Allegiant Travel Q1 2025 Earnings Report

Allegiant Travel EPS Results

• Actual EPS: $1.81
• Consensus EPS: $1.54
• Beat/Miss: Beat by +$0.27
• One Year Ago EPS: $0.57

Allegiant Travel Revenue Results

• Actual Revenue: $699.07 million
• Expected Revenue: $700.00 million
• Beat/Miss: Missed by -$930.00 thousand
• YoY Revenue Growth: +6.50%

Allegiant Travel Announcement Details

• Quarter: Q1 2025
• Date: 5/6/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, May 6, 2025
• Conference Call Time: 4:30PM ET

Allegiant Travel (NASDAQ:ALGT) is a holding company that operates Allegiant Air, a low‐cost leisure airline offering scheduled and charter air service. The company focuses on connecting underserved secondary markets with popular vacation destinations across the United States. By targeting price‐sensitive leisure travelers, Allegiant Air operates a point‐to‐point network that avoids the traditional hub‐and‐spoke model, providing non‐stop flights from smaller cities to resort and entertainment hubs.

In addition to its core flight operations, Allegiant Travel Company offers packaged travel services that include hotel accommodations, rental cars and attraction tickets through its online portal. This bundled approach allows customers to book complete vacation itineraries in a single transaction, generating ancillary revenue streams from services such as priority boarding, seat assignments and onboard amenities. The airline also provides charter services for sports teams, corporate groups and other large‐party travelers.

Founded in 1997 and headquartered in Las Vegas, Nevada, Allegiant Travel Company went public in 2006 and has since expanded its network to more than 125 destinations, primarily serving leisure markets in Florida, California, Nevada and other sunbelt states. Under the leadership of Chairman and Chief Executive Officer Maurice J. Gallagher Jr., the company emphasizes disciplined cost control, fleet consistency and point‐to‐point scheduling. Allegiant’s business model is designed to capitalize on seasonal demand patterns, offering daily and weekly frequencies that align with peak travel periods.

Allegiant Travel Q1 2025 Earnings Call Transcript

Key Takeaways

• Allegiant delivered a 99.9% completion rate, flew a Q1 record 4.4 million passengers (75% repeat), and achieved a 9.3% airline operating margin in line with original guidance.
• Management cut ~7.5 points of shoulder/off-peak Q2–Q3 capacity and enacted structural cost reductions to remain profitable in 2025 even if demand stays lower.
• The Boeing MAX fleet now represents 6% of ASMs, with dispatch reliability above plan and ~35% higher EBITDA per aircraft, and is expected to reach 16% of ASMs by year-end.
• Ancillary revenue per passenger hit a record $79.28 in Q1, driven by the expansion of Allegiant Extra seating and restored Navitaire functionality.
• Sunseeker resort turned Q1 EBITDA positive to $4.8 million (vs. –$4.6 million prior year) and the planned sale process is on track for completion this summer.

Presentation

[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 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, again, press the star and one. I would now like to turn the call over to Sherry Wilson, Managing Director of Investor Relations. You may begin.

[Sherry Wilson, Managing Director of Investor Relations at Allegiant Travel Company]

Thank you, Kayla. Welcome to the Allegiant Travel Company's first quarter 2025 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. 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. 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.

[Sherry Wilson, Managing Director of Investor Relations at Allegiant Travel Company]

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. 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. With that, I'll turn it over to Greg.

[Greg Anderson, President and 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 15 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.

[Tyler Hollingsworth, COO at Allegiant Travel Company]

Thanks, Greg.

[Greg Anderson, President and CEO at Allegiant Travel Company]

During 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 4.4 million 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. The solid execution of our key initiatives discussed in prior quarters helped boost financial performance improvement. We reported an airline operating margin of 9.3% during the first quarter, up 3 percentage points versus last year.

[Greg Anderson, President and CEO at Allegiant Travel Company]

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. Thank you. In January of 2025, we turned the capacity knob up 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.

[Greg Anderson, President and 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 the successful low-fare model targeting leisure travelers. 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.

[Greg Anderson, President and CEO at Allegiant Travel Company]

Second, a strategic design focused on tactical utilization, optimizing profitability by operating aircraft for only 6-8 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. Furthermore, the execution of our key initiatives is going well, and with these initiatives, we 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, peak utilization increased by 20% compared to the previous year and to slightly below 2019 levels.

