Allegiant earnings solid; US Airways trims losses

By Richard N. Velotta (contact), In Business reporter

Fri, Oct 30, 2009 (3 a.m.)

The parent company of a Las Vegas-based airline continues to roll despite challenging the recession, while another, the second busiest at McCarran International Airport, narrowed its earnings losses.

Allegiant Travel Co., parent of Allegiant Air, reported earnings of $13.8 million, 69 cents a share, on revenue of $133.1 million for the third quarter, which ended Sept. 30. That compared with $4.9 million, 24 cents a share, on revenue of $116.9 million for the same period a year earlier.

“We are very pleased to report these very strong results in not only our historically weakest quarter, but also in what has been an exceptionally trying economic environment,” Maurice Gallagher, chairman and CEO of Allegiant, said in a statement.

Gallagher said the company had a record third-quarter operating margin of 16 percent.

Although Allegiant’s loads were off from its extraordinary 93.8 percent in 2008’s third quarter, it still hit 89.9 percent, one of the highest levels in the industry.

“Looking forward, we are cautiously optimistic that better times are in the offing,” Gallagher said. “Scheduled fares, both air fare and ancillary per passenger, bounced off their lows of the second quarter. It’s a little early to declare victory, but we certainly like the trend, which is continuing into the fourth quarter.”

The airline’s average fare dipped from $86.32 in 2008’s third quarter to $67.09 in 2009 and ancillary revenue — the add-ons airlines charge for services such as baggage and preferential seating — increased 3.3 percent to an average $33.35 per passenger.

Allegiant is planning several new routes for the fourth quarter, but none is to and from Las Vegas. The airline has 40 routes to and from Las Vegas, two more than it had at the end of 2008’s third quarter. It has 127 total routes using its low-fare leisure model in Orlando, Fla.; Tampa Bay, Fla.; Phoenix-Mesa; Los Angeles; and Fort Lauderdale, Fla., 29 more than it had a year earlier with most of the growth because of the opening of flights to and from Los Angeles International Airport.

In a separate release, the company announced that its longtime chief financial officer and managing director of planning, Andrew Levy, has been promoted to presiden. He will retain his CFO title.

Levy has been credited with much of Allegiant’s growth strategy since 2001.

Meanwhile, Tempe, Ariz.-based US Airways Group Inc., which operates US Airways, reported a net loss of $80 million, 60 cents a share, on revenue of $2.72 billion for its third quarter that ended Sept. 30. That compares with a loss of $866 million, $8.46 a share, on revenue of $3.26 billion a year earlier.

US Airways Chairman and CEO Doug Parker said the third-quarter results “reflect the soft but improving economic environment.

“Our team is doing an excellent job of managing through this downturn, including reporting industry-leading operations performance, maintaining diligent cost control and delivering meaningful a la carte revenue generation,” Parker said. “As we look out at the improving demand environment for both business and leisure travel, US Airways is in an excellent position to capitalize on the recovering economy.”

Most of the airline’s strategy focuses on its broad network with little effect on Las Vegas.

US Airways announced a transaction with Delta Air Lines to swap takeoff and landing slots at Ronald Reagan Washington National Airport and New York’s LaGuardia Airport. US Airways will add Washington slots and the rights to expand routes to Sao Paulo and Tokyo.

The airline also launched nonstop flights to Tel Aviv from its Philadelphia gateway and seasonal service to Montego Bay, Jamaica, from its Phoenix hub.

US Airways averages about 80 daily flights to and from McCarran, half of what it had in 2007.