Allegiant Travel(ALGT) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION ITEM 1. Consolidated Financial Statements Presents unaudited consolidated financial statements, including balance sheets, income, equity, cash flows, and detailed accounting notes Consolidated Balance Sheets Total assets decreased to $4,389.141 million by June 30, 2025, due to cash, investment, and Sunseeker Resort reclassification changes Consolidated Balance Sheets (in thousands) | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | CURRENT ASSETS | | | | Cash and cash equivalents | $209,873 | $285,892 | | Short-term investments | 632,946 | 495,234 | | Assets held for sale | 194,650 | — | | TOTAL CURRENT ASSETS | 1,206,750 | 991,605 | | Property and equipment, net | 2,892,648 | 3,069,949 | | TOTAL ASSETS | $4,389,141 | $4,429,853 | | CURRENT LIABILITIES | | | | Current maturities of long-term debt and finance lease obligations | 183,063 | 454,769 | | TOTAL CURRENT LIABILITIES | 1,093,656 | 1,277,404 | | Long-term debt and finance lease obligations, net | 1,778,855 | 1,611,735 | | TOTAL LIABILITIES | $3,333,220 | $3,340,461 | | TOTAL EQUITY | 1,055,921 | $1,089,392 | | TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $4,389,141 | $4,429,853 | Consolidated Statements of Income Net loss reported for Q2 and H1 2025, driven by significant special charges from Sunseeker write-down and corporate restructuring Consolidated Statements of Income (in thousands, except per share amounts) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | OPERATING REVENUES: | | | | | | Total operating revenues | $689,384 | $666,283 | $1,388,458 | $1,322,688 | | OPERATING EXPENSES: | | | | | | Total operating expenses | 756,873 | 631,386 | 1,390,945 | 1,272,344 | | OPERATING INCOME (LOSS) | (67,489) | 34,897 | (2,487) | 50,344 | | INCOME (LOSS) BEFORE INCOME TAXES | (88,564) | 18,025 | (46,624) | 16,688 | | INCOME TAX PROVISION (BENEFIT) | (23,398) | 4,326 | (13,560) | 3,908 | | NET INCOME (LOSS) | $(65,166) | $13,699 | $(33,064) | $12,780 | | Earnings (loss) per share: Basic | $(3.62) | $0.75 | $(1.84) | $0.69 | | Earnings (loss) per share: Diluted | $(3.62) | $0.75 | $(1.84) | $0.68 | Consolidated Statements of Comprehensive Income Total comprehensive loss widened significantly in Q2 and H1 2025, reflecting the net loss, partially offset by securities changes Consolidated Statements of Comprehensive Income (in thousands) | | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | NET INCOME (LOSS) | $(65,166) | $13,699 | $(33,064) | $12,780 | | Other comprehensive income (loss): Change in available for sale securities, net of tax | 305 | (254) | (505) | (1,462) | | TOTAL COMPREHENSIVE INCOME (LOSS) | $(64,861) | $13,445 | $(33,569) | $11,318 | Consolidated Statements of Shareholders' Equity Shareholders' equity decreased to $1,055.921 million by June 30, 2025, due to net loss and share repurchases Consolidated Statements of Shareholders' Equity (in thousands) | | Balance at December 31, 2024 | Share-based compensation | Shares repurchased | Stock issued under employee stock purchase plan | Other comprehensive loss | Net loss | Balance at June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total shareholders' equity | $1,089,392 | $6,302 | $(11,470) | $5,266 | $(505) | $(33,064) | $1,055,921 | Consolidated Statements of Cash Flows Operating cash flow increased to $283.647 million in H1 2025, but investing and financing outflows led to a net cash decrease Consolidated Statements of Cash Flows (in thousands) | | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net income (loss) | $(33,064) | $12,780 | | Net cash provided by operating activities | 283,647 | 236,737 | | Net cash used in investing activities | (241,842) | (109,752) | | Net cash used in financing activities | (116,223) | (54,432) | | NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | (74,418) | 72,553 | | CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD | 302,319 | 159,584 | | CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD | $227,901 | $232,137 | Notes to Consolidated Financial Statements Detailed notes explain accounting policies, special charges, revenue, debt, income taxes, fair value, EPS, contingencies, segments, and Sunseeker sale Note 1 — Summary of Significant Accounting Policies Unaudited financial statements follow U.S. GAAP, relying on management estimates, with reclassifications for presentation conformity - Unaudited consolidated financial