Allegiant’s Third Quarter Capacity Was Down Less Than 7%

Allegiant Air has shared that its third-quarter capacity was only down 6.5% year-over-year. The airline’s load factor was just below 50% for the quarter, but its September was one of the better months in the quarter. Overall, Allegiant is in good shape heading into the fourth quarter and beyond.

Allegiant’s Third Quarter Capacity Was Down Less Than 7%
Allegiant Air’s third-quarter capacity was down less than 7% at a time when most carriers were cutting capacity in the double digits. Photo: Allegiant Air

Allegiant’s third-quarter results

According to Drew Wells, Vice President of Revenue at Allegiant, the airline’s third-quarter capacity was down minimally from the same quarter last year:

“We completed the quarter with capacity down 6.5 percent year over year and a load factor of just below 50 percent. We saw some strength towards the back half of the quarter, as evidenced by September’s load factor of 57.4 percent. We continue to monitor bookings and will make any necessary cuts to the schedule as dictated by demand trends.”

Capacity is measured in terms of available seat miles. Despite capacity being down about 6.5%, the airline’s load factor was down over 36 points from 86% to 49.7%. September ended up being one of the better months of the third quarter spanning from July through September. September is traditionally a lower-demand travel month for Allegiant, and the carrier does traditionally pull back its schedule slightly during this period.

While Allegiant’s capacity was high, its load factor remained below 50% in the third quarter. Photo: Getty Images

What is Allegiant’s strategy?

Allegiant Air is continuing to maintain a “wide selling footprint,” according to Drew Wells. The airline has seen some success from this approach and plans to continue it as much as possible. Entering the holiday season in November and December, Allegiant is building up routes to some more sun destinations, such as Palm Springs.

As an ultra-low-cost carrier (ULCC), Allegiant Air primarily caters to leisure travelers. These passengers are basically the only ones who are flying right now and likely will over the next few months. Allegiant, like its other low-cost peers, believes that it will be able to capture a sizable share of leisure passengers.

Allegiant Air
Allegiant Air is hoping to secure as much revenue as possible with new routes. Photo: Getty Images

The carrier has also been working to tap into new opportunities. The airline, in its second-quarter results, announced it was looking at offering remote work opportunities with a casino.

The financial state of Allegiant

In June, the airline averaged around $4 million in gross bookings per day. However, in September, average daily gross bookings were over $2 million per day. This is still pretty good for the airline, which turned a $93 million loss in the second quarter.

However, the average daily cash burn came in at around $1.3 million for the third quarter. This was driven slightly by a $15 million payment concerning the termination of the airline’s Sunseeker loan agreement. This planned resort is on hold as the airline seeks to preserve its cash. Allegiant anticipates its fourth-quarter daily cash burn to be below $1 million, assuming that the airline sees average daily gross bookings of more than $2 million.

Allegiant Air A320
Allegiant has an all-Airbus fleet. Photo: Getty Images

The airline’s liquidity position stands at around $850 million, with $84 million in senior secured debt backed by two Airbus A320 aircraft and eight CFM engines. There was also a sale of $150 million of senior secured notes. This cash should help the carrier do well over the next few months, but it depends on how the fourth quarter turns out for the airline.

What do you make of Allegiant’s preliminary third-quarter results? Did you fly Allegiant in the last quarter? Let us know in the comments!