Allegiant Travel boosts fourth-quarter profits

Allegiant Travel Co. boosted fourth-quarter profits past analysts' estimates, but the benefit won't be seen at McCarran International Airport.

During the quarter, revenues rose 14.9 percent to $222.8 million and net income increased 36.6 percent to $14.8 million, or 78 cents a share. The average among 14 analysts polled by Yahoo Finance was 70 cents.

Not only has subsidiary Allegiant Air expanded its flight network, but it has collected more than enough fees from other sources, especially baggage that is either checked or placed in overhead bins, to offset a decline in the average base fare. In addition, maintenance expenses dropped now that a major engine overhaul program is finished.

"Historically, one doesn't think of aviation-related companies as cash-generating machines, but we are," Allegiant Chairman and CEO Maurice Gallagher Jr., said during a conference call with Wall Street analysts.

However, said President Andrew Levy, the company found it had scheduled too many flights in off-peak days and hours in the first quarter last year. As a result, it will cut flights from McCarran during the current quarter by nearly 16 percent, a blow to the visitor industry's efforts to bring in more tourists.

Allegiant finished last year with the fifth-largest passenger count at McCarran, with 2.3 million people either boarding or getting off its planes. For several years, Allegiant has grown its local presence rapidly but slowed substantially in recent months.

Instead, Levy said, Allegiant has set Hawaii and Orlando, Fla., as its two top near-term growth targets.

The stock was flat in after-hours trading after the release of the fourth- quarter report. During the day, it dropped $2.74, or 3.58 percent, to close at $73.75 on the Nasdaq Global Select Market.

As an indicator of the overall economy, Levy said close-in ticket purchasing had slowed in the past three months, although it partially recovered in recent weeks.

"We attributed much of the softness to 'fiscal cliff' concerns, although it is difficult to prove this," he said.

After reports this week of declining consumer confidence and a slight contraction of the gross national product during the fourth quarter, "we are more persuaded that macro economic issues contributed to the weaker than expected demand we experienced," he said.

Allegiant is still trying to master the wide swings between the busy and slow times in Hawaii - flights to the islands started last year from several cities - as well as selling travel packages instead of just plane tickets. Competitor Hawaiian Airlines, during its fourth-quarter report, cited what it considered a glut of seats between the islands and the mainland.