Allegiant Travel posts higher annual, quarterly revenues, profits

Allegiant Travel Co., boosted by increased fares, stable fuel prices and lower maintenance bills, on Wednesday reported higher revenue and profits for the fourth quarter and full year.

Perhaps more intriguing were two new ventures mentioned only in passing and not explained in detail. One involves buying hotel rooms at a discount from “a large Las Vegas gaming company,” with the other a three-year deal to sell rental cars for industry giant Enterprise.

“We’ve had our little skunk works going on for a bit,” said Maurice Gallagher Jr, Allegiant’s chairman and CEO, referring to the development laboratory run by the aerospace manufacturer Lockheed Martin Corp. At this point, the new ventures are not yet producing any income but “certainly (have) a lot of future potential, we think.”

However, they do add to the cost structure already so the company wanted to show them, President Andrew Levy said.

For the quarter, the parent of Las Vegas-based Allegiant Air posted net income of $17.5 million, or 94 cents a share, up from net income of $14.8 million, or 76 cents per share, a year earlier.

Quarterly revenue rose 7 percent to $238.5 million from $222.8 million.

Allegiant’s earnings per share topped the 93 cents-per-share forecast of 12 Yahoo Finance-polled analysts.

Allegiant Travel shares fell $2.92, or 2.85 percent, Wednesday to close at $99.60 on Nasdaq.

According to Allegiant Travel’s financial report, average fares rose 6.4 percent, while add-ons such as baggage and seat selection fees rose 1.9 percent and revenue from selling hotel rooms and other outside products dropped 16 percent.

As a result, the average passenger at year’s end paid $139.22, including $94.24 for the plane seat, $40.63 for air-related fees and $4.36 for package tour components. The latter component has dropped because Allegiant decided to quit offering a 25 percent discount on airfare when purchased with a hotel stay, a tactic Levy said reduced sales volume but increased profits.

The company’s largest expense line, jet fuel, declined 0.9 percent in the quarter despite more flying. Other airlines have reported flat or slightly declining fuel prices. Maintenance fell 15.7 percent because of some one-time programs in 2012.

However, aircraft rents rose from zero to $5.5 million. Some of this reflected a pair of long-term leases, but $4.2 million stemmed from chartering planes from other companies to complete the schedule after several Airbus A320 jets went into service later than expected. Having to ground much of the fleet in September to inspect emergency slides drove up the full-year cost to $9.2 million.

For the year, net income was $91.8 million, or $4.82 a share, up 17 percent. Revenue was $996.2 million, a 9.6 percent increase.

Contact reporter Tim O’Reiley or at 702-387-5290.

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