--12-31FALSE0001362468September 30,
20222022Q30.0010.001Recent Accounting Pronouncements
The table below summarizes special charges recorded during the
three and nine months ended September 30, 2022, and
2021.
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Three Months Ended September 30, |
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(in thousands) |
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2022 |
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2021 |
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Operating |
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$ |
142 |
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$ |
1,738 |
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Non-operating |
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— |
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— |
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Total special charges |
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$ |
142 |
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$ |
1,738 |
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1421,738——1421,7380.10.1one1.71.2twothree0.58500013624682022-01-012022-09-3000013624682022-10-24xbrli:shares00013624682022-09-30iso4217:USD00013624682021-12-31iso4217:USDxbrli:shares00013624682022-07-012022-09-3000013624682021-07-012021-09-3000013624682021-01-012021-09-300001362468us-gaap:CommonStockMember2022-06-300001362468us-gaap:AdditionalPaidInCapitalMember2022-06-300001362468us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300001362468us-gaap:RetainedEarningsMember2022-06-300001362468us-gaap:TreasuryStockMember2022-06-3000013624682022-06-300001362468us-gaap:CommonStockMember2022-07-012022-09-300001362468us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300001362468us-gaap:ParentMember2022-07-012022-09-300001362468us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300001362468us-gaap:RetainedEarningsMember2022-07-012022-09-300001362468us-gaap:CommonStockMember2022-09-300001362468us-gaap:AdditionalPaidInCapitalMember2022-09-300001362468us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300001362468us-gaap:RetainedEarningsMember2022-09-300001362468us-gaap:TreasuryStockMember2022-09-300001362468us-gaap:CommonStockMember2021-12-310001362468us-gaap:AdditionalPaidInCapitalMember2021-12-310001362468us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001362468us-gaap:RetainedEarningsMember2021-12-310001362468us-gaap:TreasuryStockMember2021-12-310001362468us-gaap:CommonStockMember2022-01-012022-09-300001362468us-gaap:AdditionalPaidInCapitalMember2022-01-012022-09-300001362468us-gaap:ParentMember2022-01-012022-09-300001362468us-gaap:TreasuryStockMember2022-01-012022-09-300001362468us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-09-300001362468us-gaap:RetainedEarningsMember2022-01-012022-09-300001362468us-gaap:CommonStockMember2021-06-300001362468us-gaap:AdditionalPaidInCapitalMember2021-06-300001362468us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300001362468us-gaap:RetainedEarningsMember2021-06-300001362468us-gaap:TreasuryStockMember2021-06-3000013624682021-06-300001362468us-gaap:CommonStockMember2021-07-012021-09-300001362468us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300001362468us-gaap:ParentMember2021-07-012021-09-300001362468us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300001362468us-gaap:RetainedEarningsMember2021-07-012021-09-300001362468us-gaap:CommonStockMember2021-09-300001362468us-gaap:AdditionalPaidInCapitalMember2021-09-300001362468us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-300001362468us-gaap:RetainedEarningsMember2021-09-300001362468us-gaap:TreasuryStockMember2021-09-3000013624682021-09-300001362468us-gaap:CommonStockMember2020-12-310001362468us-gaap:AdditionalPaidInCapitalMember2020-12-310001362468us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001362468us-gaap:RetainedEarningsMember2020-12-310001362468us-gaap:TreasuryStockMember2020-12-3100013624682020-12-310001362468us-gaap:CommonStockMember2021-01-012021-09-300001362468us-gaap:AdditionalPaidInCapitalMember2021-01-012021-09-300001362468us-gaap:ParentMember2021-01-012021-09-300001362468algt:StockOfferingMemberus-gaap:CommonStockMember2021-01-012021-09-300001362468us-gaap:RetainedEarningsMember2021-01-012021-09-300001362468us-gaap:TreasuryStockMember2021-01-012021-09-300001362468us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-09-300001362468algt:HurricaneIanMember2022-01-012022-09-30algt:Aircraft00013624682021-01-012021-03-310001362468algt:AirbusA320AircraftSeriesMember2021-01-012021-03-31algt:engine0001362468algt:ScheduledServiceRevenueMember2022-07-012022-09-300001362468algt:ScheduledServiceRevenueMember2021-07-012021-09-300001362468algt:ScheduledServiceRevenueMember2022-01-012022-09-300001362468algt:ScheduledServiceRevenueMember2021-01-012021-09-300001362468algt:AirrelatedrevenueMember2022-07-012022-09-300001362468algt:AirrelatedrevenueMember2021-07-012021-09-300001362468algt:AirrelatedrevenueMember2022-01-012022-09-300001362468algt:AirrelatedrevenueMember2021-01-012021-09-300001362468algt:CobrandRevenueMember2022-07-012022-09-300001362468algt:CobrandRevenueMember2021-07-012021-09-300001362468algt:CobrandRevenueMember2022-01-012022-09-300001362468algt:CobrandRevenueMember2021-01-012021-09-30xbrli:pure00013624682022-01-012022-06-3000013624682020-04-012020-04-300001362468algt:FixedRateMember2022-09-300001362468algt:FixedRateMember2021-12-310001362468algt:VariableRateMember2022-09-300001362468algt:VariableRateMember2021-12-310001362468algt:SeniorSecuredNotesDue2027Memberus-gaap:SeniorNotesMember2022-08-310001362468algt:SeniorSecuredNotesDue2024Memberus-gaap:SeniorNotesMember2022-08-310001362468us-gaap:SeniorNotesMember2022-08-310001362468algt:MUFGBankLtdMemberus-gaap:RevolvingCreditFacilityMember2022-08-310001362468algt:MUFGBankLtdMemberus-gaap:RevolvingCreditFacilityMember2022-08-012022-08-310001362468algt:SeniorSecuredRevolvingLoanFacilityMemberalgt:BarclaysBankPLCMember2022-08-310001362468algt:Senior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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended September 30, 2022
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or |
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☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______ to_______
Commission File Number
001-33166
Allegiant Travel Company
(Exact Name of Registrant as Specified in Its Charter)
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Nevada |
20-4745737 |
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(State or Other Jurisdiction of Incorporation or
Organization) |
(IRS Employer Identification No.) |
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1201 North Town Center Drive |
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Las Vegas, |
Nevada |
89144 |
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(Address of Principal Executive Offices) |
(Zip Code) |
Registrant’s Telephone Number, Including Area Code:
(702) 851-7300
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class |
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Trading Symbol |
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Name of each exchange on which registered |
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Common stock, par value $0.001 |
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ALGT |
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NASDAQ Stock Market |
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes
☒ No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
or a smaller reporting company. See definitions of “large
accelerated filer,” “accelerated filer,” and “smaller reporting
company” in Rule 12b-2 of the Exchange Act. (Check
one):
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Large accelerated filer |
☒ |
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Accelerated filer |
☐ |
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Non-accelerated filer |
☐ |
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Smaller reporting company |
☐ |
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Emerging growth company |
☐ |
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If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act. ☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange
Act). Yes ☐
No
☒
As of October 24, 2022, the registrant had 18,398,569 shares
of common stock, $0.001 par value per share,
outstanding.
ALLEGIANT TRAVEL COMPANY
FORM 10-Q
TABLE OF CONTENTS
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PART I. |
FINANCIAL INFORMATION |
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ITEM 1. |
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ITEM 2. |
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ITEM 3. |
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ITEM 4. |
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PART II. |
OTHER INFORMATION |
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ITEM 1. |
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ITEM 1A. |
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ITEM 2. |
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ITEM 3. |
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ITEM 4. |
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ITEM 5. |
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ITEM 6. |
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|
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
ALLEGIANT TRAVEL COMPANY
CONSOLIDATED BALANCE SHEETS
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2022 |
|
December 31, 2021 |
|
(unaudited) |
|
|
|
CURRENT ASSETS |
|
|
|
|
Cash and cash equivalents |
$ |
240,528 |
|
|
$ |
363,378 |
|
|
Restricted cash |
30,671 |
|
|
37,323 |
|
|
Short-term investments |
761,362 |
|
|
819,478 |
|
|
Accounts receivable |
79,150 |
|
|
62,659 |
|
|
Expendable parts, supplies and fuel, net |
39,070 |
|
|
27,500 |
|
|
Prepaid expenses and other current assets |
46,772 |
|
|
28,073 |
|
|
|
|
|
|
TOTAL CURRENT ASSETS |
1,197,553 |
|
|
1,338,411 |
|
|
Property and equipment, net |
2,738,516 |
|
|
2,259,507 |
|
|
Long-term investments |
— |
|
|
2,231 |
|
|
Deferred major maintenance, net |
148,719 |
|
|
146,850 |
|
|
Operating lease right-of-use assets, net |
116,471 |
|
|
130,087 |
|
|
Deposits and other assets |
209,705 |
|
|
113,987 |
|
|
TOTAL ASSETS: |
$ |
4,410,964 |
|
|
$ |
3,991,073 |
|
|
CURRENT LIABILITIES |
|
|
|
|
Accounts payable |
$ |
51,394 |
|
|
$ |
43,566 |
|
|
Accrued liabilities |
256,429 |
|
|
162,892 |
|
|
Current operating lease liabilities |
19,792 |
|
|
19,081 |
|
|
Air traffic liability |
429,924 |
|
|
307,453 |
|
|
Current maturities of long-term debt and finance lease obligations,
net of related costs |
152,550 |
|
|
130,053 |
|
|
TOTAL CURRENT LIABILITIES |
910,089 |
|
|
663,045 |
|
|
Long-term debt and finance lease obligations, net of current
maturities and related costs |
1,840,000 |
|
|
1,612,486 |
|
|
Deferred income taxes |
332,506 |
|
|
346,137 |
|
|
Noncurrent operating lease liabilities |
100,111 |
|
|
115,067 |
|
|
Other noncurrent liabilities |
39,285 |
|
|
30,786 |
|
|
TOTAL LIABILITIES: |
3,221,991 |
|
|
2,767,521 |
|
|
SHAREHOLDERS' EQUITY |
|
|
|
|
Common stock, par value $0.001
|
25 |
|
|
25 |
|
|
Treasury shares |
(633,332) |
|
|
(638,057) |
|
|
Additional paid in capital |
703,633 |
|
|
692,053 |
|
|
Accumulated other comprehensive income, net |
1,154 |
|
|
2,056 |
|
|
Retained earnings |
1,117,493 |
|
|
1,167,475 |
|
|
TOTAL EQUITY: |
1,188,973 |
|
|
1,223,552 |
|
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY: |
$ |
4,410,964 |
|
|
$ |
3,991,073 |
|
The accompanying notes are an integral part of these consolidated
financial statements.
ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
OPERATING REVENUES: |
|
|
|
|
|
|
|
|
Passenger |
$ |
516,476 |
|
|
$ |
423,796 |
|
|
$ |
1,573,041 |
|
|
$ |
1,124,237 |
|
|
Third party products |
27,132 |
|
|
24,541 |
|
|
77,399 |
|
|
61,164 |
|
|
Fixed fee contracts |
15,881 |
|
|
11,117 |
|
|
38,186 |
|
|
23,943 |
|
|
Other |
836 |
|
|
15 |
|
|
1,654 |
|
|
1,682 |
|
|
Total operating revenues |
560,325 |
|
|
459,469 |
|
|
1,690,280 |
|
|
1,211,026 |
|
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
Aircraft fuel |
208,175 |
|
|
118,370 |
|
|
629,600 |
|
|
310,674 |
|
|
Salaries and benefits |
137,336 |
|
|
125,799 |
|
|
411,027 |
|
|
365,655 |
|
|
Station operations |
66,302 |
|
|
70,943 |
|
|
198,954 |
|
|
171,246 |
|
|
Depreciation and amortization |
50,092 |
|
|
46,399 |
|
|
145,618 |
|
|
134,095 |
|
|
Maintenance and repairs |
32,177 |
|
|
30,451 |
|
|
91,120 |
|
|
76,419 |
|
|
Sales and marketing |
25,815 |
|
|
22,047 |
|
|
75,462 |
|
|
51,288 |
|
|
Aircraft lease rental |
5,905 |
|
|
5,670 |
|
|
17,489 |
|
|
15,507 |
|
|
Other |
30,292 |
|
|
22,379 |
|
|
83,137 |
|
|
55,655 |
|
|
Payroll Support Programs grant recognition |
— |
|
|
(49,210) |
|
|
— |
|
|
(202,181) |
|
|
Special charges |
35,142 |
|
|
332 |
|
|
35,426 |
|
|
2,924 |
|
|
Total operating expenses |
591,236 |
|
|
393,180 |
|
|
1,687,833 |
|
|
981,282 |
|
|
OPERATING INCOME (LOSS) |
(30,911) |
|
|
66,289 |
|
|
2,447 |
|
|
229,744 |
|
|
OTHER (INCOME) EXPENSES: |
|
|
|
|
|
|
|
|
Interest expense |
34,242 |
|
|
16,595 |
|
|
78,530 |
|
|
50,174 |
|
|
Capitalized interest |
(4,296) |
|
|
(401) |
|
|
(7,594) |
|
|
(401) |
|
|
Interest income |
(4,918) |
|
|
(375) |
|
|
(7,909) |
|
|
(1,338) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other, net |
223 |
|
|
239 |
|
|
318 |
|
|
(164) |
|
|
Total other expenses |
25,251 |
|
|
16,058 |
|
|
63,345 |
|
|
48,271 |
|
|
INCOME (LOSS) BEFORE INCOME TAXES |
(56,162) |
|
|
50,231 |
|
|
(60,898) |
|
|
181,473 |
|
|
INCOME TAX PROVISION (BENEFIT) |
(9,703) |
|
|
10,977 |
|
|
(10,916) |
|
|
40,323 |
|
|
NET INCOME (LOSS) |
$ |
(46,459) |
|
|
$ |
39,254 |
|
|
$ |
(49,982) |
|
|
$ |
141,150 |
|
|
Earnings (loss) per share to common shareholders: |
|
|
|
|
|
|
|
|
Basic |
$ |
(2.58) |
|
|
$ |
2.18 |
|
|
$ |
(2.78) |
|
|
$ |
8.18 |
|
|
Diluted |
$ |
(2.58) |
|
|
$ |
2.18 |
|
|
$ |
(2.78) |
|
|
$ |
8.18 |
|
|
Shares used for computation: |
|
|
|
|
|
|
|
|
Basic |
18,014 |
|
|
17,766 |
|
|
17,985 |
|
|
17,005 |
|
|
Diluted |
18,014 |
|
|
17,767 |
|
|
17,985 |
|
|
17,015 |
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per share: |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
The accompanying notes are an integral part of these consolidated
financial statements.
ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
NET INCOME (LOSS) |
$ |
(46,459) |
|
|
$ |
39,254 |
|
|
$ |
(49,982) |
|
|
$ |
141,150 |
|
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
Change in available for sale securities, net of tax |
(1,590) |
|
|
774 |
|
|
(902) |
|
|
676 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other comprehensive income (loss) |
(1,590) |
|
|
774 |
|
|
(902) |
|
|
676 |
|
|
TOTAL COMPREHENSIVE INCOME (LOSS) |
$ |
(48,049) |
|
|
$ |
40,028 |
|
|
$ |
(50,884) |
|
|
$ |
141,826 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these consolidated
financial statements.
ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2022 |
|
Common stock outstanding |
|
Par value |
|
Additional paid-in capital |
|
Accumulated other comprehensive income (loss) |
|
Retained earnings |
|
Treasury shares |
|
Total shareholders' equity |
|
Balance at June 30, 2022 |
18,180 |
|
|
$ |
25 |
|
|
$ |
698,982 |
|
|
$ |
2,744 |
|
|
$ |
1,163,952 |
|
|
$ |
(633,332) |
|
|
$ |
1,232,371 |
|
|
Share-based compensation |
122 |
|
|
— |
|
|
4,651 |
|
|
— |
|
|
— |
|
|
— |
|
|
4,651 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive (loss) |
— |
|
|
— |
|
|
— |
|
|
(1,590) |
|
|
— |
|
|
— |
|
|
(1,590) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(46,459) |
|
|
— |
|
|
(46,459) |
|
|
Balance at September 30, 2022 |
18,302 |
|
|
$ |
25 |
|
|
$ |
703,633 |
|
|
$ |
1,154 |
|
|
$ |
1,117,493 |
|
|
$ |
(633,332) |
|
|
$ |
1,188,973 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2022 |
|
Common stock outstanding |
|
Par value |
|
Additional paid-in capital |
|
Accumulated other comprehensive income (loss) |
|
Retained earnings |
|
Treasury shares |
|
Total shareholders' equity |
|
Balance at December 31, 2021 |
18,111 |
|
|
$ |
25 |
|
|
$ |
692,053 |
|
|
$ |
2,056 |
|
|
$ |
1,167,475 |
|
|
$ |
(638,057) |
|
|
$ |
1,223,552 |
|
|
Share-based compensation |
161 |
|
|
— |
|
|
11,580 |
|
|
— |
|
|
— |
|
|
— |
|
|
11,580 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued under employee stock purchase plan |
30 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
4,725 |
|
|
4,725 |
|
|
Other comprehensive income |
— |
|
|
— |
|
|
— |
|
|
(902) |
|
|
— |
|
|
— |
|
|
(902) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(49,982) |
|
|
— |
|
|
(49,982) |
|
|
Balance at September 30, 2022 |
18,302 |
|
|
$ |
25 |
|
|
$ |
703,633 |
|
|
$ |
1,154 |
|
|
$ |
1,117,493 |
|
|
$ |
(633,332) |
|
|
$ |
1,188,973 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2021 |
|
Common stock outstanding |
|
Par value |
|
Additional paid-in capital |
|
Accumulated other comprehensive income (loss) |
|
Retained earnings |
|
Treasury shares |
|
Total shareholders' equity |
|
Balance at June 30, 2021 |
17,986 |
|
|
$ |
25 |
|
|
$ |
671,893 |
|
|
$ |
(125) |
|
|
$ |
1,117,518 |
|
|
$ |
(642,177) |
|
|
$ |
1,147,134 |
|
|
Share-based compensation |
59 |
|
|
— |
|
|
3,902 |
|
|
— |
|
|
— |
|
|
— |
|
|
3,902 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income |
— |
|
|
— |
|
|
— |
|
|
774 |
|
|
— |
|
|
— |
|
|
774 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
39,254 |
|
|
— |
|
|
39,254 |
|
|
Balance at September 30, 2021 |
18,045 |
|
|
$ |
25 |
|
|
$ |
675,795 |
|
|
$ |
649 |
|
|
$ |
1,156,772 |
|
|
$ |
(642,177) |
|
|
$ |
1,191,064 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2021 |
|
Common stock outstanding |
|
Par value |
|
Additional paid-in capital |
|
Accumulated other comprehensive income |
|
Retained earnings |
|
Treasury shares |
|
Total shareholders' equity |
|
Balance at December 31, 2020 |
16,405 |
|
|
$ |
23 |
|
|
$ |
329,753 |
|
|
$ |
(27) |
|
|
$ |
1,015,622 |
|
|
$ |
(646,008) |
|
|
$ |
699,363 |
|
|
Share-based compensation |
71 |
|
|
— |
|
|
10,800 |
|
|
— |
|
|
— |
|
|
— |
|
|
10,800 |
|
|
Issuance of common stock, net of forfeitures |
1,553 |
|
|
2 |
|
|
335,137 |
|
|
— |
|
|
— |
|
|
— |
|
|
335,139 |
|
|
Stock issued under employee stock purchase plan |
16 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3,831 |
|
|
3,831 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income |
— |
|
|
— |
|
|
— |
|
|
676 |
|
|
— |
|
|
— |
|
|
676 |
|
|
Payroll Support Programs warrant issuance |
— |
|
|
— |
|
|
105 |
|
|
— |
|
|
— |
|
|
— |
|
|
105 |
|
|
Net income |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
141,150 |
|
|
— |
|
|
141,150 |
|
|
Balance at September 30, 2021 |
18,045 |
|
|
$ |
25 |
|
|
$ |
675,795 |
|
|
$ |
649 |
|
|
$ |
1,156,772 |
|
|
$ |
(642,177) |
|
|
$ |
1,191,064 |
|
ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
2022 |
|
2021 |
|
Cash flows from operating activities: |
|
|
|
|
Net income (loss) |
$ |
(49,982) |
|
|
$ |
141,150 |
|
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
|
|
|
|
Depreciation and amortization |
145,618 |
|
|
134,095 |
|
|
Special charges |
35,426 |
|
|
2,924 |
|
|
Other adjustments |
9,206 |
|
|
26,778 |
|
|
Changes in certain assets and liabilities: |
|
|
|
|
Air traffic liability |
122,471 |
|
|
44,014 |
|
|
|
|
|
|
Other - net |
(40,917) |
|
|
24,634 |
|
|
Net cash provided by operating activities |
221,822 |
|
|
373,595 |
|
|
Cash flows from investing activities: |
|
|
|
|
Purchase of investment securities |
(968,064) |
|
|
(1,028,481) |
|
|
Proceeds from maturities of investment securities |
1,024,861 |
|
|
679,588 |
|
|
Aircraft pre-delivery deposits |
(88,500) |
|
|
(3,300) |
|
|
Purchase of property and equipment |
(304,956) |
|
|
(163,202) |
|
|
|
|
|
|
Other investing activities |
1,037 |
|
|
2,062 |
|
|
Net cash (used in) investing activities |
(335,622) |
|
|
(513,333) |
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Proceeds from the issuance of debt and finance lease
obligations |
745,800 |
|
|
106,657 |
|
|
|
|
|
|
Principal payments on debt and finance lease
obligations |
(666,046) |
|
|
(239,644) |
|
|
Debt issuance costs |
(12,681) |
|
|
(705) |
|
|
Proceeds from issuance of common stock |
— |
|
|
335,139 |
|
|
Other financing activities |
(82,775) |
|
|
3,936 |
|
|
Net cash provided by (used in) by financing activities |
(15,702) |
|
|
205,383 |
|
|
NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH |
(129,502) |
|
|
65,645 |
|
|
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF
PERIOD |
400,701 |
|
|
170,319 |
|
|
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF
PERIOD |
$ |
271,199 |
|
|
$ |
235,964 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH PAYMENTS (RECEIPTS) FOR: |
|
|
|
|
Interest paid, net of amount capitalized |
$ |
60,452 |
|
|
$ |
30,739 |
|
|
Income tax payments (refunds) |
36 |
|
|
(12,762) |
|
|
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS: |
|
|
|
|
Right-of-use (ROU) assets acquired |
$ |
— |
|
|
$ |
23,157 |
|
|
Flight equipment acquired under finance leases |
172,507 |
|
|
40,826 |
|
|
Purchases of property and equipment in accrued
liabilities |
82,359 |
|
|
12,727 |
|
|
|
|
|
The accompanying notes are an integral part of these consolidated
financial statements.
ALLEGIANT TRAVEL COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1 — Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements
include the accounts of Allegiant Travel Company (the “Company”)
and its majority-owned operating subsidiaries. The Company's
investments in unconsolidated affiliates, which are 50
percent or less owned, are accounted for under the equity or
cost method, and are insignificant to the consolidated financial
statements. All intercompany balances and transactions have been
eliminated.
These unaudited consolidated financial statements reflect all
normal recurring adjustments which management believes are
necessary to present fairly the financial position, results of
operations, and cash flows of the Company for the respective
periods presented. Certain information and footnote disclosures
normally included in the annual consolidated financial statements
prepared in accordance with U.S. generally accepted accounting
principles ("U.S. GAAP") have been omitted pursuant to the rules
and regulations of the Securities and Exchange Commission for Form
10-Q. These unaudited interim consolidated financial statements
should be read in conjunction with the audited consolidated
financial statements of the Company and notes thereto included in
the annual report of the Company on Form 10-K for the year ended
December 31, 2021 and filed with the Securities and Exchange
Commission.
The preparation of financial statements in conformity with U.S.
GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities, at the date of the
financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results may differ
from these estimates.
The Company reclassified certain prior period amounts to conform to
the current period presentation. Unless otherwise noted, all
amounts disclosed are stated before consideration of income
taxes.
Note 2 — Hurricane Ian
As a result of Hurricane Ian's direct hit on the southwest coast of
Florida on September 28, 2022, the construction site of Sunseeker
Resort at Charlotte Harbor (the "Resort" or "Sunseeker Resort") was
damaged.
Within days after the hurricane, the Company began to assess the
damage to the Resort. Insurance claim adjustors representing the
Company and the insurance carriers are assessing the extent of the
damages and the costs to restore the Resort to its condition prior
to the hurricane and determining the extent of construction
interruption.
The Company has significant levels of insurance in place to cover
the losses resulting from Hurricane Ian including for physical
damage due to a named windstorm or flood (storm surge), business
interruption and an OCIP (owner-controlled insurance
program).
The Company recognized a special charge of $35.0 million
during the quarter associated with the estimated loss incurred from
Hurricane Ian, which charge also reduced the carrying amount of the
Resort. The estimate is preliminary and subject to change as the
damage assessment continues. The amount of the loss will be offset
in future periods by amounts to be recovered from the Company’s
insurance policies.