[Greg Anderson, President and CEO at Allegiant Travel Company]

Peak leisure demand remains healthy, with same-store travel 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 flew 6% of our ASMs and continues to outperform expectations operationally and financially. 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. Allegiant Xtra is now on more than half of our fleet, a fivefold increase when compared to the first quarter of 2024, and importantly, maintaining a strong revenue premium over our standard product. Additionally, we continue to enhance our bookings and reservation system, Navitaire.

[Greg Anderson, President and CEO at Allegiant Travel Company]

These improvements have strengthened our operations and enabled us to reintroduce lost functionality and new features that are resulting in higher revenue. 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. Finally, Sunseeker. 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 $4.8 million compared to an EBITDA loss of negative $4.6 million in the first quarter of 2024. To that end, we recognize our core competencies lie within the airline business, where we see abundant opportunity and long-term success.

[Greg Anderson, President and CEO at Allegiant Travel Company]

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. We are pleased to report this process remains on track for completion this summer, and we look forward to sharing further details when appropriate. I will close where I started. In a volatile environment, consistent execution and adaptability are essential, and that is where Allegiant 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. We will continue to manage capacity and costs aggressively as we closely monitor the demand environment. Our greatest driver to success is Team Allegiant.

[Greg Anderson, President and CEO at Allegiant Travel Company]

Their dedication continues to set us apart, and it is an honor to work with such a talented and inspiring team. It is with that, I'll turn it over to Drew.

[Drew Wells, 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 million in airline revenue, approximately 6% above the prior year, producing a one-Q RASM of $12.29, 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 7.5 hours per aircraft per day in the first quarter. Despite the growth in the quarter, utilization still remains more than 10% lower than any other reporting carrier.

[Drew Wells, Chief Commercial Officer at Allegiant Travel Company]

To expand on this a bit more, given the demand environment that existed throughout the initial capacity planning process, we grew off-peak day-of-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 variants. As we previously communicated, 2025 growth supported growing into our infrastructure. 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.

[Drew Wells, Chief Commercial Officer at Allegiant Travel Company]

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. 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 Allegiant Xtra expansion and fully regained functionality from our Navitaire cutover in fall 2023. 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.

[Drew Wells, Chief Commercial Officer at Allegiant Travel Company]

More than 7.5 percentage 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. Following the capacity adjustments, we anticipate 2024 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.

[Drew Wells, Chief Commercial Officer at Allegiant Travel Company]

Due to the timing of shifting demand trends, we had limited flexibility to adjust our April schedule. Looking ahead, while we anticipate second quarter travel to face greater year-over-year pressure than in the first quarter, periods like Easter and peak June are expected to deliver solid performance. 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 Xtra-equipped aircraft. Despite the growth in departures and routes served, we continue to see a benefit of nearly $500 per departure on flights with a seat layout. 10% of 2Q departures are expected to take place on a new Boeing 737 Max.

[Drew Wells, Chief Commercial Officer at Allegiant Travel Company]

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 the absolute contribution grow nearly 60% in April 2025 versus April 2024. 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 12-month ASM growth of less than 4% versus the previous 12 months. Additionally, consumer spend on the card was robust and outpaced one-queue 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. Now, I'd like to hand it over to Robert Neal.

[Robert Neal, 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 of 2025, Allegiant Travel Company consolidated net income was $33.4 million, resulting in consolidated earnings per share of $1.81. Our airline segment reported net income of $39 million, yielding airline-only earnings per share of $2.11, placing both consolidated and airline-only EPS within our original guidance. The airline generated $121 million in EBITDA during the quarter, 25% higher than the first quarter of 2024, 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 $606 million, approximately 2% above the first quarter of 2024 on 14% higher capacity.

[Robert Neal, CFO at Allegiant Travel Company]

Excluding fuel, airline operating costs were $440 million, bringing non-fuel airline unit costs to $8.07, down 9% year-over-year, outperforming our expectations. As a reminder, TAZMEX fuel for the quarter included wage increases for our flight attendants from the April 2024 CBA, as well as approximately $20 million in costs related to our pilot retention bonus. 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 in the later quarters. I will note better-than-expected benefits for 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. I'm optimistic about our cost structure looking through the rest of the year.

