Allegiant Travel Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 6, 2025
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Operator

Thank you for standing by. My name is Kayla, and I will be your conference operator today. At this time, I would like to welcome everyone to the Allegiant Travel Company First Quarter twenty twenty five Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator

I would now like to turn the call over to Sherry Wilson, Managing Director of Investor Relations. You may begin.

Sherry Wilson
Sherry Wilson
Managing Director, Investor Relations at Allegiant Travel Company

Thank you, Kayla. Welcome to the Allegiant Travel Company's first quarter twenty twenty five earnings call. We will begin today's call with Greg Anderson, President and CEO, providing a high level overview of our results along with an update on our business. Drew Wells, Chief Commercial Officer, will walk through our capacity plans and revenue performance and finally, Robert Neal, Chief Financial Officer, will speak to our financial results and outlook. Following commentary, we will open it up to questions. We ask that you please limit yourself to one question and one follow-up.

Sherry Wilson
Sherry Wilson
Managing Director, Investor Relations at Allegiant Travel Company

The company's comments today will contain forward looking statements concerning our future performance and strategic plan. Various risk factors could cause the underlying assumptions of these statements and our actual results to differ materially from those expressed or implied by our forward looking statements. These risk factors and others are more fully disclosed in our filings with the SEC. Any forward looking statements are based on information available to us today. We undertake no obligation to update publicly any forward looking statements, whether as a result of future events, new information or otherwise.

Sherry Wilson
Sherry Wilson
Managing Director, Investor Relations at Allegiant Travel Company

The company cautions investors not to place undue reliance on forward looking statements, which may be based on assumptions and events that do not materialize. To view this earnings release as well as the rebroadcast of the call, feel free to visit the company's Investor Relations site at ir.allegiantair.com. And with that, I'll turn it over to Greg.

Gregory Anderson
President & CEO at Allegiant Travel Company

Sherry, thank you. Before I dive in, I am pleased to announce Tyler Hollingsworth has been officially named as our Chief Operating Officer. Over his fifteen years at Allegiant, Tyler has held key roles across operations, most recently serving as Interim COO and has been instrumental in delivering the strong performance we continue to see today. That makes Tyler an excellent fit. Congratulations, Tyler.

Gregory Anderson
President & CEO at Allegiant Travel Company

Thanks, Greg. Turning to the quarter, the team delivered an outstanding controllable completion rate of 99.9% on 32,000 departures, up 14% compared to the same period last year. More than 4,400,000 passengers flew our airline in the quarter, a first quarter record, with 75% being repeat customers. Our customers recognize Allegiant's role in leisure focused travel and consistently choose us for the distinctive value and experience we provide. This ongoing preference is evident in the strong engagement in our award winning loyalty program, with the number of active cardholders increasing by nearly 7% year over year.

Gregory Anderson
President & CEO at Allegiant Travel Company

The solid execution of our key initiatives discussed in prior quarters helped to boost financial performance improvement. We reported an airline operating margin of 9.3% during the first quarter, up three percentage points versus last year. These results fell comfortably within the range of our initial guide provided in January, making us one of the few airlines to meet their initial targets. This excellent performance demonstrates the great work done by Team Allegiant despite a challenging start to the year. I want to extend my sincere appreciation for them.

Gregory Anderson
President & CEO at Allegiant Travel Company

Thank you. In January of twenty twenty five, we turned to capacity now above to plan for a year of strong growth. The demand backdrop was robust and our favorable availability of crew and aircraft set us up nicely to drive meaningful margin expansion throughout the year. However, as economic uncertainty weighed on consumer confidence and discretionary spending, we acted quickly to adapt. Fortunately, Allegiant was built and designed with flexibility in mind.

Gregory Anderson
President & CEO at Allegiant Travel Company

While peak leisure demand remains healthy, we responded promptly by turning the capacity knob down, primarily in the shoulder and off peak, given the demand softness that showed up during these periods. Cost discipline is essential for us to protect margins. Aggressively managing capacity combined with additional structural cost reductions action during the quarter are expected to keep the airline solidly profitable in 2025 even in a stabilized lower demand environment. That said, we are currently seeing some improvements in our bookings. Allegiant pioneered a successful low fare model targeting leisure travelers.

Gregory Anderson
President & CEO at Allegiant Travel Company

Our differentiated approach allows us to not only perform better than most during downturns, but hold strong our niche in the industry. Our airline has structural advantages with the foundation built on the following cornerstones: first, minimizing competitive overlap with other domestic carriers and offering a network that ensures convenient nonstop travel from the core leisure airports we serve Second, a strategic design focused on tactical utilization, optimizing profitability by operating aircraft for only six to eight hours per day on average. Third, a long term fleet strategy centered on opportunistically acquiring and owning aircraft to support low fixed costs while building a high degree of fleet flexibility. Lastly, maintaining an industry leading cost structure as most leisure travelers are highly influenced by lower fares. For these reasons, Allegiant has been and will continue to be positioned uniquely.

Gregory Anderson
President & CEO at Allegiant Travel Company

Furthermore, the execution of our key initiatives are going well. And with these initiatives, are expected to further strengthen our foundation and drive margin improvement. Let me provide you with a brief update on our progress. First, restoring peak utilization. In the first quarter, utilization increased by 20% compared to the previous year and just slightly below 2019 levels.

Gregory Anderson
President & CEO at Allegiant Travel Company

Peak leisure demand remains healthy with same store trasm during these periods holding up well despite meaningful growth. Second, fleet flexibility. We are proactively managing our aircraft to the market conditions and our strategic needs. Moreover, our fleet holds significant equity value, a value we expect to meaningfully increase as we expand our in service MAX fleet. During the first quarter, our growing cadre of MAX aircraft was 6% of our ASMs and continues to outperform expectations operationally and financially.

Gregory Anderson
President & CEO at Allegiant Travel Company

By year end, we anticipate 16% of ASMs to be flown by the MAX fleet and will continue to support strengthening our differentiated model. Third, product enhancements. Allegion Extra is now on more than half of our fleet, a fivefold increase when compared to the first quarter of twenty twenty four and importantly, maintaining a strong revenue premium over our standard product. Additionally, we continue to enhance our bookings and reservation system, Navitaire. These improvements have strengthened our operations and enabled us to reintroduce lost functionality and new features that are resulting in higher revenue.