statements include Allegiant Travel Company and its majority-owned subsidiaries, with all intercompany balances and transactions eliminated[18] - The preparation of financial statements requires management to make estimates and assumptions that affect reported amounts, and actual results may differ from these estimates[20] - Certain prior period amounts have been reclassified to conform to the current period presentation[21] Note 2 — Special Charges Q2 2025 special charges totaled $117.9 million, mainly from Sunseeker write-down and corporate restructuring - In Q2 2025, the Company recorded $102.2 million in special charges related to the pending sale of Sunseeker Resort, including a $100.4 million write-down and $1.8 million for retention pay[22] - The Company recorded $12.1 million of special charges in Q2 2025 for corporate restructuring efforts, including voluntary separation packages and termination of marketing agreements, in response to softened air travel demand[26] Summary of Special Charges (in thousands) | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Accelerated depreciation on airframes identified for early retirement | $2,501 | $9,251 | $3,892 | $24,166 | | Flight attendant ratification bonus | — | 10,821 | — | 10,821 | | Organizational restructuring | 12,095 | — | 12,095 | — | | Airline special charges | 14,596 | 20,072 | 15,987 | 34,987 | | Sunseeker special charges, net of insurance recoveries | 103,328 | (1,958) | 100,382 | (3,775) | | Total special charges | $117,924 | $18,114 | $116,369 | $31,212 | Note 3 — Revenue Recognition Passenger revenue increased in Q2 and H1 2025, driven by ancillary charges and loyalty, while resort revenue also grew Passenger Revenue (in thousands) | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Scheduled service | $247,208 | $272,715 | $530,576 | $562,594 | | Ancillary air-related charges | 352,873 | 307,390 | 668,152 | 582,183 | | Loyalty redemptions | 17,827 | 14,394 | 35,930 | 29,657 | | Total passenger revenue | $617,908 | $594,499 | $1,234,658 | $1,174,434 | Resort Revenue (in thousands) | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Rooms | $8,732 | $6,653 | $24,163 | $16,610 | | Food and beverage | 7,766 | 7,643 | 17,728 | 18,415 | | Other | 4,136 | 2,515 | 9,431 | 5,673 | | Total resort revenue | $20,634 | $16,811 | $51,322 | $40,698 | - As of June 30, 2025, the air traffic liability balance was $363.5 million, with approximately $322.9 million related to forward bookings and $40.6 million to credit vouchers[29] Note 4 — Property and Equipment Net property and equipment decreased to $2,892.648 million by June 30, 2025, due to Sunseeker Resort asset reclassification Property and Equipment, Net (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Airline Flight equipment | $3,487,636 | $3,345,458 | | Sunseeker Resort Land and buildings/leasehold improvements | — | 255,201 | | Total property and equipment, net | $2,892,648 | $3,069,949 | - As of June 30, 2025, all assets related to Sunseeker Resort and Aileron Golf Course are presented as 'Assets held for sale' on the balance sheet due to a pending sale agreement[35] - The Company had firm commitments to purchase 37 aircraft as of June 30, 2025[35] Note 5 — Long-Term Debt Long-term debt decreased to $1,961.918 million by June 30, 2025, with new aircraft debt offset by significant principal repayments Long-Term Debt and Finance Lease Obligations (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Fixed-rate debt and finance lease obligations due through 2032 | $1,336,800 | $1,481,186 | | Variable-rate debt due through 2037 | 625,118 | 585,318 | | Total long-term debt and finance lease obligations, net of related costs | 1,961,918 | 2,066,504 | | Less current maturities, net of related costs | 183,063 | 454,769 | | Long-term debt and finance lease obligations, net of current maturities and related costs | $1,778,855 | $1,611,735 | - During the six months ended June 30, 2025, the Company borrowed $218.5 million under credit agreements for new aircraft and drew down $55.3 million from a new $221.3 million facility[38][39] - The Company fully repaid the $100.0 million Sunseeker construction loan in February 2025 and the $130.5 million unsecured credit facility during the six months ended June 30, 2025[43][45] - As of June 30, 2025, the Company had $275.0 million available under revolving credit facilities and $335.0 million in undrawn aircraft and pre-delivery deposit financing