Note 3 — Revenue Recognition
Passenger Revenue
Passenger revenue is the most significant category in the Company's
reported operating revenues, as outlined below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
(in thousands) |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Scheduled service |
$ |
254,545 |
|
|
$ |
195,225 |
|
|
$ |
775,740 |
|
|
$ |
552,765 |
|
|
Ancillary air-related charges |
252,080 |
|
|
224,170 |
|
|
765,096 |
|
|
558,687 |
|
|
Loyalty redemptions
|
9,851 |
|
|
4,401 |
|
|
32,205 |
|
|
12,785 |
|
|
Total passenger revenue |
$ |
516,476 |
|
|
$ |
423,796 |
|
|
$ |
1,573,041 |
|
|
$ |
1,124,237 |
|
Sales of passenger tickets not yet flown are recorded in air
traffic liability. Passenger revenue is recognized when
transportation is provided. As of September 30, 2022, the air
traffic liability balance was $429.9 million, of which
approximately $367.8 million was related to forward bookings,
with the remaining $62.1 million related to credit vouchers
for future travel.
The normal contract term of passenger tickets is 12 months and
passenger revenue associated with future travel will principally be
recognized within this time frame. Of the $307.5 million that was
recorded in the air traffic liability balance as of
December 31, 2021, approximately 75.1 percent was recognized
into passenger revenue during the nine months ended
September 30, 2022.
In 2020, the Company announced that credit vouchers issued for
canceled travel beginning in January 2020 would have an extended
expiration date of two years from the original booking date. This
policy continued for vouchers issued through June 30, 2021.
Effective July 1, 2021, vouchers issued have an expiration date of
one year from the original booking date.
The Company periodically evaluates the estimated amount of credit
vouchers expected to expire unused and any adjustment is removed
from air traffic liability and included in passenger revenue in the
period in which the evaluation is complete. Estimates of passenger
revenue to be recognized from air traffic liability for credit
voucher breakage may be subject to variability and differ from
historical experience due to the change in contract duration and
uncertainty regarding demand for future air travel.
Loyalty redemptions
In relation to the travel component of the Allways® Allegiant World
Mastercard® contract with Bank of America, the Company has a
performance obligation to provide cardholders with points to be
used for future travel award redemptions. Therefore, consideration
received from Bank of America related to the travel component is
deferred based on its relative selling price and is recognized into
passenger revenue when the points are redeemed and the
transportation is provided. Similarly, in relation to the Allways
Rewards program, points earned through the program are deferred
based on the stand-alone selling price and recognized into
passenger revenue when the points are redeemed and the underlying
service has been provided.
The following table presents the activity of the point liability
for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
(in thousands) |
2022 |
|
2021 |
|
Points balance at January 1 |
$ |
40,490 |
|
|
$ |
21,841 |
|
|
Points awarded (deferral of revenue) |
54,678 |
|
|
23,319 |
|
|
Points redeemed (recognition of revenue) |
(32,205) |
|
|
(12,785) |
|
|
Points balance at September 30 |
$ |
62,963 |
|
|
$ |
32,375 |
|
As of September 30, 2022 and 2021, $34.0 million and $15.9
million, respectively, of the current points liability is reflected
in accrued liabilities and represents the current estimate of
revenue to be recognized in the next 12 months based on historical
trends, with the remaining balance reflected in other noncurrent
liabilities expected to be recognized into revenue in periods
thereafter.
Note 4 — Property and Equipment
The following table summarizes the Company's property and equipment
as of the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
September 30, 2022 |
|
December 31, 2021 |
|
Flight equipment, including pre-delivery deposits |
$ |
2,892,277 |
|
|
$ |
2,573,657 |
|
|
Computer hardware and software |
194,983 |
|
|
160,237 |
|
|
Land and buildings/leasehold improvements |
60,036 |
|
|
59,735 |
|
|
Other property and equipment |
91,199 |
|
|
78,192 |
|
|
Sunseeker Resort |
277,315 |
|
|
83,864 |
|
|
Total property and equipment |
3,515,810 |
|
|
2,955,685 |
|
|
Less accumulated depreciation and amortization |
(777,294) |
|
|
(696,178) |
|
|
Property and equipment, net |
$ |
2,738,516 |
|
|
$ |
2,259,507 |
|
Accrued capital expenditures as of September 30, 2022 and
December 31, 2021 were $82.4 million and $17.7 million,
respectively.
Note 5 — Long-Term Debt
The following table summarizes the Company's long-term debt and
finance lease obligations as of the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
September 30, 2022 |
|
December 31, 2021 |
|
Fixed-rate debt and finance lease obligations due through
2032 |
$ |
1,624,432 |
|
|
$ |
827,382 |
|
|
Variable-rate debt due through 2029 |
368,118 |
|
|
915,157 |
|
|
Total debt and finance lease obligations, net of related
costs |
1,992,550 |
|
|
1,742,539 |
|
|
Less current maturities, net of related costs |
152,550 |
|
|
130,053 |
|
|
Long-term debt and finance lease obligations, net of current
maturities and related costs |
$ |
1,840,000 |
|
|
$ |
1,612,486 |
|
|
|
|
|
|
|
Weighted average fixed-interest rate on debt |
6.5% |
|
5.8% |
|
Weighted average variable-interest rate on debt |
4.5% |
|
2.5% |
Maturities of long-term debt and finance lease obligations for the
remainder of 2022 and for the next four years and thereafter, in
the aggregate, are: remaining in 2022 - $34.2 million; 2023 -
$152.5 million; 2024 - $299.8 million; 2025 - $145.2 million; 2026
- $138.8 million; and $1,222.0 million thereafter.
Senior Secured Notes
In August, 2022, the Company issued $550.0 million in aggregate
principal amount of its 7.250% Senior Secured Notes due 2027 (the
“Notes”) pursuant to an Indenture, dated as of August 17,
2022. The Notes are secured by first priority security interests
in, subject to permitted liens, substantially all of the property
and assets of the Company and its subsidiaries (other than
Sunseeker Resort and its subsidiaries) (excluding aircraft,
aircraft engines, real property and certain other assets).
The collateral also secures the Company’s existing
$150.0 million 8.500% Senior Secured Notes due 2024 and the
Company’s new revolving credit facility through Barclays Bank, PLC
(described below), on a
pari passu
basis.
The Notes bear interest at a fixed rate of 7.25 percent per annum,
payable in cash on February 15 and August 15 of each year,
beginning February 15, 2023. The Notes will mature on
August 15, 2027.
The Notes contain certain covenants that limit the ability of the
Company to, among other things: (i) make restricted payments; (ii)
incur indebtedness or issue preferred stock; (iii) create or incur
certain liens; (iv) dispose of loyalty program or brand
intellectual property collateral; (v) merge, consolidate or sell
all or substantially all assets and (vi) enter into certain
transactions with affiliates.
The Notes also require the Company to comply with certain
affirmative covenants, including to maintain a minimum aggregate
amount of liquidity of $300.0 million. If the Company fails to
satisfy the minimum liquidity requirement, then the Company will be
required to pay additional interest on all outstanding Notes in an
amount equal to 2.0% per annum of the principal amount of such
Notes until the Company demonstrates compliance with the liquidity
requirement.
The Company used the net proceeds from the sale of the Notes to
repay the Company’s Term Loan B, which had an outstanding principal
amount of $533.0 million, and to pay costs and expenses of the
transaction.
Senior Secured Revolving Credit Facilities
In August, 2022, the Company entered into a credit agreement with
MUFG Bank, Ltd under which the Company is entitled to borrow up to
$100.0 million. The revolving credit facility has a term of 24
months and the borrowing ability is based on the value of aircraft
and engines placed into the collateral pool. The notes under the
facility bear interest at a floating rate based on SOFR. As of
September 30, 2022, the facility remains undrawn.
In August, 2022, the Company entered into a credit agreement with
certain lenders and Barclays Bank PLC as administrative agent and
lead arranger that provides a senior secured revolving loan
facility of $75.0 million. The facility is secured by the same
collateral that secures the Notes, has a term of 57 months and
notes under the facility bear interest at a floating rate based on
SOFR. As of September 30, 2022, the facility remains
undrawn.
In September, 2022, the Company entered into a credit agreement
with Norddeutsche Landesbank Girozentrale (acting through its New
York branch) and Landesbank Hessen-Thüringen Girozentrale (the
"Lenders") under which the Company is entitled to borrow up to
$300.0 million. The revolving credit facility has a term of 24
months and the borrowing ability is based on the amount of
pre-delivery deposits paid with respect to up to twenty (20)
737-MAX aircraft, the purchase rights for which the Company may
choose to place in the collateral pool. The Facility is secured by
the purchase rights for the applicable aircraft. The commitment
amount at the time of signing is $200.0 million and the facility
may be increased to $300.0 million subject to agreement between the
Company and the Lenders. Any notes under the Facility will bear
interest at a floating rate based on SOFR and all borrowings will
be due no later than December 31, 2024 or upon delivery of the
applicable aircraft. As of September 30, 2022, the facility remains
undrawn.
Note 6 — Income Taxes
The Company recorded a $9.7 million income tax benefit at an
effective tax rate of 17.3 percent and an $11.0 million income tax
expense at a 21.9 percent effective tax rate for the three months
ended September 30, 2022 and 2021, respectively. The effective tax
rate for the three months ended September 30, 2022 differed from
the statutory Federal income tax rate of 21.0 percent primarily due
to state income taxes and the impact of permanent tax differences.
While the Company expects its effective tax rate to be fairly
consistent in the near term, it will vary depending on recurring
items such as the amount of income earned in each state and the
state tax rate applicable to such income. Discrete items during
interim periods may also affect the Company's tax
rates.
The Company recorded a $10.9 million income tax benefit at an
effective tax rate of 17.9 percent and a $40.3 million income
tax expense at a 22.2 percent effective tax rate for the nine
months ended September 30, 2022 and 2021, respectively. The
effective tax rate for the nine months ended September 30, 2022
differed from the statutory Federal income tax rate of 21.0 percent
primarily due to state income taxes and the impact of permanent tax
differences, none of which are individually
significant.
Note 7 — Fair Value Measurements
The Company utilizes the market approach to measure the fair value
of its financial assets. The market approach uses prices and other
relevant information generated by market transactions involving
identical or comparable assets. The assets classified as Level 2
primarily utilize quoted market prices or alternative pricing
sources including transactions involving identical or comparable
assets and models utilizing market observable inputs for valuation
of these securities. No changes in valuation techniques or inputs
occurred during the nine months ended September 30,
2022.
Financial instruments measured at fair value on a recurring
basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2022 |
|
December 31, 2021 |
|
(in thousands) |
Total |
|
Level 1 |
|
Level 2 |
|
Total |
|
Level 1 |
|
Level 2 |
|
Cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds |
$ |
49,106 |
|
|
$ |
49,106 |
|
|
$ |
— |
|
|
$ |
25,019 |
|
|
$ |
25,019 |
|
|
$ |
— |
|
|
Commercial Paper |
70,450 |
|
|
— |
|
|
70,450 |
|
|
179,455 |
|
|
— |
|
|
179,455 |
|
|
Municipal debt securities |
16,398 |
|
|
— |
|
|
16,398 |
|
|
63,875 |
|
|
— |
|
|
63,875 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash equivalents |
135,954 |
|
|
49,106 |
|
|
86,848 |
|
|
268,349 |
|
|
25,019 |
|
|
243,330 |
|
|
Short-term |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial paper |
450,529 |
|
|
— |
|
|
450,529 |
|
|
419,469 |
|
|
— |
|
|
419,469 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt securities |
196,962 |
|
|
— |
|
|
196,962 |
|
|
234,436 |
|
|
— |
|
|
234,436 |
|
|
Municipal debt securities |
20,965 |
|
|
— |
|
|
20,965 |
|
|
165,573 |
|
|
— |
|
|
165,573 |
|
|
Federal agency debt securities |
92,906 |
|
|
— |
|
|
92,906 |
|
|
— |
|
|
— |
|
|
— |
|
|
Total short-term |
761,362 |
|
|
— |
|
|
761,362 |
|
|
819,478 |
|
|
— |
|
|
819,478 |
|
|
Long-term |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal debt securities |
— |
|
|
— |
|
|
— |
|
|
2,231 |
|
|
— |
|
|
2,231 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term |
— |
|
|
— |
|
|
— |
|
|
2,231 |
|
|
— |
|
|
2,231 |
|
|
Total financial instruments |
$ |
897,316 |
|
|
$ |
49,106 |
|
|
$ |
848,210 |
|
|
$ |
1,090,058 |
|
|
$ |
25,019 |
|
|
$ |
1,065,039 |
|
None of the Company's debt is publicly held and as a result, the
Company has determined the estimated fair value of these notes to
be Level 3. Certain inputs used to determine fair value are
unobservable and, therefore, could be sensitive to changes in
inputs. The Company utilizes the discounted cash flow method to
estimate the fair value of Level 3 debt.
