Maurice Gallagher, CEO of Allegiant Air, stated, “we are back!” on the carrier’s first-quarter earnings call. After the carrier reported a profit for the quarter, the airline has an optimistic outlook of profitability and growth. Viewing 2020 as a pause for the airline, it is back on its growth trajectory and is planning new capacity increases.
Allegiant Air reports first-quarter profit
Allegiant Air recorded a profit of $6.9 million in the first quarter of 2021. Though a relatively small number, this is still a significant milestone for the airline, at a time when most other carriers recorded a loss. The primary driver for the airline’s profitability for the quarter came from the federal government’s Payroll Support Program (PSP).
Revenue for the quarter was down 38% from the same quarter in 2019. One of the highlights of the quarter was ancillary revenue. Per passenger, ancillary revenue was down just 0.2% from the same quarter in 2019. This helped Allegiant’s total fare per passenger, which was down just 8.9%.
An improving outlook on capacity
Allegiant’s first-quarter capacity was up 2.7% from the same quarter in 2019. This was at a time when most carriers were still operating at less capacity than the same quarter. The load factor for the quarter was 55.3%, which is around 34 points lower than what it was in 2019.
In March, passenger demand started to pick up. The combination of vaccinations and fewer new daily cases improved customer confidence in travel. For the month, Allegiant notched a 54% load factor. That tailwind, however, helped lead April’s load factor up a whopping ten points to 64%.
In the second quarter, Allegiant expects its capacity to be up between 2% and 6% compared to the same quarter in 2019. Revenue for the quarter is expected to be down 6% to 10% from the same quarter in 2019.
Major growth is on the horizon
Allegiant Air ended the first quarter with 100 Airbus A320 family of aircraft in its fleet. It plans to add five jets in the second quarter and another three in the third quarter. By the end of the year, Allegiant will fly 108 Airbus jets. During the first quarter, Allegiant acquired three jets.
The carrier expects this to be split between 35 Airbus A319s and 73 Airbus A320s, the large majority of which are 186-seat aircraft.
Gregory Anderson, Chief Financial Officer at Allegiant, stated the following on the airline’s first-quarter earnings call on future aircraft acquisition:
“Our fleet team is in no short supply of deals coming across their desks, with prices that reflect a 30% discount on average to pre-pandemic levels. Based on current commitments, we expect to end the year with 108 aircraft, which supports our ability to increase capacity in the back half of 2021 by as much as 20%, as Drew and his team see no shortage and opportunities to put aircraft to work.”
Mr. Anderson is referencing Drew Wells, Senior Vice President of Revenue at Allegiant, who heads up the carrier’s network planning. The crisis has presented the team with the opportunity to acquire some used aircraft for cheap.
Allegiant Air now expects to be profitable through 2021 and expects income levels for this year to be higher than 2019. While other airlines are still working their way out of the crisis, Allegiant is back on track with its expansionary vision. In February, the carrier “stepped on the gas” and added a host of new routes.
Maurice Gallagher stated the following on the carrier’s outlook for 2021:
“I’m extremely excited about our future, more so than I have been in previous quarters. I expect traffic to continue to grow in the coming months. Based on the data we’re seeing, I would say we are back. 2021 and beyond, I believe, will be as good or better than I could have hoped.”
Allegiant is not planning on messing around, and its 2021 outlook shows it believes it is ready to fight and get back to business. It has already turned a profit in the first quarter, which was a difficult one overall, and the second and third quarter should be buoyed by summer travel.
All of this combined indicates that Allegiant will have a successful year, which is amazing considering the circumstances.
Are you surprised at Allegiant’s rebound? Will you fly Allegiant this year? Let us know in the comments!