commitments[46] Note 6 — Income Taxes Income tax benefit recorded in Q2 and H1 2025, with effective tax rate differing from statutory due to state taxes and Sunseeker write-down - For the three months ended June 30, 2025, the Company recorded a $23.4 million income tax benefit at a 26.4% effective tax rate, compared to a $4.3 million income tax expense at 24.0% in 2024[47] - For the six months ended June 30, 2025, the Company recorded a $13.6 million income tax benefit at a 29.1% effective tax rate, compared to a $3.9 million income tax expense at 23.4% in 2024[48] - The effective tax rate for both periods in 2025 differed from the statutory federal income tax rate of 21.0% primarily due to state income taxes, permanent tax differences, and discrete items, mainly the Sunseeker write-down[47][48] Note 7 — Fair Value Measurements Financial assets are measured at fair value using market approach (Level 2), while long-term debt uses discounted cash flow (Level 3) - The Company utilizes the market approach to measure the fair value of its financial assets, with Level 2 assets primarily using quoted market prices or models with market observable inputs[49] - The estimated fair value of long-term debt is determined using the discounted cash flow method and classified as Level 3, as certain inputs are unobservable[50] Financial Instruments Measured at Fair Value (in thousands) | (in thousands) | As of June 30, 2025 Total | As of June 30, 2025 Level 1 | As of June 30, 2025 Level 2 | As of December 31, 2024 Total | As of December 31, 2024 Level 1 | As of December 31, 2024 Level 2 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Cash equivalents: | | | | | | | | Money market funds | $45,979 | $45,979 | $— | $41,494 | $41,494 | $— | | Commercial paper | 18,527 | — | 18,527 | 22,689 | — | 22,689 | | US Government and agency obligations | 17,992 | — | 17,992 | 81,535 | — | 81,535 | | Total cash equivalents | 94,012 | 45,979 | 48,033 | 160,150 | 41,494 | 118,656 | | Short-term investments: | | | | | | | | Corporate debt securities | 304,380 | — | 304,380 | 242,313 | — | 242,313 | | Commercial paper | 217,224 | — | 217,224 | 149,807 | — | 149,807 | | US Government and agency obligations | 99,939 | — | 99,939 | 94,295 | — | 94,295 | | Total short-term investments | 632,946 | — | 632,946 | 495,234 | — | 495,234 | | Long-term investments: | | | | | | | | US Government and agency obligations | 5,257 | — | 5,257 | 10,452 | — | 10,452 | | Corporate debt securities | 4,674 | — | 4,674 | 39,931 | — | 39,931 | | Total long-term investments | 9,931 | — | 9,931 | 51,725 | — | 51,725 | | Total financial instruments | $736,889 | $45,979 | $690,910 | $707,109 | $41,494 | $665,615 | Note 8 — Earnings per Share Basic and diluted loss per share of $(3.62) and $(1.84) reported for Q2 and H1 2025, a significant decline from prior year - Basic and diluted earnings per share are computed using the two-class method, with unvested restricted stock awards considered participating securities[52] Earnings (Loss) Per Share (in thousands, except per share amounts) | (in thousands, except per share amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Basic: | | | | | | Net income (loss) attributable to common stock | $(65,166) | $13,366 | $(33,064) | $12,162 | | Earnings (loss) per share, basic | $(3.62) | $0.75 | $(1.84) | $0.69 | | Weighted-average shares outstanding | 17,995 | 17,828 | 17,989 | 17,746 | | Diluted: | | | | | | Net income (loss) attributable to common stock | $(65,166) | $13,366 | $(33,064) | $12,162 | | Earnings (loss) per share, diluted | $(3.62) | $0.75 | $(1.84) | $0.68 | | Adjusted weighted-average shares outstanding under two-class method | 17,995 | 17,869 | 17,989 | 17,836 | Note 9 — Contingencies Routine legal and administrative actions are not expected to materially impact financial position, liquidity, or operations - The Company is subject to certain legal and administrative actions considered routine to its business activities[55] - Management believes the ultimate outcome of any potential and pending legal or administrative matters will not have a material adverse impact on its financial position, liquidity, or results of operations[55] Note 10 — Segments Operates Airline (profitable) and Sunseeker Resort (significant operating loss due to sale-related special charges) segments - The Company's two operating segments are Airline and Sunseeker Resort, with performance evaluated by the President and CEO based on operating