[Robert Neal, CFO at Allegiant Travel Company]

Turning to the balance sheet, we ended the quarter with $1.2 billion in available liquidity, comprised of $906 million in cash and investments and $275 million in undrawn revolvers. Debt repayment during the quarter was $281 million, inclusive of $246 million in prepayments and $35 million in scheduled debt repayments. Net leverage improved to 2.6 turns, down from 3.2 turns at the end of 2024, driven by $191 million in cash from operations. Total debt ended at $2 billion, down 10% versus the first quarter of 2024, reflecting the final prepayment of the Sunseeker construction loan and repayment of $96 million in an unsecured bridge facility, offset by financing for four Max aircraft deliveries.

[Robert Neal, CFO at Allegiant Travel Company]

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 from moderated CapEx, reduced operating expenses, and assuming we finalize a plan for Sunseeker in the coming months. 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 12-month revenues, exclusive of $275 million in undrawn revolver capacity. Additionally, our unencumbered fleet assets carry a current market value of approximately $600 million. Capital expenditures during the quarter were $83 million, which included approximately $65 million for aircraft, engines, PDPs, and inductions, and $18 million in other airline CapEx. Deferred heavy maintenance spend was approximately $14 million.

[Robert Neal, CFO at Allegiant Travel Company]

On the fleet side, we retired two A320 series aircraft during the quarter and placed four 737 Max aircraft into service, two more than previously anticipated. We ended the quarter with 127 aircraft in the operating fleet. We are becoming increasingly confident in Boeing's ability to deliver, and we now expect 12 Max deliveries during 2025, 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 have 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.

[Robert Neal, CFO at Allegiant Travel Company]

In addition, during the second quarter, we extended $100 million 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 million to $435 million at the midpoint of today's guidance. We expect aircraft-related CapEx to come down by about $30 million from the midpoint of prior guide to approximately $270 million, as incremental aircraft delivery CapEx is more than offset by reduction in PDP requirements from a slower delivery schedule in 2026. We're forecasting deferred heavy maintenance CapEx of approximately $60 million and other airline CapEx of approximately $105 million. 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.

[Robert Neal, CFO at Allegiant Travel Company]

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 $2.40 per gallon. In light of the fluid environment, we're not explicitly providing detailed unit cost guidance in our comments today. 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 action 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 own fleet, as well as great opportunity in our order book.

[Robert Neal, CFO at Allegiant Travel Company]

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've reduced our operating budget by more than $15 million in fixed costs in the balance of the year, with the expectation to capture more than $20 million annually. Together with reduced or deferred CapEx, we have removed over $90 million in spend from our 2025 plan, excluding variable cost reductions from lower capacity, demonstrating the agility and responsiveness of our team.

[Robert Neal, CFO at Allegiant Travel Company]

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. With that, Kayla, we can now begin analyst questions.

[Operator]

At this time, I'd like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. Please limit to one question and one follow-up question. Our first question comes from the line of Duane Pfennigwerth with Evercore ISI. Your line is open.

[Duane Pfennigwerth, Equity Analyst Global Airlines & Lodging at Evercore ISI]

Hey, nice to speak with you. 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. Maybe you could just speak in broad strokes, at least on an airline-only basis, how you're thinking about that margin trajectory. 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 given here.

[Greg Anderson, President and CEO at Allegiant Travel Company]

Hey, 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 miss. You hit on it. Our true north is going to be to drive and optimize margins. I think in the second half of the year, while we're not going to give a guide, we'll continue to 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 continue to assess the structural costs. If there's opportunity to pull more structural costs out of the business, we're going to continue to look at that.

[Greg Anderson, President and CEO at Allegiant Travel Company]

To your point on the third quarter, that's generally for us, and seasonally, this has been the way in the history of our model as the softest quarter of the year. Fourth quarter, we would see stronger earnings than the third quarter. We're focused on optimizing any way we can in this environment, and we're going to make the necessary decisions to do so. I'm going to pause there to just see if Drew or BJ have any other commentary on the second half of the year. I may just add then, Duane, that in the fourth quarter last year, we did produce—I want to say it was like a 13% margin for the airline.

[Greg Anderson, President and CEO at Allegiant Travel Company]

Our goal is to continue to, again, optimize margins, and then we'll see how we can improve the third quarter, which is our quarter with the most off-peak demand environment as we focus on the leisure customer.