Gregory Anderson
President & CEO at Allegiant Travel Company

And fourth, cost discipline. Managing costs relentlessly is an everyday commitment to improve productivity, streamline decision making and challenge the status quo. Due to the recent economic downturn, material structural cost savings have already been proactively actioned with more initiatives under review. These changes support sustainable margin growth, including adjustments in workforce alignment and enhancement through technology enabled productivity. And finally, Sunseeker.

Gregory Anderson
President & CEO at Allegiant Travel Company

We are confident that our new Sunseeker resort will do well over the long term. Sunseeker's financial performance exceeded expectations during the first quarter with EBITDA reaching $4,800,000 compared to an EBITDA loss of negative 4 point 6 million dollars in the first quarter of twenty twenty To that end, we recognize our core competencies lie within the airline business, where we see abundant opportunity and long term success. Maintaining a strong industry leading balance sheet is also a top priority of ours. Pursuing a transaction related to the sale of the resort is an important step towards our objectives for the airline. And so we're pleased to report this process remains on track for completion this summer, and we look forward to share further details when appropriate.

Gregory Anderson
President & CEO at Allegiant Travel Company

Now I'll close where I started. In a volatile environment, consistent execution and adaptability are essential, and that's where Allegion excels. Our ability to deliver strong results while maintaining operational flexibility sets us apart. The foundation of our model enables us to perform, adapt and repeat. As we look ahead, our true north will remain centered around expanding margins and positioning Allegiant for long term success.

Gregory Anderson
President & CEO at Allegiant Travel Company

We will continue to manage capacity and cost aggressively as we closely monitor the demand environment. And our greatest driver to success is Team Allegion. Their dedication continues to set us apart, and it is an honor to work with such a talented and inspiring team. And with that, I'll turn it over to Drew.

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

Thank you, Greg, and thanks to everyone for joining us this afternoon. We finished the first quarter with $668,000,000 in airline revenue, approximately 6% above the prior year, producing a 1Q TRASM of $0.01 $2.02 $9 which was down 7.1% year over year, in line with our early March re guide and off just about a point from the initial guided figure of down just more than 6%. Allegiant grew total ASMs by 14.2% with stage length increasing by about 1.6. The first quarter capacity continues to build upon the unique attributes of our business model while supporting growth without adding aircraft and personnel. We were able to increase aircraft utilization by approximately 19% to seven point five hours per aircraft per day in the first quarter.

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

Despite the growth in the quarter, utilization still remains more than 10% lower than any other reported carrier. To expand on this a bit more, given the demand environment that existed throughout the initial capacity planning process, we grew off peak day a week ASMs approximately 34% in the first quarter. Even with this growth, we still flew 73% of ASMs on the peak leisure days of Thursday, Friday, Sunday and Monday, the highest of reporting carriers in the first quarter. Due to the rapidly changing demand dynamics in the first quarter, this became increasingly important as the spread from peak day to off peak day unit revenue performance returned to pre pandemic variance. As we previously communicated, 2025 growth supported growing into our infrastructure.

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

The schedule was designed to fully leverage the existing infrastructure and, in turn, expand the margin profile. The abrupt change in demand forced us to course correct and better align our capacity with the current demand environment. That current demand environment continues to present challenges across the industry. We've diligently worked to find both the right price point that continues to stimulate customer demand and the right capacity to balance the overall revenue and cost outlook. Through all economic environments, leisure customers have shown the intent to continue to travel but typically need a lower price point to fulfill that intent.

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

To support bookings, we've seen pressure on yields, but ancillary revenue has remained resilient. In the first quarter, our ancillary revenue per passenger of $79.28 was a record and up nearly 5% year over year primarily driven by Allegion Extra expansion and fully regained functionality from our Navitaire cutover in fall twenty twenty three. Given the off peak weakness experienced in the quarter, we focused our capacity review on shoulder season flying in May and August, and in particular, off peak day flying in those months. More than 7.5 points of May through August capacity was removed, and roughly two thirds of that capacity came from cuts to Tuesday, Wednesday and Saturday flying. The adjustments to peak day flying were largely driven by closure of our LAX base, a strategic decision in response to rising airport costs, along with targeted route suspensions aimed at optimizing network efficiency.

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

Following the capacity adjustments, we anticipate 2Q ASMs to be up approximately 15.5 year over year, showcasing our continued ability to adapt and optimize in response to changing demand. In comparison to other airlines, we removed a larger percentage of capacity than any other carrier relative to published schedules at the start of the year. The quarter's ASM jump is predominantly driven by April's roughly 20% capacity increase based on the late Easter shift and a comp of down double digits in April 2024. Due to the timing of shifting demand trends, we had limited flexibility to adjust our April schedule. Looking ahead, while we anticipate second quarter TRASM to face greater year over year pressure than in the first quarter, periods like Easter and peak June are expected to deliver solid performance.

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

We will remain vigilant and flexible with capacity moving forward to remain best positioned. Recent booking trends are promising and we are optimistic about the continued recovery and growth in demand. As we move forward, we expect to see continued strength and growth in our strategic initiatives. Nearly 65% of 2Q departures are planned to be on Allegiant Extra equipped aircraft. Despite the growth in departures and route serves, we continue to see a benefit of nearly $500 per departure on flights with the seat layout.

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

10% 2Q departures are expected to take place on a new Boeing MAX. To date, our capacity deployment has been done to maximize throughput of crew members completing their operating experience. However, later this year, we expect to shift scheduled capacity toward a more commercial driven solution. We have lapped the first year of our Allianz travel insurance product and have seen contribution grow nearly 60% in April 2025 versus April 2024. And finally, at the end of the first quarter, our co branded Allegiant Always Visa credit card grew cardholders approximately 11% over the last year despite trailing twelve month ASM growth of less than 4% versus the previous twelve months.

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

Additionally, consumer spend on the card was robust and outpaced 1Q year over year passenger growth with early indications that April remains strong as well. We look forward to continuing to grow the program alongside our partners. And now I'd like to hand it over to Robert Neil.

Robert Neal
Robert Neal
Senior VP & CFO at Allegiant Travel Company

All right. Thank you, Drew. Good afternoon, everyone, and thank you for joining us today. I'll walk through our results and our outlook this afternoon, providing commentary on an adjusted basis, excluding any special items unless otherwise noted. For the first quarter twenty twenty five, Allegiant Travel Company consolidated net income was $33,400,000 resulting in consolidated earnings per share of 1.81 Our Airline segment reported net income of $39,000,000 yielding airline only earnings per share of $2.11 placing both consolidated and airline only EPS within our original guidance.

