• Joe Breitfeller

Allegiant Travel Reports Second Quarter Net Loss of $93.1 Million or $5.85 per Diluted Share

Allegiant Travel Company reported on Wednesday a second quarter net loss of $93.1 million or $(5.85) per diluted share on a 72.9 percent revenue decline to $133.3 million. The company closed the quarter with $663.1 million in cash and investments.


Allegiant Airbus A320ceo - Courtesy Airbus

Yesterday (July 29, 2020), Allegiant Travel Company reported a second quarter net loss of $93.1 million or $(5.85) per diluted share. The carrier’s quarterly revenue declined 72.9 percent year-over-year to $133.3 million. Allegiant’s adjusted loss per share was $(5.96) which excludes one-time non-recurring charges, U.S. Cares Act Payroll Support Program (PSP) benefits and the associated tax benefits. The company ended the quarter on June 30, 2020 with a load factor of 56.8 percent, a 38 percent increase over April. During the quarter, Allegiant showed a progressive revenue improvement with a decrease of 95 percent in April, 75 percent in May and 52 percent in June. Despite yield pressure, the airline’s ancillary revenue per passenger remained stable versus last year at $51.57, while quarterly expenses were down 35.7 percent to $246.6 million on a 50.1 percent capacity reduction. In Thursday’s announcement, Allegiant Travel Company’s Chairman and CEO, Maurice J. Gallagher, said in part,


“The second quarter proved to be the most turbulent quarter in the history of the industry. As the virus spread throughout the country in March and April, the industry saw an unprecedented plummet in demand, followed by significant capacity cuts, upwards of 80 to 90 percent. As cases subsided, demand began trickling back in, only to begin recessing again with the uptick in cases beginning late June. It appears demand will continue to ebb and flow along with fluctuations in reported cases for the foreseeable future. We have built a unique way to operate our company as compared to the rest of the industry, which will continue to sustain us throughout the duration of these uncertain times…


“Although we were able to manage through the chaos of the quarter, arguably better than most, this environment is unsustainable long-term. It continues to be of utmost importance to strengthen liquidity positions. We completed the quarter with an average daily cash burn of $900 thousand, a 57 percent reduction from our initial forecasts. June bookings were a significant contributor to this reduction, with several days in June exceeding prior year booking levels. In fact, June bookings resulted in cash breakeven for the month of June. We continued to remain disciplined in regard to cost savings and successfully cut more than 38 percent of operating expenses for the quarter. These efforts coupled with funds related to the CARES Act as well as executed financing arrangements enabled us to grow our liquidity position by nearly $200 million to end the quarter with total liquidity of $663.1 million. Unfortunately, the strength seen in June has since weakened as case numbers have risen. I am comfortable the strides made in building liquidity throughout the quarter will act as a safety net as we continue to manage the ever-changing demand environment…”


Allegiant Travel has taken numerous measures to cut expenses and bolster liquidity, including a 20 percent reduction (220 positions) in the size of management and support team workgroups. Impacted team members will be paid through September 30, 2020 in compliance with the U.S. Cares Act Payroll Support Program (PSP) guidelines. During the quarter, Allegiant received $154.7 million out of $171.9 million with PSP funds. The company is also eligible to receive up to $276 million in loans under a separate Cares Act provision.


As previously mentioned, the carrier closed the second quarter with $663.1 million in liquidity. On June 23, 2020, Allegiant entered a sale-leaseback transaction for four A320 Family aircraft, raising $48 million. The company also raised an additional $65.9 million in the third quarter including a Federal income tax refund of $48.7 million, the balance of $17.2 million in Cares Act PSP funds and a $21 million Federal excise tax refund. Allegiant expects their daily cash burn to average around $1 million for the third quarter. The airline has 24 unencumbered aircraft and ten unencumbered spare engines with a market value of approximately $387 million. As of June 30, 2020, Allegiant’s air traffic liability was $355 million, their balance related to future bookings was $139 million, and they held a travel voucher balance for future flights of $216 million.


In Trading Thursday morning, shares in Allegiant Travel Company (NASDAQ: ALGT) were down 7.34 percent to $106.36/share (10:48 AM EDT).



Source: Allegiant Travel Company

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