Allegiant Q1 Profit Drops On Fuel, Staff Costs

April 25, 2017

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Allegiant Air parent Allegiant Travel Company reported a first quarter net profit of USD$41.6 million, a 42.2 percent drop as fuel and staff costs weighed.

Operating revenue for the quarter to end March was up 7.8 percent at $375.8 million, but expenses were up 33.2 percent to $302.9 million, as fuel costs jumped 57.8 percent to $84.7 million and staff costs rose 39.1 percent to $96.3 million.

Allegiant carried 2.88 million passengers during the quarter, a rise of 11.1 percent on 1Q16.

Passenger traffic in revenue passenger miles (RPMs) was up 7.5 percent on an available seat miles (ASM) capacity increase of 12.5 percent. Passenger load factor dropped as a result, to 80.2 percent, a 3.8 percentage point dip.

Allegiant Travel’s chief executive Maurice Gallagher said the company has had 57 consecutive quarters of profit and that the leisure airline’s move to an all-Airbus fleet was on schedule.

“One-time expenses associated with this transition will be lumpy, most of which will occur from now through the summer of 2018. By the end of this year we expect to have 60 percent of the transition complete, or a fleet of 51 Airbus aircraft. We should be finished with this effort and out of the MD-80 by the end of 2019,” Gallagher said.

Looking forward, Allegiant expects total revenue per available seat mile (TRASM) to increase by between 1.5 and 3.5 percent in the second quarter, as the timing of Easter is expected to add 1.5 percentage points. Costs per available seat mile (CASM) ex fuel are expected to increase between 13 and 15 percent.