Wednesday, February 1, 2017

Allegiant Air posts $220 million 2016 net profit

Las Vegas-based Allegiant Travel Co., parent of ultra-low-cost carrier Allegiant Air, reported a $219.5 million net profit for 2016, down 0.4% from $220.4 million in 2015.

Allegiant posted a fourth-quarter 2016 net profit of $41.3 million, down 27.2% from $56.7 million in net income for 4Q 2015. Fourth-quarter revenue totaled $335.9 million, up 8% from 4Q 2015.

Allegiant chairman and CEO Maurice Gallagher described 2016 as a transformational year. “We finalized a single fleet type plan, signed our first pilot contract agreement … and announced the appointment of John Redmond as president of Allegiant,” Gallagher said. “Each of these actions is critical in the evolution of our business model in the coming years.”

Allegiant plans to transition to an all-Airbus fleet by 2019. The airline ordered 12 A320ceos in July 2016.

In a Jan. 31 conference call with analysts, Gallagher announced a new senior management tier for the company, executive vice president (EVP). Allegiant’s current senior vice presidents (SVPs) Jude Bricker, Scot Allard and Scott Sheldon were all elevated to the new EVP level. Four VPs were concurrently promoted to SVP status: Greg Anderson, to SVP and principal accounting officer; Lukas Johnson, to SVP planning; Trent Porter, to SVP financial planning; and Rob Wilson, to SVP systems. Gallagher described the new positions as “allow[ing] more pathways upwards for our ... managers.”

Allegiant’s total 2016 operating revenue was $1.4 billion, up 8% from $1.3 billion in 2015. Operating expenses increased 11.4% year-over-year (YOY) to $992.3 million, reflecting a 27.1% rise in salaries and benefits, a 21.3% increase in station operation expenses and a 20% increase in maintenance and repairs costs, offset by 60.3% YOY drop in aircraft lease rental expenses ($924 million in 2016, compared to $2.3 billion in 2015). Allegiant’s operating income for the year was $370.6 million, down 0.3% from $371.8 million in 2015.

Allegiant’s 2016 traffic grew 15% in 2016 to 10.3 billion RPMs on a 17.6% rise in capacity to 12.4 billion ASMs, producing a load factor of 83.1%, down 1.9 points from 2015.

Allegiant’s fleet as of Dec. 31, 2016, totaled 84 aircraft, up four aircraft from 2015, comprising 47 MD-80s, 17 Airbus A319s, 16 A320s and four Boeing 757s. The airline intends to retire its 757 fleet in 2017; two 757s are planned for retirement by the end of the 2017 first quarter. Two A319s and one A320 are set to enter service during 1Q 2017.

Allegiant Air, which historically specializes in flights from smaller US cities to US vacation destinations, said it has now been profitable for every quarter for 14 consecutive years. The airline increased its network 21.6% in 2016, operating 360 routes as of the end of the year, compared to 296 in 2015. 

During 4Q 2016, the airline started flying to Newark, New Jersey and San Juan, Puerto Rico and opened up Trenton, New Jersey as an origination city. In May and June this year, Allegiant plans to launch a combined 17 new routes from origination airports in Louisville, Kentucky and Destin/Fort Walton Beach, Florida.

(Mark Nensel - ATWOnline News)

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