Allegiant reports strong earnings, acquires more jets

Allegiant Travel Co., parent company of Allegiant Air, on Wednesday reported double-digit percentage increases in earnings for its first quarter, traditionally the company’s strongest.

The Las Vegas-based company also announced that it acquired 11 more Airbus twin-engine jets in two transactions, taking delivery by the end of 2020. That’s in addition to three A320 jets the company added to the fleet in the first quarter.

The company also is bumping up its recurring quarterly dividend from 30 cents to 70 cents a share, replacing a special $1.65 dividend that had been paid annually.

For the quarter that ended March 31, Allegiant reported net income of $72 million — a 12.9 percent increase from 2015 — and $4.29 a share, on revenue of $348.6 million. That compares to net income of $64.8 million, $3.74 a share, on revenue of $329.2 million for the same quarter a year earlier.

The company attributed the increases to operating 298 routes in the quarter compared with 247 last year. Executives also said they noted better-than-expected sales closer to dates of travel and that the Easter holiday fell in the first quarter this year instead of the second in 2015.

Allegiant Chairman and CEO Maurice Gallagher also said he expects to have the company’s first union contracts in place by the end of the year.

“While there can be no guarantees, both we and our crews are motivated to conclude these talks,” Gallagher said of negotiations with the company’s pilots and flight attendants.

Union contract negotiations have been a source of tension at the airline for nearly four years.

Teamsters Local 1224, which began contract negotiations with Allegiant management in December 2012, has threatened strikes, called attention to maintenance issues and battled in court with the airline.

After earnings were released, the union issued a statement critical of the company’s maintenance strategy.

“It’s clear that Allegiant’s bare-minimum approach to its operation isn’t working,” the Teamsters statement said. “The federal government is conducting a high-profile investigation and with an emergency occurring virtually every week due to a preventable maintenance issue, passengers are increasingly saying it isn’t worth the risk to fly Allegiant.

“It is a step that Allegiant is finally acknowledging the high rate of mechanical issues that pilots have been speaking out about, but what pilots, shareholders and passengers need is action — not just words — from the airline and that means a real investment into Allegiant’s maintenance operation, workforce and safety culture.”

In the company’s earnings call, Chief Operating Officer Jude Bricker also said second- and fourth-quarter earnings for the company could be negatively affected by a series of heavy maintenance checks scheduled on aircraft in those months.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Find him on Twitter: @RickVelotta.