Allegiant Travel(US:ALGT)2023-05-03 22:01Financial Data and Key Metrics Changes - The company reported earnings per share (EPS) of $3.09 for Q1 2023, exceeding initial expectations and prompting an increase in full-year EPS guidance to approximately $9.75 per share [5][32] - Total revenue grew by 29% year-over-year, reaching $650 million, with a unit revenue increase of 28.8% compared to the same quarter last year [5][27][33] - Consolidated net income for Q1 2023 was $56.1 million, with an adjusted EPS of $3.04 [32] Business Line Data and Key Metrics Changes - The airline segment reported an airline-only EPS of $3.30, significantly ahead of expectations [32] - The Always Rewards credit card program saw record signups, with March being the best month ever, contributing to strong revenue performance [20][21] - Ancillary revenue per passenger reached $75 in Q1, indicating a healthy base for optimizing airfare [29] Market Data and Key Metrics Changes - The company experienced a load factor of 86% in Q1, with over 4.1 million guests traveling [5][6] - The customer database grew to 16.5 million, with an average increase of 225,000 customers per month [6] - Early booking indicators for the Sunseeker Resort showed promising results, with an average daily rate (ADR) of $407 and increasing to $540 in March [8][9] Company Strategy and Development Direction - The company aims to enhance guest experience and strengthen its brand, which is crucial for expanding its customer database [6] - Allegiant is focused on becoming the employer of choice, with ongoing negotiations for collective bargaining agreements with flight attendants and pilots [7][15] - The Sunseeker Resort is on track for an opening date of October 16, with a revised capital expenditure budget of $695 million [8][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about reaching agreements with team members and highlighted the importance of operational reliability [7][15] - The company anticipates a full-year airline earnings increase to $11 per share, despite trimming capacity guidance by 2.5 percentage points [12][34] - Management remains confident in the demand environment, with no significant booking impacts observed from macroeconomic pressures [27][30] Other Important Information - The company finished Q1 2023 with total available liquidity of $1.5 billion, including $1.1 billion in cash [35] - Allegiant plans to take delivery of three midlife A320 series and two 737 MAX 8-200 aircraft in 2023, with a focus on expanding its fleet [36][37] Q&A Session Summary Question: Capacity and CASM-X impacts - Management explained that the 9.8% increase in unit costs was influenced by various factors, including retention credits and airport-related costs [41] Question: Pilot situation and attrition - Management confirmed that attrition is in line with expectations, with new pilot hires exceeding initial plans [43] Question: First-time flyers and legacy carriers - Management noted that many first-time customers are choosing Allegiant due to price and non-stop flight options, especially in markets where legacy carriers have reduced service [47] Question: Revenue guidance and fuel price correlation - Management acknowledged a relationship between fuel prices and revenue but emphasized that Allegiant's approach has historically been to manage capacity in response to fuel price changes [49] Question: Guidance for the second quarter - Management indicated that while they expect flat performance in Q2, they are monitoring various factors that could influence capacity and revenue [52][54]