Carrying value and estimated fair value of long-term debt,
excluding finance leases, including current maturities and without
reduction for related costs, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2022 |
|
December 31, 2021 |
|
|
|
(in thousands) |
Carrying Value |
|
Estimated Fair Value |
|
Carrying Value |
|
Estimated Fair Value |
|
Hierarchy Level |
|
Non-publicly held debt |
$ |
1,538,638 |
|
|
$ |
1,457,343 |
|
|
$ |
1,447,462 |
|
|
$ |
1,261,170 |
|
|
3 |
Due to their short-term nature, the carrying amounts of cash,
restricted cash, accounts receivable and accounts payable
approximate fair value.
Note 8 — Earnings (Loss) per Share
Basic and diluted earnings (loss) per share are computed pursuant
to the two-class method. Under this method, the Company attributes
net income (loss) to two classes: common stock and unvested
restricted stock. Unvested restricted stock awards granted to
employees under the Company’s Long-Term Incentive Plan are
considered participating securities as they receive non-forfeitable
rights to cash dividends at the same rate as common
stock.
Diluted net income per share is calculated using the more dilutive
of the two methods. Under both methods, the exercise of employee
stock options is assumed using the treasury stock method. The
assumption of vesting of restricted stock, however,
differs:
1.Assume
vesting of restricted stock using the treasury stock
method.
2.Assume
unvested restricted stock awards are not vested, and allocate
earnings to common shares and unvested restricted stock awards
using the two-class method.
For the three months and nine months ended September 30, 2022,
basic and diluted income (loss) per share are the same because of
the (loss) position.
The following table sets forth the computation of net income (loss)
per share, on a basic and diluted basis, for the periods indicated
(share count and dollar amounts other than per-share amounts in the
table are in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Basic: |
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
(46,459) |
|
|
$ |
39,254 |
|
|
$ |
(49,982) |
|
|
$ |
141,150 |
|
|
Less income allocated to participating securities |
— |
|
|
(573) |
|
|
— |
|
|
(2,028) |
|
|
Net income (loss) attributable to common stock |
$ |
(46,459) |
|
|
$ |
38,681 |
|
|
$ |
(49,982) |
|
|
$ |
139,122 |
|
|
Earnings (loss) per share, basic |
$ |
(2.58) |
|
|
$ |
2.18 |
|
|
$ |
(2.78) |
|
|
$ |
8.18 |
|
|
Weighted-average shares outstanding |
18,014 |
|
|
17,766 |
|
|
17,985 |
|
|
17,005 |
|
|
Diluted: |
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
(46,459) |
|
|
$ |
39,254 |
|
|
$ |
(49,982) |
|
|
$ |
141,150 |
|
|
Less income allocated to participating securities |
— |
|
|
(573) |
|
|
— |
|
|
(2,027) |
|
|
Net income (loss) attributable to common stock |
$ |
(46,459) |
|
|
$ |
38,681 |
|
|
$ |
(49,982) |
|
|
$ |
139,123 |
|
|
Earnings (loss) per share, diluted |
$ |
(2.58) |
|
|
$ |
2.18 |
|
|
$ |
(2.78) |
|
|
$ |
8.18 |
|
|
Weighted-average shares outstanding |
18,014 |
|
|
17,766 |
|
|
17,985 |
|
|
17,005 |
|
|
Dilutive effect of stock options and restricted stock |
— |
|
|
103 |
|
|
— |
|
|
121 |
|
|
Adjusted weighted-average shares outstanding under treasury stock
method |
18,014 |
|
|
17,869 |
|
|
17,985 |
|
|
17,126 |
|
|
Participating securities excluded under two-class
method |
— |
|
|
(102) |
|
|
— |
|
|
(111) |
|
|
Adjusted weighted-average shares outstanding under two-class
method |
18,014 |
|
|
17,767 |
|
|
17,985 |
|
|
17,015 |
|
Note 9 — Contingencies
The Company is subject to certain legal and administrative actions
it considers routine to its business activities. The Company
believes the ultimate outcome of any potential and pending legal or
administrative matters will not have a material adverse impact on
its financial position, liquidity or results of
operations.
Note 10 — Segments
Operating segments are components of a company for which separate
financial and operating information is regularly evaluated and
reported to the Chief Operating Decision Maker ("CODM"), and is
used to allocate resources and analyze performance. The Company's
CODM is the executive leadership team, which reviews information
about the Company's two operating segments: Airline and Sunseeker
Resort.
Airline Segment
The Airline segment operates as a single business unit and includes
all scheduled service air transportation, ancillary air-related
products and services, third party products and services, fixed fee
contract air transportation and other airline-related revenue. The
CODM evaluation includes, but is not limited to, route and flight
profitability data, ancillary and third party product and service
offering statistics, and fixed fee contract information when making
resource allocation decisions with the goal of optimizing
consolidated financial results.
Sunseeker Resort Segment
The Sunseeker Resort segment represents activity related to the
development and construction of Sunseeker Resort in Southwest
Florida, as well as the renovation of Aileron Golf Course (formerly
known as Kingsway Golf Course). Plans for the resort include a
500-room hotel and two towers offering more than 180 one, two and
three-bedroom suites, bar and restaurant options, and other
amenities. The golf course is a short drive from the resort site
and is considered, from a planning and strategic perspective, to be
an additional resort amenity. The construction of Sunseeker Resort
is an extension of the Company's leisure travel focus and it is
expected that many customers flying to Southwest Florida on
Allegiant will elect to stay at this resort and enjoy its
amenities.
Selected information for the Company's segments and the
reconciliation to the consolidated financial statement amounts are
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Airline |
|
Sunseeker Resort
(1)
|
|
|
|
Consolidated |
|
Three Months Ended September 30, 2022 |
|
|
|
|
|
|
|
|
|
Operating revenue: |
|
|
|
|
|
|
|
|
|
Passenger |
|
$ |
516,476 |
|
|
$ |
— |
|
|
|
|
$ |
516,476 |
|
|
Third party products |
|
27,132 |
|
|
— |
|
|
|
|
27,132 |
|
|
Fixed fee contract |
|
15,881 |
|
|
— |
|
|
|
|
15,881 |
|
|
Other |
|
836 |
|
|
— |
|
|
|
|
836 |
|
|
Operating income (loss) |
|
6,844 |
|
|
(37,755) |
|
|
|
|
(30,911) |
|
|
Interest expense, net |
|
18,882 |
|
|
1,134 |
|
|
|
|
20,016 |
|
|
Depreciation and amortization |
|
50,064 |
|
|
28 |
|
|
|
|
50,092 |
|
|
Capital expenditures |
|
165,814 |
|
|
91,076 |
|
|
|
|
256,890 |
|
|
Three Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
Operating revenue: |
|
|
|
|
|
|
|
|
|
Passenger |
|
$ |
423,796 |
|
|
$ |
— |
|
|
|
|
$ |
423,796 |
|
|
Third party products |
|
24,541 |
|
|
— |
|
|
|
|
24,541 |
|
|
Fixed fee contract |
|
11,117 |
|
|
— |
|
|
|
|
11,117 |
|
|
Other |
|
15 |
|
|
— |
|
|
|
|
15 |
|
|
Operating income (loss) |
|
68,641 |
|
|
(2,352) |
|
|
|
|
66,289 |
|
|
Interest expense, net |
|
16,220 |
|
|
(401) |
|
|
|
|
15,819 |
|
|
Depreciation and amortization |
|
46,363 |
|
|
36 |
|
|
|
|
46,399 |
|
|
Capital expenditures |
|
54,032 |
|
|
12,622 |
|
|
|
|
66,654 |
|
(1)Includes
$35.0 million special charge in the third quarter 2022
relating to Hurricane Ian damage to Sunseeker Resort.The amount of
the loss will be offset in future periods by amounts to be
recovered under the Company’s insurance policies.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Airline |
|
Sunseeker Resort
(1)
|
|
|
|
Consolidated |
|
Nine Months Ended September 30, 2022 |
|
|
|
|
|
|
|
|
|
Operating revenue: |
|
|
|
|
|
|
|
|
|
Passenger |
|
$ |
1,573,041 |
|
|
$ |
— |
|
|
|
|
$ |
1,573,041 |
|
|
Third party products |
|
77,399 |
|
|
— |
|
|
|
|
77,399 |
|
|
Fixed fee contract |
|
38,186 |
|
|
— |
|
|
|
|
38,186 |
|
|
Other |
|
1,654 |
|
|
— |
|
|
|
|
1,654 |
|
|
Operating income (loss) |
|
44,902 |
|
|
(42,455) |
|
|
|
|
2,447 |
|
|
Interest expense, net |
|
52,111 |
|
|
5,904 |
|
|
|
|
58,015 |
|
|
Depreciation and amortization |
|
145,573 |
|
|
45 |
|
|
|
|
145,618 |
|
|
Capital expenditures |
|
404,015 |
|
|
228,452 |
|
|
|
|
632,467 |
|
|
Nine Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
Operating revenue: |
|
|
|
|
|
|
|
|
|
Passenger |
|
$ |
1,124,237 |
|
|
$ |
— |
|
|
|
|
$ |
1,124,237 |
|
|
Third party products |
|
61,164 |
|
|
— |
|
|
|
|
61,164 |
|
|
Fixed fee contract |
|
23,943 |
|
|
— |
|
|
|
|
23,943 |
|
|
Other |
|
1,682 |
|
|
— |
|
|
|
|
1,682 |
|
|
Operating income (loss) |
|
235,340 |
|
|
(5,596) |
|
|
|
|
229,744 |
|
|
Interest expense, net |
|
48,765 |
|
|
(401) |
|
|
|
|
48,364 |
|
|
Depreciation and amortization |
|
133,984 |
|
|
111 |
|
|
|
|
134,095 |
|
|
Capital expenditures |
|
192,747 |
|
|
12,622 |
|
|
|
|
205,369 |
|
(1)Includes
$35.0 million special charge in the third quarter 2022
relating to Hurricane Ian damage to Sunseeker Resort.The amount of
the loss will be offset in future periods by amounts to be
recovered under the Company’s insurance policies.
Total assets were as follows as of the dates
indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
As of September 30, 2022 |
|
As of December 31, 2021 |
|
Airline |
$ |
4,012,922 |
|
|
$ |
3,872,041 |
|
|
Sunseeker Resort |
398,042 |
|
|
119,032 |
|
|
|
|
|
|
Consolidated |
$ |
4,410,964 |
|
|
$ |
3,991,073 |
|
Note 11 — Subsequent Events
In October 2022, the lender funded an additional $87.5 million
into the construction disbursement account for the Sunseeker
project and the Company received a disbursement of
$87.5 million from the account. After these transactions, the
construction disbursement account has a balance of approximately
$117.5 million, which is recorded as a deposit on the
Company's balance sheet.
The Company has a $50.0 million loan to Viva Aerobus in
deposits and other assets on the balance sheet which is to convert
to equity upon approval of the joint alliance from the Mexican
Federal Economic Competition Commission. This approval was obtained
on October 6, 2022.
Item 2. Management’s Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion and analysis presents factors that had a
material effect on our results of operations during the three and
nine months ended September 30, 2022 and 2021. Also discussed
is our financial position as of September 30, 2022 and
December 31, 2021. You should read this discussion in
conjunction with our unaudited consolidated financial statements,
including the notes thereto, appearing elsewhere in this Form 10-Q
and our consolidated financial statements appearing in our annual
report on Form 10-K for the year ended December 31, 2021. This
discussion and analysis contains forward-looking statements. Please
refer to the section below entitled “Cautionary Note Regarding
Forward-Looking Statements” for a discussion of the uncertainties,
risks and assumptions associated with these
statements.
Third Quarter 2022 Review
Highlights:
–Total
operating revenue was $560.3 million, up 28.4 percent year over
three-year
–Total
average fare of $125.95 up 15.5% from the third quarter
2019.
–Total
average fare - air-related charges of $58.40, up 16.7 percent from
2019, driven predominantly by strength in bundled
ancillary
–Total
average fare - third party products of $6.29, up 29.7 percent year
over three-year driven by Allways Allegiant World Mastercard
strength
–Load
factor of 88.5 percent, a 2.5 percentage point increase from the
third quarter of 2019
–Acquired
38 thousand new Allways Allegiant World Mastercard holders during
the quarter, the strongest third quarter acquisition since the
program's inception
–Allegiant
World Mastercard® and Allegiant Allways Rewards® were voted as the
No. 1 Best Airline Credit Card and Best Frequent Flyer Program in
USA Today's 10 Best 2022 Loyalty/Rewards Readers' Choice
Awards
–In
October, named to Newsweek's Top 100 Most Loved Workplaces® list
for the second consecutive year
–Donated
$100,000 to the American Red Cross for critical disaster relief to
communities in the aftermath of Hurricane Ian
AIRCRAFT
The following table sets forth the aircraft in service and operated
by us as of the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2022 |
|
December 31, 2021 |
|
|
|
A319 |
35 |
|
|
35 |
|
|
|
|
A320(1)
|
81 |
|
|
73 |
|
|
|
|
Total |
116 |
|
|
108 |
|
|
|
(1)Does
not include ten aircraft of which we have taken delivery as of
September 30, 2022, but were not yet in service as of that
date.