income and pretax income[56] - The Airline segment includes scheduled service air transportation, ancillary air-related products, third-party products, and fixed-fee contract air transportation[57] - The Sunseeker Resort segment includes hotel rooms, group meeting facilities, food and beverage options, Aileron Golf Course, and other Resort amenities[58] Segment Operating Income (Loss) (in thousands) | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Airline Operating Income (Loss) | $43,157 | $46,956 | $104,009 | $71,172 | | Sunseeker Operating Income (Loss) | $(110,646) | $(12,059) | $(106,496) | $(20,828) | | Consolidated Operating Income (Loss) | $(67,489) | $34,897 | $(2,487) | $50,344 | Note 11 — Sale of Sunseeker Resort Agreement to sell Sunseeker Resort for $200 million led to a $100.4 million Q2 2025 write-down and 'held for sale' reclassification - In June 2025, the Company's board approved a plan for the sale of Sunseeker Resort and related Aileron Golf Course, meeting held-for-sale accounting requirements[63] - On July 3, 2025, the Company entered into an Agreement of Purchase and Sale for substantially all Resort assets for approximately $200 million, with closing anticipated in September 2025[64] - A $100.4 million write-down charge was recorded in Q2 2025 to reduce the Resort's carrying value to fair value less costs to sell, and its assets and liabilities were reclassified as 'held for sale'[65] Sunseeker Resort Assets and Liabilities Held for Sale (in thousands) | (in thousands) | As of June 30, 2025 | | :--- | :--- | | Assets: | | | Accounts receivable | $2,552 | | Inventories, net | 1,372 | | Prepaid expenses and other current assets | 5,260 | | Property and equipment, net | 284,587 | | Deposits and other assets | 1,290 | | Valuation allowance | (100,411) | | Assets held for sale | $194,650 | | Liabilities: | | | Accrued liabilities | $5,355 | | Other noncurrent liabilities | 1,960 | | Liabilities held for sale | $7,315 | Note 12 — Subsequent Events Post-June 30, 2025, Sunseeker Resort sale finalized, and $210.1 million borrowed for aircraft and debt prepayment - On July 3, 2025, the Company and its Sunseeker subsidiaries entered into an Agreement of Purchase and Sale with affiliates of Blackstone Real Estate Group for the sale of Sunseeker Resort Charlotte Harbor[66] - In July 2025, the Company borrowed $210.1 million on previously reported but undrawn credit facilities, collateralized by aircraft assets, to finance aircraft deliveries and prepay other outstanding debt[67] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 and H1 2025 financial performance, condition, liquidity, capital, and trends, including Sunseeker sale impact Second Quarter 2025 Review Q2 2025 revenue grew 3.5% to $689.4 million, but Sunseeker write-down caused a $67.5 million operating loss; airline operations were profitable - Total consolidated operating revenue was $689.4 million, up 3.5% year-over-year, on capacity growth of 15.7%[73] - The Company reported an operating loss of $67.5 million and a loss before income tax of $88.6 million, primarily due to the Sunseeker write-down charge[73] - Airline-only operating income was $43.2 million, yielding an airline-only operating margin of 6.5%[73] - Airline-only operating cost per available seat mile (CASM), excluding fuel and special charges, decreased 6.7% year-over-year to 7.68 ¢[73] - In early July 2025, the Company entered into a contract to sell Sunseeker Resort and related properties for $200.0 million, with the transaction scheduled to close in September 2025[73] Trends Softened air travel demand, volatile fuel costs, ongoing pilot negotiations, and the pending Sunseeker sale are key operational trends - Consumer confidence fluctuations and macroeconomic uncertainty have contributed to softened demand for domestic leisure air travel, impacting fares, load factors, and profitability[77] - Aircraft fuel costs remain volatile, influenced by economic and geopolitical factors, and the Company does not use financial derivative products to hedge against fuel price volatility[78][79] - The Company is focusing on increasing peak period aircraft utilization to 2019 levels, with June 2025 utilization at 8.7 hours per aircraft compared to 9.7 hours in June 2019[80] - Pilot union negotiations are ongoing, and the Company has accrued $192.6 million for a pilot retention bonus, payable upon ratification of a new collective bargaining agreement[81][82][83] - The