SEC Form 10-Q filed by Allegiant Travel Company
$ALGT
Air Freight/Delivery Services
Consumer Discretionary
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the quarterly period ended March 31, 2025 | ||||||||
| or | ||||||||
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the transition period from _______ to_______
Commission File Number 001-33166
(Exact Name of Registrant as Specified in Its Charter)
| (State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification No.) | |||||||
| (Address of Principal Executive Offices) | (Zip Code) | |||||||
Registrant’s Telephone Number, Including Area Code: (702 ) 851-7300
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
| ☒ | Accelerated filer | ☐ | ||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of April 29, 2025, the registrant had 18,254,744 shares of common stock, $0.001 par value per share, outstanding.
ALLEGIANT TRAVEL COMPANY
FORM 10-Q
TABLE OF CONTENTS
| PART I. | FINANCIAL INFORMATION | |||||||
| ITEM 1. | ||||||||
| ITEM 2. | ||||||||
| ITEM 3. | ||||||||
| ITEM 4. | ||||||||
| PART II. | OTHER INFORMATION | |||||||
| ITEM 1. | ||||||||
| ITEM 1A. | ||||||||
| ITEM 2. | ||||||||
| ITEM 3. | ||||||||
| ITEM 4. | ||||||||
| ITEM 5. | ||||||||
| ITEM 6. | ||||||||
2
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
ALLEGIANT TRAVEL COMPANY
CONSOLIDATED BALANCE SHEETS
(in thousands)
| March 31, 2025 | December 31, 2024 | ||||||||||
| (unaudited) | |||||||||||
| CURRENT ASSETS | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
| Short-term investments | |||||||||||
| Accounts receivable | |||||||||||
| Expendable parts, supplies and fuel, net | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| TOTAL CURRENT ASSETS | |||||||||||
| Property and equipment, net | |||||||||||
| Long-term investments | |||||||||||
| Deferred major maintenance, net | |||||||||||
| Operating lease right-of-use assets, net | |||||||||||
| Deposits and other assets | |||||||||||
| TOTAL ASSETS: | $ | $ | |||||||||
| CURRENT LIABILITIES | |||||||||||
| Accounts payable | |||||||||||
| Accrued liabilities | |||||||||||
| Current operating lease liabilities | |||||||||||
| Air traffic liability | |||||||||||
| Current loyalty program liability | |||||||||||
| Current maturities of long-term debt and finance lease obligations, net of related costs | |||||||||||
| TOTAL CURRENT LIABILITIES | |||||||||||
| Long-term debt and finance lease obligations, net of current maturities and related costs | |||||||||||
| Deferred income taxes | |||||||||||
| Noncurrent operating lease liabilities | |||||||||||
| Noncurrent loyalty program liability | |||||||||||
| Other noncurrent liabilities | |||||||||||
| TOTAL LIABILITIES: | $ | $ | |||||||||
| SHAREHOLDERS' EQUITY | |||||||||||
Common stock, par value $ | |||||||||||
| Treasury shares | ( | ( | |||||||||
| Additional paid in capital | |||||||||||
| Accumulated other comprehensive income, net | |||||||||||
| Retained earnings | |||||||||||
| TOTAL EQUITY: | $ | ||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY: | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
3
ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(unaudited)
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| OPERATING REVENUES: | |||||||||||
| Passenger | $ | $ | |||||||||
| Third party products | |||||||||||
| Fixed fee contracts | |||||||||||
| Resort and other | |||||||||||
| Total operating revenues | |||||||||||
| OPERATING EXPENSES: | |||||||||||
| Salaries and benefits | |||||||||||
| Aircraft fuel | |||||||||||
| Station operations | |||||||||||
| Depreciation and amortization | |||||||||||
| Maintenance and repairs | |||||||||||
| Sales and marketing | |||||||||||
| Aircraft lease rentals | |||||||||||
| Other | |||||||||||
| Special charges, net of recoveries | ( | ||||||||||
| Total operating expenses | |||||||||||
| OPERATING INCOME | |||||||||||
| OTHER (INCOME) EXPENSES: | |||||||||||
| Interest income | ( | ( | |||||||||
| Interest expense | |||||||||||
| Capitalized interest | ( | ( | |||||||||
| Other, net | |||||||||||
| Total other expenses | |||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | ( | ||||||||||
| INCOME TAX PROVISION (BENEFIT) | ( | ||||||||||
| NET INCOME (LOSS) | $ | $ | ( | ||||||||
| Earnings (loss) per share to common shareholders: | |||||||||||
| Basic | $ | $ | ( | ||||||||
| Diluted | $ | $ | ( | ||||||||
| Shares used for computation: | |||||||||||
| Basic | |||||||||||
| Diluted | |||||||||||
| Cash dividends declared per share: | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
4
ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| NET INCOME (LOSS) | $ | $ | ( | ||||||||
| Other comprehensive loss: | |||||||||||
| Change in available for sale securities, net of tax | ( | ( | |||||||||
| TOTAL COMPREHENSIVE INCOME (LOSS) | $ | $ | ( | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
5
ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in thousands)
(unaudited)
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||||||||||||||||||||
| Common stock outstanding | Par value | Additional paid-in capital | Accumulated other comprehensive income | Retained earnings | Treasury shares | Total shareholders' equity | |||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Shares repurchased by the Company and held as treasury shares | ( | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, 2024 | |||||||||||||||||||||||||||||||||||||||||
| Common stock outstanding | Par value | Additional paid-in capital | Accumulated other comprehensive income | Retained earnings | Treasury shares | Total shareholders' equity | |||||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Shares repurchased by the Company and held as treasury shares | ( | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||
Cash dividends, $ | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||
6
ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income (loss) | $ | $ | ( | ||||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Other adjustments | ( | ||||||||||
| Changes in certain assets and liabilities: | |||||||||||
| Air traffic liability | |||||||||||
| Other - net | |||||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Purchase of investment securities | ( | ( | |||||||||
| Proceeds from maturities of investment securities | |||||||||||
| Aircraft pre-delivery deposits | ( | ||||||||||
| Purchase of property and equipment, including capitalized interest | ( | ( | |||||||||
| Other investing activities | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Cash dividends paid to shareholders | ( | ||||||||||
| Proceeds from the issuance of debt and finance lease obligations | |||||||||||
| Repurchase of common stock | ( | ( | |||||||||
| Principal payments on debt and finance lease obligations | ( | ( | |||||||||
| Debt issuance costs | ( | ||||||||||
| Other financing activities | |||||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | |||||||||||
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD | |||||||||||
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD | $ | $ | |||||||||
| CASH PAYMENTS FOR: | |||||||||||
| Interest paid, net of amount capitalized | $ | $ | |||||||||
| Income tax payments (received) | ( | ||||||||||
| SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS: | |||||||||||
| Right-of-use (ROU) assets acquired | $ | $ | |||||||||
| Purchases of property and equipment in accrued liabilities and other | |||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
7
ALLEGIANT TRAVEL COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1 — Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements include the accounts of Allegiant Travel Company (the “Company”) and its majority-owned operating subsidiaries. The Company's investments in unconsolidated affiliates, which are 50 percent or less owned, are accounted for under the equity or cost method, and are insignificant to the consolidated financial statements. All intercompany balances and transactions have been eliminated.
These unaudited consolidated financial statements reflect all normal recurring adjustments which management believes are necessary to present fairly the financial position, results of operations, and cash flows of the Company for the respective periods presented. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission for Form 10-Q. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company and notes thereto included in the annual report of the Company on Form 10-K for the year ended December 31, 2024 and filed with the Securities and Exchange Commission.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates.