Robert Neal
Robert Neal
Senior VP & CFO at Allegiant Travel Company

The airline generated £121,000,000 in EBITDA during the quarter, 25% higher than the first quarter of twenty twenty four, resulting in an EBITDA margin of 18.1%. Fuel came in at $2.61 per gallon, in line with our initial expectations. Total airline operating expenses were $6.00 $6,000,000 approximately 2% above the first quarter of twenty twenty four on 14% higher capacity. Excluding fuel, airline operating costs were $440,000,000 bringing non fuel airline unit costs to $0.08 $07 down 9% year over year, outperforming our expectations. As a reminder, CASM ex fuel for the quarter included wage increases for our flight attendants from the April 2024 CBA as well as approximately $20,000,000 in costs related to our pilot retention bonus.

Robert Neal
Robert Neal
Senior VP & CFO at Allegiant Travel Company

The better than expected cost performance was attributable to various items throughout each of our cost lines, some of which are timing related and will shift into later quarters. But I will note better than expected benefits from non salary flight crew expenses and higher than expected gains on asset sales, both of which are reflected in the other expenses line. I'm pleased to see the cost performance coming in on plan as we benefit from better leveraging our existing infrastructure and growing into our workforce. And I'm optimistic about our cost structure looking through the rest of the year. Turning to the balance sheet.

Robert Neal
Robert Neal
Senior VP & CFO at Allegiant Travel Company

We ended the quarter with 1,200,000,000 in available liquidity comprised of $9.00 £6,000,000 in cash and investments and £275,000,000 in undrawn revolvers. Debt repayment during the quarter was £281,000,000 inclusive of £246,000,000 in prepayments and £35,000,000 in scheduled debt repayments. Net leverage improved to 2.6 turns, down from 3.2 turns at the end of twenty twenty four, driven by $191,000,000 in cash from operations. Total debt ended at $2,000,000,000 down 10% versus the first quarter of twenty twenty four, reflecting the final prepayment of the Sunseeker construction loan and repayment of $96,000,000 in an unsecured bridge facility, offset by financing for four MAX aircraft deliveries. While we remain committed to investments in the business, specifically our ongoing fleet renewal, we expect to see leverage reductions in the balance of the year with support for moderated CapEx, reduced operating expenses and assuming we finalize a plan for Sunseeker in the coming months.

Robert Neal
Robert Neal
Senior VP & CFO at Allegiant Travel Company

As we've shared before, earning the right to grow is underpinned by balance sheet strength, which remains a top priority for our management team. Liquidity metrics remain strong with cash at 37% of trailing twelve month revenues, exclusive of $275,000,000 in undrawn revolver capacity. Additionally, our unencumbered fleet assets carry a current market value of approximately $600,000,000 Capital expenditures during the quarter were $83,000,000 which included approximately $65,000,000 for aircraft, engines, PDPs and inductions and $18,000,000 in other airline CapEx. Deferred heavy maintenance spend was approximately $14,000,000 On the fleet side, we retired two A320 series aircraft during the quarter and placed four seven thirty seven MAX aircraft into service, two more than previously anticipated. And we ended the quarter with 127 aircraft in the operating fleet.

Robert Neal
Robert Neal
Senior VP & CFO at Allegiant Travel Company

We're becoming increasingly confident in Boeing's ability to deliver, and we now expect 12 MAX deliveries during twenty twenty five, three more than our previous estimate. As discussed on our February call, we plan to offset these incremental aircraft by removing three more A320 series aircraft from service this year in addition to the 12 aircraft we had previously planned to exit and still anticipate ending the year with 122 aircraft in service. We've secured financing for all of our aircraft deliveries this year with the first nine having either closed already or under definitive documentation and the remaining three under LOI. In addition, during the second quarter, we extended £100,000,000 of our revolving credit capacity with Credit Agricole providing liquidity support through 2028. Notwithstanding the improved delivery performance at Boeing, we are reducing our full year capital expenditure forecast by $80,000,000 to $435,000,000 at the midpoint of today's guidance.

Robert Neal
Robert Neal
Senior VP & CFO at Allegiant Travel Company

We expect aircraft related CapEx to come down by about $30,000,000 from the midpoint of prior guide to approximately $270,000,000 as incremental aircraft delivery CapEx is more than offset by a reduction in PDP requirements from a slower delivery schedule in 2026. We're forecasting deferred heavy maintenance CapEx of approximately $60,000,000 and other airline CapEx of approximately $105,000,000 Moving to our second quarter outlook. While we remain confident in the structural advantages of our model, including cost flexibility and a highly adaptable fleet, we think it's prudent to hold off on providing full year projections. So for the second quarter, we expect airline only operating margin of approximately 7% at the midpoint and consolidated earnings per share of $0.50 with the airline contributing roughly $1 Our guidance today assumes a second quarter fuel cost of $2.4 per gallon. In light of the fluid environment, we're not explicitly providing detailed unit cost guidance in our comments today.

Robert Neal
Robert Neal
Senior VP & CFO at Allegiant Travel Company

That said, we do expect to perform in line with messaging provided on our February call, where we expect to see unit cost reductions throughout the year, even considering capacity reductions actioned to date, with the first quarter delivering the strongest year over year performance. As Greg said, Allegiant's tactical utilization model focused exclusively on the leisure traveler has historically positioned us well during times of economic uncertainty. We expect no different this time with continued flexibility in our owned fleet as well as great opportunity in our order book. In response to economic headlines and the challenging environment, leaders from across the business have come together to implement numerous cost initiatives, including early out options for certain employee groups, closure of our crew and aircraft base in Los Angeles, adjustments to overhead infrastructure and reduction of department budgets across the board. In total, we reduced our operating budget by more than £15,000,000 in fixed costs in the balance of the year with the expectation to capture more than £20,000,000 annually.

Robert Neal
Robert Neal
Senior VP & CFO at Allegiant Travel Company

Together with reduced or deferred CapEx, we have removed over £90,000,000 in spend from our 2025 plan, excluding variable cost reductions from lower capacity, demonstrating the agility and responsiveness of our team. In closing, I want to thank all of our team members for their hard work and dedication, not only for strong performance during the first quarter, but for coming together and making the right decisions to position Allegiant to outperform over the long term. Despite near term headwinds, the strength of our model rooted in flexibility, low fixed costs and bias for action provides a solid foundation to weather the current environment and capitalize on future opportunities. Thank you all for your time today. And with that, Kayla, we can now begin analyst questions.

