Allegiant Air has today discussed its earnings for the third quarter of this year. The low-cost carrier recorded a total operating revenue of $201 million during Q3. This figure is down from $436 million this time last year. Moreover, it recorded a net loss of $29.1 million, which is down from an income of $43.9 million this time in 2019. However, the airline is positive as it sees improvements in activity compared with the initial impact of the global health crisis this year.
Reasons to be optimistic
In an earnings call attended by Simple Flying, The Nevada-headquartered outfit emphasized how it recorded positive cash inflows for September. Nonetheless, this factor excludes a $5 million payment that is connected with the termination of a loan agreement intended to finance the development of the Sunseeker resort on Charlotte Harbor.
Regardless, there was reason to be optimistic about September. According to a statement of figures seen by Simple Flying, the revenue for the month was down 42.8%, which was the lowest monthly reduction since the rise of COVID-19 in the United States. The airline also completed the quarter with a load factor in September of 57.4%.
This figure makes September the highest month of load factors since March, which was when the pandemic rocked the aviation industry. Speaking of the pandemic, the recognized special charges related to coronavirus totals $33.6 million during quarter three.
Altogether, the total revenue for the quarter was $201.0 million. This number is down 54.0% year over year from 2019.
Notably, total sources of liquidity received during quarter three totals to approximately $184.9 million. Contributing to this figure is $84 million in financings secured from A320 aircraft and CFM engines. The firm entered into a sale leaseback transaction. This move saw the sale of four A320 family planes. Three of these sales closed in the third quarter, generating a sum of $30 million. Thereafter, a fourth sale closed this month, giving $10 million.
A helping hand
Additionally, the daily cash burn averaged $1.3 million for the quarter. Meanwhile, gross bookings averaged just over $2 million per day during the same period.
The airline highlighted how a 25% reduction in workforce is a key contributor to helping it manage the crisis. The carrier expressed its sorrow about letting important members of staff go, but it values their efforts. Altogether, the company reduced approximately 300 management and support positions, a number which included voluntary leaves. Ultimately, this move is giving an anticipated annual saving of approximately $20 million.
Moreover, the operator is furloughing around 130 pilots, which is a 13% reduction. 100 of these crew members were furloughed as of October 1st, while 30 employees are expected to be added to the list as of November 1st.
Altogether, Allegiant is taking the positives from the third quarter into the future. It is excited about the next three months as it predicts 30% more passengers to fly this holiday season.
Maurice J. Gallagher, Allegiant Air chairman and chief executive officer, spoke about the results. Amid the pandemic, the businessman feels that year over year numbers don’t tell the quarterly picture amid the dire industry climate. Therefore, he is focusing on monthly progress.
“The only way back will be one step at a time. In the early days we had little to no view on how we were going to to get back to the top after we crawled into this abyss. Today, however, we have a good sense of where we are and are beginning to believe we can return to our former state,” Gallagher said in the earnings call.
“Year over year comparisons are meaningless. Month over month is what is important. And the further we get away from March, the better our results will be. But each of our subsequent months have improved consequently since that time. And we expect this trend to continue through the end of this year and through to 2021.”
The airline summarized that there is consistent growth. However, there is cautious optimism as September showed passenger numbers not dropping near what it saw in April but highs not overtaking June.
What are your thoughts about Allegiant Air’s financial results for the third quarter? What do you expect from the airline for the remainder of the year? Let us know what you think of the situation in the comment section.