[Duane Pfennigwerth, Equity Analyst Global Airlines & Lodging at Evercore ISI]

Got it. Maybe just on Sunseeker, can you give us an update on the process and maybe timing? With respect to the F&B or out-of-room spend, how much of that is actually generated by customers that are staying in the resort versus locals? If we just think about the mix between room revenue and out-of-room revenue, are these trends kind of—are these trends consistent? Are these trends repeatable? Is there something about the first quarter that makes it a one-off?

[Greg Anderson, President and CEO at Allegiant Travel Company]

Why do I not start on your first question there, Duane, about the process? Mike is on the call. I think he can add some commentary on the second part of the question around the profile of F&B versus who's staying there. In terms of the process, as you know, we've been running a competitive process for several months now. We continue to downselect along the way with the best-suited counterparties. This includes counterparties that are well-capitalized with dry powder, meaning that we're focused on execution in this environment. The process does remain on track to have a transaction closed by this summer. Just given kind of the nature of the discussions we're in, I should probably just leave it at that. The positive is we do remain on track. Mike, do you want to add to Dwayne's question?

[Greg Anderson, President and CEO at Allegiant Travel Company]

Yeah, absolutely, Duane. The food and beverage revenues are probably a 70/30 split, 70% coming from inside the hotels and 30% the work that we do to attract locals to the property. In terms of sustainability, the key in driving the earnings in Q1 and Q2 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 business on the books in advance. In Q1, we had just about double versus what we had in prior year. That shows up really well in occupancy in ADR, as well as in catering, which is a high-margin business for us. It is absolutely sustainable on a go-forward basis. You can always consider Q1 to be the strongest of the quarters in the year, for sure. That is the model going forward.

[Operator]

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

[Mike Linenberg, Analyst at Deutsche Bank]

Oh, yeah. Hey, everyone. Just 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? And the capacity, I know we started the year at 17%, and then it was 13%. What's a good number for where we think your capacity is on an annual basis?

[Robert Neal, CFO at Allegiant Travel Company]

Hey, Mike. On fuel, we're using $2.40 for our assumptions for the rest of the year at this point. We usually just peg to sort of what we're paying immediately before the call. It's pretty close to that today.

[Drew Wells, Chief Commercial Officer at Allegiant Travel Company]

On the capacity front, Drew here, based on what's published today, what we anticipate, what I think goes on sale today or tomorrow for the last six weeks of the year, with a little bit of completion adjustment, 13 is the right number. We will stay on top of that as we see how things progress here in the coming months.

[Greg Anderson, President and CEO at Allegiant Travel Company]

Mike, it's Greg. Just to Drew's point on that, we're remaining very flexible. Should the demand environment not improve, our bias would be to cut more capacity in the back half of the year.

[Mike Linenberg, Analyst at Deutsche Bank]

Okay, great. Just as a quick follow-up, your other operating expenses were down pretty meaningfully. I know, BJ, you mentioned you ended up taking a gain. What was the—I mean, I did not see it in the release, and maybe you said it, and I apologize. What is the amount on that gain? Is that, as we look forward for modeling, something we are going to continue to see in subsequent quarters? Thanks for taking my questions.

[Robert Neal, CFO at Allegiant Travel Company]

Thanks, Mike. Yeah, 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. They are still sort of negotiating with counterparties and whatnot. We did not disclose the gain this time like we did in the fourth quarter. That should tell you it is not as large as it was in the fourth quarter. There is another meaningful good guy in the other expenses line this year, which is a reduction in non-salary flight crew expenses. These are costs related to crew travel and training events and things like that, which were significantly lower this year and actually were elevated through all of last year.

[Robert Neal, CFO at Allegiant Travel Company]

Maybe lastly, on the gains from sale, we do not have anything planned currently for the second quarter. Not to say something could not get done, but we do not have anything planned currently. There were some gains last year, so I would expect to see a little bit of pressure there in 2Q. The program will continue in the back half of the year as the MAX airplanes deliver.