The Company has reclassified certain prior period amounts to conform to the current period presentation.
Note 2 — Special Charges
Sunseeker Resort
Sunseeker Resort at Charlotte Harbor (the "Resort" or "Sunseeker Resort") was impacted by Hurricanes Ian, Idalia, Debby, Helene and Milton between 2022 and 2024. While the Resort was built to withstand hurricanes and flooding, these weather events are unprecedented in their frequency and the amount of destruction caused in Southwest Florida. The Company believes these weather events will be unusual and has included the cost of these events and the related insurance recoveries in special charges. The estimated losses are recorded to special charges in the period of the event and are offset by insurance recoveries in the period they are approved for payment by the insurer.
Airline
In September 2023, the Company reevaluated its fleet plan and identified 21 airframes for early retirement to coincide with 737 MAX aircraft deliveries as scheduled under an amendment to the Company's agreement with The Boeing Company signed in September 2023. Two airframes were retired in 2023 and seven airframes were retired in 2024. Additionally, two airframes have been retired during the three months ended March 31, 2025. The remaining airframes are to be retired between August 2025 and December 2026. The accelerated depreciation on these airframes resulting from a change in the estimated useful life is recorded as a special charge in the quarters ended March 31, 2025 and March 31, 2024.
Special Charges
The table below summarizes special charges recorded during the three months ended March 31, 2025, and 2024.
| Three Months Ended March 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
Losses due to Sunseeker weather events, net of insurance recoveries(1) | $ | ( | $ | ( | |||||||
| Accelerated depreciation on airframes identified for early retirement | |||||||||||
| Total special charges | $ | ( | $ | ||||||||
(1) Includes $3.7 million and $0.7 million of business interruption insurance proceeds for the three months ended March 31, 2025 and March 31, 2024, respectively.
8
Note 3 — Revenue Recognition
Passenger Revenue
Passenger revenue is the most significant category in the Company's reported operating revenues, as outlined below:
| Three Months Ended March 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Scheduled service | $ | $ | |||||||||
| Ancillary air-related charges | |||||||||||
| Loyalty redemptions | |||||||||||
| Total passenger revenue | $ | $ | |||||||||
Sales of passenger tickets not yet flown are recorded in air traffic liability. Passenger revenue is recognized when transportation is provided. As of March 31, 2025, the air traffic liability balance was $439.6 million, of which approximately $389.2 million was related to forward bookings, with the remaining $50.4 million related to credit vouchers for future travel.
The normal contract term of passenger tickets is 12 months and passenger revenue associated with future travel will principally be recognized within this time frame. Of the $370.9 million that was recorded in the air traffic liability balance as of December 31, 2024, approximately 72.3 percent was recognized into passenger revenue during the three months ended March 31, 2025.
The Company periodically evaluates the estimated amount of credit vouchers expected to expire unused and any adjustment is removed from air traffic liability and included in passenger revenue in the period in which the evaluation is complete.
Resort Revenue
The Company's resort revenues for the three months ended March 31, 2025 are set forth in the table below:
| Three Months Ended March 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Rooms | |||||||||||
| Food and beverage | $ | $ | |||||||||
| Other | |||||||||||
| Total resort revenue | $ | $ | |||||||||
Revenue from banquets, golf, retail and spa services is included in other resort revenue. Resort revenue is recognized as the underlying services or goods have been provided. There is typically little to no lag between when the services are performed and when payment is remitted. Large group reservations, conventions, and other event bookings require advance deposits which are recorded as accrued liabilities in the Company's balance sheet until the related services and goods are provided. Guest receivables are recorded in accounts receivable on the Company's balance sheet for room nights stayed prior to payment at checkout. The amounts of advance deposit liabilities and guest ledger receivables were not material as of March 31, 2025 or December 31, 2024.
Loyalty redemptions
In relation to the travel component of the Allways Rewards® co-brand credit card contract, the Company has a performance obligation to cardholders with future travel award redemptions at the airline and resort. Therefore, consideration received related to the travel component is deferred based on its relative selling price and is recognized into passenger revenue or resort revenue when the points are redeemed and the underlying service is provided. Similarly, in relation to the Allways Rewards loyalty program, points earned through the program are deferred based on the stand-alone selling price and recognized into passenger or resort revenue when the points are redeemed and the underlying service is provided.
The following table presents the activity of the co-branded credit card and the loyalty program as of the dates indicated:
9
| Three Months Ended March 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Balance at January 1 | $ | $ | |||||||||
| Points awarded (deferral of revenue) | |||||||||||
| Points redeemed (recognition of revenue) | ( | ( | |||||||||
| Balance at March 31 | $ | $ | |||||||||
Note 4 — Property and Equipment
The following table summarizes the Company's property and equipment as of the dates indicated:
| (in thousands) | March 31, 2025 | December 31, 2024 | |||||||||
| Airline | |||||||||||
| Flight equipment | $ | $ | |||||||||
| Computer hardware and software | |||||||||||
| Land and buildings/leasehold improvements | |||||||||||
| Other property and equipment | |||||||||||
| Sunseeker Resort | |||||||||||
| Land and buildings/leasehold improvements | |||||||||||
| Other property and equipment | |||||||||||
| Total property and equipment | |||||||||||
| Less accumulated depreciation and amortization | ( | ( | |||||||||
| Property and equipment, net | $ | $ | |||||||||
As of March 31, 2025, the Company had firm commitments to purchase 42 aircraft.
At the end of fourth quarter 2024, the Company recorded an impairment loss of $321.8 million to reflect the difference between the carrying value of the Sunseeker Resort assets and their fair values. As the result of the recent developments related to tariffs, the potential for weakened business conditions, and the ongoing process for a full or partial sale of the Resort, it is reasonably possible that a change in the estimate of the Resort's fair value will occur in the near term and that a reduction in the estimate of fair value will result in recognition of additional impairment losses related to the Resort.
Accrued capital expenditures, which primarily relate to the airline, as of March 31, 2025 and December 31, 2024 were $8.3 million and $8.9 million, respectively.
10
Note 5 — Long-Term Debt
The following table summarizes the Company's long-term debt and finance lease obligations, net of related costs, as of the dates indicated:
| (in thousands) | March 31, 2025 | December 31, 2024 | |||||||||
| Fixed-rate debt and finance lease obligations due through 2032 | $ | $ | |||||||||
| Variable-rate debt due through 2037 | |||||||||||
| Total long-term debt and finance lease obligations, net of related costs | |||||||||||
| Less current maturities, net of related costs | |||||||||||
| Long-term debt and finance lease obligations, net of current maturities and related costs | $ | $ | |||||||||
| Weighted average fixed-interest rate on debt | |||||||||||
| Weighted average variable-interest rate on debt | |||||||||||
| Interest Rate(s) Per Annum at | Balance as of | ||||||||||||||||||||||||||||||||||
| (dollars in thousands) | Maturity Dates | March 31, 2025 | March 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||
| Senior secured notes | 2027 | $ | $ | ||||||||||||||||||||||||||||||||
| Consolidated variable interest entities | 2028 | - | 2029 | - | |||||||||||||||||||||||||||||||
| Revolving credit facilities | 2025 | - | 2027 | N/A | |||||||||||||||||||||||||||||||
| Debt secured by aircraft, engines, other equipment and real estate | 2025 | - | 2037 | - | |||||||||||||||||||||||||||||||
| Finance leases | 2028 | - | 2032 | - | |||||||||||||||||||||||||||||||
| Sunseeker construction loan | 2025 | N/A | |||||||||||||||||||||||||||||||||
| Unsecured debt | 2025 | ||||||||||||||||||||||||||||||||||
| Total debt | $ | $ | |||||||||||||||||||||||||||||||||
| Related costs | ( | ( | |||||||||||||||||||||||||||||||||
| Total debt net of related costs | $ | $ | |||||||||||||||||||||||||||||||||
Maturities of long term debt as of March 31, 2025, for the next five years and thereafter, in the aggregate, are:
| (in thousands) | As of March 31, 2025 | ||||
| Remaining in 2025 | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total debt and finance lease obligations, net of related costs | $ | ||||
Debt Secured by Aircraft
In March 2024, the Company entered into credit agreements under which it was entitled to borrow up to $218.5 million, and which was to be collateralized by new aircraft upon delivery. During the three months ended March 31, 2025, the Company borrowed $174.5 million under these facilities. The loans bear interest at a variable rate based on SOFR, and are payable in quarterly installments over a term of 12 years.