VivaAerobus alliance application for antitrust immunity remains suspended by the US DOT due to measures forcing the Mexican Government to correct perceived violations of the air transport agreement[85][86] Results of Operations Revenue grew in Q2 and H1 2025, but significant special charges from Sunseeker write-down led to operating losses Comparison of three months ended June 30, 2025 to three months ended June 30, 2024 Q2 2025 total operating revenues rose 3.5% to $689.4 million, but $117.9 million in special charges led to a $67.5 million operating loss Operating Revenue (in thousands) - Three Months Ended June 30 | Operating Revenues (in thousands) | 2025 | 2024 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Passenger | $617,908 | $594,499 | 3.9% | | Third party products | 33,649 | 37,102 | (9.3)% | | Fixed fee contracts | 17,019 | 17,699 | (3.8)% | | Resort and other | 20,808 | 16,983 | 22.5% | | Total operating revenues | $689,384 | $666,283 | 3.5% | - Passenger revenue increased by $23.4 million (3.9%) due to an 11.0% increase in scheduled service passengers, with a 3.4% increase in average ancillary fare offsetting a 16.9% decline in average base fare[87] - Resort revenues increased by $3.8 million (22.7%) with occupancy rising to 51.0% from 33.0% in Q2 2024, partially offset by a decrease in average daily rate[90] Airline Unitized Costs (in cents) - Three Months Ended June 30 | Airline Unitized costs (in cents) | 2025 | 2024 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Salaries and benefits | 3.51 ¢ | 3.94 ¢ | (10.9)% | | Aircraft fuel | 2.86 | 3.39 | (15.6)% | | Station operations | 1.30 | 1.39 | (6.5)% | | Depreciation and amortization | 1.12 | 1.18 | (5.1)% | | Maintenance and repairs | 0.63 | 0.61 | 3.3% | | Sales and marketing | 0.43 | 0.52 | (17.3)% | | Aircraft lease rentals | 0.19 | 0.11 | 72.7% | | Other | 0.50 | 0.48 | 4.2% | | Special charges | 0.25 | 0.40 | (37.5)% | | Airline operating CASM | 10.79 ¢ | 12.02 ¢ | (10.2)% | | Airline operating CASM, excluding fuel | 7.93 ¢ | 8.63 ¢ | (8.1)% | | Airline operating CASM, excluding fuel and special charges | 7.68 ¢ | 8.23 ¢ | (6.7)% | - Airline operating CASM, excluding fuel and special charges, decreased 6.7% to 7.68 ¢, primarily due to a 15.7% increase in ASMs and efficient capacity growth without increasing full-time equivalent employees[92] - Special charges totaled $117.9 million, including a $100.4 million write-down for Sunseeker Resort and $14.6 million for airline corporate restructuring efforts[104][105] Comparison of six months ended June 30, 2025 to six months ended June 30, 2024 H1 2025 total operating revenues rose 5.0% to $1,388.5 million, but $116.4 million in special charges resulted in a $2.5 million operating loss Operating Revenue (in thousands) - Six Months Ended June 30 | Operating Revenues (in thousands) | 2025 | 2024 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Passenger | $1,234,658 | $1,174,434 | 5.1% | | Third party products | 68,852 | 70,501 | (2.3)% | | Fixed fee contracts | 33,271 | 36,560 | (9.0)% | | Resort and other | 51,677 | 41,193 | 25.5% | | Total operating revenues | $1,388,458 | $1,322,688 | 5.0% | - Passenger revenue increased by $60.2 million (5.1%) due to a 9.9% increase in scheduled service passengers, with a 4.4% increase in average ancillary fare offsetting a 13.0% decline in average base fare[108] - Resort revenues increased by $10.6 million (26.1%) with occupancy rising to 60.6% from 36.1% in H1 2024, partially offset by a decrease in average daily rate[111] Airline Unitized Costs (in cents) - Six Months Ended June 30 | Airline Unitized costs (in cents) | 2025 | 2024 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Salaries and benefits | 3.77 ¢ | 4.06 ¢ | (7.1)% | | Aircraft fuel | 2.95 | 3.48 | (15.2)% | | Station operations | 1.32 | 1.39 | (5.0)% | | Depreciation and amortization | 1.11 | 1.20 | (7.5)% | | Maintenance and repairs | 0.63 | 0.62 | 1.6% | | Sales and marketing | 0.43 | 0.56 | (23.2)% | | Aircraft lease rentals | 0.15 | 0.12 | 25.0% | | Other | 0.46 | 0.58 | (20.7)% | | Special charges | 0.14 | 0.36 | (61.1)% | | Airline operating CASM | 10.96 ¢ | 12.37 ¢ | (11.4)% | | Airline operating CASM, excluding fuel | 8.01 ¢ | 8.90 ¢ | (10.0)% | | Airline operating CASM, excluding fuel and special charges | 7.87 ¢ | 8.54 ¢ | (7.8)% | - Airline operating CASM, excluding fuel and special charges, decreased 7.8% to 7.87 ¢, driven by a 15.0% increase in ASMs and