Las Vegas Sun

March 28, 2024

Allegiant increases profit, but notes summer slowdown in travel

  3Q 2010 3Q 2009 % change 2Q 2010
Revenue $163.6 million $133,1 million 22.9% $168.4 million
Earnings $13.2 million $13.8 million -4.5% $17.6 million
Earnings per share 67 cents 68 cents -1.5% 87 cents

The highlights

  • + By passenger volume, Allegiant is the No. 6 carrier at McCarran International Airport.
  • - Allegiant now serves 68 cities, one fewer than at the end of September 2009. It has 40 Las Vegas routes, the same as a year earlier.
  • + The company reported a 52-week stock price high of $58.21 on March 24.
  • + Oct. 27 stock price: $43.35.

Las Vegas-based Allegiant Travel Co., the parent company of Allegiant Air, reported its second-best third quarter since 2005 and its 31st consecutive profitable quarter, but still didn’t meet executives’ expectations on revenue projections because of a late-summer dip in leisure travel and higher-than-expected fuel costs.

Increased capacity and aircraft helped boost Allegiant’s revenue to $163.6 million for the quarter, 22.9 percent ahead of the $133.1 million reported in the third quarter of 2009.

But the travel slowdown in what traditionally is a weak quarter and the 23 percent year-over-year increase in fuel costs to what was calculated as $7.39 per passenger resulted in a decline in net income.

The company reported $13.2 million, 67 cents a share, in net income – which beat analysts’ estimates by 3 cents a share – compared with $13.8 million, 68 cents a share, in the same quarter in 2009.

“This summer we felt the effects of the slowdown in the general economy, particularly at the consumer level, Allegiant Chairman and CEO Maurice Gallagher said in a release announcing earnings. “Unlike business-oriented carriers, this slowdown, combined with our substantial growth, led to smaller unit revenue increases than anticipated. As we have done in the past, we have reduced capacity in the coming quarters to allow us to push unit revenues accordingly.”

Allegiant plans to continue its growth plan, but decelerate it, adding five cities, which will push the company past 70 destinations nationwide.

But one of the strategies the company is switching gears on will be its operation in Orlando. Since May 2005, the company had flights to and from both Orlando Sanford International Airport and the busier Orlando International Airport. The company announced Tuesday that it will move flights to and from 10 destinations from Orlando International back to the Sanford airport by Feb. 4.

While operations at Orlando International gave the airline more visibility, the consolidation will cut costs for the company, Gallagher said.

Andrew Levy, president of Allegiant Travel, said the company is continuing to benefit from ancillary revenue with third-quarter sales up 32.2 percent to $6.7 million. Ancillary revenue is the add-ons that passengers choose to buy – baggage fees, preferred seating, food and beverage and tickets to entertainment.

Ancillary revenue represents 29.6 percent of the company’s gross revenue and accounted for $4.52 of every ticket purchased by an Allegiant customer.

Other highlights from the quarter:

* The company signed a three-year charter deal with Peppermill Resorts, Wendover, to fly charter flights from around the country there, dedicating one MD-83 jet for the community.

* Secured $14 million in debt financing for two Boeing 757 jets acquired earlier in the year for use in flights between the West Coast and Hawaii.

* Announced plans to reconfigure its MD-80 jets to hold 166 seats up from the current 150. The reconfigurations will occur over several months.

* Entered a new three-year agreement with Alamo Rent A Car, a subsidiary of Enterprise Holdings, to be the exclusive car rental partner of Allegiant through 2013.

Join the Discussion:

Check this out for a full explanation of our conversion to the LiveFyre commenting system and instructions on how to sign up for an account.

Full comments policy