11
Other Secured Debt
In November 2023, the Company entered into a pre-delivery deposit financing facility to borrow up to $158.0 million, secured by the Company's purchase rights for certain Boeing 737 MAX aircraft. The facility bears a floating interest rate based on SOFR and was originally due upon delivery of each aircraft or no later than June 30, 2025. In April 2025, the Company entered into an amendment to extend the maturity date of the agreement to March 2027. As of March 31, 2025, the facility had an outstanding principal balance of $132.6 million. As the extension of this facility evidences the Company's intent and ability to refinance the debt on a long-term basis, the Company has included $53.9 million of the facility's outstanding balance, which will be due upon delivery of aircraft that will occur more than one year after the balance sheet date, in long term debt as of March 31, 2025.
Construction Loan Agreement
In October 2021, Sunseeker Florida, Inc. (“SFI”), a wholly-owned subsidiary of the Company, entered into a credit agreement and borrowed $350.0 million to fund the initial phases of Sunseeker Resort construction. The loan had an original maturity date of October 2028, with semi-annual principal payments of $26.0 million beginning in 2025. Prior to first quarter 2025, the Company had prepaid $250.0 million of the loan's principal balance. During the three months ended March 31, 2025, the Company prepaid the remaining $100.0 million principal balance in full.
Unsecured Debt
In December 2024, the Company entered into an unsecured credit facility and received proceeds of $130.5 million. The loan bears interest at a floating rate based on SOFR, and principal repayments are due at the delivery of certain 737 MAX aircraft, or no later than December 2025. During the three months ended March 31, 2025, the Company made repayments totaling $95.8 million under the facility as principal amounts became due upon delivery of aircraft.
Note 6 — Income Taxes
Note 7 — Fair Value Measurements
The Company utilizes the market approach to measure the fair value of its financial assets. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. The assets classified as Level 2 primarily utilize quoted market prices or alternative pricing sources including transactions involving identical or comparable assets and models utilizing market observable inputs for valuation of these securities. No changes in valuation techniques or inputs occurred during the three months ended March 31, 2025.
12
Financial instruments measured at fair value on a recurring basis:
| As of March 31, 2025 | As of December 31, 2024 | ||||||||||||||||||||||||||||||||||
| (in thousands) | Total | Level 1 | Level 2 | Total | Level 1 | Level 2 | |||||||||||||||||||||||||||||
| Cash equivalents | |||||||||||||||||||||||||||||||||||
| Money market funds | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Commercial paper | |||||||||||||||||||||||||||||||||||
| US Government and agency obligations | |||||||||||||||||||||||||||||||||||
| Municipal debt securities | |||||||||||||||||||||||||||||||||||
| Corporate debt securities | |||||||||||||||||||||||||||||||||||
| Total cash equivalents | |||||||||||||||||||||||||||||||||||
| Short-term | |||||||||||||||||||||||||||||||||||
| Corporate debt securities | |||||||||||||||||||||||||||||||||||
| Commercial paper | |||||||||||||||||||||||||||||||||||
| US Government and agency obligations | |||||||||||||||||||||||||||||||||||
| Certificates of deposit | |||||||||||||||||||||||||||||||||||
| Municipal debt securities | |||||||||||||||||||||||||||||||||||
| Total short-term | |||||||||||||||||||||||||||||||||||
| Long-term | |||||||||||||||||||||||||||||||||||
| Corporate debt securities | |||||||||||||||||||||||||||||||||||
| US Government and agency obligations | |||||||||||||||||||||||||||||||||||
| Municipal debt securities | |||||||||||||||||||||||||||||||||||
| Total long-term | |||||||||||||||||||||||||||||||||||
| Total financial instruments | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
None of the Company's long-term debt is publicly traded. The Company has determined the estimated fair value of all this debt to be Level 3, as certain inputs used to determine the fair value of these agreements are unobservable and, therefore, could be sensitive to changes in inputs. The Company utilizes the discounted cash flow method to estimate the fair value of Level 3 debt.
Carrying value and estimated fair value of long-term debt, including current maturities and without reduction for related costs, are as follows:
| As of March 31, 2025 | As of December 31, 2024 | ||||||||||||||||||||||||||||
| (in thousands) | Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | Fair Value Level | ||||||||||||||||||||||||
| Non-publicly held debt | $ | $ | $ | $ | 3 | ||||||||||||||||||||||||
Due to the short-term nature, carrying amounts of cash, cash equivalents, restricted cash, accounts receivable and accounts payable approximate fair value.
Note 8 — Earnings per Share
Basic and diluted earnings per share are computed pursuant to the two-class method. Under this method, the Company attributes net income to two classes: common stock and unvested restricted stock. Unvested restricted stock awards granted to employees under the Company’s Long-Term Incentive Plan are considered participating securities as they receive non-forfeitable rights to cash dividends at the same rate as common stock.
Diluted net income per share is calculated using the more dilutive of the two methods. Under both methods, the exercise of employee stock options is assumed using the treasury stock method. The assumption of vesting of restricted stock, however, differs:
1.Assume vesting of restricted stock using the treasury stock method.
13
2.Assume unvested restricted stock awards are not vested, and allocate earnings to common shares and unvested restricted stock awards using the two-class method.
The following table sets forth the computation of net income per share, on a basic and diluted basis, for the periods indicated (share count and dollar amounts other than per-share amounts in the table are in thousands):
| Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Basic: | |||||||||||
| Net income (loss) | $ | $ | ( | ||||||||
| Less income allocated to participating securities | ( | ( | |||||||||
| Net income (loss) attributable to common stock | $ | $ | ( | ||||||||
| Earnings (loss) per share, basic | $ | $ | ( | ||||||||
| Weighted-average shares outstanding | |||||||||||
| Diluted: | |||||||||||
| Net income (loss) | $ | $ | ( | ||||||||
| Less income allocated to participating securities | ( | ( | |||||||||
| Net income (loss) attributable to common stock | $ | $ | ( | ||||||||
| Earnings (loss) per share, diluted | $ | $ | ( | ||||||||
| Weighted-average shares outstanding | |||||||||||
| Dilutive effect of restricted stock | |||||||||||
| Adjusted weighted-average shares outstanding under treasury stock method | |||||||||||
| Participating securities excluded under two-class method | ( | ||||||||||
| Adjusted weighted-average shares outstanding under two-class method | |||||||||||
Note 9 — Contingencies
The Company is subject to certain legal and administrative actions it considers routine to its business activities. The Company believes the ultimate outcome of any potential and pending legal or administrative matters will not have a material adverse impact on its financial position, liquidity or results of operations.
