Allegiant announces profitable first quarter 2010

Allegiant Travel Company, parent company of Allegiant Air and Allegiant Vacations, has reported financial results for first quarter of 2010 and comparisons to prior year equivalents.

Total operating revenue rose by 19.4% to $169.6 million from 1Q09’s figure of $142.1 million. Operating income though, was down by 18.5% at $36.2 million compared with $44.5 million in 1Q09. The operating margin for the quarter was 21.4%, a 9.9 percentage point drop from the 31.3% recorded in the same period last year.

The airline produced another positive quarterly net income at $22.6 million, though this was 19.8% less that the $28.2 million achieved in 1Q09.

"We are pleased to announce our 29th consecutive profitable quarter," stated Maurice Gallagher, chairman and CEO of Allegiant Travel Company. "Our first quarter results continue to reaffirm the stability and strength of our model. This is the fifth year in a row where our first quarter operating profit percentage has been double digit. The 31% operating margin we achieved in the first quarter of 2009 benefited from the lowest quarterly fuel prices in over five years ($1.47 per gallon). This year, in spite of a 48% increase in fuel price to $2.17 per gallon, we nonetheless achieved a 21% operating margin.

"We continued growing during this quarter. Average aircraft in operation increased by seven (46 vs 39) versus the prior year. On a system basis, we generated 17% more ASMs, 10% more departures and 11% more passengers. Southern California flying and other longer routes drove a 6.5% increase in our scheduled service average stage length from 887 in the first quarter of last year to 945 miles this year.

"Improving unit revenues are also part of the story. We generated a $116.49 average fare per scheduled passenger versus $108.61, a nearly $8 increase compared to the first quarter last year. Sequentially, unit revenues were also up 7% from $108.59 in the fourth quarter of 2009, another sign of an improving economy. And total revenue per ASM (TRASM) also increased 2.4% year-over-year despite the significant increase in stage length.

"This quarter also marked our eighth consecutive quarter of load factors near or above 90%. Beginning in the second quarter of 2008, we increased our focus on filling aircraft to take advantage of strong ancillary revenues and reduce per-passenger costs by spreading costs, particularly fuel, over more passengers. This strategy has worked well and we plan to continue this approach indefinitely.

Andrew Levy, the company’s president and chief financial officer stated, "We remain pleased with our cost management. Operating expense per passenger, excluding fuel, was up only 6.6% to $52.89 despite the increase in average stage length and a 6.3% decline in departures per aircraft. The increase in fuel price and the longer stage length resulted in a $14 increase in fuel expense per passenger from $25.80 to $39.91.

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