ALGT Q2 2023 Earnings

Call Details

• Call Title: Allegiant Travel Company Q2 2023 Earnings Call
• Date: August 2, 2023 at 4:30 PM UTC
• Management Team:
  • Sherry Wilson (Managing Director of Investor Relations)
  • John Redmond (Chief Executive Officer)
  • Greg Anderson (President)
  • Scott DeAngelo (EVP and Chief Marketing Officer)
  • Drew Wells (SVP and Chief Revenue Officer)
  • Robert Neal (SVP and Chief Financial Officer)
  • Kenny Wilper (Chief Operating Officer)

Call Summary

Financial Performance

• Total operating revenue for Q2 was $684M, representing growth of 8.6% year over year on system ASM growth of 1.3%.
• Consolidated adjusted net income for the quarter was $76.9M, which produced adjusted EPS of $4.35 and was described as in line with 2019 EPS levels.
• Airline operating margin was reported at 18.6% by the CFO and 18% by the CEO for Q2, among the highest in the industry for the quarter.
• TRASM for the quarter was 13.64 cents and increased year over year by 7.5%, which the company noted bested any previous second quarter by 0.5%.
• Ancillary revenue exceeded $70 per passenger in Q2, and yield and ancillary products each contributed roughly $5 incremental per passenger versus Q2 2022.
• Non-fuel unit cost increased 12.9% year over year, with four percentage points driven by pilot payroll accruals and frontline labor cost increases and roughly three points related to lower productivity.

Guidance

• Full-year airline EPS midpoint was increased by $0.75 to $11.75, with the CFO attributing the increase fully to a $0.10 decrease in full-year fuel cost assumptions to $2.90 per gallon from $3.00.
• Consolidated full-year adjusted EPS, including Sunseeker Resort impact, is expected to be roughly $10.50 at the midpoint after a $1.25 per share loss related to Sunseeker.
• The company expects TRASM for the last nine months to be up mid-single-digits, though management narrowed that to the lower side of mid-single-digits.
• Full-year airline CapEx is expected to be roughly $640M, with the CFO noting a four-year CapEx guide implies just under $500M in aircraft, engine, and induction-related spend this year.
• Scheduled service ASMs for Q3 are expected to be very slightly negative, with full-year system ASMs still guided to be flat to up 3%.
• Navitare integration was delayed to late August, and the anticipated ancillary lift was pushed out of Q3 and is expected to contribute starting in Q4.