Allegiant Travel(US:ALGT)2023-02-02 01:28Financial Data and Key Metrics Changes - The company reported a record total revenue of $2.3 billion for 2022, which is 25% higher than the previous best in 2019 [30] - Fourth quarter operating margin, excluding employee recognition bonus and special charges, was just shy of 16% [8] - Fourth quarter EBITDA exceeded $140 million, reflecting strong financial performance [8] - Net income for the fourth quarter was $52.5 million, with adjusted earnings per share of $3.17, well above initial guidance [37] Business Line Data and Key Metrics Changes - The company achieved a controllable completion percentage of 99.5% in the second half of 2022, significantly improving operational performance [7][17] - Total ancillary revenue per passenger exceeded $70 for the first time in the fourth quarter [31] - The co-brand card program drove total compensation of over $100 million in 2022, with more than 400,000 active cardholders [24] Market Data and Key Metrics Changes - The company experienced a 32.6% increase in fourth quarter revenue compared to the same period in 2019 [30] - Web traffic to allegiant.com increased by 24% from 2019, with 136 million users in 2022 [22] - Searches for travel during spring break and summer are up by 40% to 75% compared to last year [28] Company Strategy and Development Direction - The company is focused on operational integrity and finalizing labor contracts with flight attendants and pilots, with expectations to reach agreements by midyear [9][20] - Significant investments are being made in technology upgrades, including systems like SAP and Navitaire, to enhance operational efficiency [19][71] - The company plans to maintain a conservative capacity growth strategy in 2023, prioritizing operational stability [33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand environment, with no signs of slowing down [8] - The company is prepared for potential economic challenges, emphasizing the resilience of leisure travelers [55] - Management highlighted the importance of the upcoming Investor Day to outline expected contributions from strategic initiatives [21] Other Important Information - The company bought back 377,529 shares during the fourth quarter at an average price of $78.94, totaling $29.8 million [13] - The company expects to receive 27 MAX 8200 aircraft in late 2023, with plans for conservative operational requirements [40] - The Sunseeker resort is expected to open in October 2023, with ongoing construction and remediation efforts [11] Q&A Session All Questions and Answers Question: Impact of adding flight attendant and pilot contracts and slowing capacity growth on EPS guidance - Management indicated that labor deals would have a half-year impact, estimating about a one-third increase in CASM for that period [45] Question: Growth potential for ancillary revenue per passenger - Management believes there are still opportunities for growth in ancillary revenue, particularly with the rollout of Navitaire and Allegiant Extra [47][49] Question: RASM growth and potential recession impact - Management views mid-single-digit RASM growth as reasonable, with existing markets providing stability [53][54] Question: Prioritization of ASM growth - Management stated that ASM growth will focus on restoring frequency in existing markets rather than new markets [62] Question: Climate considerations for the Sunseeker resort - Management emphasized that the resort was designed to withstand hurricanes, built to Category five standards [65][66]