[Operator]

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

[Catherine O'Bryne, Analyst at Goldman Sachs]

Hey, good afternoon, everyone. Thanks for the time. You called out over the last few weeks, you've seen demand stabilize, and then there's been some improvement over the last several days. Can you just give us a bit more color on that? Over what period are you seeing the improvement? Maybe help us think about the magnitude of the step down starting in February to stabilization, and then how much things have improved off that bottom, realizing it's a recent trend. I know you noted to expect a steeper rise and decline in 2Q. Just trying to get a sense of how big of a step down, kind of putting all of that mosaic together on trends. Thanks so much.

[Drew Wells, 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 think about maybe size of the change in RASM, right? In the last call, we said we'd be down just more than six, ended at 7.1, said we'll be down more despite taking about five points out of the 2Q schedule. So there's probably a mid—accounting for all that, there's probably a mid-single-digit kind of variance in what we thought the revenue production would be. So maybe read between the lines in terms of what that meant for change 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 today has felt a little bit better.

[Drew Wells, Chief Commercial Officer at Allegiant Travel Company]

I'll probably stop short of magnitude of downswing or upswing there, but that's kind of the long and short of it.

[Catherine O'Bryne, Analyst at Goldman Sachs]

I guess maybe just a quick follow-up. Anything notable on where you're seeing that improvement? Is it something regional? Is it closing bookings? Is it something beyond 30 days? Any noticeable trends, or it's pretty broad-based?

[Drew Wells, Chief Commercial Officer at Allegiant Travel Company]

Pretty broad-based. In the first quarter, or our last call, we talked about Canadian border cities in particular. That has stabilized. I would not say it is meaningfully on the upswing, but that has at least stabilized. Seeing a little bit more come into summer, a little bit less than we would like maybe into May. I think that builds well into some of the comments today around the peak and Memorial Day through June is where we would hope to see that lift. We are definitively still in a shoulder period here until we get to Memorial Day.

[Operator]

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

[Scott Group, Managing Director at Wolfe Research]

Hey, thanks. Afternoon. Just wanted to follow up there. 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, however you want to think about it?

[Drew Wells, Chief Commercial Officer at Allegiant Travel Company]

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

[Greg Anderson, President and CEO at Allegiant Travel Company]

Yeah. Everyone, you just said, right, your mid-single-digit sell headwind of 5-6%. I think, Scott, in the second quarter is what we're seeing or estimating, excuse me.

[Scott Group, Managing Director at Wolfe Research]

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

[Drew Wells, Chief Commercial Officer at Allegiant Travel Company]

No. Yeah. Taking relative to what we would have expected at the first quarter call that we said would be better than where the first quarter ended up, if your second quarter would be better than the first, and now we're on the other side of that. Just trying to size the amount of the swing, which is, I guess, unknown to unknown. Yeah, I think that's kind of what we're given, right?

[Scott Group, Managing Director at Wolfe Research]

Okay. So we're all on the same. You previously thought second quarter would be less negative than first quarter. Now it's going to be more negative than first quarter. The delta between the two is about a five or six-point swing. Again, we don't know how much less negative you originally thought Q2 was going to be.

[Drew Wells, Chief Commercial Officer at Allegiant Travel Company]

That's right. You've rolled up the mystery very well there.

[Scott Group, Managing Director at Wolfe Research]

Okay. Fair enough. Okay. Maybe just a similar question around—I just want to 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? I do not know, any more color you can share on CASM?

[Robert Neal, 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 pulls that have taken place. We said Q1 would be the low point in year over year cost performance. Unit cost performance will be strong throughout the year. 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 million gain on sale in the fourth quarter of 2024, and we had utilization coming back up in the last few weeks of the year. Feeling really good about unit cost performance if you can get the read there.

[Operator]

Your next question comes from the line of Conor T. Cunningham with Melius Research. Your line is open.

[Conor T. Cunningham, Travel & Transports Analyst at Melius Research]

Hi, everyone. Thank you. When I think about you guys, I don't necessarily view you as someone who cares about market share as much as some of the other carriers that have talked about this earnings cycle. Just trying to understand how you got to the seven and a half points of capacity that you pulled out of the market. Maybe to all the questions that have kind of been asked already. It seems like your unit revenue is deteriorating a little bit faster than you anticipate, which is understandable. Why are we not pulling down more? It's not quite clear to me that we're fixing the second half issues without pulling down incrementally more from here. Just any thoughts around how you got to the 7.5 number in general? Thank you.