Operator

Our first question comes from the line of Duane Pfennigwerth with Evercore ISI. Your line is open.

Duane Pfennigwerth
Senior Managing Director at Evercore ISI

Hey, nice to speak with Could you speak to I know you're not giving full year guidance here, but just the shape of margins last year in the back half was pretty variable. So maybe you could just speak in broad strokes at least on an airline only basis, how you're thinking about that margin trajectory? And specifically, the third quarter of last year where you had a pretty decent sized loss, how you're thinking about, again, the trajectory of margins relative to the 2Q guide that you're giving here?

Gregory Anderson
President & CEO at Allegiant Travel Company

Duane. Nice to speak with you as well. This is Greg. Why don't I kick it off and the team can add, if there's anything that I may have missed. But you hit on it.

Gregory Anderson
President & CEO at Allegiant Travel Company

Our true north is going to be to drive optimize margins. And so I think in the second half of the year, while we're not gonna give a a guide, we'll continue to, you know, aggressively manage capacity and costs, to optimize margin. We'll have more time to adjust to the environment, for Drew and his team to try and optimize the capacity and also optimize the network. We'll we'll continue to assess the structural costs, you know, and if there's opportunity to to pull more structural costs out of the business, we're gonna continue to look at that. But to to your point on the third quarter, that's generally for us, and seasonally, it's just been the way, in in the history of our our model is the softest quarter of the year.

Gregory Anderson
President & CEO at Allegiant Travel Company

Know, fourth quarter, we we would see, you know, stronger earnings, than in the third quarter. But we're we're focused on optimizing any way we can in this environment, and, we're we're gonna make the necessary decisions to do so. I'm gonna pause there to see if Drew or or BJ have any other commentary on the second half, of the year. I I may just add then, Duane, that we you know, in the fourth quarter last year, we we did produce, I wanna say, was, like, a 13% margin for the airline. You know, and our goal is to continue to, again, optimize margins, and then we'll see how we can improve the the third quarter, which is our quarter with the most off peak demand environment as we focus on the leisure customer.

Duane Pfennigwerth
Senior Managing Director at Evercore ISI

Got it. And then maybe just on Sunseeker. Can you give us an update on the process and maybe timing? And then with respect to the F and B or out of room spend, how much of that is actually generated by customers that are staying in the resort versus locals? And if we just think about the mix between room revenue and out of room revenue, are these trends kind of are these trends consistent?

Duane Pfennigwerth
Senior Managing Director at Evercore ISI

Are these trends repeatable? Or is there something about the first quarter that makes it a one off?

Gregory Anderson
President & CEO at Allegiant Travel Company

Well, why don't I start on your first question there, Duane, about the process? And then Mike is on the call. I think he can add some commentary on the second part of the question around the the the profile of F and B versus who's staying there. But in terms of the process, you know, we as you know, we we've been running a competitive process for several months now. We continue to down select along the way with the best suited counterparties, and this includes counterparties that are well capitalized with dry powder, meaning that, you know, we're focused on execution in this environment.

Gregory Anderson
President & CEO at Allegiant Travel Company

But the process does remain on track, to have a transaction closed by this summer. Like, just given kind of the nature of the discussions we're in, I should probably just leave it at that. But but the the positive is we do remain on track. And then, Micah, do you wanna add, to to Dwayne's quest question?

Micah Richins
Micah Richins
Executive VP & COO of Sunseeker Resorts at Allegiant Travel Company

Yeah. Absolutely, Dwayne. The the food and beverage revenues are probably seventy thirty split, 70% coming from inside the hotels and 30%, the work that we do to, to attract locals to the property. In terms of sustainability, the the key in driving the the earnings in q one and q two and then beyond has been, as we've talked before, is really, really tightly related to how well we do with group business and putting that group on group business on the books in advance. You know, in q one, we had just about double, versus what we had in prior year, and that shows up really well in occupancy, in ADR, as well as in catering, which is a high margin business for us.

Micah Richins
Micah Richins
Executive VP & COO of Sunseeker Resorts at Allegiant Travel Company

So it's absolutely sustainable on a go forward basis. You should always consider q one, to be the strongest of the quarters in the year for sure, but that is that is the model going forward.

Operator

And your next question comes from the line of Mike Linenberg with Deutsche Bank. Your line is open.

Michael Linenberg
Michael Linenberg
Managing Director at Deutsche Bank

Yes. Hey, everyone. Just some modeling some boring modeling questions here. What is the underlying fuel that you're using? And maybe what are you paying for jet fuel now just because it has come down so much through earnings season?

Michael Linenberg
Michael Linenberg
Managing Director at Deutsche Bank

And the capacity, I know we started the year at 17% and then it was 13%. Where are we like what's a good number for where we think your capacity is on an annual basis?

Robert Neal
Robert Neal
Senior VP & CFO at Allegiant Travel Company

Hey, Mike. It's Vijay On fuel, we're using $2.4 for our assumptions for the rest of the year at this point. We we usually just pay to sort of what we're paying immediately before the call,

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

and it's pretty close to that today. Mhmm. And then on on the capacity front, Drew here, based on on what's published today, what we anticipate, what I think goes on sale today or tomorrow for the the last six weeks of the year, with a little bit of completion adjustment, 13 is is the right number. Oh. But we'll we'll stay we'll stay on top of that as we see see how things progress here in in the coming months.

Gregory Anderson
President & CEO at Allegiant Travel Company

And and, Mike, it's Greg. I just to to Drew's point on on that, you know, we'll we're remaining very flexible, but should the demand environment not improve our bias would be to cut more capacity in the back half of the year.

Michael Linenberg
Michael Linenberg
Managing Director at Deutsche Bank

Okay. Great. And then just as a quick follow-up, your other operating expenses were down pretty meaningfully. I know, Vijay, you mentioned you ended up taking a gain. What was the I mean, I didn't see it in the release and maybe you said it and I apologize.

Michael Linenberg
Michael Linenberg
Managing Director at Deutsche Bank

What is the amount on that gain? And then is that as we look forward for modeling, is that something we're going to continue to see in subsequent quarters? Thanks for taking my questions.