Note 10 — Segments
Operating segments are components of a company for which separate financial and operating information is regularly evaluated and reported to the Chief Operating Decision Maker ("CODM") and is used to allocate resources and analyze performance. The Company's CODM is the President and CEO, who assesses segment performance and makes resource allocation decisions using information about each operating segment's operating income and pretax income. The CODM reviews separate financial information and makes resource allocation decisions for the Company's two operating segments: Airline and Sunseeker Resort.
Airline Segment
The Airline segment operates as a single business unit and includes all scheduled service air transportation, ancillary air-related products and services, third party products and services, fixed fee contract air transportation and other airline-related revenue. Scheduled service and fixed fee air transportation services have similar operating margins, economic characteristics and production processes (check-in, baggage handling and flight services) which target the same class of customers and are subject to the same regulatory environment. As a result, the Company believes its airline activities operate under one reportable segment and does not separately track expenses for scheduled service and fixed fee air transportation services.
Sunseeker Resort Segment
The Sunseeker Resort segment operates as a single business unit and includes hotel rooms and suites for occupancy, group meeting facilities, food and beverage options, Aileron Golf Course and other Resort amenities.
Segment profit or loss, revenues, significant segment expenses, and other required financial information for each of the Company's operating segments are set forth below:
14
| Three Months Ended March 31, 2025 | |||||||||||||||||
| (in thousands) | Airline | Sunseeker | Consolidated | ||||||||||||||
| REVENUES FROM EXTERNAL CUSTOMERS | $ | $ | $ | ||||||||||||||
| OPERATING EXPENSES: | |||||||||||||||||
| Salaries and benefits | |||||||||||||||||
| Aircraft fuel | |||||||||||||||||
| Station operations | |||||||||||||||||
| Depreciation and amortization | |||||||||||||||||
| Maintenance and repairs | |||||||||||||||||
| Sales and marketing | |||||||||||||||||
| Aircraft lease rentals | |||||||||||||||||
Other operating expense(1) | |||||||||||||||||
| Special charges, net of recoveries | ( | ( | |||||||||||||||
| Total operating expenses | |||||||||||||||||
| OPERATING INCOME | |||||||||||||||||
| OTHER (INCOME) EXPENSES: | |||||||||||||||||
| Interest income | ( | ( | |||||||||||||||
| Interest expense | |||||||||||||||||
| Capitalized interest | ( | ( | |||||||||||||||
| Other non-operating expense | |||||||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | $ | $ | ( | $ | |||||||||||||
| Capital expenditures | |||||||||||||||||
| Three Months Ended March 31, 2024 | |||||||||||||||||
| (in thousands) | Airline | Sunseeker | Consolidated | ||||||||||||||
| REVENUES FROM EXTERNAL CUSTOMERS | $ | $ | $ | ||||||||||||||
| OPERATING EXPENSES: | |||||||||||||||||
| Salaries and benefits | |||||||||||||||||
| Aircraft fuel | |||||||||||||||||
| Station operations | |||||||||||||||||
| Depreciation and amortization | |||||||||||||||||
| Maintenance and repairs | |||||||||||||||||
| Sales and marketing | |||||||||||||||||
| Aircraft lease rentals | |||||||||||||||||
Other operating expense(1) | |||||||||||||||||
| Special charges, net of recoveries | ( | ||||||||||||||||
| Total operating expenses | |||||||||||||||||
| OPERATING INCOME (LOSS) | ( | ||||||||||||||||
| OTHER (INCOME) EXPENSES: | |||||||||||||||||
| Interest income | ( | ( | |||||||||||||||
| Interest expense | |||||||||||||||||
| Capitalized interest | ( | ( | ( | ||||||||||||||
| Other non-operating expense | |||||||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | $ | $ | ( | $ | ( | ||||||||||||
| Capital expenditures | |||||||||||||||||
(1) Other operating expenses in the Airline segment consist of insurance, crew training and travel, legal expense, gains and losses on the sale of flight equipment, and other general and administrative expenses. Other operating expenses in the Sunseeker segment consist of food and beverage cost of goods sold, contract labor, property tax, insurance, and other general and administrative expense.
15
Total assets were as follows as of the dates indicated:
| (in thousands) | As of March 31, 2025 | As of December 31, 2024 | |||||||||
| Airline | $ | $ | |||||||||
| Sunseeker Resort | |||||||||||
| Consolidated | $ | $ | |||||||||
Note 11 — Subsequent Events
16
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis presents factors that had a material effect on our results of operations during the three months ended March 31, 2025 and 2024. Also discussed is our financial position as of March 31, 2025 and December 31, 2024. You should read this discussion in conjunction with our unaudited consolidated financial statements, including the notes thereto, appearing elsewhere in this Form 10-Q and our consolidated financial statements appearing in our annual report on Form 10-K for the year ended December 31, 2024. This discussion and analysis contains forward-looking statements. Please refer to the section below entitled “Cautionary Note Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements.
First Quarter 2025 Review
First quarter 2025 highlights include:
•Total operating revenue of $699.1 million, up 6.5 percent over the prior year, on capacity growth of 14.2 percent year-over-year and an 8.4 percent increase in passengers.
•Record total average ancillary fare of $79.28 per passenger, up 4.7 percent year-over-year driven by reintroduction of a third ancillary product bundle offering, Allegiant Extra expansion, Allianz travel insurance, and cobrand credit card strength
•Operating income of $65.0 million, yielding an operating margin of 9.3 percent
•Airline-only operating income of $60.9 million, yielding an airline-only operating margin of 9.1 percent, a more than five-point improvement over the prior year
•Income before income tax of $41.9 million, yielding a pre-tax margin of 6.0 percent
•Airline-only income before income tax of $49.6 million, yielding an airline-only pre-tax margin of 7.4 percent
•Airline-only operating CASM, excluding fuel of 8.07 ¢, down 9.0 percent year-over-year
•$36.1 million in total cobrand credit card remuneration received from Bank of America
•As of March 31, 2025, we had 558,000 total Allegiant Allways Rewards Visa cardholders
•Ended the quarter with 19 million total active Allways Rewards members
•The only US Airline named by Newsweek as one of America's Most Loved Brands 2025
AIRCRAFT
The following table sets forth the aircraft in service and operated by us as of the dates indicated:
| March 31, 2025 | December 31, 2024 | ||||||||||
Airbus A320(1) | 85 | 87 | |||||||||
Airbus A319(2) | 34 | 34 | |||||||||
| Boeing 737-8200 | 8 | 4 | |||||||||
| Total | 127 | 125 | |||||||||
(1)Includes 23 aircraft under finance lease and 13 aircraft under operating lease as of March 31, 2025, and December 31, 2024.
(2)Includes four aircraft under operating lease as of March 31, 2025 and December 31, 2024.
As of March 31, 2025, we are party to forward purchase agreements for 42 aircraft with eight of these deliveries expected in 2025 and the remainder between 2026 and 2028. The timing of these deliveries is based on management's best estimates.
Due to the heavy maintenance needs on certain aging Airbus airframes and capacity constraints at the maintenance, repair, and overhaul contractors, we reevaluated our fleet plan and identified 21 aging airframes for early retirement to coincide with the delivery schedule for our 737 MAX aircraft provided in an amendment to our Boeing purchase agreement signed in September 2023. Two airframes were retired in 2023, seven in 2024, and two more during the first three months of 2025. The remaining ten airframes identified are to be retired between August 2025 and December 2026. The timing of the retirements was coordinated with the revised delivery schedule for the 737 MAX aircraft to provide us with opportunities for fleet renewal and replacement. The accelerated depreciation on these airframes resulting from a change in the estimated useful life is being recorded as a special charge, of which $1.4 million was recorded during first quarter 2025. We plan to retain the engines associated with these airframes in our spare engine pool and use the substantial remaining life on these engines to offset future overhaul costs.
