Allegiant Travel sees 27.9 percent drop in quarterly profits


Even after raising ticket prices and other fees, Allegiant Travel Co. experienced a 28 percent drop in third-quarter profits.

Fuel, maintenance and market costs all rose by at least 25 percent, and interest expense more than tripled for Allegiant Travel, the parent of Las Vegas discount flier Allegiant Air.

As a result, net income dropped to $9.5 million, or 49 cents per share, down from $13.2 million, or 67 cents per share, a year earlier.

Analysts polled by Yahoo Finance had expected earnings of 44 cents a share for the latest quarter.

Revenues increased 17 percent to $191.5 million from $163.6 million.

Although most of the gain came from higher ticket prices, commissions from selling hotel rooms and other fees for extras also contributed.

Fuel costs are a particular problem for Allegiant because most of its fleet is composed of fuel-guzzling derivatives of the MD-80, a design with roots in the 1960s. And, unlike several other airlines, Allegiant does not purchase hedges, financial instruments design to protect against price spikes by locking in supplies at set prices.

 

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