As of September 30, 2022, we are party to forward purchase
agreements for 52 aircraft with five aircraft scheduled for
delivery in 2023 and the remainder under contract thereafter.
Additionally, we are party to a finance lease for one aircraft
which has now been delivered in October 2022.
NETWORK
As of September 30, 2022, we were selling 583 routes versus
598 as of the same date in 2021 and 466 as of September 30, 2019,
which represents a 2.5 percent decrease and 25.1 percent increase,
respectively. Our total active number of origination cities and
leisure destinations were 94 and 32, respectively, as of
September 30, 2022.
Our unique model is predicated around expanding and contracting
capacity to meet seasonal travel demands.
TRENDS
COVID-19
The COVID-19 pandemic significantly impacted our operating results
in 2020 and 2021 and we suffered numerous cancellations due to the
effect of the Omicron variant on flight crews into first quarter
2022. COVID-19 may continue to impact our operations into the
future. We believe that demand in the foreseeable future could
fluctuate in response to fluctuations in COVID-19 cases, variants
of the virus, hospitalizations, deaths, treatment efficacy, the
availability of vaccines, CDC recommendations, and government
restrictions.
Strong Demand Momentum
As concerns over COVID-19 have declined, we have seen significant
increases in load factors and average total fare per passenger
beginning in March and continuing through the year to
date.
Aircraft Fuel
The cost of fuel is volatile, as it is subject to many economic and
geopolitical factors we can neither control nor predict.
Significant increases in fuel costs could materially affect our
operating results and profitability. We have not sought to use
financial derivative products to hedge our exposure to fuel price
volatility, nor do we have any plans to do so in the
future.
The cost per gallon of fuel began to increase significantly in 2021
and the increases were exacerbated by the geopolitical impact of
the war in Ukraine. As a result, the average fuel cost per gallon
increased by 75.0 percent in third quarter 2022 over third quarter
2021 and 78.2 percent over third quarter 2019. We expect high fuel
costs will continue to impact our total costs and operating
results.
Boeing Agreement
In December 2021, we signed an agreement with The Boeing Company to
purchase 50 newly manufactured 737MAX aircraft scheduled to be
delivered in 2023 to 2025 with options to purchase an additional 50
737’s. We believe this new aircraft purchase is complimentary with
our low cost strategy based on our intent to retain ownership of
the aircraft, the longer useful life for depreciation purposes,
expected fuel savings and operational reliability from the use of
these new aircraft.
Operations
Staffing challenges continue to impact our operations and costs and
we have pulled back some of our planned growth for fourth quarter
2022 and into 2023 as a result. We believe these issues are not
unique to Allegiant nor do we believe they are systemic. Our
irregular operations costs are also impacted by our policy to
compensate passengers for their inconvenience in addition to the
ticket price, not generally done in the airline
industry.
We are investing incrementally in our employee hiring and retention
and our operations in an attempt to improve performance and this
may put pressure on unit costs in the near term. However, if these
problems persist, we may suffer reputational damage and incur
higher costs for irregular operations.
Union Negotiations
The collective bargaining agreement with our pilots is currently
amendable and the parties have begun to discuss the terms of a new
labor agreement for this work group. We are also in the process of
negotiating a new contract with the union representing our flight
attendants. The terms of any new collective bargaining agreement
will impact our costs over the term of the contract.
Pilot Scarcity
The supply of pilots necessary for airline industry growth may be a
limiting factor. The pandemic resulted in more than 3,000 early
pilot retirements across U.S. mainline and cargo carriers and the
pipeline for new pilots does not appear at the present time to be
sufficiently robust to replace retired pilots and to allow for
projected industry growth. The ability to hire and retain pilots
will be critical to our and the industry’s growth.
Engagement of Schneider Electric as ESG Consultant
We have entered into a three-year partnership with Schneider
Electric to help us develop an Environmental, Social and Governance
(ESG) program including:
–Identifying
and prioritizing relevant ESG topics through a materiality
assessment
–Establishing
ESG goals and environmental goal achievement plans
–Developing
an inaugural ESG report referencing the Global Reporting Initiative
(GRI) and Sustainability Accounting Standards Board (SASB)
frameworks
–Providing
ongoing carbon emissions reporting of Scope 1, 2 and 3 greenhouse
gas (GHG) emissions
–Supporting
the communications efforts around our ESG program
VivaAerobus Alliance
In December 2021, we announced plans for a fully-integrated
commercial alliance agreement with VivaAerobus, designed to expand
options for nonstop leisure air travel between our markets in the
United States and Mexico. We and VivaAerobus have submitted a joint
application to the DOT requesting approval of and antitrust
immunity for the alliance. VivaAerobus has received approval from
the Mexican Federal Economic Competition Commission to proceed with
the alliance.
We and VivaAerobus currently expect to offer new routes under the
alliance beginning in the first half of 2023, pending U.S.
governmental approval of the applications and the return of Mexico
to Category 1.
Sunseeker Resort
Near the end of September 2022, Hurricane Ian cut a destructive
path through Florida and Charlotte County, in particular. Sunseeker
Resort suffered damage from the Hurricane, to a large extent
attributable to subcontractor cranes which fell onto the
buildings.
We have begun and will continue to evaluate damage caused by the
Hurricane and have engaged outside specialists, including
structural engineers, to evaluate the damage and advise as to the
course of action to assure the safe completion of the Resort. We
maintain robust insurance coverage against damage from hurricanes
and business interruption insurance and are pursuing claims to
recover losses.
The Resort was previously selling rooms for as early as May 2023.
Realizing there will be some delays caused by the Hurricane, the
Resort has now pushed back the selling date to September 2023. As
the extent of the damage is not yet known nor can the Company
predict how quickly resources will be available to complete the
construction, it is too early to tell whether the delays will be
longer or shorter.
RESULTS OF OPERATIONS
Comparison of three months ended September 30, 2022 to three
months ended September 30, 2021
As comparisons of our 2022 results to periods during 2021 reflect
disproportionate changes due to the continued impact of the
pandemic on air travel during 2021, we have also provided analysis
of certain revenue and expense line items to 2019 results where
helpful to understand trends in our performance.
Operating Revenue
Passenger revenue.
For the third quarter 2022, passenger revenue increased 21.9
percent compared to the same period in 2021 as scheduled service
passengers were up 12.5 percent due to stronger passenger demand.
In addition, stronger passenger demand resulted in a 17.7 percent
increase in scheduled service average base fare. We reduced the
number of departures year-over-year to support operational
reliability. Capacity was flat year-over-year as an increase in the
average stage length and a slight increase in average seats per
departure offset the reduction in departures.
Passenger revenue for the third quarter 2022, as compared to third
quarter 2019, increased by 32.0 percent, as passengers increased by
15.0 percent on a 17.0 percent increase in capacity and average
stage length increased by 4.4 percent, resulting in a 2.5
percentage point increase in load factor. Average total fare per
scheduled service passenger increased by 15.5 percent over the same
period in 2019 as a result of a 16.7 percent increase in ancillary
air-related revenue per passenger and a 29.7 percent increase in
ancillary third party revenue per passenger.
The increase in ancillary air-related revenue per passenger over
the same period in 2019 was primarily driven by increased revenue
from the sale of
bundled products as bundled products were not offered during the
same period in 2019.
Third party products revenue.
Third party products revenue for the third quarter 2022 increased
10.6 percent compared to the third quarter 2021 and 49.0 percent
compared to the third quarter 2019. The increase from 2021 is
primarily the result of greater travel demand for hotels over the
same period and increased Allways® Rewards Program revenues.
Increased rental car and hotel rates also contributed to the
increase over 2021.
The substantial increase from 2019 is attributable to increased
rental car rates (which more than offset the impact of fewer rental
car days) and growth in our Allways® Rewards Program
revenues.
Fixed fee contract revenue.
Fixed fee contract revenue for the third quarter 2022 increased
42.9 percent compared to the same period in 2021 as a result of an
8.1 percent increase in fixed fee departures when compared to lower
charter activity during the 2021 quarter impacted by the pandemic.
In addition, fuel per gallon pass throughs (which are accounted for
as fixed fee contract revenue) increased 75.0 percent as compared
to 2021.
Fixed fee contract revenue for the third quarter 2022, as compared
to 2019, decreased by 19.8 percent as a result of a 28.5 percent
decrease in fixed fee revenue departures partially offset by an
increase in fuel pass throughs treated as revenue.
Operating Expenses
We primarily evaluate our expense management by comparing our costs
per available seat mile (ASM) across different periods, which
enables us to assess trends in each expense category. The following
table presents unit costs on a per ASM basis, or CASM, for the
indicated periods, 2019 being included as a more representative
pre-pandemic third quarter comparison. Excluding fuel on a per ASM
basis provides management and investors the ability to measure and
monitor our cost performance absent fuel price volatility. Both the
cost and availability of fuel are subject to many economic and
political factors beyond our control.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Percent Change |
|
Unitized costs (in cents) |
2022 |
|
2021 |
|
2019 |
|
YoY |
|
Yo3Y |
|
Aircraft fuel |
4.68 |
¢ |
|
2.67 |
¢ |
|
2.69 |
¢ |
|
75.3 |
% |
|
74.0 |
% |
|
Salaries and benefits |
3.09 |
|
|
2.83 |
|
|
2.77 |
|
|
9.2 |
|
|
11.6 |
|
|
Station operations |
1.49 |
|
|
1.60 |
|
|
1.12 |
|
|
(6.9) |
|
|
33.0 |
|
|
Depreciation and amortization |
1.13 |
|
|
1.04 |
|
|
1.01 |
|
|
8.7 |
|
|
11.9 |
|
|
Maintenance and repairs |
0.72 |
|
|
0.69 |
|
|
0.64 |
|
|
4.3 |
|
|
12.5 |
|
|
Sales and marketing |
0.58 |
|
|
0.50 |
|
|
0.45 |
|
|
16.0 |
|
|
28.9 |
|
|
Aircraft lease rentals |
0.13 |
|
|
0.13 |
|
|
— |
|
|
— |
|
|
NM |
|
Other |
0.67 |
|
|
0.50 |
|
|
0.69 |
|
|
34.0 |
|
|
(2.9) |
|
|
Payroll Support Programs grant recognition |
— |
|
|
(1.12) |
|
|
— |
|
|
NM |
|
NM |
|
Special charges |
0.79 |
|
|
0.01 |
|
|
— |
|
|
NM |
|
NM |
|
CASM |
13.28 |
¢ |
|
8.85 |
¢ |
|
9.37 |
¢ |
|
50.1 |
|
|
41.7 |
|
|
Operating CASM, excluding fuel |
8.60 |
¢ |
|
6.18 |
¢ |
|
6.68 |
¢ |
|
39.2 |
|
|
28.7 |
|
|
Sunseeker Resort CASM |
0.85 |
|
|
0.05 |
|
|
0.04 |
|
|
NM |
|
NM |
|
Operating CASM, excluding fuel and Sunseeker Resort
activity |
7.75 |
¢ |
|
6.13 |
¢ |
|
6.64 |
¢ |
|
26.4 |
|
|
16.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NM - Not meaningful
Aircraft fuel expense.
Aircraft fuel expense increased $89.8 million, or 75.9
percent, for the third quarter 2022 compared to third quarter 2021.
This is primarily due to a 75.0 percent increase in average fuel
cost per gallon.
When compared to the same period in 2019, aircraft fuel expense
increased by 99.1 percent as average fuel cost per gallon increased
78.2 percent and fuel gallons consumed increased 11.6 percent on a
14.5 percent increase in capacity.
Salaries and benefits expense.
Salaries and benefits expense increased $11.5 million, or 9.2
percent, for the third quarter 2022 when compared to the same
period in 2021. The increase is primarily due to a 24.2 percent
increase in the number of full time equivalent employees from the
third quarter 2021.
When compared to the same period in 2019, salaries and benefits
expense increased by $29.8 million or 27.7 percent on a 24.1
percent increase in the number of full time equivalent employees
year over three-year. On a per ASM basis, salaries and benefits
expense increased 11.6 percent. The cost increases primarily relate
to increases in crew pay and increased salaries and benefit costs
associated with irregular operations.
Station operations expense.
Station operations expense for the third quarter 2022 decreased
$4.6 million, or 6.5 percent compared to the same period in 2021
due to decreased departures of 4.0 percent.
As compared to the same period in 2019, station operations expense
increased by $22.8 million or 52.3 percent due to a 6.2 percent
increase in departures, increased costs associated with irregular
operations and increased airport fees.
Depreciation and amortization expense.
