Allegiant Airlines financial information
| 1Q 2011 | 1Q 2010 | % change | 4Q 2010 | |
|---|---|---|---|---|
| Revenue | $193.2 million | $169.6 million | +13.9% | $162 million |
| Earnings | $17.2 million | $22.6 million | -24.1 | $12.4 million |
| Earnings per share | 89 cents | $1.12 | -20.5% | 64 cents |
+ By passenger volume, Allegiant is the No. 7 carrier at McCarran International Airport.
+ Allegiant now serves 45 Las Vegas routes compared with 40 a year earlier with 140 flights a week.
+ April 27 stock price: $43.17 (52-week high $56.28 on May 26).
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Earnings declined for Las Vegas-based Allegiant Travel Co., the parent company of Allegiant Air, which recorded its 33rd straight profitable quarter and saw revenue increase 13.9 percent for the three months that ended March 31.
Rising fuel costs were the biggest culprit for weaker earnings with the leisure-based airline earning $17.2 million, 89 cents a share, on revenue of $193.2 million compared with $22.6 million, $1.12 a share, on revenue of $169.6 million in the same quarter a year earlier.
Allegiant also closely monitored capacity enabling the company to move quickly to trim unprofitable routes.
“Our current capacity plans remain very constrained, all in an effort to manage through this period of rapid fuel price escalation,” Allegiant Chairman and CEO Maurice Gallagher said in a release accompanying the announcement of earnings today. “Once we believe fuel price increases begin to moderate, we expect to return our rate of growth to our historic norms.”
Fuel costs soared 14 percent from the fourth quarter of 2010 to the first quarter of 2011. The company stayed profitable by increasing fares by 9.3 percent and seeing a 33 percent increase in third-party ancillary revenue. The average total fare of $125 per passenger is the highest Allegiant has ever had.
Improvement in ancillary revenue was attributed to increased sales of hotel and transportation products.
Allegiant has 45 Las Vegas routes and by passenger counts ranks as the seventh busiest air carrier at McCarran International Airport.
For the quarter, Allegiant had an 92.9 percent load factor – the percentage of paying passengers on flights – 1.2 percentage points higher than in the first quarter of 2010.
Allegiant President Andrew Levy said he expects revenue to increase in the second quarter after advanced bookings indicate April passenger revenue per available seat mile would increase by between 22 percent and 24 percent.
In today’s conference call with investors, Gallagher and Levy said the company has acquired four of the six Boeing 757 jets the company plans to acquire to begin service next year to Hawaii. The company also is in the midst of adding seats on every plane in its fleet of 51 MD-80 jets.
Gallagher said the company is still planning to have at least one of the 757s on its operating certificate by summer so that pilots can begin training on the new aircraft type. Levy described the 757 acquisitions as “ongoing and on schedule.”
Company officials continued to keep details on routes to be served by the 757s close to the vest. The airline announced last year that it would fly to Hawaii from the West Coast with the planes, but hasn’t given any details about what cities would be served.
Gallagher also has said that it would take 12 months to complete the modification of the MD-80 fleet, adding 16 seats per plane to have 166-passenger aircraft.
“It’s a very large project that’s moving along,” Gallagher said on the conference call. “There are a lot of engineering issues. It turns out the MD-80 is not a really uniform aircraft,” with different planes acquired having different seat configurations.
Allegiant also announced that it has modified its engine maintenance philosophy, resulting in higher operating costs but lower capital expenditures because the company will have more engine overhauls and fewer engine replacements.
“In recent years, we overhauled very few of our engines and instead replaced most engines when needing repair with engines acquired in the secondary market. This approach resulted in lower operating expenses but higher capital expenditures,” said Scott Sheldon, Allegiant’s senior vice president and chief financial officer.
“In late 2010, we decided to alter our approach and now expect to manage our engines through a combination of performing service overhauls on some units and purchasing engines to replace others. We expect to recognize expenses of between $20 million and $25 million in 2011 for the overhaul or repair of 30-35 MD-80 engines,” he said.
Allegiant executives also downplayed the significance of the growth of an Atlanta-based rival, Vision Air, which announced earlier this month that it would adopt a similar business model to Allegiant’s and begin flying between Las Vegas and Fort Walton Beach, Fla.
“We know what’s out there in the public domain, but we’re not really concerned about what they’re doing or what anybody else is doing,” Levy said. “There are a lot of markets we’re going to go after in the West if they’re on our list. Right now, (Vision) doesn’t register strong on our radar.”