efficient capacity growth[113] - Special charges totaled $116.4 million, including a $100.4 million write-down for Sunseeker Resort and $16.0 million for airline corporate restructuring and accelerated depreciation[126][127][128] Comparative Airline-Only Operating Statistics Airline operations in Q2 and H1 2025 saw significant capacity and passenger growth, with improved CASM excluding fuel and special charges Airline Operating Statistics - Three Months Ended June 30 | Airline operating statistics (unaudited) | 2025 | 2024 | Percent Change YoY | | :--- | :--- | :--- | :--- | | Passengers | 5,127,025 | 4,621,848 | 10.9 % | | Available seat miles (ASMs) (thousands) | 5,799,409 | 5,013,209 | 15.7 | | Airline operating CASM, excluding fuel and special charges (cents) | 7.68 ¢ | 8.23 ¢ | (6.7) | | Departures | 37,314 | 32,252 | 15.7 | | Average block hours per aircraft per day | 7.7 | 6.6 | 16.7 | | Average fuel cost per gallon | $2.42 | $2.83 | (14.5) | | Load factor | 81.9 % | 84.7 % | (2.8) ppt | | Average fare - total | $128.32 | $138.12 | (7.1) | Airline Operating Statistics - Six Months Ended June 30 | Airline operating statistics (unaudited) | 2025 | 2024 | Percent Change YoY | | :--- | :--- | :--- | :--- | | Passengers | 9,578,331 | 8,726,708 | 9.8 % | | Available seat miles (ASMs) (thousands) | 11,250,993 | 9,785,180 | 15.0 | | Airline operating CASM, excluding fuel and special charges (cents) | 7.87 ¢ | 8.54 ¢ | (7.8) | | Departures | 70,549 | 61,477 | 14.8 | | Average block hours per aircraft per day | 7.6 | 6.5 | 16.9 | | Average fuel cost per gallon | $2.51 | $2.92 | (14.0) | | Load factor | 81.2 % | 84.3 % | (3.1) ppt | | Average fare - total | $137.23 | $144.05 | (4.7) | Liquidity and Capital Resources Liquidity increased to $852.8 million by June 30, 2025, with decreased net debt and suspended dividends for fleet investments - Cash, cash equivalents, and investment securities increased to $852.8 million as of June 30, 2025, from $832.9 million at December 31, 2024[133] - As of June 30, 2025, the Company had $275.0 million of undrawn capacity under revolving credit facilities and $335.0 million in undrawn borrowing capacity under aircraft financing facilities[133][139] - Net debt (total debt less unrestricted cash, cash equivalents, and investments) decreased by $124.5 million to $1.11 billion as of June 30, 2025, from December 31, 2024[138] - The Company has indefinitely suspended its quarterly cash dividend in anticipation of upcoming capital needs related to fleet investments[136] - Approximately 68.1% of the Company's debt and finance lease obligations are fixed-rate as of June 30, 2025[140] Sources and Uses of Cash Operating activities generated $283.6 million cash in H1 2025, while investing and financing activities resulted in significant outflows - Net cash provided by operating activities was $283.6 million for the six months ended June 30, 2025, compared to $236.7 million in 2024[141] - Net cash used in investing activities was $241.8 million for the six months ended June 30, 2025, compared to $109.8 million in 2024, primarily due to $90.0 million of net investment purchases and $186.9 million in capital expenditures[16][145][146] - Net cash used in financing activities was $116.2 million for the six months ended June 30, 2025, compared to $54.4 million in 2024, driven by $432.6 million in debt principal payments, partially offset by $323.8 million from new debt issuances[16][147] - Operating cash flows are impacted by advance ticket sales (recorded as air traffic liability), salaries and benefits (including a $192.6 million pilot retention bonus accrual), and volatile fuel expenses[142][143][144] CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Forward-looking statements involve risks and uncertainties, with actual results potentially differing materially due to various factors, including the Sunseeker sale - Forward-looking statements are based on management's beliefs and assumptions and involve risks, uncertainties, and assumptions, with actual results potentially differing materially[148][149] - Important risk factors include regulatory reviews, aircraft issues, reliance on automated systems and Boeing, data security breaches, volatility of fuel costs, labor issues, economic conditions, government regulations, aircraft financing, the VivaAerobus alliance, terrorist attacks, competitive environment, and the Sunseeker Resort sale[149] - The Company undertakes no obligation