Robert Neal
Robert Neal
Senior VP & CFO at Allegiant Travel Company

Thanks, Mike. Yes. On the gain, I don't want to give the number exactly. These are from asset sales that are still happening kind of on a continued basis. The fleet team is liquidating some of the assets that we have begun to retire as these MAX airplanes have come into service, and so they're still sort of negotiating with counterparties and whatnot.

Robert Neal
Robert Neal
Senior VP & CFO at Allegiant Travel Company

We didn't disclose the gain this time like we did in the fourth quarter, so that should tell you it's not as large as as it was in the fourth quarter. And then there's another meaningful good guy in the other expenses line this year, which is a reduction in non salary flight crew expenses. So these are costs related to, like, crew travel and training events and things like that, which were significantly lower this year and actually were elevated through all of last year. Maybe lastly, on the gains from sale, we don't have anything planned currently for the second quarter. Not to say something couldn't get done, but we don't have anything planned currently.

Robert Neal
Robert Neal
Senior VP & CFO at Allegiant Travel Company

And there were some gains last year, so I would expect to see a little bit of pressure there in 2Q. But the program will continue in the back half of the year as the MAX airplanes deliver.

Operator

And your next question comes from the line of Catherine O'Brien with Goldman Sachs. Your line is open.

Catherine O'Brien
Catherine O'Brien
Vice President at Goldman Sachs

Hey. Good afternoon, everyone. Thanks for the time. So you called out over the last few weeks, you've seen demand stabilize, and there's been some improvement over the last several days. Can you just give us a bit more color on that?

Catherine O'Brien
Catherine O'Brien
Vice President at Goldman Sachs

Like like, over what period you've seen the improvement? Maybe help us think about the magnitude of the step down starting in Feb to stabilization and then and then how much things have improved off that bottom realizing it's a recent trend? And and I know you noted, you know, to expect a steeper RASM decline in February. Just just trying to get a sense of of how big of a step down kind of putting all that mosaic together on on trends. Thanks so much.

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

Yeah. Drew here, and I'll invariably disappoint you by not giving you all the details you're looking for. But, I mean, if you just if you just think about, you know, maybe size of of the the change in in RASM. Right? In in the last call, we said we'd be down just more than six, ended at seven one, that will be down more despite taking about five points out of the the two q schedule.

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

So, you know, there's there's probably a mid accounting for all that, there's probably a mid single digit kind of kind of variance in what we thought the, you know, revenue production would be. So you maybe read between the lines in terms of what that meant for for change in in demand. And then, really, it's been about the last week that we've seen kind of an uptick. Back half of last week through through today, it's it's doubled a little bit better. I'll probably stop short of of magnitude of of down swing or up swing there, but I've got long and short of it.

Catherine O'Brien
Catherine O'Brien
Vice President at Goldman Sachs

I guess maybe just a quick follow-up. Anything notable on on on where you're seeing that improvement? Is it something regional? Is it close in bookings? Is it something beyond thirty day? Like, any noticeable trends or it's pretty broad based?

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

Pretty broad based. You know, we in the first quarter, we we, or our last call, we talked about, you know, Canadian border cities in particular. That that's stabilized. I wouldn't say it's it's meaningfully on the upswing, but but that's at least stabilized. Seeing a little bit more come into summer, a little bit less than we'd like maybe into May.

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

But, you know, I think that that builds well into, you know, some of the comments today around around the peak and, you know, Memorial Day through through June is where we would hope to see that that lift, and we're definitively still in the shoulder period here until we get to Memorial Day.

Operator

And your next question comes from the line of Scott Group with Wolfe Research. Your line is open.

Scott Group
MD & Senior Analyst at Wolfe Research

Hey, thanks. Afternoon. Just wanted to follow-up there. So any just maybe I missed it in that last answer, but any directional color you can give on sort of the RASM expectation for Q2 either sequentially year over year or however you want to think about it?

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

I'd I'd probably be the way I had it in my remarks. Right? We'll we'll be we'll be down. We pressured more than than we were in the first quarter on a year over year, but I think that's about the the extent of what we're we're sharing today.

Gregory Anderson
President & CEO at Allegiant Travel Company

Yeah. Think everyone you just said, right, your mid single digit satellite, the headwind of 6%. I think, Scott, in the second quarter is what we're seeing or estimating. Excuse me.

Scott Group
MD & Senior Analyst at Wolfe Research

So I just wanted you're saying that Q2 is five or six points worse than Q1?

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

No. Just just yeah. Taking relative to what we would have expected at the first quarter call that that we said would be better, than where the first quarter ended up if if your second quarter will be better than first. And now we're on the other side of that. So just trying to size the amount of the swing, which is, I guess, unknown to unknown.

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

But, yeah, I think that's kind of what we're given. Right?

Scott Group
MD & Senior Analyst at Wolfe Research

Okay. So me just so we're all on the you thought sec previously thought second quarter would be less negative than first quarter. Now it's going to be more negative than first quarter and the delta between the two is about a five or six point swing. But again, we don't know how much less negative you originally thought Q2 was going to be.

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

That's that's right. You you rolled up the, the mystery very well there.

Scott Group
MD & Senior Analyst at Wolfe Research

Okay. Fair enough. Okay. And then maybe just similar question around, I just wanna understand what your sort of messaging is on CASM. Is it down sort of each quarter year over year of the rest of the year?

Scott Group
MD & Senior Analyst at Wolfe Research

And any more I don't know. Any more color you wanna you can share on CASM?

Robert Neal
Robert Neal
Senior VP & CFO at Allegiant Travel Company

Sure, Scott. Yeah. I just wanted to reiterate. I think there was a question on the February call about sort of the cadence of CASM ex through the year. I think we'll maintain that, although maybe not to completely the same degree with some of the capacity pools that have taken place.

Robert Neal
Robert Neal
Senior VP & CFO at Allegiant Travel Company

So we said 1Q would be the low point in year over year cost performance. But unit cost performance will be strong throughout the year and expecting unit cost to be down in the second quarter and the third quarter. Fourth quarter is a little bit more challenging. Remember, we had a $15,000,000 gain on sale in the fourth quarter of 24,000,000 and we had utilization coming back up in the last few weeks of the year. But feeling really good about unit cost performance if you can get the rate there.

Operator

And your next question comes from the line of Connor Cunningham with Melius Research. Your line is open.

