Sliding fuel costs, network growth help Allegiant Travel cruise to profitable quarter

Allegiant Travel Co. rode a double-digit percentage increase in network growth and plunging fuel costs to another profitable quarter and year, company officials said Wednesday.

Las Vegas-based Allegiant, parent company of Allegiant Air, reported earnings of $56.7 million, $3.38 a share, on revenue of $310.9 million for the quarter that ended Dec. 31. That compares with earnings of $4.8 million, 27 cents a share, on revenue of $279 million for the same quarter a year earlier.

It was the company's 52nd straight profitable quarter. Earnings results beat Wall Street analysts' estimates by 24 cents a share.

The company returned $7.6 million to shareholders through the repurchase of 37,400 shares during the fourth quarter and declared $32.8 million in dividends, paying 30 cents per share in a recurring dividend in December and $1.65 a share in a special dividend in January.

Allegiant also released its 2015 totals, reporting earnings of $220.4 million, $12.94 a share, on revenue of $1.26 billion. That compares with earnings of $157.3 million, $4.86 a share, on revenue of $1.14 billion for 2014.

"The drop in global energy prices was a big contributor to these results, and once again the team executed on our unique model, generating operating margins just short of 30 percent for the year," Chairman and CEO Maurice Gallagher said in a statement issued with the release of earnings results.

Gallagher also blamed high-profile media accounts of recent operational issues experienced by Allegiant on the airline's pilots union.

"The simple answer is that they have a history of this kind of tactic of making sure all your peccadillos are out there for everybody to see," Gallagher said in response to an analyst's inquiry in the earnings teleconference.

"We're a juicy type of story in this kind of area," he said.

Allegiant management and the International Brotherhood of Teamsters Local 1224 are expected to return to the bargaining table later this year to continue what has been a three-year process to deliver what would be the airline's first union contract.

New to the process will be Jude Bricker, Allegiant's recently named new chief operating officer, who replaced Steve Harfst, who abruptly resigned earlier this month.

In Wednesday's earnings conference call, Gallagher said Allegiant pays "$1.05 a gallon into the plane and that's deja vu back to 2002 and 2003."

But the company also capitalized on a major expansion of its network, with 27 percent more routes than it had a year ago.

The company also is gradually reducing costs, expanding its fleet with more efficient Airbus A320 jets and slowly retiring its MD-80s. The airline added seven used Airbus jets to the fleet in the fourth quarter.

Bricker said one of the biggest operational challenges the airline has faced is keeping up with crew availability as the fleet and network expands.

Bricker said he expects that issue to subside by the end of the first quarter as a group of new employees makes its way through the training process.

Allegiant officials project growth to slow in 2016 with the first quarter being the best with gradual slowing through the year.

Officials also announced that Allegiant has signed a deal with Bank of America to produce a branded credit card, which is expected to launch within six months.

Bricker also said the company has grown to the point that it will be required to report its on-time record, lost baggage and complaints statistics to the U.S. Department of Transportation. He said he expects that will begin by 2017.

Investors reacted favorably to the earnings report with Allegiant stock closing up $3.70, 2.3 percent, to $158.50 on above-average trading on Nasdaq.

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