1 with service between Los Angeles International Airport and 13 destinations.

+ “Our Southern California routes are off to a great start, with July booked load factors now running ahead of our scheduled average.” – Maurice Gallagher, CEO

- Fuel prices were up 13 percent for the quarter and the company’s ancillary income per passenger fell slightly from last quarter, but was still ahead of the second quarter of 2008 by 16.6 percent.

+ The average fare on Allegiant dropped 12.4 percent during the quarter to $97.52.

+ Allegiant maintained an average number of passengers per departure at133.

+ The company reported a 52-week stock price high of $57.52 on April 22.

+ July 21 stock price: $45.80.

+++++

The parent company of Las Vegas-based Allegiant Air continued its torrid earnings pace, reporting a double-digit percentage increase in revenue and earnings that were more than nine times greater than in the same quarter a year ago.

After markets closed today, Allegiant Travel Co. reported second-quarter earnings of $23.9 million, $1.17 a share, on revenue of $148 million for the period ending June 30. That compares with earnings of $2.6 million, 13 cents a share, on revenue of $131.6 million for the same period in 2008. Company officials have scheduled a conference call to discuss results Wednesday morning.

“We had another very good quarter, our third highly profitable quarter in a row,” Allegiant CEO Maurice Gallagher said in a release issued with the earnings results. “In these extremely difficult times when our industry has substantially reduced its operations and seen record declines in unit revenue, we are pleased to report these quality numbers.”

Growth was the key to Allegiant’s success. The company opened a new Southern California base offering seven new routes from Los Angeles International Airport on May 1. Gallagher said the Southern California routes are off to a great start with load factors running ahead of projections.

“This further diversifies our exposure to regional economies and offers more protection to us in these uncertain times,” Gallagher said.

In addition, Allegiant added a new secondary leisure market, Myrtle Beach, S.C., and has increased the number of small cities served from 51 to 60 in the past year. Allegiant now has 134 routes, up from 100 a year ago and three of those involve new routes to and from Las Vegas.

The company, which also does contract flying on charter routes, inaugurated its new Cuban family charter program in the second quarter, operating between Miami and four Cuban cities.

The company’s expansion offset declines in airfare revenue from the first quarter due to price cuts brought upon by the weak economy. Allegiant’s average fare on scheduled service declined 22 percent to $65.16 per ticket, not including ancillary revenue. Including ancillary revenue – the money the airline collects for beverages, seat selections, checking luggage and other concession sales – the average fare was $97.52, down 12.4 percent from last year.

Fuel costs also increased by 13 percent during the quarter, but other airlines have reported the price of oil declining heading into the third quarter. Allegiant has no fuel hedging program.

But the airline had an extraordinary load factor of 90.8 percent for the quarter, up 0.3 percentage points from the second quarter of 2008.

Growth at Allegiant doesn’t appear to be ending anytime soon as the airline announced it plans to have 46 MD-80 twin-engine jets in its fleet by the end of the year, up from the 43 it presently operates. The company announced the acquisition from Japan Airlines of seven jets, which will be parted out to bolster the company’s maintenance inventory.

The company also said it expects third-quarter departure growth of about 30 percent, fourth-quarter departure growth of about 20 percent and full-year growth of at least 20 percent over 2008 by the end of the year.