Conor Cunningham
Director - Travel & Transports Analyst at Melius Research LLC

Hi, everyone. Thank you. So when I think about you guys, necessarily view you as someone who cares about market share as much as some of the other carriers that have talked about that this earnings cycle. So just trying to understand how you got to the 7.5 points of capacity that you pulled out of the market. Maybe like to all the questions that have kind of been asked already, it just it seems like, you know, your your unit revenue is deteriorating a little bit faster than you anticipate, which is understandable.

Conor Cunningham
Director - Travel & Transports Analyst at Melius Research LLC

But why are we not pulling down more? And then I I'm not quite it's not quite clear to me that we're fixing the second half issues without pulling down incrementally more from here. So just any thoughts around how you got to the 7.5 number in general? Thank you.

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

Yes. Not a problem, Connor. So as we think about the short term kind of right capacity load, we we're we're still looking to to maximize the the margin profile, understanding that we don't have maybe quite as many levers to pull, broadly from from the fixed expense perspective. So if we take a look at February, about 97% of our markets cover their variable expenses. We we think May is going to look somewhat similar to the similar to that, maybe slightly more, depressed.

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

And so that's kind of what we're targeting again. Right? We're we're targeting ensuring that the capacity that's out there is covering the variable, that will push earnings and, you know, by way, margin as well, as high as we can. You know, I'm sure we'll get some of those calls wrong, but that's kind of where we left out to take a look at where the bookings were, where we felt we we were in a good place from from that gross contribution. And, and then, of course, everything that that spilled out from the LAX based closure, and impact there primarily through the summer. But that was the approach.

Gregory Anderson
President & CEO at Allegiant Travel Company

Okay. And then in the second half, we just Drew Drew, on the second half, just to hit on your your point there, Connor, around capacity. I mean, we're we're just we're monitoring, the environment, and we will but we're gonna aggressively manage capacity in the second half. I I don't wanna put words in Drew's mouth, but we just don't have to make those decisions today on the second half. But in the coming weeks and months, we will be. Is that fair, Drew?

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

Yeah. That that's fair. Right.

Conor Cunningham
Director - Travel & Transports Analyst at Melius Research LLC

Okay. And then may maybe bigger picture. You you mentioned in the deck, you know, past performance, and and I think that, you know, we all know your your competitive advantages relative to some of these other peers out there. So when when you look at a a potential downturn, I mean, I know that you're not seeing that quite yet, but a further one from here, you know, this cycle is a lot different than prior cycles. You have other leisure, you know, focused airlines that are really struggling out there, and there's relative strength at the larger airlines.

Conor Cunningham
Director - Travel & Transports Analyst at Melius Research LLC

So I'm just trying to understand on how you may approach this downturn a little bit different. Like, is M and A something that you guys would look at? Just like, what are the thought process around a further pullback knowing that you'll be at a relative advantage to a lot of other airlines out there? Thank you.

Gregory Anderson
President & CEO at Allegiant Travel Company

No. I appreciate that, Connor. Why don't I kick it off? It's an important question. And I do, though, think that relative to, let's say, prior downturns that the kind of foundation of Allegion is still intact, meaning I'm talking about the four cornerstones that I mentioned in my script are really the network, the tactical utilization and the flexibility

Gregory Anderson
President & CEO at Allegiant Travel Company

So that gives us a lot more optionality, I think, to adjust to the environment. In our infrastructure, it is, I think, you and others are aware, you know, we've been waiting for some time on the delays with the MAX aircraft. So we've been carrying an infrastructure. That that was larger than what we had thinking we'd have the opportunity to grow in that this year. But with the the demand environment dropping now, we're we've already actioned on the infrastructure, we will continue to do so.

Gregory Anderson
President & CEO at Allegiant Travel Company

But to your point on the or your question on the industry, you know, I think consolidation or m and a, I think we're all aligned that, you know, the industry needs less supply, particularly in the low fare space. Leisure fares have not kept up, obviously, with the rising cost environment. And, clearly, there's some low cost carriers that their models are struggling. I think we continue to be, in my opinion, in a category of our own. Well, I'll say consolidation isn't necessarily a requirement for Allegion.

Gregory Anderson
President & CEO at Allegiant Travel Company

I think we still have a great model with great assets, network, the product set, the flexibility, and all that to continue to outperform in a downturn and emerge in a relative stronger position. That said, you know, our focus is and always will be to drive shareholder value and should we should always be open to any opportunities that are in support of that.

Robert Neal
Robert Neal
Senior VP & CFO at Allegiant Travel Company

Hey, Conor. It's BJ. I'll just add in, you know, back to your your first question just to tie to that that last one. I mean, that's one of the reasons that that you haven't seen further cuts from us. The the the cuts that we've done today, we believe, are margin optimizing and doing much more than that would make us cut into our infrastructure to to a place that might not put us in such an advantageous position on the other side of all this.

Robert Neal
Robert Neal
Senior VP & CFO at Allegiant Travel Company

So we just want to be thinking about what we're doing today with the future in mind.

Operator

And your next question comes from the line of Andrew Didora with Bank of America. Your line is open.

Andrew Didora
Andrew Didora
Senior Equity Research Analyst at Bank of America Merrill Lynch

Hey, good afternoon, everyone. First question might be a little bit of a stretch, but just in terms of Sunseeker, is there anything that you're seeing in your booking curve there, maybe in the longer dated group bookings that can give you, like, a bit of a read in terms of how you think airline demand could trend over the the rest of 2025?

Gregory Anderson
President & CEO at Allegiant Travel Company

I Yeah. My on the I don't know that we have a good answer for you on that, candidly, Andrew. What what I would say, though, in Sunseeker, it's tough because it's more nascent. Right? We just opened it last year.

Gregory Anderson
President & CEO at Allegiant Travel Company

But year over year, you know, we've seen a lot of strength that's that's on the Sunseeker side. That's you know, group business has been a big catalyst of that. And on the second quarter, I think we put out our guide, which is down roughly a million, I think, in EBITDA. That's a significant improvement year over year. So I think it's just a little bit difficult for us to kind of weave through just given the, you know, the relatively new nature of the of the resort.

Gregory Anderson
President & CEO at Allegiant Travel Company

But let us follow-up and see if there's something we can clean from that and come back to you on.