[Drew Wells, Chief Commercial Officer at Allegiant Travel Company]

Yeah. Not a problem, Conor. As we think about the short-term kind of right capacity load, we're still looking to maximize the margin profile, understanding that we don't have maybe quite as many levers to pull broadly from the fixed expense perspective. If we take a look at February, about 97% of our markets cover their variable expenses. We think May is going to look somewhat similar to that, maybe slightly more depressed. That's kind of what we're targeting again, right? We're targeting ensuring that the capacity that's out there is covering the variable that will push earnings and, by way, margin as well as high as we can.

[Drew Wells, Chief Commercial Officer at Allegiant Travel Company]

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 were in a good place from that gross contribution. Of course, everything that spilled out from the LAX base closure and impact there primarily through the summer. That was the approach.

[Greg Anderson, President and CEO at Allegiant Travel Company]

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

[Drew Wells, Chief Commercial Officer at Allegiant Travel Company]

Yeah, that's fair, right?

[Conor T. Cunningham, Travel & Transports Analyst at Melius Research]

Okay. And then maybe bigger picture. You mentioned in the deck past performance, and I think that we all know your competitive advantages relative to some of these other peers out there. When you look at a potential downturn, I mean, I know that you're not seeing that quite yet, but a further one from here, this cycle is a lot different than prior cycles. You have other leisure-focused airlines that are really struggling out there, and there's relative strength at the larger airlines. I'm just trying to understand on how you may approach this downturn a little bit differently. Is M&A something that you guys would look at? Just what are the thought processes around a further pullback, knowing that you'll be at a relative advantage to a lot of other airlines out there? Thank you.

[Greg Anderson, President and CEO at Allegiant Travel Company]

No, I appreciate that, Conor. Why do not I kick it off? It is an important question. I do, though, think that relative to, let us say, prior downturns, the kind of foundation of Allegiant is still intact, meaning kind of talking about the four cornerstones that I mentioned in my script, but really the network, the tactical utilization, and the flexibility within our fleet. That gives us a lot more optionality, I think, to adjust to the environment. Our infrastructure, as I think you and others are aware, we have been waiting for some time on the delays with the MAX aircraft. We have been carrying an infrastructure that was larger than what we had, thinking we would have the opportunity to grow in that this year. With the demand environment dropping now, we have already actioned on the infrastructure, and we will continue to do so.

[Greg Anderson, President and CEO at Allegiant Travel Company]

To your point on the or your question on the industry, I think consolidation or M&A, I think we're all aligned that the industry needs less supply, particularly in the low-fare space. Leisure fares have not kept up, obviously, with the rising cost environment. Clearly, there are some low-cost carriers that their models are struggling. I think we continue to be, in my opinion, in a category of our own. While I'll say consolidation isn't necessarily a requirement for Allegiant, I think we still have a great model with great assets, a 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, our focus is and always will be to drive shareholder value, and we should always be open to any opportunities that are in support of that.

[Robert Neal, CFO at Allegiant Travel Company]

Hey, Connor, it's BJ.

[Robert Neal, CFO at Allegiant Travel Company]

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

[Operator]

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

[Andrew Didora, Senior Equity Research Analyst at Bank of America]

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 a bit of a read in terms of how you think airline demand could trend over the rest of 2025?

[Robert Neal, CFO at Allegiant Travel Company]

Yeah. I don't know that we have a good answer for you on that, candidly, Andrew. What I would say, though, Sunseeker is tough because it's more nascent, right? We just opened it last year. Year over year, we've seen a lot of strength on the Sunseeker side. Group business has been a big catalyst of that. On the second quarter, I think we put out our guide, which is down roughly $1 million, I think, in EBITDA. That's a significant improvement year over year. I think it's just a little bit difficult for us to kind of weave through, just given the relatively new nature of the resort. Let us follow up and see if there's something we can glean from that and come back to you on.

[Drew Wells, Chief Commercial Officer at Allegiant Travel Company]

Maybe only the thing I'd mention, right? With that area, Sunseeker Resort, we're kind of exiting the peak season, going into the off-peak now. It's going to be tough to get a little bit of a read-through from the airline side until we get that full winter schedule extended. Then you'll get a bit more of a read-through to the actual core peak demand for that area. Yeah, it's a great point. We might need a little time to get back on that.

