Allegiant remains profitable, sees 'better times' ahead

Allegiant Air parent Allegiant Travel Co. concluded the third quarter, which it described as "our historically weakest," with a $13.8 million profit that represented a nearly threefold gain over the $4.9 million surplus reported in the year-ago period.

"In the third quarter of 2008, we squeezed capacity hard to compensate for extraordinarily high fuel prices. This year we returned to more normal third-quarter aircraft utilization, which, in combination with a seven-aircraft increase in our fleet, resulted in high year-over-year growth against a backdrop of continued industry capacity cuts," Chairman and CEO Maurice Gallagher Jr. said. "Notwithstanding our somewhat dramatic snapback of capacity, our unit revenue declines were largely in line with the industry and we produced a record third-quarter 16% operating margin."

Allegiant's operating revenue rose 13.9% to $133.1 million while expenses increased just 2.2% to $111.2 million. Operating profit surged 170.3% to $21.9 million from $8.1 million in the third quarter of 2008.

Average fare dropped 22.3% to $67.09 but ancillary revenue rose 3.3% to an average $33.35 per person. It operated 44 MD-80s at the conclusion of the quarter (40 owned), compared to 37 one year ago. It has two more ready to enter service in the current quarter as it launches nine new routes.

Allegiant flew 1.17 billion RPMs during the period, up 36.8%, against a 42.7% lift in capacity to 1.35 billion ASMs that cut load factor 3.8 points to 86.9%. Operating RASM dropped 20.2% to 9.86 cents and unit cost fell 28.4% to 8.23 cents, or by 9.1% to 4.99 cents excluding fuel.

"We are cautiously optimistic that better times are in the offing. Scheduled fares, both airfare and ancillary per passenger, bounced off their lows of the second quarter," Gallagher said. "It's a little early to declare victory, but we certainly like the trend."

Allegiant anticipates fourth-quarter ASM growth of some 23% and a full-year capacity increase of 22%. It is targeting a fleet of 52 aircraft by the close of 2010.