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

Maybe on the other thing I'd mentioned, right, with with that that area, Ponta Gorda, we're kinda exiting the peak season going into the off peak now. It's gonna be tough to get a little bit of a read through from the airline side until we get that full winter schedule extended, and and then you'll get a bit more of a read through to to the actual core peak demand of for that area. So, yeah, it's it's a great point. Might need a little time to get back on that.

Andrew Didora
Andrew Didora
Senior Equity Research Analyst at Bank of America Merrill Lynch

No. Understood. I knew it was a little bit of a stretch question. Again, just kind of as a follow-up here, just with regards to the capacity changes you've discussed on the call, I assume these are the lowest margin flying that you have. Some other airlines have spoken to the kind of the RASM differential of peak versus off peak.

Andrew Didora
Andrew Didora
Senior Equity Research Analyst at Bank of America Merrill Lynch

Any way you could help quantify that RASM differential for for the routes you've you've cut versus the rest of your system?

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

Yeah. I don't have that off top of my head for for that that split. You know, when we look at just overall through through the peak March period, like I put in my remarks, it looks very much like like pre pandemic peak days to off peak day. You know? So as you as you peel that back and and to what we cut back, it would be things we anticipate maybe a a little bit weaker, as you can imagine, or places where we could easily absorb.

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

Yeah. We do believe it or have a few of these in our our system, a double data that we can absorb onto a single with with relatively little, loss of of revenue there. So maybe that helps a little bit, but I know I'm not getting all the way there for you.

Andrew Didora
Andrew Didora
Senior Equity Research Analyst at Bank of America Merrill Lynch

Okay. That's all I had. Thank you.

Gregory Anderson
President & CEO at Allegiant Travel Company

Thanks, Andrew.

Operator

Next question comes from Tom Fitzgerald with TD Cowen. Your line is open.

Thomas Fitzgerald
Senior Hotels And Online Travel Analyst at TD Cowen

Hi, everyone. Thanks so much for the time. In the slides, you talked about how the MAX is outperforming your expectations operationally and financially. Wondering if you could give any numbers on that. I remember when the order was first placed, you talked about looking at it on EBITDA per aircraft metric. So I don't know if it's outperforming on your, margin expectations versus the rest of the aircraft in your fleet, but any color there would be helpful.

Gregory Anderson
President & CEO at Allegiant Travel Company

Yeah. Tom, thanks. It's Greg. Why don't I take it, and BJ may add some color if you'd like. On the on the operational front, I mean, dispatch reliability is above advertised from Boeing before we place the order.

Gregory Anderson
President & CEO at Allegiant Travel Company

And it's almost it's a full point, maybe a little bit more than that above our system average. So really pleased with the operational performance. On the financial performance, and I, you know, I think you were alluding to this, but we we placed our order, you know, at a time when no one else was buying airplanes. So I just it was timed well, we we believe. But in the first quarter, keep in mind it's still early, but the first quarter, we had about, I wanna say, a 35% EBITDA advantage per aircraft on the on the MAX fleet as compared to the a three twenty hundred eighty seat Allegiant extra product, you know, configuration.

Gregory Anderson
President & CEO at Allegiant Travel Company

So we're we're seeing it perform nicely. It's still early. Drew mentioned this, I think, in his opening comments as well. We haven't built the plan around the Mac yet to commercialize. We've been really working the the the pilots and getting them type rated and trained.

Gregory Anderson
President & CEO at Allegiant Travel Company

Last year, I think we had roughly a hundred pilots or a little bit more offline waiting to be type rated on the MAX aircraft. And today, Tyler, we I think all or nearly all are now through and and are are flying for the most part. Is that fair?

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

Yeah. That's fair.

Gregory Anderson
President & CEO at Allegiant Travel Company

So in the fall, then we'll begin to better commercialize the max where we think there could even be more opportunity. But I caveat all that with it's still early, and this is the first quarter.

Robert Neal
Robert Neal
Senior VP & CFO at Allegiant Travel Company

Hey, Tom, I'd just add that in addition to the EBITDA performance that Greg mentioned, we've talked about depreciation expense being similar to those A320s that we were adding you know, kind of, I'll call it, 2018, '19 time frame. So you're seeing similar depreciation, but you're also seeing a benefit from the maintenance honeymoon. We haven't been adding new airplanes in a long time, so there's a meaningful benefit in the maintenance honeymoon as well.

Thomas Fitzgerald
Senior Hotels And Online Travel Analyst at TD Cowen

Okay. That's really helpful color. Appreciate that. Just as a quick follow-up on the modeling side, and apologies if you mentioned this in your prepared, but on the sales and distribution line item and OpEx that was down, I want to say, like, 17%. Was that just improvements on Navitar?

Thomas Fitzgerald
Senior Hotels And Online Travel Analyst at TD Cowen

Is that, a higher mix of direct bookings? Appreciate any any color you could provide there. Thanks again for the time, everyone.

Robert Neal
Robert Neal
Senior VP & CFO at Allegiant Travel Company

Sure, Tom. Yeah. It was a handful of things. There there is some reduced spending in certain types of advertising like sponsorships. There's some improvement in credit card fees, but the meaningful driver there is a settlement with one of the card processors related to processing fees going back a number of years.

Operator

And your next question comes from the line of Christopher Stathopoulos Your line is open.

Christopher Stathoulopoulos
Senior Equity Research Analyst at Susquehanna

Good afternoon. I want to circle back to the comments, I think it was from Scott on RASM. So in the prepared remarks, heard same store RASM, I think, performing, well or up, and two q qualitatively more negative than one q. So, you know, as we think about your route structure here, you screen lower with respect to relative route overlap. So if you could perhaps if we could rank order your routes here, you know, what what is the delta between the top quartile and bottom quartile routes?

Christopher Stathoulopoulos
Senior Equity Research Analyst at Susquehanna

If you wanna show it on a stage length adjusted basis, just wanna better understand here, given your network stress structure and and fewer overlaps, how the better to kind of how that quartile, I guess, or rank order, however you wanted to, you know, describe it, is is performing on a relative basis? Thank you.

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

Yeah. So if I remember it from Greg's remarks, he was talking to kind of the peak margin, peak periods in particular holding up quite well, which is is true. You know, we we're not gonna sit here and say that the off peak controls are holding up well. That's that's why I've seen capacity come out in the way you have and and will continue to be reviewed. I'm I'm not particularly interested in going through quartile results here on the call. So no.