[Andrew Didora, Senior Equity Research Analyst at Bank of America]

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

[Drew Wells, Chief Commercial Officer at Allegiant Travel Company]

I don't have that off the top of my head for that split. When we look at just overall through the peak March period, like I put in my remarks, it looks very much like pre-pandemic peak day to off-peak day. As you peel that back into what we cut back, it would be things we anticipate maybe a little bit weaker, as you can imagine, or places where we could easily absorb. We do, believe it or not, have a few of these in our system, a double data that we could absorb onto a single with relatively little loss of revenue there. Maybe that helps a little bit, but I know I'm not getting all the way there for you.

[Andrew Didora, Senior Equity Research Analyst at Bank of America]

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

[Greg Anderson, President and CEO at Allegiant Travel Company]

Thanks, Andrew.

[Operator]

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

[Tom Fitzgerald, Vice President and Equity Research Analyst at TD Cowen]

Hey, everyone. Thanks so much for the time. In the slides, you talked about how the MAX is outperforming your expectations operationally and financially. I wonder 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 metrics. 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.

[Greg Anderson, President and CEO at Allegiant Travel Company]

Yeah. Tom, thanks. It's great. Why don't I take it? And BJ may add some color if you'd like. On the operational front, I mean, dispatch reliability is above advertised from Boeing before we placed the order. It's a full point, maybe a little bit more than that, above our system average. Really pleased with the operational performance. On the financial performance, I think you were alluding to this, but we placed our order at a time when no one else was buying airplanes, so it was timed well, we believe. In the first quarter, and keep in mind, it's still early, but the first quarter, we had about, I want to say, a 35% EBITDA advantage per aircraft on the MAX fleet as compared to the A320 180-seat Allegiant Xtra product configuration. We're seeing it perform nicely. It's still early.

[Greg Anderson, President and CEO at Allegiant Travel Company]

Drew mentioned this, I think, in his opening comments as well. We have not built the plan around the MAX yet to commercialize. We have been really working the pilots and getting them type-rated and trained. Last year, I think we had roughly 100 pilots or a little bit more offline waiting to be type-rated on the MAX aircraft. And today, Tyler, I think all or nearly all are now through and are flying for the most part. Is that fair?

[Tom Fitzgerald, Vice President and Equity Research Analyst at TD Cowen]

Yeah, that's fair.

[Greg Anderson, President and CEO at Allegiant Travel Company]

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

[Robert Neal, 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, kind of, I'll call it 2018, 2019 timeframe. 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, and so there's a meaningful benefit in the maintenance honeymoon as well.

[Tom Fitzgerald, Vice President and Equity Research Analyst at TD Cowen]

Okay, thanks. 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 in OpEx, that was down, I want to say, 17%. Was that just improvements on Navitaire, or is that a higher mix of direct bookings? Appreciate any color you could provide there. Thanks again for the time, everyone.

[Robert Neal, CFO at Allegiant Travel Company]

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

[Operator]

Your next question comes from the line of Christopher Nicholas Stathoulopoulos with Susquehanna International Group. Your line is open.

[Christopher Nicholas Stathoulopoulos, Senior Equity Research Analyst at Susquehanna International Group]

Good afternoon. I want to circle back to the comments, I think it was from Scott on RASM. In the prepared remarks, I heard same-store RASM, I think, performing well or up, and 2Q qualitatively more negative than 1Q. As we think about your route structure here, you screen lower with respect to relative route overlap. If you could, perhaps if we could rank order your routes here, what is the delta between the top quartile and bottom quartile routes? If you want to show it on a stage-length adjusted basis, just want to better understand here, given your network structure and fewer overlaps, how the better to kind of how that quartile, I guess, or rank order, however you want to describe it, is performing on a relative basis. Thank you.

[Drew Wells, Chief Commercial Officer at Allegiant Travel Company]

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

[Christopher Nicholas Stathoulopoulos, Senior Equity Research Analyst at Susquehanna International Group]

Okay. As a follow-up on 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, Chief Commercial Officer at Allegiant Travel Company]

For the second half of the year, we remain somewhat elevated, low double digits for July and into August. Mind you, August has come down approximately 15 percentage points, give or take, from what we had originally planned. September, I believe, is in the mid to high single. October looks quite high, but remember, we have our hurricane comp there that cut out a meaningful amount of capacity. You are kind of getting into, by the time you get to the holidays, that's the capacity that's going to go on sale here this week. We have had a lot more time to digest what the demand environment looks like and respond accordingly. Remember, we had boosted December 2024 utilization as kind of our first peak period. I would not expect meaningful growth there. That is kind of where we stand today for published or soon-to-be-published schedules.

