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Allegiant Travel Company Reports First Quarter Net Loss of $33 Million on Revenues of $409.2 Million

Allegiant Travel Company reported on Tuesday a first quarter net loss of $33 Million or ($2.08) per diluted share on a 9.4 percent revenue decline to $409.2 Million. The carrier ended the quarter with an ‘airline only’ earnings per share of $1.89.

Allegiant Travel Company Reports First Quarter 2020 Financial Results - Image Credit: 123rf

Yesterday (May 12, 2020), Allegiant Travel Company (NASDAQ: ALGT) reported a first quarter net loss of $33 million or ($2.08) per diluted share on a 9.4 percent revenue decline to $409.2 million. Although March revenues declined 40 percent year-over-year, the company closed the quarter with an ‘airline-only’ EPS of $1.89 and an operating margin of 12.6 percent. As of March 31, 2020, Allegiant had $464 in cash and short-term investments, which increased to $517 million as of April 30th, 2020. In the second quarter, the carrier is expecting a cash burn rate of $2.1 million per day, with a planned decrease to $1.5 million in the third quarter. The cash burn rates assume that the company will receive gross bookings of $750 thousand per day during the second and third quarters. In Tuesday’s announcement, Allegiant Travel Company’s Chairman and CEO, Maurice J. Gallagher said in part,

“The events that have unfolded over the past eight weeks are truly unprecedented. We began to see the first signs of demand weakness at the end of February, with a steep downward demand trajectory by mid-March. Despite March revenues down nearly 40 percent year over year, we finished the quarter with an airline-only EPS of $1.89 per share and an airline-only operating margin of 12.6 percent. These numbers are a true testament to the flexibility of our model and our ability to right-size capacity quickly and seamlessly.”

Mr Gallagher continued to explain that that the company had taken early and decisive action to reduce cash burn and preserve liquidity and that 25 percent of the Allegiant team has participated in voluntary leave and pay reduction programs. As previously reported, the company will receive a total of $171.9 million under the U.S. Cares Act Payroll Support Program (PSP) including a $150.3 million grant and a $21.6 million unsecured low-interest 10-year loan. In return, Allegiant has issued warrants to the U.S. Treasury for the right to purchase 25,898 company shares at the strike price of $83.33/share. Additionally, the company will receive nearly $100 million in federal tax refunds during the second quarter of 2020 related to a net operating loss (NOL) carry-back rules of the CARES Act. Allegiant also has access to an additional $276 million through September under the loan provision of the CARES Act.

The company has reduced April capacity by 87.4 percent and expects significant reductions for the remainder of the second quarter. Allegiant has also reduced their planned 2020 CAPEX by $260 million, suspended stock buybacks and dividends and instituted a hiring freeze. Over 1,100 Allegiant team members are currently participating in some form of pay reduction program. The company owns 28 unencumbered aircraft and 8 unencumbered spare engines with an appraised value of approximately $431 million. Spending for nearly all non-airline subsidiaries have been suspended indefinitely, while construction on the company’s Charlotte Harbor, Florida Sunseeker Resort has also been suspended resulting in a $137 million impairment. Allegiant has no plans for future capital commitments to the resort, but will seek strategic partnerships instead. In Trading Wednesday morning, shares in Allegiant Travel Company (NASDAQ: ALGT) were up 6.26% at $77.78/share (9:51 AM EDT).

Source: Allegiant Travel Company


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