17
NETWORK
As of March 31, 2025, we were selling 577 routes versus 556 as of the same date in 2024. Growth of our network in the past two years has been impacted by challenges created by delayed aircraft deliveries, the uncertainty of our pilot staffing levels and other factors. Network growth will continue to be affected by timing of aircraft deliveries, aircraft in heavy maintenance, airport construction and disruption, and other impacts arising from recent macroeconomic factors creating softer air travel demand. We have identified over 1,400 incremental domestic nonstop routes as opportunities for future network growth, of which over 78 percent currently have no non-stop service. Our total active number of origination cities and leisure destinations were 85 and 34, respectively, as of March 31, 2025.
Our unique model is predicated around expanding and contracting capacity to meet seasonal leisure travel demands.
TRENDS
Business and Macroeconomic Conditions
The Presidential administration is in the process of expanding the scope of tariffs and significantly increasing the tariff rates on goods imported into the U.S. In response, foreign governments have imposed, and are expected to impose, retaliatory measures against the U.S.
These or additional changes in U.S. or international trade policies, along with continued uncertainty surrounding these policies, could lead to continuing weakness in the airline and hospitality industries, which may adversely impact our operations through increased supply chain challenges, commodity price volatility and a decline in discretionary spending and consumer confidence, among others. We continue to monitor how these factors could impact our business.
Aircraft Fuel
The cost of fuel remains volatile, influenced by numerous economic and geopolitical factors beyond our control or prediction. Significant increases in fuel costs could materially impact our operating results and profitability. We have not used financial derivative products to hedge against fuel price volatility, nor do we have any plans to do so in the future.
Since 2021, fuel costs have risen significantly, further exacerbated by ongoing geopolitical tensions, including the war in Ukraine and recent developments in Iran. Although the average fuel cost per gallon decreased 13.9 percent in first quarter 2025 compared to the same period in 2024, fuel cost per gallon for the quarter remained 19.7 percent higher than in full year 2019. Higher fuel costs may continue to impact our total costs and operating results.
Optimizing Utilization
We are in the midst of an effort to thoughtfully increase aircraft utilization back to 2019 levels by adding service to our schedule in our most profitable peak periods. By way of example, our aircraft utilization rate was 8.9 hours per aircraft in March 2025 compared to 9.7 hours per aircraft in March 2019 and 7.4 hours per aircraft in March 2024. We will continue to evaluate the benefits of utilization increases in the current economic environment. These efforts are subject to various risks, some of which may not be under our control.
Boeing Agreement
We have signed an agreement and amendments with Boeing to purchase 50 newly manufactured 737 MAX aircraft with options to purchase up to an additional 80 737 MAX aircraft. We took delivery of four 737 MAX aircraft in 2024 and four in the first quarter of 2025, all of which have entered revenue service. We believe this new aircraft purchase is complementary with our low-cost strategy based on our intent to retain ownership of the aircraft, the longer useful life for depreciation purposes, and expected fuel savings and operational reliability from the use of these new aircraft.
In the interest of increased quality control at Boeing and its suppliers, the FAA has indicated aircraft production rates will be capped until they are satisfied with Boeing's quality practices. These factors, other delays in Boeing obtaining needed regulatory approvals, and other factors impacting Boeing could delay deliveries to us. At this time, we currently expect eight more aircraft to be delivered to us in the last three quarters of 2025.
New Reservation System
During 2023, we converted to the Navitaire reservation system to replace our legacy home-grown system. While we expect incremental passenger revenue once this system is fully implemented, we suffered some per passenger air ancillary revenue degradation (in the area of bundled ancillary products in particular) as certain functionality was unavailable during the transition. We restored functionality around our third bundled product offering in late 2024 and will continue to devote resources to the transition issues. We currently expect to regain all the lost per passenger revenue during the first half of 2025 and begin to achieve some of the expected incremental per passenger revenue in the first half of 2026.
18
Union Negotiations
The collective bargaining agreement with our pilots has been amendable since 2021. We and the International Brotherhood of Teamsters ("IBT”) jointly requested the mediation services of the National Mediation Board ("NMB") in January 2023 to assist with the negotiations. The mediation process with the NMB is continuing.
Separately from the ongoing collective bargaining agreement negotiations, to address retention and pilot pay issues and increase pilot staffing levels, effective in May 2023, we began accruing a retention bonus, with IBT's agreement, for pilots who continue employment with us until a new labor agreement is approved. The amount being accrued is 35 percent of current hourly pay rates, except for our first year first officers for whom the percentage is 82 percent, in each case, calculated at a minimum of 85 pay credit hours per month. Our implementation of the retention bonus has allowed us to effectively increase pay rates for our pilot team members (by way of the accrual of the retention bonus), add pilots through hiring and significantly slow attrition.
For the three months ended March 31, 2025, we recorded estimated pilot retention bonus accruals of $22.7 million bringing the total accrual to $168.8 million at March 31, 2025, including the related payroll taxes. The bonus will be paid to all pilots remaining employed with us after ratification of a new collective bargaining agreement.
Sunseeker Resort
Sunseeker Resort at Charlotte Harbor opened in December 2023. As with many new hotels or resorts, Sunseeker's booking and occupancy rates are lower than more established properties. Although Sunseeker produced operating income in the three months ended March 31, 2025, we expect losses to continue in 2025. We have hired experienced advisors to seek a capital partner to purchase the Resort or an interest in the Resort. These efforts are progressing but remain subject to many uncertainties and may not be successful.
VivaAerobus Alliance
In December 2021, we announced plans for a fully-integrated commercial alliance agreement with VivaAerobus, designed to expand options for nonstop leisure air travel between our markets in the United States and Mexico. We and VivaAerobus continue to await U.S. government approval of our joint application to the DOT requesting approval of, and antitrust immunity for, the alliance. The DOT process progressed substantially under the prior presidential administration, but review was suspended in 2023. In April 2025, we filed a motion with the DOT to resume the procedural schedule on the application for antitrust immunity.
We believe this alliance is consistent with the DOT's goal of providing maximum benefits to the public, as the alliance is expected to increase competition, reduce transborder fares and provide increased nonstop service for our consumers traveling between the U.S. and Mexico.
The alliance is anticipated to add new transborder routes and nonstop competition where currently only connecting service is available. More than 250 new potential nonstop route opportunities have been identified as part of the DOT application, though specific routes targeted for service will be announced at a later date, following the application's approval. We and VivaAerobus expect to offer flights under the alliance after governmental approval of the applications.
19
RESULTS OF OPERATIONS
Comparison of three months ended March 31, 2025 to three months ended March 31, 2024
Operating Revenue
| Three Months Ended March 31, | Percent Change | ||||||||||||||||
| Operating Revenues (in thousands) | 2025 | 2024 | YoY | ||||||||||||||
| Passenger | $ | 616,750 | $ | 579,936 | 6.3 | % | |||||||||||
| Third party products | 35,203 | 33,399 | 5.4 | ||||||||||||||
| Fixed fee contracts | 16,252 | 18,861 | (13.8) | ||||||||||||||
| Resort and other | 30,869 | 24,210 | 27.5 | ||||||||||||||
| Total operating revenues | $ | 699,074 | $ | 656,406 | 6.5 | ||||||||||||
Passenger revenue. Passenger revenue increased $36.8 million or 6.3 percent compared to first quarter 2024 driven by an 8.6 percent increase in scheduled service passengers on a 14.4 percent increase in scheduled service capacity. The increase in scheduled service passengers was offset by a 2.1 percent decrease in scheduled service total fare which resulted from a 9.1 percent decline in average base fare offset by a 5.6 percent increase in average ancillary fare. The higher ancillary revenue was driven in part by sales of Allegiant Extra. Since March 31, 2024, we have configured an additional 53 aircraft with the extra legroom seating for our Allegiant Extra offering, bringing the total number to 68 aircraft as of March 31, 2025.
