Allegiant Air reports triple-digit rise in quarterly profits
Allegiant Air continued its earnings climb Wednesday as its Las Vegas-based parent company, Allegiant Travel Co., reported triple-digit percentage increases in earnings for the third quarter.
Allegiant recorded earnings of $44.5 million, $2.62 a share, on revenue of $300 million for the quarter that ended Sept. 30. That compares with earnings of $14.2 million, 80 cents a share, on revenue of $265 million for the same period a year earlier, a 213.4 percent increase.
The results barely missed 12 analysts’ projected estimate of $2.63 a share.
The company will pay a 30-cents-per-share dividend on Dec. 4 to shareholders of record Nov. 23, duplicating a 30-cent dividend paid Sept. 4.
Company executives, in a conference call Wednesday, projected slower growth in future quarters based on adjustments to anticipated higher fuel costs.
The company continues to increase its fuel efficiency, operating more of its flights on Airbus jets than its gas-guzzling MD-80 fleet.
Allegiant currently has 18 Airbus aircraft, increasing to 25 by the end of the year. Under the company’s current plan, it will have 50 in the next few years.
Airbus planes flew 32 percent of of third-quarter available seat miles compared with 22 percent a year ago. Most of Allegiant’s Airbus use is dedicated to East Coast destinations while West Coast flights, including Las Vegas, are dominated by MD-80 use.
Under current plans, Allegiant has 51 of the 166-passenger MD-80s and will retire five of them by the end of next year. There are 17 Airbus A319 and A320 jets in the fleet now with 33 in use by the end of 2016.
Most of the company’s recent growth has been centered on East Coast operations, particularly on destinations to and from Cincinnati. New routes accounted for 79 percent of the company’s growth in available seat miles in the quarter.
As of Sept. 30, the company is selling tickets on 296 routes compared with 236 a year ago.
Allegiant reported that scheduled service revenue increased by 1.9 percent, driven primarily by a 22.8 percent increase in passengers offset by a 17.1 percent decline in average fare t0 $120.59.
Third-party ancillary sales were flat for the quarter, but air-related ancillary fees were up 13.4 percent for the period.
Following the release of Allegiant’s results, the head of Teamsters Local 1224, the pilot union in contract negotiations with the company, called on the company to invest some of its profits in airline maintenance and operations programs.
“The company’s nickel-and-dime approach to maintenance has resulted in a high number of delays, emergency landings and evacuations this summer,” said union president Dan Wells.
“These operational issues can be prevented, but Allegiant continuously refuses to put its money into its aircraft, maintenance and staff,” he said. “Allegiant customers are facing hours on planes without air conditioning, cancellations and delays because spare tires have not been stocked and aircraft engines overheating because the company is cutting corners on maintenance that could easily be addressed.”
Allegiant’s stock price dipped $1.29, 0.8 percent, to $215.97 a share Wednesday on light trading.
Contact reporter Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Find @RickVelotta on Twitter.