[Drew Wells, Chief Commercial Officer at Allegiant Travel Company]

As Greg mentioned, that's all very much still under review. As we think about kind of new route profile, we'll stay probably mid-single digits. I think maybe 5% of routes that'll be in a period of maturing still for 12 months. The rest should be in the same-store capacity. I think we're down for this year, I think we've announced mid-20s number of routes that have gone canceled or suspended. Obviously, door is still open for more of those such that the environment calls for it.

[Robert Neal, CFO at Allegiant Travel Company]

On aircraft configuration, Drew, feel free to add in if you know by flight. On configuration, we ended 2024 with 52 of our A320s in the Allegiant Xtra configuration and 4 of our MAXs. Currently at 60 A320s and 9 MAXs in the fleet. By the end of the year, I'm showing 75 A320s in the Allegiant Xtra configuration and all 16 MAXs.

[Drew Wells, Chief Commercial Officer at Allegiant Travel Company]

Yeah. A little bit less than half of what's left to retrofit on the A320s will happen here in the next couple of weeks with the balance happening in September to round that out.

[Robert Neal, CFO at Allegiant Travel Company]

Yeah. Actually, maybe just to share, if you look at the fleet plan and the earnings release for this year, we started breaking out 180 versus 186 seats at A320. The 186 seat is the Allegiant Extra configuration. We gave a guide by quarter.

[Operator]

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

[Dan McKenzie, Equity Research at Seaport Global]

Oh, 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? I guess I'm just trying to get some sense of the sustainability of the current trends. Is that uptick just as simple as lower pricing stimulating demand further out, or are you seeing it tied more to reduced, say, macro headline risk?

[Greg Anderson, President and CEO at Allegiant Travel Company]

Yeah. Good question. So fare yields have been depressed for a few months as we worked to stimulate customer demand. That's been successful. April sale looked really good, candidly, a few weeks back. That's had definitely an influence. I think this goes just a level deeper in terms of search traffic and overall visitation being a little bit healthier. That helps drive more bookings while fares remain lower as well. A little bit of both, with more recently probably being more than just fares on their own.

[Dan McKenzie, Equity Research at Seaport Global]

Our Q guide does not take into, we're not assuming any uptick in revenue.

[Greg Anderson, President and CEO at Allegiant Travel Company]

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

[Dan McKenzie, Equity Research at Seaport Global]

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

[Greg Anderson, President and CEO at Allegiant Travel Company]

I can try on that. We mentioned that 65% of the second quarter departures will have Allegiant Extra on board. That will tick up just a little bit, I believe, in the third quarter and maybe just a little bit more in the fourth, but without a huge number of MAXs coming through the back half of the year. It is just going to be the retrofit, of which there are only 15, I believe, remaining in the year. It will tick up a little bit, but I would not run away with it. It is definitely outpunching its weight. Remember, Allegiant Extra rolls through as an ancillary item as seat revenue and not something in the fare line. While we do not go to that level of detail, you are going to outpunch 62% of departures in terms of the contribution of seat rev, if that makes sense.

[Operator]

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

[Sherry Wilson, Managing Director of 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.

Participants

Executives

• Greg Anderson, President and CEO
• Tyler Hollingsworth, COO
• Drew Wells, Chief Commercial Officer
• Sherry Wilson, Managing Director of Investor Relations
• Robert Neal, CFO

Analysts

• Andrew Didora, Senior Equity Research Analyst at Bank of America
• Dan McKenzie, Equity Research at Seaport Global
• Tom Fitzgerald, Vice President and Equity Research Analyst at TD Cowen
• Scott Group, Managing Director at Wolfe Research
• Christopher Nicholas Stathoulopoulos, Senior Equity Research Analyst at Susquehanna International Group
• Analyst
• Mike Linenberg, Analyst at Deutsche Bank
• Catherine O'Bryne, Analyst at Goldman Sachs
• Duane Pfennigwerth, Equity Analyst Global Airlines & Lodging at Evercore ISI
• Conor T. Cunningham, Travel & Transports Analyst at Melius Research