Christopher Stathoulopoulos
Senior Equity Research Analyst at Susquehanna

Okay. And and so as a follow-up on on the sound, the shape of second half capacity, any color you can provide with respect to markets, new routes, suspensions, frequency and of course, the new aircraft configuration that you cited earlier? Thank you.

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

So for the second half of the year, we remain somewhat elevated low double digits for for July and into August. Mind you, August has come down approximately 15 points, give or take, from from what we had originally planned. September, I I believe, is in the the mid to high single. October looks quite high, but remember, we have a hurricane comp there that that cut out a meaningful amount of capacity. And then you're kinda getting into you know, by the time you get to the holidays, you know, that's the capacity that's gonna go on sale here this week.

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

So we've got a lot more time to digest what the the demand environment looks like and respond accordingly. And and remember, we had boosted December 2024 utilization. That's kind of our first peak period. So I wouldn't expect meaningful growth there. So that that's kind of where we stand today for for published or soon to be published schedules.

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

But as Greg mentioned, that that's all very much, still under review. As we think about kind of new route profile, you know, we'll we'll stay probably mid single digits. I I think maybe 5% of of routes that'll be in in a period of of maturing still first twelve months. The the rest should be in in a same store capacity. I think we're we're down for for this year.

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

I think we've announced mid twenties number of routes that have gone canceled or suspended. And obviously, doors still open for for more of those such that the environment calls for it.

Robert Neal
Robert Neal
Senior VP & CFO at Allegiant Travel Company

And then on aircraft configurations, feel free to add in if you know by flight. So on on configuration, we ended 24 with 52 of our a three twenties in the Allegion X-ray configuration and four of our MAXs. Currently at 60 a three twenties and nine MAXs in the fleet. And then by the year end of the year, I'm showing 75 a three twenties and the Allegion extra configuration and then all 16 maxes.

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

Yeah. A little bit less than half of what's left to retrofit on the a three twenties will happen here in the next couple of weeks with the balance happening in September to round that out.

Robert Neal
Robert Neal
Senior VP & CFO at Allegiant Travel Company

Yeah. And actually, maybe just just to share, if you look at the fleet plan in the earnings release for this year, we started breaking out one eighty versus one eighty sixty to a three twenty. The one eighty seat is the AllegionX configuration. So we gave the guidance by quarter.

Operator

And your next question comes from the line of Dan McKenzie with Seaport Global. Your line is open.

Daniel McKenzie
Equity Research Analyst at Seaport Research Partners

Hey, thanks. Good afternoon, guys. Drew, apologies for, kicking a dead horse here on the recent uptick. But, does the guide embed that pickup as continuing into the month of June? And I guess I'm just trying to get some sense of the sustainability of the current trends.

Daniel McKenzie
Equity Research Analyst at Seaport Research Partners

Is that uptick just as simple as lower pricing stimulating demand further out? Or are you seeing it tied more to reduce, say, macro headline risk?

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

Yeah. Good good question. So, you know, fair deals have have been depressed for for a few months as as we work to simulate customer demand. You know, that that's been successful. April sale looked looked really good, candidly, a a few weeks back. So that that's had definitely an influence. I I think this this goes just a level deeper, in terms of search traffic and overall visitation being a little bit healthier that that helps drive more bookings while fares remain lower as well.

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

So, you know, a little bit of both, but with more recently probably being more than just fares on on their own.

Gregory Anderson
President & CEO at Allegiant Travel Company

And our q q guide does not take into we're not assuming any uptick in revenue.

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

No. I'm I'm not assuming that this is, yeah, continuing in meaningfully positive fashion or something like that. So that's more of a status quo kind of approach.

Daniel McKenzie
Equity Research Analyst at Seaport Research Partners

Understood. Okay. And then, I guess, Drew, Allegiant Extra is on, I guess, over 50% of the fleet today. So I guess the question is, what does that look like at the end of the second quarter and for the full year? And can you share what percent of the revenue picture it is? And what rate it's growing at?

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

I can try on that. So we mentioned that 65% of the second quarter departures will have Allegion Extra onboard. That will tick up just a little bit, I believe, in the third quarter and maybe just a little bit more in the fourth. Without a huge number of MAXs coming to the back half of the year. It's just gonna be the retrofit of which there's only 15, I believe, remaining in the year.

Drew Wells
Drew Wells
SVP & Chief Commercial Officer at Allegiant Travel Company

So it'll tick up a little bit, but I I wouldn't run away with it. It's definitely out punching its weight. So remember, Legion Extra rolls through as an ancillary item as seat revenue and not something in the fare line. So while we don't go to that level of detail, you know, you're you're gonna out punch 62% of of departures, in terms of of the contribution of of seat revs, if that makes sense.

Operator

And I would now like to turn the call back over to Sherry Wilson.

Sherry Wilson
Sherry Wilson
Managing Director, Investor Relations at Allegiant Travel Company

Thank you everyone for joining the call today. Please feel free to reach out with questions. Otherwise, we'll talk to you next quarter.

Operator

This concludes today's conference call. You may now disconnect.

Executives
    • Sherry Wilson
      Sherry Wilson
      Managing Director, Investor Relations
    • Drew Wells
      Drew Wells
      SVP & Chief Commercial Officer
    • Robert Neal
      Robert Neal
      Senior VP & CFO
    • Micah Richins
      Micah Richins
      Executive VP & COO of Sunseeker Resorts
Analysts
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Key Takeaways

  • In Q1, Allegiant delivered an airline operating margin of 9.3%, up 300 bps year-over-year on record passenger traffic and met its initial guidance.
  • Management cut over 7.5 points of summer capacity (primarily off-peak) to align with softer demand, and now expects 2Q ASMs to rise ~15.5% YoY.
  • Allegiant's model leverages minimal network overlap, high tactical utilization (7.5 hours/day), and a growing MAX fleet (16% of ASMs by year-end) to maintain low costs and flexibility.
  • Non-fuel unit costs (CASM ex-fuel) fell 9% YoY to $0.0807, driven by structural cost cuts, asset sale gains, and productivity initiatives, with further declines expected.
  • The balance sheet remains strong with $1.2 billion in liquidity, net leverage down to 2.6x, a $600 million unencumbered fleet, and reduced 2025 CapEx guidance to $435 million.
AI Generated. May Contain Errors.
Earnings Conference Call
Allegiant Travel Q1 2025
00:00 / 00:00

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