Third party products revenue. Third party products revenue increased $1.8 million or 5.4 percent compared to first quarter 2024. This growth was primarily driven by a $1.1 million increase in car rental revenue and a $1.2 million increase from our new travel insurance product implemented during first quarter 2024. These increases were partially offset by smaller decreases in hotel room revenue and the marketing component of co-brand revenue.
Fixed fee contract revenue. Fixed fee contract revenue decreased $2.6 million or 13.8 percent compared to first quarter 2024 on a 13.4 percent decrease in fixed fee departures. Volume for sports flying decreased as the result of having less aircraft time available to dedicate to fixed fee flying during March Madness compared to the prior year quarter.
Resort and other revenue. Resort and other revenue increased $6.7 million or 27.5 percent compared to first quarter 2024. Resort occupancy was 70.3 percent compared to 39.2 percent in first quarter 2024, which represents a significant improvement over the Resort's first full quarter of operations in the prior year quarter. Revenue driven by increased occupancy was partially offset by a decrease in average daily rate to $284 from $327 during first quarter 2024 and an $0.8 million decrease in food & beverage revenues.
Operating Expenses
The following table presents airline only operating unit costs on a per available seat mile (ASM) basis, defined as Operating CASM, for the indicated periods. Excluding fuel on a per ASM basis provides management and investors the ability to measure and monitor our cost performance absent fuel price volatility. Both the cost and availability of fuel are subject to many economic and political factors beyond our control. Excluding special charges allows management and investors to better compare our airline unit costs with those of other airlines.
| Three Months Ended March 31, | Percent Change | ||||||||||||||||
| Airline Unitized costs (in cents) | 2025 | 2024 | YoY | ||||||||||||||
| Salaries and benefits | 4.04 | ¢ | 4.18 | ¢ | (3.3) | % | |||||||||||
| Aircraft fuel | 3.05 | 3.56 | (14.3) | ||||||||||||||
| Station operations | 1.35 | 1.39 | (2.9) | ||||||||||||||
| Depreciation and amortization | 1.10 | 1.21 | (9.1) | ||||||||||||||
| Maintenance and repairs | 0.64 | 0.63 | 1.6 | ||||||||||||||
| Sales and marketing | 0.43 | 0.61 | (29.5) | ||||||||||||||
| Aircraft lease rentals | 0.11 | 0.13 | (15.4) | ||||||||||||||
| Other | 0.40 | 0.73 | (45.2) | ||||||||||||||
| Special charges | 0.02 | 0.31 | (93.5) | ||||||||||||||
| Airline operating CASM | 11.14 | ¢ | 12.75 | ¢ | (12.6) | ||||||||||||
| Airline operating CASM, excluding fuel | 8.09 | ¢ | 9.18 | ¢ | (11.9) | ||||||||||||
| Airline operating CASM, excluding fuel and special charges | 8.07 | ¢ | 8.87 | ¢ | (9.0) | ||||||||||||
20
Airline operating CASM, excluding fuel and airline special charges. Airline operating CASM, excluding fuel and airline special charges, decreased 9.0 percent to 8.07 ¢ from 8.87 ¢ in first quarter 2024. The primary driver of the CASM-ex decrease was a 14.2 percent increase in ASMs, resulting from our targeted efforts to increase utilization in our more profitable peak periods. Virtually every expense line item was lower on a per ASM basis due in part to the increase in capacity.
Aircraft fuel expense. Aircraft fuel expense decreased $3.8 million or 2.2 percent compared to first quarter 2024. This was primarily due to a 13.9 percent decrease in average fuel cost per gallon and a 0.9 percent increase in fuel efficiency, offset by a 13.2 percent increase in fuel gallons consumed.
Salaries and benefits expense. Airline salaries and benefits expense increased $20.9 million or 10.5 percent compared to first quarter 2024. The increase was primarily attributable to the new collective bargaining agreement with our flight attendant group that took effect on April 1, 2024 and to a 15.5 percent increase in total block hours flown compared to first quarter 2024.
Salaries and benefits expense at Sunseeker Resort decreased $2.8 million or 19.9 percent compared to first quarter 2024 due to a 34.4 percent decrease in average full-time equivalent employees as we adjusted staffing to better correspond with the needs of the Resort.
Station operations expense. Station operations expense increased $7.0 million or 10.6 percent compared to first quarter 2024. The increase was primarily driven by a 13.7 percent year-over-year increase in departures that resulted in a corresponding rise in airport landing fees, ground handling, deicing, and other stations-related expenses. The increase in costs was partially offset by a reduction in passenger compensation resulting from smoother winter operations (that is, fewer irregular operations events this quarter).
Depreciation and amortization expense. Airline depreciation and amortization expense increased $1.8 million or 3.2 percent compared to first quarter 2024. This increase was primarily driven by a $1.0 million increase in capitalized software amortization resulting from the airline's implementation of new enterprise resource planning ("ERP") systems throughout 2024, a $1.3 million increase in heavy maintenance amortization, and a slight increase in engine depreciation, which were partially offset by decreases in aircraft and ground equipment depreciation.
Sunseeker Resort depreciation and amortization decreased $2.4 million or 39.7 percent compared to first quarter 2024, primarily as the result of an impairment loss recorded in fourth quarter 2024 which reduced the carrying amount of Resort assets.
Maintenance and repairs expense. Maintenance and repairs expense increased $4.6 million or 15.1 percent compared to first quarter 2024, which remained relatively flat on a per ASM basis.
Sales and marketing expense. Airline sales and marketing expense decreased $5.5 million or 19.1 percent compared to first quarter 2024, primarily due to a non-recurring item related to our credit card agreement that offset expenses in first quarter 2025 and decreases in sponsorship related expenses.
Sunseeker Resort sales and marketing expense increased $0.2 million or 12.0 percent compared to first quarter 2024. The Sunseeker segment saw an increase in credit card fees in proportion to the 28.5% increase in revenues, which was offset by cost savings related to a more targeted approach in marketing efforts.
Other operating expense. Other operating expense decreased $12.3 million or 25.9 percent compared to first quarter 2024. Airline other operating expenses decreased by $12.2 million primarily as a result of gains on opportunistic sales of flight equipment and decreases in crew travel, legal and software support expense.
Sunseeker Resort other operating expenses were relatively flat compared to the prior year quarter.
Special charges. In first quarter 2025, we recorded a $1.6 million net credit to special charges, which includes $1.4 million in accelerated depreciation due to the early retirement of airframes as part of a revised fleet plan extending through 2026. This was more than offset by $2.9 million in net insurance recoveries during the quarter related to losses from Sunseeker weather events that occurred between 2022 and 2024.
21
Interest Expense and Income
Interest expense, net of interest income and capitalized interest, increased $5.6 million or 33.6 percent, compared to first quarter 2024. Interest expense for the quarter ended March 31, 2025, includes a $3.4 million loss on debt extinguishment related to the early repayment of the Sunseeker construction loan which was partially offset by the effect of lower debt balances and a slight decrease in interest rates. Capitalized interest decreased by $4.7 million as eight 737 MAX deliveries have been placed in service as of March 31, 2025. Interest income decreased by $0.3 million as a result of lower average investment balances, which was offset in part by higher average yields on investments, compared to first quarter 2024.