Depreciation and amortization expense for the third quarter 2022
increased by 8.0 percent as compared to the third quarter 2021 as
the average number of aircraft owned and in service increased 6.6
percent year-over-year.
Compared to the same period in 2019, depreciation and amortization
expense increased $10.7 million or 27.0 percent as the average
number of aircraft owned and in service increased 17.3 percent and
our deferred major maintenance balance increased 49.4 percent for
the period ended September 30, 2022 as compared to September 30,
2019.
Maintenance and repairs expense.
Maintenance and repairs expense for the third quarter 2022
increased $1.7 million, or 5.7 percent, compared to the same
period in 2021. Routine maintenance costs increased as the average
number of aircraft in service increased 9.0 percent year-over-year
and as a result of increased costs related to outsourced labor in
2022 (largely attributable to our smaller bases and
outstations).
Compared to the same period in 2019, maintenance and repairs
expense increased by $7.4 million or 29.9 percent primarily due to
a 31.4 percent increase in the average number of aircraft in
service and as a result of increased costs related to outsourced
labor in 2022.
Sales and marketing expense.
Sales and marketing expense for the third quarter 2022 increased by
17.1 percent compared to the same period in 2021, due to an
increase in net credit card fees as a result of a 21.9 percent
increase in passenger revenue year-over-year.
Compared to the same period in 2019, sales and marketing expense
increased by 46.8 percent primarily due to an increase in net
credit card fees as a result of a 32.0 percent increase in
passenger revenue compared to the same period in 2019 as well as
our entrance into new marketing agreements.
Other operating expense.
Other expense increased $7.9 million or 35.4 percent for the
third quarter 2022 compared to the third quarter 2021 attributable
to incremental increases in our employee training
activity.
Payroll Support Programs grant recognition.
During 2021, we received $203.9 million in funds through the
payroll support programs and recognized $49.2 million as an offset
to operating expense on our statement of income during the third
quarter of 2021. The funds were fully utilized in 2021. There were
no such funds received in 2022.
Special charges.
Special charges of $35.1 million were recorded within operating
expenses for the third quarter 2022 compared to $0.3 million for
the same period 2021. The special charges in 2022 relate to an
estimated loss incurred from the impact of Hurricane Ian. The
amount of the loss will be offset in future periods by amounts to
be recovered under our insurance policies. The charges in 2021
include accelerated depreciation on an airframe resulting from an
accelerated retirement plan. See Note 2 of Notes to Consolidated
Financial Statements (unaudited) for further information on the
special charge recorded in 2022 related to Hurricane
Ian.
Interest Expense
Interest expense for the quarter ended September 30, 2022
increased by $17.6 million, or 106.3 percent over third quarter
2021, due to new fixed rate debt and finance lease transactions
entered into since third quarter 2021 as well as a 2.1 percentage
point increase in the weighted average variable interest rate
year-over-year as general interest rates have risen. During the
third quarter 2022, we recognized a loss on debt extinguishment of
$5.0 million in relation to the prepayment of our Term Loan
B.
Income Tax Expense
We recorded a $9.7 million income tax benefit at an effective tax
rate of 17.3 percent and an $11.0 million income tax expense at a
21.9 percent effective tax rate for the three months ended
September 30, 2022 and 2021, respectively. The effective tax rate
for the three months ended September 30, 2022 differed from the
statutory Federal income tax rate of 21.0 percent primarily due to
state income taxes and the impact of permanent tax
differences.
Comparison of nine months ended September 30, 2022 to nine
months ended September 30, 2021
As comparisons of our 2022 results to periods during 2021 reflect
disproportionate changes due to the continued impact of the
pandemic on air travel during 2021, we have also provided analysis
of certain revenue and expense line items to 2019 results where
helpful to understand trends in our performance.
Operating Revenue
Passenger revenue.
For the nine months ended September 30, 2022, passenger
revenue increased 39.9 percent compared with the same period in
2021 as scheduled service passengers were up 29.5 percent due to
stronger passenger demand in general and when compared to lower
passenger demand related to COVID-19 during the first nine months
of 2021. In addition, stronger passenger demand resulted in a 10.4
percent increase in scheduled service average base
fare.
Passenger revenue for the first nine months of 2022, as compared to
the first nine months of 2019 increased by 24.3 percent, as
scheduled service passengers increased by 12.6 percent on a 16.2
percent increase in capacity and average stage length increased by
3.3 percent, resulting in a 0.5 percentage point increase in load
factor. Average total fare per scheduled service passenger
increased by 11.0 percent over the same period in 2019 primarily
driven by a 16.5 percent increase in ancillary air related revenue
per passenger and a 28.3 percent increase in ancillary third party
revenue per passenger.
The increase in ancillary air related revenue per passenger over
the same period in 2019 was primarily driven by increased revenue
from the sale of
bundled products as bundled products were not offered in the 2019
period.
Third party products revenue.
Third party products revenue for the nine months ended
September 30, 2022 increased 26.5 percent over the same period
in 2021 and 44.5 percent when compared to 2019. The increase from
2021 is primarily the result of greater travel demand for rental
cars and hotels and increased Allways® Rewards Program revenues.
Increased rental car and hotel rates combined with a 11.0 percent
increase in rental car days sold and a 13.7 percent increase in
room nights sold contributed to the substantial increase over
2021.
The increase from 2019 is attributable to increased rental car and
hotel room rates (which more than offset the impact of fewer rental
car days and hotel room nights) and substantial growth in our
Allways® Rewards Program revenues.
Fixed fee contract revenue.
Fixed fee contract revenue for the nine months ended
September 30, 2022 increased 59.5 percent compared to the same
period in 2021 as a result of an 11.1 percent increase in fixed fee
departures largely due to lower charter activity during the
pandemic in the same period of 2021. In addition, fuel per gallon
pass throughs (which are accounted for as fixed fee contract
revenue) increased 84.8 percent as compared to the same period in
2021.
Fixed fee contract revenue for the nine months ended
September 30, 2022, as compared to 2019, decreased by 10.9
percent as a result of a 22.7 percent decrease in fixed fee
departures, partially offset by higher charter rates and higher
fuel cost pass throughs.
Operating Expenses
The following table presents unit costs on a per ASM basis, defined
as Operating CASM, for the indicated
periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
Percent Change |
|
Unitized costs (in cents) |
2022 |
|
2021 |
|
2019 |
|
YoY |
|
Yo3Y |
|
Aircraft fuel |
4.48 |
¢ |
|
2.38 |
¢ |
|
2.65 |
¢ |
|
88.2 |
% |
|
69.1 |
% |
|
Salaries and benefits |
2.92 |
|
|
2.80 |
|
|
2.78 |
|
|
4.3 |
|
|
5.0 |
|
|
Station operations |
1.41 |
|
|
1.31 |
|
|
1.05 |
|
|
7.6 |
|
|
34.3 |
|
|
Depreciation and amortization |
1.04 |
|
|
1.03 |
|
|
0.93 |
|
|
1.0 |
|
|
11.8 |
|
|
Maintenance and repairs |
0.65 |
|
|
0.59 |
|
|
0.56 |
|
|
10.2 |
|
|
16.1 |
|
|
Sales and marketing |
0.54 |
|
|
0.39 |
|
|
0.48 |
|
|
38.5 |
|
|
12.5 |
|
|
Aircraft lease rentals |
0.12 |
|
|
0.12 |
|
|
— |
|
|
— |
|
|
NM |
|
Other |
0.59 |
|
|
0.43 |
|
|
0.60 |
|
|
37.2 |
|
|
(1.7) |
|
|
Payroll Support Programs grant recognition |
— |
|
|
(1.55) |
|
|
— |
|
|
NM |
|
NM |
|
Special charges |
0.25 |
|
|
0.02 |
|
|
— |
|
|
NM |
|
NM |
|
CASM |
12.00 |
¢ |
|
7.52 |
¢ |
|
9.05 |
¢ |
|
59.6 |
|
|
32.6 |
|
|
Operating CASM, excluding fuel
(2)
|
7.52 |
¢ |
|
5.14 |
¢ |
|
6.40 |
¢ |
|
46.3 |
|
|
17.5 |
|
|
Sunseeker Resort CASM |
0.30 |
|
|
0.04 |
|
|
0.05 |
|
|
NM |
|
NM |
|
Operating CASM, excluding fuel and Sunseeker Resort
activity |
7.22 |
¢ |
|
5.10 |
¢ |
|
6.35 |
¢ |
|
41.6 |
|
|
13.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aircraft fuel expense.
Aircraft fuel expense increased $318.9 million, or 102.7 percent,
for the nine months ended September 30, 2022 compared to the
same period in 2021. This is primarily driven by a 84.8 percent
increase in average fuel cost per gallon. In addition, ASMs
increased by 7.7 percent contributing to a 9.6 percent increase in
fuel gallons consumed.
Aircraft fuel expense increased by $305.3 million or 94.2 percent
for the nine months ended September 30, 2022 compared to the
same period in 2019. This is primarily driven by an increase in
average fuel cost per gallon of 72.9 percent in addition to a 14.8
percent increase in ASMs resulting in a 12.1 percent increase in
fuel gallons consumed.
Salaries and benefits expense.
Salaries and benefits expense increased $45.4 million, or 12.4
percent, for the nine months ended September 30, 2022 compared
to the same period in 2021. The increase is primarily due to a 24.2
percent increase in the number of full time equivalent employees
from the same period in 2021, offset by the employee retention tax
credit recognized in the first quarter of 2022.
Salaries and benefits expense for the nine months ended September
30, 2022 increased by $70.4 million or 20.7 percent as compared to
the same period in 2019. The increase is primarily due to a 24.1
percent increase in the number of full time equivalent employees
from same period in 2019, offset by the employee retention tax
credit recognized in the first quarter of 2022.
On a per ASM basis, salaries and benefits expense increased 5.0
percent. The cost increases primarily relate to increases in crew
pay and increased salaries and benefits costs associated with
irregular operations.
Station operations expense.
Station operations expense for the nine months ended
September 30, 2022 increased $27.7 million or 16.2 percent due
to a 2.5 percent increase in departures, increased costs associated
with irregular operations, and increased airport and landing
fees.
As compared to the nine month period ended September 30, 2019,
station operations expense increased by $70.6 million or 55.0
percent due to a 7.9 percent increase in departures, increased
costs associated with irregular operations and increased airport
fees.
Irregular operations costs in 2022 were significantly attributable
to COVID absences due to the Omicron variant in January and
February. These absences resulted in numerous flight cancellations.
Higher than usual cancellations continued into the third quarter as
a result of staffing challenges and other factors. The amount of
irregular operations costs is significantly impacted by our
decision to compensate impacted passengers for their inconvenience
in addition to the ticket price.
Depreciation and amortization expense.
Depreciation and amortization expense for the nine months ended
September 30, 2022 increased $11.5 million or 8.6 percent
as compared to the same period in 2021 due to a 7.6 percent
increase in the average number of aircraft owned and in
service.
When compared to the nine months ended September 30, 2019,
depreciation and amortization expense increased 27.6 percent as the
average number of aircraft owned and in service increased 20.3
percent and our deferred major maintenance balance increased 61.6
percent.
Maintenance and repairs expense.
Maintenance and repairs expense for the nine months ended
September 30, 2022 increased by $14.7 million or 19.2 percent
compared to the same period in 2021. Routine maintenance costs
increased as the average number of aircraft in service increased
10.9 percent year-over-year and as a result of increased costs
related to outsourced labor in 2022.
As compared to the nine months ended September 30, 2019,
maintenance and repairs expense increased by $22.7 million or 33.1
percent as the number of aircraft in service increased by 34.0
percent and increased costs related to outsourced labor in 2022
(largely attributable to our smaller bases and
outstations).
Sales and marketing expense.
Sales and marketing expense for the nine months ended
September 30, 2022 increased 47.1 percent compared to the same
period in 2021, due to an increase in net credit card fees as a
result of a 39.9 percent increase in passenger revenue
year-over-year.
Compared to the nine months ended September 30, 2019, sales and
marketing expense increased 27.8 percent due to an increase in net
credit card fees as a result of a 24.3 percent increase in
passenger revenue.
Other expense.
Other expense for the nine months ended September 30, 2022
increased by $27.5 million or 49.4 percent year-over-year, due to
increased service, incremental increases in our employee training
activity and offset by decreased activity in our non-airline
subsidiaries due to the sale of Teesnap in the second quarter of
2021.
Payroll Support Programs grant recognition.
During 2021, we received $203.9 million in funds through the
payroll support programs and recognized $202.2 million as an offset
to operating expense on our income statement for the nine month
period ending September 30, 2021. The funds were fully utilized in
2021. There were no such funds received in 2022.
Special charges.
