Allegiant Travel reports strong revenue, earnings

Las Vegas-based Allegiant Travel, parent company of Allegiant Air, continued its financial roll, reporting double-digit percentage increases for revenue and earnings in the company’s second quarter.

The company on Wednesday reported earnings of $33.5 million, $1.86 a share, 29.8 percent more than the second quarter of 2013. That’s based on revenue of $290.5 million, 13.6 percent better than the same quarter a year earlier.

The results beat the average estimate of 14 analysts by 7 cents a share.

Allegiant’s financial performance improved despite lower third-party ancillary revenue for the quarter and a load factor that was flat at 89.5 percent.

The company said the decline in third-party ancillary revenue was primarily due to the improving Las Vegas hotel market.

The company had a pre-purchase agreement with an undisclosed casino company for discounted rooms in Las Vegas that ended in the third quarter of 2013. Allegiant’s new agreement with the company is not as attractive to customers because of the improving local market. As a result, the number of hotel room nights sold by Allegiant declined 19.8 percent from last year to 136,500.

The third-party ancillary revenue decline was partially offset by a 2.6 percent increase in the number of rental car days, driven primarily by a net increase in growth in Allegiant’s Florida destinations.

The company benefited from the addition of service on 12 new routes. In addition, the company increased the use of the more efficient Airbus A319 fleet on its routes, using them to generate 21.9 percent of the company’s available seat miles.

In the company’s conference call, Allegiant President Andrew Levy said the company would institute a new fee for passengers to print boarding passes at airports.

The fee, $5 per printed boarding pass, is designed to push customers to print passes at their homes or at resorts prior to their flights or to use the Allegiant app to produce a mobile boarding pass on a smart phone. The new fee takes effect Sept. 1.

The company increased its fares compared with the previous year for the 18th straight quarter. The average fare for scheduled service is now at $89.63, 1.9 percent more than in the second quarter of 2013.

Company officials also told investment analysts that it expects higher depreciation and amortization expenses for the rest of the year as Allegiant buys 12 A319 jets currently leased through a European operator. The company assumed $142 million in debt on the purchases.

The airline has more Airbus jets in its acquisition pipeline. The company anticipates increasing its fleet size from 69 at the end of the third quarter to 79 by the end of 2016.

Allegiant will add seven 156-seat A319 jets and three 177-seat A320s by the end of 2016.

The Airbus jets are newer and more fuel-efficient than the company’s 53-jet MD-80 fleet.

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