Income Tax Expense
We recorded a $9.8 million income tax expense at an effective tax rate of 23.5 percent and a $0.4 million income tax benefit at a 31.3 percent effective tax rate for the three months ended March 31, 2025 and 2024, respectively. The effective tax rate for the three months ended March 31, 2025 differed from the statutory federal income tax rate of 21.0 percent primarily due to state income taxes and permanent tax items.
22
Comparative Airline-Only Operating Statistics
The following tables set forth our airline operating statistics for the periods indicated:
| Three Months Ended March 31, | Percent Change (1) | ||||||||||||||||
| 2025 | 2024 | YoY | |||||||||||||||
| Airline operating statistics (unaudited): | |||||||||||||||||
| Total system statistics: | |||||||||||||||||
| Passengers | 4,451,306 | 4,104,860 | 8.4 | % | |||||||||||||
| Available seat miles (ASMs) (thousands) | 5,451,584 | 4,771,971 | 14.2 | ||||||||||||||
Airline operating expense per ASM (CASM) (cents) | 11.14 | ¢ | 12.75 | ¢ | (12.6) | ||||||||||||
| Fuel expense per ASM (cents) | 3.05 | ¢ | 3.56 | ¢ | (14.3) | ||||||||||||
| Airline special charges per ASM (cents) | 0.02 | ¢ | 0.31 | ¢ | (93.5) | ||||||||||||
Airline operating CASM, excluding fuel and special charges (cents) | 8.07 | ¢ | 8.87 | ¢ | (9.0) | ||||||||||||
| Departures | 33,235 | 29,225 | 13.7 | ||||||||||||||
| Block hours | 83,871 | 72,632 | 15.5 | ||||||||||||||
| Average stage length (miles) | 935 | 919 | 1.7 | ||||||||||||||
| Average number of operating aircraft during period | 125.1 | 125.8 | (0.6) | ||||||||||||||
| Average block hours per aircraft per day | 7.5 | 6.3 | 19.0 | ||||||||||||||
| Full-time equivalent employees at end of period | 6,057 | 5,951 | 1.8 | ||||||||||||||
| Fuel gallons consumed (thousands) | 63,636 | 56,224 | 13.2 | ||||||||||||||
| ASMs per gallon of fuel | 85.7 | 84.9 | 0.9 | ||||||||||||||
| Average fuel cost per gallon | $ | 2.61 | $ | 3.03 | (13.9) | ||||||||||||
| Scheduled service statistics: | |||||||||||||||||
| Passengers | 4,420,811 | 4,069,519 | 8.6 | ||||||||||||||
| Revenue passenger miles (RPMs) (thousands) | 4,271,328 | 3,883,810 | 10.0 | ||||||||||||||
| Available seat miles (ASMs) (thousands) | 5,305,191 | 4,636,922 | 14.4 | ||||||||||||||
| Load factor | 80.5 | % | 83.8 | % | (3.3) | ||||||||||||
| Departures | 32,133 | 28,177 | 14.0 | ||||||||||||||
| Block hours | 81,414 | 70,365 | 15.7 | ||||||||||||||
| Average seats per departure | 175.0 | 177.5 | (1.4) | ||||||||||||||
Yield (cents) (2) | 7.06 | ¢ | 7.86 | ¢ | (10.2) | ||||||||||||
Total passenger revenue per ASM (TRASM) (cents)(3) | 12.29 | ¢ | 13.23 | ¢ | (7.1) | ||||||||||||
Average fare - scheduled service(4) | $ | 68.19 | $ | 74.98 | (9.1) | ||||||||||||
Average fare - air-related charges(4) | $ | 71.32 | $ | 67.52 | 5.6 | ||||||||||||
| Average fare - third party products | $ | 7.96 | $ | 8.21 | (3.0) | ||||||||||||
| Average fare - total | $ | 147.47 | $ | 150.71 | (2.1) | ||||||||||||
| Average stage length (miles) | 941 | 926 | 1.6 | ||||||||||||||
| Fuel gallons consumed (thousands) | 61,826 | 54,566 | 13.3 | ||||||||||||||
| Average fuel cost per gallon | $ | 2.63 | $ | 3.01 | (12.6) | ||||||||||||
| Percent of sales through website during period | 92.5 | % | 96.5 | % | (4.0) | ||||||||||||
| Other data: | |||||||||||||||||
| Rental car days sold | 360,890 | 357,944 | 0.8 | ||||||||||||||
| Hotel room nights sold | 39,940 | 61,294 | (34.8) | ||||||||||||||
(1)Except load factor and percent of sales through website during period, which are presented as a percentage point change.
(2)Defined as scheduled service revenue divided by revenue passenger miles.
(3)Various components of this measure do not have a direct correlation to ASMs. This measure is provided on a per ASM basis so as to facilitate comparison with airlines reporting revenues on a per ASM basis.
(4)Reflects division of passenger revenue between scheduled service (base fare) and air-related charges in our booking path.
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LIQUIDITY AND CAPITAL RESOURCES
Current liquidity
Cash, cash equivalents and investment securities (short-term and long-term) increased to $906.3 million as of March 31, 2025, from $832.9 million at December 31, 2024. Investment securities represent highly liquid marketable securities which are available-for-sale.
As of March 31, 2025, we had $275.0 million of undrawn capacity under revolving credit facilities and $69.1 million remaining available under aircraft financing facilities. In April 2025 we entered into an additional aircraft financing commitment totaling $221.3 million, which will be funded when the associated aircraft deliver.
Restricted cash represents escrowed funds under fixed fee contracts and cash collateral against letters of credit required by hotel properties for guaranteed room availability, airports and certain other parties. Under our fixed fee flying contracts, we require our customers to prepay for flights to be provided by us. The prepayments are escrowed until the flight is completed and are recorded as restricted cash with a corresponding amount reflected as air traffic liability.
Our operating cash flows and long-term debt borrowings have allowed us to invest in our fleet renewal. Future capital needs are primarily for the acquisition of additional aircraft, including our existing aircraft commitments.
Our share repurchase authority at March 31, 2025 is $64.7 million. We completed open market share repurchases totaling $11.0 million during first quarter 2025 and may continue to repurchase shares on an opportunistic basis. In July 2024, we suspended our quarterly cash dividend in anticipation of upcoming capital needs related to our fleet investments.
We believe we have more than adequate liquidity resources through our cash, cash equivalent and short term investment balances, financing commitments, our undrawn capacity under existing credit facilities, operating cash flows and anticipated access to liquidity, to meet our current contractual obligations and remain in compliance with the debt covenants in our existing financing agreements for the next 12 months. We will continue to consider raising funds through debt financing as needed to fund capital expenditures.
Debt
Our debt and finance lease obligations balance, without reduction for related issuance costs, decreased from $2.08 billion as of December 31, 2024 to $2.03 billion as of March 31, 2025. Net debt (total debt less unrestricted cash, cash equivalents, and investments) as of March 31, 2025 was $1.11 billion, a decrease of $126.1 million from December 31, 2024.
During the three months ended March 31, 2025, we borrowed $224.5 million, of which $174.5 million was secured by aircraft and aircraft related assets. In the same period, we also repaid $280.6 million in principal, including prepayment of the remaining $100.0 million principal balance related to our Sunseeker construction loan. As of March 31, 2025, we had $275.0 million undrawn and available under our revolving credit facilities.