Special charges of $35.4 million were recorded within operating
expenses for the nine months ended September 30, 2022 compared to
$2.9 million for the same period in 2021. The special charges in
2022 relate to the estimated
loss incurred from the impact of of Hurricane Ian. The amount of
the loss will be offset in future periods by amounts to be
recovered under our insurance policies. The charges in 2021 include
accelerated retirements of five airframes and eight engines and an
impairment loss on a building associated with the Allegiant Nonstop
family entertainment line of business. See Note 2 of the Notes to
Consolidated Financial Statement (unaudited) for further
information on the special charge recorded in 2022 related to
Hurricane Ian.
Income Tax Expense
We recorded a $10.9 million income tax benefit at an effective rate
of 17.9 percent compared to a $40.3 million tax expense at a 22.2
percent effective tax rate for the nine months ended September 30,
2022 and 2021, respectively. The 17.9 percent effective tax rate
for the nine months ended September 30, 2022 differed from the
statutory federal income tax rate of 21.0 percent primarily due to
state income taxes and the impact of permanent tax differences. The
22.2 percent effective tax rate for the nine months ended September
30, 2021 differed from the statutory federal income tax rate of
21.0 percent primarily due to state income taxes and the impact of
ASU 2016-09 related to share-based payments.
Comparative Consolidated Operating Statistics
The following tables set forth our operating statistics for the
periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Percent Change
(1)
|
|
2022 |
|
2021 |
|
2019 |
|
YoY |
|
Yo3Y |
|
Operating statistics (unaudited): |
|
|
|
|
|
|
|
|
|
|
Total system statistics: |
|
|
|
|
|
|
|
|
|
|
Passengers |
4,359,417 |
|
3,872,651 |
|
|
3,806,369 |
|
12.6 |
% |
|
14.5 |
% |
|
Available seat miles (ASMs) (thousands) |
4,450,595 |
|
4,441,201 |
|
|
3,888,400 |
|
0.2 |
|
|
14.5 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating expense per ASM (CASM) (cents) |
13.28 |
¢ |
|
8.85 |
¢ |
|
9.37 |
¢ |
|
50.1 |
|
|
41.7 |
|
|
Fuel expense per ASM (cents) |
4.68 |
¢ |
|
2.67 |
¢ |
|
2.69 |
¢ |
|
75.3 |
|
|
74.0 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating CASM, excluding fuel (cents) |
8.60 |
¢ |
|
6.18 |
¢ |
|
6.68 |
¢ |
|
39.2 |
|
|
28.7 |
|
|
Sunseeker Resort CASM (cents)(2)
|
0.85 |
¢ |
|
0.05 |
¢ |
|
0.04 |
¢ |
|
NM |
|
NM |
|
Operating CASM, excluding fuel and Sunseeker Resort activity
(cents) |
7.75 |
¢ |
|
6.13 |
¢ |
|
6.64 |
¢ |
|
26.4 |
|
|
16.7 |
|
|
ASMs per gallon of fuel |
82.4 |
|
82.5 |
|
|
80.3 |
|
(0.1) |
|
|
2.6 |
|
|
Departures |
29,432 |
|
30,663 |
|
|
27,707 |
|
(4.0) |
|
|
6.2 |
|
|
Block hours |
67,277 |
|
67,398 |
|
|
59,678 |
|
(0.2) |
|
|
12.7 |
|
|
Average stage length (miles) |
857 |
|
829 |
|
|
823 |
|
3.4 |
|
|
4.1 |
|
|
Average number of operating aircraft during period |
115.1 |
|
105.6 |
|
|
87.6 |
|
9.0 |
|
|
31.4 |
|
|
Average block hours per aircraft per day |
6.4 |
|
7.0 |
|
|
7.4 |
|
(8.6) |
|
|
(13.5) |
|
|
Full-time equivalent employees at end of period |
5,294 |
|
4,261 |
|
|
4,267 |
|
24.2 |
|
|
24.1 |
|
|
Fuel gallons consumed (thousands) |
54,044 |
|
53,850 |
|
|
48,443 |
|
0.4 |
|
|
11.6 |
|
|
Average fuel cost per gallon |
$ |
3.85 |
|
$ |
2.20 |
|
|
$ |
2.16 |
|
75.0 |
|
|
78.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scheduled service statistics: |
|
|
|
|
|
|
|
|
|
|
Passengers |
4,316,163 |
|
|
3,834,956 |
|
|
3,753,611 |
|
|
12.5 |
|
15.0 |
|
Revenue passenger miles (RPMs) (thousands) |
3,820,339 |
|
3,302,519 |
|
|
3,170,826 |
|
|
15.7 |
|
20.5 |
|
Available seat miles (ASMs) (thousands) |
4,315,984 |
|
|
4,312,893 |
|
|
3,687,473 |
|
|
0.1 |
|
17.0 |
|
Load factor |
88.5 |
% |
|
76.6 |
% |
|
86.0 |
% |
|
11.9 |
|
2.5 |
|
Departures |
28,436 |
|
|
29,593 |
|
|
26,238 |
|
|
(3.9) |
|
8.4 |
|
Block hours |
65,182 |
|
|
65,296 |
|
|
56,576 |
|
|
(0.2) |
|
15.2 |
|
Average seats per departure |
175.8 |
|
|
174.3 |
|
|
170.8 |
|
|
0.9 |
|
2.9 |
|
Yield (cents)
(3)
|
6.92 |
¢ |
|
6.04 |
¢ |
|
6.42 |
¢ |
|
14.6 |
|
7.8 |
|
Total passenger revenue per ASM (TRASM) (cents)(4)
|
12.60 |
¢ |
|
10.40 |
¢ |
|
11.10 |
¢ |
|
21.2 |
|
13.5 |
|
Average fare - scheduled service(5)
|
$ |
61.26 |
|
|
$ |
52.05 |
|
|
$ |
54.20 |
|
|
17.7 |
|
13.0 |
|
Average fare - air-related charges(5)
|
$ |
58.40 |
|
|
$ |
58.45 |
|
|
$ |
50.03 |
|
|
(0.1) |
|
16.7 |
|
Average fare - third party products |
$ |
6.29 |
|
|
$ |
6.40 |
|
|
$ |
4.85 |
|
|
(1.7) |
|
29.7 |
|
Average fare - total |
$ |
125.95 |
|
|
$ |
116.91 |
|
|
$ |
109.08 |
|
|
7.7 |
|
15.5 |
|
Average stage length (miles) |
860 |
|
|
834 |
|
|
824 |
|
|
3.1 |
|
4.4 |
|
Fuel gallons consumed (thousands) |
52,491 |
|
|
52,249 |
|
|
46,038 |
|
|
0.5 |
|
14.0 |
|
Average fuel cost per gallon |
$ |
3.84 |
|
|
$ |
2.19 |
|
|
$ |
2.17 |
|
|
75.3 |
|
77.0 |
|
Rental car days sold |
364,481 |
|
|
366,407 |
|
|
482,944 |
|
|
(0.5) |
|
(24.5) |
|
Hotel room nights sold |
71,205 |
|
|
66,626 |
|
|
99,991 |
|
|
6.9 |
|
(28.8) |
|
Percent of sales through website during period |
96.1 |
% |
|
95.4 |
% |
|
93.1 |
% |
|
0.7 |
|
3.0 |
(1)Except
load factor and percent of sales through website during period,
which are presented as a percentage point change.
(2)Includes
a $35.0 million special charge in the third quarter 2022
relating to Hurricane Ian damage to Sunseeker Resort.The amount of
the loss will be offset in future periods by amounts to be
recovered under our insurance policies.
(3)Defined
as scheduled service revenue divided by revenue passenger
miles.
(4)Various
components of this measure do not have a direct correlation to
ASMs. This measure is provided on a per ASM basis so as to
facilitate comparison with airlines reporting revenues on a per ASM
basis.
(5)Reflects
division of passenger revenue between scheduled service (base fare)
and air-related charges in our booking path.
Comparative Consolidated Operating Statistics
The following tables set forth our operating statistics for the
periods indicated:
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Nine Months Ended September 30, |
|
Percent Change
(1)
|
|
2022 |
|
2021 |
|
2019 |
|
YoY |
|
Yo3Y |
|
Operating statistics (unaudited): |
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Total system statistics: |
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|
|
Passengers |
12,834,078 |
|
9,906,371 |
|
11,426,183 |
|
29.6 |
% |
|
12.3 |
% |
|
Available seat miles (ASMs) (thousands) |
14,060,825 |
|
13,049,732 |
|
12,245,704 |
|
7.7 |
|
|
14.8 |
|
|
Operating expense per ASM (CASM) (cents) |
12.00 |
¢ |
|
7.52 |
¢ |
|
9.05 |
¢ |
|
59.6 |
|
|
32.6 |
|
|
Fuel expense per ASM (cents) |
4.48 |
¢ |
|
2.38 |
¢ |
|
2.65 |
¢ |
|
88.2 |
|
|
69.1 |
|
|
Operating CASM, excluding fuel (cents) |
7.52 |
¢ |
|
5.14 |
¢ |
|
6.40 |
¢ |
|
46.3 |
|
|
17.5 |
|
|
Sunseeker Resort CASM (cents)(2)
|
0.30 |
¢ |
|
0.04 |
¢ |
|
0.05 |
¢ |
|
NM |
|
NM |
|
Operating CASM, excluding fuel and Sunseeker Resort activity
(cents) |
7.22 |
¢ |
|
5.10 |
¢ |
|
6.35 |
¢ |
|
41.6 |
|
|
13.7 |
|
|
ASMs per gallon of fuel |
84.2 |
|
85.6 |
|
82.2 |
|
(1.6) |
|
|
2.4 |
|
|
Departures |
90,064 |
|
87,854 |
|
83,454 |
|
2.5 |
|
|
7.9 |
|
|
Block hours |
212,403 |
|
197,581 |
|
187,829 |
|
7.5 |
|
|
13.1 |
|
|
Average stage length (miles) |
885 |
|
852 |
|
858 |
|
3.9 |
|
|
3.1 |
|
|
Average number of operating aircraft during period |
112.7 |
|
101.6 |
|
84.1 |
|
10.9 |
|
|
34.0 |
|
|
Average block hours per aircraft per day |
6.9 |
|
7.1 |
|
8.2 |
|
(2.8) |
|
|
(15.9) |
|
|
Full-time equivalent employees at end of period |
5,294 |
|
4,261 |
|
4,267 |
|
24.2 |
|
|
24.1 |
|
|
Fuel gallons consumed (thousands) |
167,070 |
|
152,464 |
|
148,980 |
|
9.6 |
|
|
12.1 |
|
|
Average fuel cost per gallon |
$ |
3.77 |
|
$ |
2.04 |
|
$ |
2.18 |
|
84.8 |
|
|
72.9 |
|
|
|
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|
Scheduled service statistics: |
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|
|
|
|
|
|
Passengers |
12,736,268 |
|
|
9,838,512 |
|
|
11,307,004 |
|
|
29.5 |
|
12.6 |
|
Revenue passenger miles (RPMs) (thousands) |
11,646,212 |
|
|
8,657,151 |
|
|
9,964,948 |
|
|
34.5 |
|
16.9 |
|
Available seat miles (ASMs) (thousands) |
13,716,838 |
|
|
12,739,769 |
|
|
11,800,788 |
|
|
7.7 |
|
16.2 |
|
Load factor |
84.9 |
% |
|
68.0 |
% |
|
84.4 |
% |
|
16.9 |
|
0.5 |
|
Departures |
87,475 |
|
|
85,303 |
|
|
80,149 |
|
|
2.5 |
|
9.1 |
|
Block hours |
206,868 |
|
|
192,481 |
|
|
180,674 |
|
|
7.5 |
|
14.5 |
|
Average seats per departure |
175.7 |
|
|
173.8 |
|
|
171.0 |
|
|
1.1 |
|
2.7 |
|
Yield (cents)
(3)
|
6.94 |
¢ |
|
6.53 |
¢ |
|
6.85 |
¢ |
|
6.3 |
|
1.3 |
|
Total passenger revenue per ASM (TRASM) (cents)(4)
|
12.03 |
¢ |
|
9.30 |
¢ |
|
11.18 |
¢ |
|
29.4 |
|
7.6 |
|
Average fare - scheduled service(5)
|
$ |
63.44 |
|
|
$ |
57.48 |
|
|
$ |
60.40 |
|
|
10.4 |
|
5.0 |
|
Average fare - air-related charges(5)
|
$ |
60.07 |
|
|
$ |
56.79 |
|
|
$ |
51.56 |
|
|
5.8 |
|
16.5 |
|
Average fare - third party products |
$ |
6.08 |
|
|
$ |
6.22 |
|
|
$ |
4.74 |
|
|
(2.3) |
|
28.3 |
|
Average fare - total |
$ |
129.59 |
|
|
$ |
120.49 |
|
|
$ |
116.70 |
|
|
7.6 |
|
11.0 |
|
Average stage length (miles) |
889 |
|
|
857 |
|
|
861 |
|
|
3.7 |
|
3.3 |
|
Fuel gallons consumed (thousands) |
162,933 |
|
|
148,578 |
|
|
143,433 |
|
|
9.7 |
|
13.6 |
|
Average fuel cost per gallon |
$ |
3.77 |
|
|
$ |
2.03 |
|
|
$ |
2.17 |
|
|
85.7 |
|
73.7 |
|
Rental car days sold |
1,161,579 |
|
|
1,046,751 |
|
|
1,495,502 |
|
|
11.0 |
|
(22.3) |
|
Hotel room nights sold |
222,334 |
|
|
195,535 |
|
|
319,197 |
|
|
13.7 |
|
(30.3) |
|
Percent of sales through website during period |
96.2 |
% |
|
94.3 |
% |
|
93.4 |
% |
|
1.9 |
|
2.8 |
(1)Except
load factor and percent of sales through website during period,
which are presented as a percentage point change.
