Allegiant Travel(ALGT) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company achieved an adjusted airline-only operating margin of over 13% for Q4 2024, a 6.5 percentage point increase from the previous year [9] - The airline segment reported a net income of $107.5 million for the full year 2024, resulting in an airline-only earnings per share of$5.84 [40] - The consolidated net income for Q4 2024 was $38.9 million, yielding earnings per share of$2.10 [39] Business Line Data and Key Metrics Changes - Airline revenue for 2024 was $2.44 billion, approximately 2.6$3 to almost $76 compared to 2023 [23] - The airline segment generated$139.2 million in EBITDA during Q4 2024, resulting in an EBITDA margin of 22.8%, nearly seven points higher than Q4 2023 [40] Market Data and Key Metrics Changes - The company expects capacity growth of over 15% throughout 2025, with Q1 2025 capacity expected to grow by 14% compared to Q1 2024 [20][26] - The first quarter of 2025 will mark the first time in three years with quarterly growth over 10% [27] - The company anticipates a 1 to 1.5 percentage point headwind to TRASM in Q1 due to Easter timing and a mild stage increase [33] Company Strategy and Development Direction - The company is focused on transitioning Sunseeker off Allegiant's balance sheet and has launched a competitive process for a potential sale or stake sale [13][15] - The ongoing optimization of the Navitaire system is expected to enhance revenue throughout 2025 [12] - The company plans to retire 12 aircraft during 2025, closing the year with a total of 122 aircraft in service [49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the health of the consumer and the constructive industry capacity backdrop for 2025 [20] - The midpoint of the airline's full-year EPS guidance for 2025 is $9, suggesting an improvement in earnings of over 50$1.1 billion in available liquidity, including $833 million in cash and investments [44] - A total non-cash impairment of$322 million was recorded in Q4 2024 related to the Sunseeker entity [47] - The Allegiant Always credit card program is expected to generate over $140 million in total remuneration during 2025 [19] Q&A Session Summary Question: Can you provide clarity on capacity growth across the quarters? - Management guided approximately 14% growth for Q1, with the second and third quarters likely in the low 20s, and the fourth quarter expected to have the lowest year-over-year growth [58][60] Question: How is the debt related to Sunseeker being managed? - The company has focused on balance sheet improvement and paid off maturing debt associated with Sunseeker using proceeds from equipment sales and improved earnings [70][71] Question: What is the expected seasonality for Sunseeker? - Typically, the first quarter is the strongest for Sunseeker, followed by the fourth quarter, with summer being the softest period [92] Question: How does the company view the overlap with Spirit Airlines? - The overlap is relatively thin, approximately 4%, and management believes consolidation is not necessary for Allegiant [108][110] Question: What are the expectations for normalized margins in the future? - Management expects margins in 2026 to be higher than in 2025, aiming to return to historical margins through improved productivity and network maturation [112][115]