to publicly update any forward-looking statements[150] CRITICAL ACCOUNTING POLICIES AND ESTIMATES Critical accounting estimates focus on Sunseeker Resort assets held for sale, valued based on transaction price, subject to revision - Assets are classified as held for sale when all accounting requirements are met, presented at the lower of carrying amount or estimated fair value less costs to sell, with a valuation allowance if necessary[151] - Sunseeker Resort met held-for-sale criteria in Q2 2025, with its fair value estimated based on an agreed-upon transaction price, leading to a valuation allowance[152] - Subsequent revisions to these estimates could occur if the underlying transaction or terms change, or due to changing market conditions, industry, economy, or weather events[152] ITEM 3. Quantitative and Qualitative Disclosures About Market Risk Market risks include volatile fuel prices and interest rate fluctuations on variable-rate debt, with quantified impacts on expenses - Aircraft fuel expense represented 23.9% of total operating expenses for the six months ended June 30, 2025, making the Company's results significantly impacted by changes in fuel prices[155] - A hypothetical 10% increase in the average price per gallon of fuel would have increased fuel expense by approximately $33.8 million for the six months ended June 30, 2025[155] - As of June 30, 2025, the Company had $629.1 million of variable-rate debt; a hypothetical 100 basis point change in interest rates would have affected interest expense by approximately $3.3 million for the six months ended June 30, 2025[156] - The Company does not hedge fuel price risk[155] ITEM 4. Controls and Procedures Disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025, ensuring timely and accurate reporting of required information[157] - No material changes in internal control over financial reporting occurred during the quarter ending June 30, 2025[158] PART II. OTHER INFORMATION ITEM 1. Legal Proceedings Routine legal and administrative actions are not expected to materially impact financial position, liquidity, or operations - The Company is subject to certain legal and administrative actions considered routine to its business activities[159] - Management believes the ultimate outcome of any pending legal or administrative matters will not have a material adverse impact on its financial position, liquidity, or results of operations[159] ITEM 1A. Risk Factors No changes to risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024 - The Company has evaluated its risk factors and determined there are no changes to those set forth in Part I, Item 1A. of its Annual Report on Form 10-K for the year ended December 31, 2024[160] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds In Q2 2025, 6,980 shares were repurchased at $50.36 average, mainly for tax withholding, with $64.7 million remaining authority Repurchases of Common Stock - Second Quarter 2025 | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares that May yet be Purchased Under the Plans or Programs (in thousands) | | :--- | :--- | :--- | :--- | | April | 6,600 | $50.14 | | | May | 380 | $54.24 | | | June | — | $— | | | Total | 6,980 | $50.36 | $64,694 | - Shares repurchased were primarily from employees who vested a portion of their restricted stock grants, to satisfy income tax withholding requirements[161] ITEM 3. Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - None[162] ITEM 4. Mine Safety Disclosures This item is not applicable to the company's operations - Not applicable[162] ITEM 5. Other Information No directors or executive officers adopted or terminated Rule 10b5-1 trading plans in Q2 2025 - During the three months ended June 30, 2025, none of the Company's directors or executive officers adopted or terminated any Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements[162] ITEM 6. Exhibits Lists exhibits filed with Form 10-Q, including corporate documents, officer certifications, and XBRL taxonomy - Exhibits include Articles of Incorporation, Bylaws, Rule 13a-14(a)/15d-14(a) Certifications of Principal Executive and Financial Officers, Section 1350 Certifications, and XBRL Taxonomy Extension Documents[165] Signatures Report signed on August 6, 2025, by Robert J. Neal, Executive Vice President and Chief Financial Officer - The report was signed on August 6, 2025, by Robert J. Neal, Executive Vice President and Chief Financial Officer of Allegiant Travel Company[169]