(2)Includes
$35.0 million special charge in the third quarter 2022
relating to Hurricane Ian damage to Sunseeker Resort.The amount of
the loss will be offset in future periods by amounts to be
recovered under our insurance policies.
(3)Defined
as scheduled service revenue divided by revenue passenger
miles.
(4)Various
components of this measure do not have a direct correlation to
ASMs. This measure is provided on a per ASM basis so as to
facilitate comparison with airlines reporting revenues on a per ASM
basis.
(5)Reflects
division of passenger revenue between scheduled service (base fare)
and air-related charges in our booking path.
LIQUIDITY AND CAPITAL RESOURCES
Current liquidity
Cash, cash equivalents and investment securities (short-term and
long-term) decreased to $1.00 billion at September 30, 2022,
from $1.19 billion at December 31, 2021. Investment
securities represent highly liquid marketable securities which are
available-for-sale.
Restricted cash represents escrowed funds under fixed fee
contracts, escrowed airport project funds and cash collateral
against letters of credit required by hotel properties for
guaranteed room availability, airports and certain other parties.
Under our fixed fee flying contracts, we require our customers to
prepay for flights to be provided by us. The prepayments are
escrowed until the flight is completed and are recorded as
restricted cash with a corresponding amount reflected as air
traffic liability.
We believe we have more than adequate liquidity resources through
our cash balances, operating cash flows and borrowings to meet our
future contractual obligations. We will continue to consider
raising funds through debt financing on an opportunistic
basis.
Debt
Our debt and finance lease obligations balance, without reduction
for related issuance costs, increased from $1.77 billion as of
December 31, 2021 to $2.02 billion as of September 30,
2022. During the nine months ended September 30, 2022, we
entered into debt and finance leases for $918.3 million including
debt of $550.0 million to refinance our term loan due 2024. During
this period, we made principal payments of $666.0 million,
including a $531.7 million prepayment of our term loan due 2024,
$24.7 million prepayment of our payroll support program loans and
$1.7 million prepayment of debt secured by aircraft.
As of September 30, 2022, approximately 82 percent of our debt
and finance lease obligations are fixed-rate.
Sources and Uses of Cash
Operating Activities.
Operating cash inflows are primarily derived from providing air
transportation and related ancillary products and services to
customers. During the nine months ended September 30, 2022,
our operating activities provided $221.8 million of cash compared
to $373.6 million during the same period 2021. This change is
mostly attributable to a $191.1 million decrease in net income
offset by changes in current assets and liability
accounts.
Investing Activities.
Cash used for investing activities was $335.6 million during the
nine months ended September 30, 2022 compared to $513.3
million used for investing activities during the same period in
2021. The change is due to a $405.7 million increase in proceeds
from maturities, net of purchases, of investment securities during
the nine months ended September 30, 2022 as proceeds from
maturities exceeded purchases of investment securities in the nine
months ended September 30, 2022 but not in the same period of 2021.
This was offset by a $227.0 million increase in purchases of
property and equipment, including $88.5 million related to aircraft
pre-delivery deposits during the nine months ended September 30,
2022.
Financing Activities.
Cash used for financing activities for the nine months ended
September 30, 2022 was $15.7 million, compared to $205.4
million cash provided by financing activities for the same period
in 2021. The change resulted from $335.1 million of proceeds from
the issuance of common stock in the first nine months of 2021
offset by an increase in proceeds from debt issuance in excess of
principal payments and debt issuance costs of $200.8 million
compared to the same period in 2021 as debt proceeds exceeded
principal payments and debt issuance costs in the nine months ended
September 30, 2022 but not in the same period of 2021. The $82.8
million in other financing activities is largely attributable to
the deposit of $87.5 million of loan proceeds into a construction
disbursement account and as such, is a direct offset to $87.5
million of proceeds from the issuance of debt obligations for
Sunseeker Resort.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this quarterly report on
Form 10-Q, and in the section entitled “Management’s Discussion and
Analysis of Financial Condition and Results of Operations,” that
are based on our management’s beliefs and assumptions, and on
information currently available to our management. Forward-looking
statements include our statements regarding number of contracted
aircraft to be placed in service in the future, the timing of
aircraft deliveries and retirements, the implementation of a joint
alliance with VivaAerobus, the development of our Sunseeker Resort,
as well as other information concerning future results of
operations, business strategies, financing plans, competitive
position, industry environment, potential growth opportunities, the
effects of future regulation and the effects of competition.
Forward-looking statements include all statements that are not
historical facts and can be identified by the use of
forward-looking terminology such as the words "believe," "expect,"
"anticipate," "intend," "plan," "estimate," “project,” “hope” or
similar expressions.
Forward-looking statements involve risks, uncertainties and
assumptions. Actual results may differ materially from those
expressed in the forward-looking statements. Important risk factors
that could cause our results to differ materially from those
expressed in the forward-looking statements may be found in our
periodic reports filed with the Securities and Exchange Commission
at www.sec.gov.
These risk factors include, without limitation, the impact of
Hurricane Ian on our Florida markets and on completion of Sunseeker
Resort, the impact and duration of the COVID-19 pandemic on airline
travel and the economy, liquidity issues resulting from the effect
of the COVID-19 pandemic on our business, restrictions imposed on
us a result of accepting government grants under the government
payroll support programs, an accident involving, or problems with,
our aircraft, public perception of our safety, our reliance on our
automated systems, our reliance on third parties to deliver
aircraft under contract to us on a timely basis, risk of breach of
security of personal data, volatility of fuel costs, labor issues
and costs, the ability to obtain regulatory approvals as needed,
the effect of economic conditions on leisure travel, debt covenants
and balances, the ability to finance aircraft to be acquired, the
ability to obtain necessary government approvals to implement the
announced alliance with VivaAerobus and to otherwise prepare to
offer international service, terrorist attacks, risks inherent to
airlines, our competitive environment, our reliance on third
parties who provide facilities or services to us, the possible loss
of key personnel, economic and other conditions in markets in which
we operate, the ability to successfully develop a resort in
Southwest Florida, governmental regulation, increases in
maintenance costs and cyclical and seasonal fluctuations in our
operating results.
Any forward-looking statements are based on information available
to us today and we undertake no obligation to publicly update any
forward-looking statements, whether as a result of future events,
new information or otherwise.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
There have been no material changes to our critical accounting
estimates during the nine months ended September 30,
2022. For information regarding our critical accounting
policies and estimates, see disclosures in the Consolidated
Financial Statements and accompanying notes contained in
our 2021 Form 10-K, and in Note 1 of Notes to
Consolidated Financial Statements (unaudited).
Item 3. Quantitative and Qualitative Disclosures About Market
Risk
We are subject to certain market risks, including commodity prices
(specifically aircraft fuel). The adverse effects of changes in
these markets could pose potential losses as discussed below. The
sensitivity analysis provided does not consider the effects that
such adverse changes may have on overall economic activity, nor
does it consider additional actions we may take to mitigate our
exposure to such changes. Actual results may differ.
Aircraft Fuel
Our results of operations can be significantly impacted by changes
in the price and availability of aircraft fuel. Aircraft fuel
expense for the nine months ended September 30, 2022
represented 37.3 percent of our total operating expenses. Increases
in fuel prices, or a shortage of supply, could have a material
impact on our operations and operating results. Based on our fuel
consumption for the nine months ended September 30, 2022, a
hypothetical ten percent increase in the average price per gallon
of fuel would have increased fuel expense by approximately $63.7
million. We have not hedged fuel price risk for many
years.
Interest Rates
As of September 30, 2022, we had $371.7 million of
variable-rate debt, including current maturities and without
reduction for $3.6 million in related costs. A hypothetical 100
basis point change in interest rates would have affected interest
expense on variable rate debt by approximately $6.1 million for the
nine months ended September 30, 2022 as the amount of our
variable rate debt during the year was much higher prior to the
prepayment of our term loan in August 2022.
Item 4. Controls and Procedures
As of September 30, 2022, under the supervision and with the
participation of our management, including our chief executive
officer ("CEO") and chief financial officer (“CFO”), we evaluated
the design and operation of our disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) of the Securities
Exchange Act of 1934, as amended, or the “Exchange Act”) as of the
end of the period covered by this report. Based on that evaluation,
management, including our CEO and CFO, has concluded that our
disclosure controls and procedures are designed, and are effective,
to give reasonable assurance that the information we are required
to disclose is recorded, processed, summarized and reported within
the time periods specified in the SEC’s rules and forms and is
accumulated and communicated to the Company’s management, including
the CEO and the CFO, as appropriate to allow timely decisions
regarding required disclosure.
There were no changes in our internal control over financial
reporting that occurred during the quarter ending
September 30, 2022, that have materially affected, or are
reasonably likely to materially affect, our internal control over
financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We are subject to certain legal and administrative actions we
consider routine to our business activities. We believe the
ultimate outcome of any pending legal or administrative matters
will not have a material adverse impact on our financial position,
liquidity or results of operations.
Item 1A. Risk Factors
We have evaluated our risk factors and determined there are no
changes to those set forth in Part I, Item 1A of our Annual Report
on Form 10-K for the year ended December 31, 2021 and filed with
the Commission on March 1, 2022 other than to include the following
risk factor:
The damage caused by Hurricane Ian may impact air traffic to those
areas of Florida impacted by the storm and the damage to our
Sunseeker Resort may result in delays and additional
costs.
Near the end of September 2022, Hurricane Ian struck Southwest
Florida and moved across the State of Florida causing substantial
damage in its wake. All airports in the affected areas were closed
for a period of time, but have now reopened. Particular areas in
Southwest Florida suffered damage which may take years to restore.
These areas include the tourist destinations of Fort Myers Beach,
Sanibel Island and Captiva Island among others, to which many of
our customers travel when flying on our network. There is no
assurance that passenger travel to our leisure destinations in
Punta Gorda, Sarasota and Key West will not be impacted, or to what
extent, as a result of the lingering effects of the damage and
recovery from Hurricane Ian.
Hurricane Ian also caused significant damage to our Sunseeker
Resort. We are in the process of evaluating the extent of the
damage and our insurance coverages. While we do not at this time
believe the delay to the completion of the Resort will be longer
than a few months, this will depend on the availability of workers
and materials and other factors which are beyond our
control.
Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds
Our Repurchases of Equity Securities
(a)During
third quarter 2022, we issued 17,876 shares of restricted stock to
Scott Sheldon, our president and chief operating Officer, 16,812
shares of restricted stock to Gregory Anderson, our president and
chief financial officer, 9,949 shares to Scott DeAngelo, our
executive vice president and chief marketing officer, and 11,244
shares to Rob Wilson, our executive vice president and chief
information officer under their respective employment agreements.
These shares of restricted stock represent the base equity grant
for the period under their employment agreements and vest over
three years. All of these shares were issued in reliance upon an
exemption from registration pursuant to Section 4(a)(2) of the
Securities Act of 1933, as amended, on the basis that the issuance
did not involve a public offering.
(b)Not
applicable
(c)We
did not repurchase any common stock during the third quarter
2022.
Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosures
Not applicable
Item 5. Other Information
None
Item 6. Exhibits
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101.SCH |
XBRL Taxonomy Extension Schema Document |
|
101.CAL |
XBRL Taxonomy Extension Calculation Linkbase Document |
|
101.DEF |
XBRL Taxonomy Extension Definition Linkbase Document |
|
101.LAB |
XBRL Taxonomy Extension Labels Linkbase Document |
|
101.PRE |
XBRL Taxonomy Extension Presentation Linkbase Document |
(1)Certain
confidential information in this agreement has been omitted because
it (i) is not material and (ii) would be competitively harmful if
publicly disclosed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly
authorized.
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ALLEGIANT TRAVEL COMPANY |
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Date: |
November 3, 2022 |
By: |
/s/ Gregory Anderson |
|
|
Gregory Anderson, as duly authorized officer of the Company
(President and Chief Financial Officer) and as Principal Financial
Officer |
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