Allegiant Travel updates Q3 guidance, sees improved revenue

LAS VEGAS - Allegiant Travel Company (NASDAQ: NASDAQ:ALGT) has provided an update on its financial and operational performance for August 2024, indicating a more positive outlook than previously anticipated. The company's Chief Commercial Officer, Drew Wells, reported a robust demand environment and better-than-expected unit revenue performance for the latter half of September. Preliminary results show a 5.5 percent year-over-year decline in third-quarter unit revenues, an improvement from the 7.5 percent decline forecasted earlier.

The airline's Chief Financial Officer, Robert Neal, also noted that non-fuel unit costs for the third quarter are projected to increase by 4.5 percent compared to the previous year, which is 2.5 percentage points better than expected. This is attributed to lower-than-anticipated costs related to CrowdStrike (NASDAQ:CRWD) impact and a higher completion factor. Fuel costs are expected to average $2.70 per gallon for the quarter, down from the prior estimate of $2.80.

Allegiant's updated third-quarter guidance includes a system available seat miles (ASMs) increase of approximately 1.8 percent year over year, with scheduled service ASMs up around 1.6 percent. The airline anticipates an operating margin between negative 0.5 and negative 1.5 percent. Additionally, earnings per share, excluding special charges, are projected to be between negative $0.75 and negative $1.25, a notable improvement from the previously guided range of negative $1.50 to negative $2.50. The consolidated earnings per share, also excluding special charges, are expected to be between negative $1.75 and negative $2.25, compared to the earlier range of negative $2.50 to negative $3.50.

For August 2024, Allegiant reported a 1.3 percent increase in passengers compared to August 2023, with revenue passenger miles (RPMs) up by 0.8 percent. The airline saw a 2.7 percent increase in available seat miles (ASMs) and a 3.4 percent rise in departures. However, there was a slight decrease in load factor and average stage length. The company's estimated average fuel cost per gallon for the system was $2.63 in August.

Allegiant, known for connecting travelers from small-to-medium cities to vacation destinations with nonstop flights and low fares, continues to focus on its core airline business. As the information is based on a press release statement, the current figures are preliminary and subject to change.

In other recent news, Allegiant Travel Company reported a consolidated net income of $32.5 million and earnings per share of $1.77 for the second quarter. Despite this strong performance, Allegiant experienced a slight decrease in passenger traffic and load factor in July 2024. The company also revealed plans to integrate new Boeing (NYSE:BA) aircraft into its fleet as part of its growth strategy.

On the analyst front, Susquehanna and TD Cowen revised their price targets for Allegiant, citing concerns about potential supply and demand imbalance in the U.S. domestic market and decreased demand for Allegiant's Sunseeker resort in Florida. These revisions followed the company's Q2 financial results and ongoing efforts to improve Sunseeker's performance through a strategic review with Prospect Hotel Advisors.

These are recent developments for Allegiant. As the company navigates its way through these changes, it continues to focus on enhancing its operational performance and financial returns. Despite the cautious outlook from some analysts, Allegiant remains committed to its growth strategy and operational improvements.

InvestingPro Insights

As Allegiant Travel Company (NASDAQ: ALGT) navigates a dynamic operational landscape, recent data from InvestingPro provides further context to its financial health and stock performance. With a market capitalization of $761.71 million, Allegiant operates with a significant debt burden and is quickly burning through cash, which could influence investor confidence. The company's current P/E ratio stands at -53.37, reflecting the challenges it faces in terms of profitability, especially considering analysts do not anticipate the company will be profitable this year.

InvestingPro Tips suggest that Allegiant's stock price movements have been quite volatile, with the price having fallen significantly over the last three months by 19.03% and taking a big hit over the last six months with a 38.4% decrease. Despite these challenges, the company pays a significant dividend to shareholders, with a dividend yield of 5.6% as of the last recorded date. This could be an attractive point for income-focused investors, although it's important to consider the sustainability of such dividends in light of the company's financial metrics.

For those interested in a deeper analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/ALGT, providing more detailed insights into Allegiant's financial performance and stock valuation.

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