As of March 31, 2025, approximately 67.6 percent of our debt and finance lease obligations are fixed-rate.
Sources and Uses of Cash
Operating Activities. Operating cash inflows are primarily derived from providing air transportation and related ancillary products and services to customers. During the three months ended March 31, 2025, our operating activities provided $191.4 million of cash compared to $167.8 million during the same period 2024. This change is primarily attributable to a $33.0 million increase in net income compared to the 2024 period.
Investing Activities. Cash used for investing activities was $121.9 million during the three months ended March 31, 2025 compared to $93.6 million during the same period in 2024. The change is attributable to purchases of investment securities net of maturities, of $73.3 million for the three months ended March 31, 2025, compared to proceeds from maturities of investment securities, net of purchases, of $70.5 million, for the three months ended March 31, 2024. This was offset by a $92.4 million decrease in cash used to purchase property and equipment including aircraft PDPs and an increase in other investing activities primarily driven by proceeds from the sale of aircraft and engine assets during first quarter 2025.
Financing Activities. Cash used in financing activities for the three months ended March 31, 2025 was $69.0 million, compared to $23.5 million during the same period in 2024. The change was primarily driven by a $249.1 million increase in principal repayments on long term debt and finance lease obligations, which was offset by a $205.7 million increase in proceeds from issuance of debt.
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this quarterly report on Form 10-Q, and in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” that are based on our management’s beliefs and assumptions, and on information currently available to our management. Forward-looking statements include our statements regarding the number of contracted aircraft to be placed in service in the future, the timing of aircraft deliveries and retirements, our ability to increase aircraft utilization and also to increase per passenger revenue with our new revenue management system, the implementation of a joint alliance with VivaAerobus, the operations and possible sale of our Sunseeker Resort or an interest therein, the impact of U.S. trade policies on our business, as well as other information concerning future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, the effects of future regulation and the effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words "believe," "expect," "anticipate," "intend," "plan," "estimate," “project,” “hope” or similar expressions.
Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in the forward-looking statements. Important risk factors that could cause our results to differ materially from those expressed in the forward-looking statements may be found in our periodic reports filed with the Securities and Exchange Commission at www.sec.gov. These risk factors include, without limitation, the impact of regulatory reviews of, and production limits on, Boeing on our aircraft delivery schedule, an accident involving, or problems with, our aircraft, public perception of our safety, our reliance on our automated systems, our reliance on Boeing to deliver aircraft under contract to us on a timely basis, risk of breach of security of personal data, volatility of fuel costs, labor issues and costs, the ability to obtain regulatory approvals as needed, the effect of economic conditions on leisure travel, debt covenants and balances, the impact of government regulations on the airline industry, the ability to finance aircraft to be acquired, the ability to obtain necessary government approvals to implement the announced alliance with VivaAerobus and to otherwise prepare to offer international service, terrorist attacks, risks inherent to airlines, our competitive environment, our reliance on third parties who provide facilities or services to us, the possible loss of key personnel, economic and other conditions in markets in which we operate, the ability to successfully operate Sunseeker Resort at Charlotte Harbor or to dispose of an interest in it on acceptable terms, increases in maintenance costs and the availability of outside maintenance contractors to perform needed work on our aircraft on a timely basis and at acceptable rates, cyclical and seasonal fluctuations in our operating results and the perceived acceptability of our environmental, social, and governance efforts.
Any forward-looking statements are based on information available to us today and we undertake no obligation to publicly update any forward-looking statements, whether as a result of future events, new information or otherwise.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
There have been no material changes to our critical accounting estimates during the three months ended March 31, 2025. For information regarding our critical accounting policies and estimates, see disclosures in the Consolidated Financial Statements and accompanying notes contained in our 2024 Form 10-K, and in Note 1 of Notes to Consolidated Financial Statements (unaudited) in this Form 10-Q.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are subject to certain market risks, including commodity prices (specifically aircraft fuel). The adverse effects of changes in these markets could pose potential losses as discussed below. The sensitivity analysis provided does not consider the effects that such adverse changes may have on overall economic activity, nor does it consider additional actions we may take to mitigate our exposure to such changes. Actual results may differ.
Aircraft Fuel
Our results of operations can be significantly impacted by changes in the price and availability of aircraft fuel. Aircraft fuel expense for the three months ended March 31, 2025 represented 26.2 percent of our total operating expenses. Increases in fuel prices, or a shortage of supply, could have a material impact on our operations and operating results. Based on our fuel consumption for the three months ended March 31, 2025, a hypothetical ten percent increase in the average price per gallon of fuel would have increased fuel expense by approximately $16.9 million. We do not hedge fuel price risk.
Interest Rates
As of March 31, 2025, we had $656.8 million of variable-rate debt, including current maturities, and without reduction for $3.9 million in related costs. A hypothetical 100 basis point change in interest rates would have affected interest expense on variable rate debt by approximately $1.6 million for the three months ended March 31, 2025.
Item 4. Controls and Procedures
As of March 31, 2025, under the supervision and with the participation of our management, including our chief executive officer ("CEO") and chief financial officer (“CFO”), we evaluated the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, or the “Exchange Act”) as of the end of the period covered by this report. Based on that evaluation, management, including our CEO and CFO, has concluded that our disclosure controls and procedures are designed, and are effective, to give reasonable assurance that the information we are required to disclose is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management, including the CEO and the CFO, as appropriate to allow timely decisions regarding required disclosure.
There were no changes in our internal control over financial reporting that occurred during the quarter ending March 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We are subject to certain legal and administrative actions we consider routine to our business activities. We believe the ultimate outcome of any pending legal or administrative matters will not have a material adverse impact on our financial position, liquidity or results of operations.
Item 1A. Risk Factors
We have evaluated our risk factors and determined there are no changes to those set forth in Part I, Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 2024, and filed with the Securities Exchange Commission on March 3, 2025.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Our Repurchases of Equity Securities
The following table reflects the repurchases of our common stock during first quarter 2025:
| Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of our Publicly Announced Plan | Approximate Dollar Value of Shares that May yet be Purchased Under the Plans or Programs (in thousands) (2) | ||||||||||||||||||||||
| January | 155 | $ | 95.64 | — | ||||||||||||||||||||||
| February | 68,624 | $ | 88.24 | 68,005 | ||||||||||||||||||||||
| March | 77,871 | $ | 64.86 | 76,962 | ||||||||||||||||||||||
| Total | 146,650 | $ | 75.84 | 144,967 | $ | 64,694 | ||||||||||||||||||||
(1)Includes shares repurchased from employees who vested a portion of their restricted stock grants. These share repurchases were made at the election of each employee pursuant to an offer to repurchase by us. In each case, the shares repurchased constituted a portion of vested shares necessary to satisfy income tax withholding requirements.
(2)Represents the remaining dollar amount of open market purchases of our common stock which have been authorized by our board of directors under a share repurchase program.
Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosures
Not applicable
Item 5. Other Information
Securities Trading Plans of Directors and Executive Officers
During the three months ended March 31, 2025, none of our directors or executive officers adopted terminated
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Item 6. Exhibits
| 101.SCH | XBRL Taxonomy Extension Schema Document | ||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | ||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | ||||
| 101.LAB | XBRL Taxonomy Extension Labels Linkbase Document | ||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | ||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| ALLEGIANT TRAVEL COMPANY | |||||||||||
| Date: | May 7, 2025 | By: | /s/ Robert J. Neal | ||||||||
| Robert J. Neal, as duly authorized officer of the Company (Executive Vice President and Chief Financial Officer) and as Principal Financial Officer | |||||||||||
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