Allegiant Travel NASDAQ: ALGT reported record second-quarter revenue as the company began integrating Sun Country Airlines following the May 13 acquisition close. Management said both airlines posted year-over-year unit-revenue improvement of more than 20%, while the combined company delivered what it described as the highest operating margin among U.S. carriers during the quarter.
The company’s reported second-quarter figures include Allegiant’s full quarter and Sun Country’s results from the acquisition date through June 30. Prior-year comparisons generally reflect Allegiant on a standalone basis.
Chief Executive Officer Greg Anderson said the combined business produced strong operating results while completing the acquisition and launching integration work. He pointed to Allegiant’s repeat-customer base, flexible low-utilization scheduling model, aircraft ownership strategy, community presence and balance sheet as key competitive advantages.
“We are better positioned today than at any point in our history,” Anderson said, adding that the company remains focused on building a leading U.S. leisure carrier.
Revenue Growth and Second-Quarter Results
On a standalone basis, Allegiant generated $776 million of total revenue in the second quarter, up 16.1% from the prior year, according to Chief Commercial Officer Drew Wells. The airline reduced system capacity by 6.8% but kept passenger counts nearly flat, producing a record quarterly revenue total.
Standalone Allegiant total revenue per available seat mile, or TRASM, reached $0.1442, up 24.6% year over year. Wells said the increase reflected gains across multiple revenue levers, including a more than 40% rise in yield, an approximately four-point improvement in load factor and more than 30% growth in third-party revenue per passenger.
Allegiant’s scheduled-service air revenue increased by $102 million from a year earlier, exceeding the company’s $99 million increase in fuel expense, Wells said.
For the combined entity, second-quarter revenue totaled $943.5 million. Chief Financial Officer Robert Neal said the company generated adjusted pre-tax income of $64.5 million and adjusted earnings per share of $2.19. Sun Country contributed $13.4 million of pre-tax income during the post-acquisition period.
The combined company reported a 9.2% operating margin and nearly $158 million of EBITDA, representing an EBITDA margin of nearly 17%. Sun Country contributed $29.7 million of EBITDA during the stub period.
Sun Country Integration and Network Actions
Management said integration work is progressing, with customers now able to search for flights on both airlines’ websites and be redirected to the operating carrier to complete a booking. The companies are also reviewing supplier relationships, schedule planning and network opportunities.
Allegiant has submitted its single operating certificate transition plan to the Federal Aviation Administration and is targeting approval in the first half of 2028. The company expects at least $140 million in annualized run-rate synergies from the transaction by 2029.
However, Anderson said Sun Country has faced elevated pilot attrition among junior Minneapolis-St. Paul-based pilots, largely because of increased hiring by the largest carrier in the Twin Cities. Allegiant is reducing off-peak Minneapolis-St. Paul capacity during the second half of 2026 in response to attrition and higher fuel prices.
The company said its pilot training classes are full and expects pilots entering service later this year to support renewed Minneapolis-St. Paul capacity growth in 2027. Management also said Allegiant and its pilots ratified a new collective bargaining agreement, with nearly 80% of voting pilots approving the contract.
Commercial Initiatives and Premium Products
Allegiant highlighted several commercial initiatives intended to support revenue growth. The company’s Allways Rewards co-brand credit-card remuneration rose 24% year over year in the second quarter. Management reiterated its long-term goal of doubling co-brand remuneration from about 5% of revenue currently to 10%.
The carrier also launched an Expedia partnership, marking Allegiant’s entry into online travel agency distribution. Wells said Allegiant was fully live on Expedia as of July 10, and about 3% of bookings in the first few weeks came through Expedia’s network. More than half of those bookings came from customers new to Allegiant, according to management.
Allegiant said it intends to retain control of its brand, product offering and customer relationship while using Expedia as a customer-acquisition channel. The company initially launched a simplified airfare-only offering and expects to add products and capabilities over time.
In addition, Allegiant plans to introduce a premium seating product, Allegiant First, on select aircraft beginning in 2027. The new configuration will include eight premium seats and reduce seating by two seats from the current 190-seat MAX layout. Wells said the initiative followed the stronger-than-expected performance of Allegiant Extra and demand for premium offerings.
Outlook, Costs and Fleet
For the third quarter, Allegiant expects combined scheduled-service capacity to decline about 5.5% from a pro forma prior-year base. Wells projected total third-quarter revenue would rise approximately 16.5% from combined airline-only third-quarter 2025 revenue of about $808 million.
Management expects combined unit-revenue growth in the third quarter to be broadly in line with Allegiant’s 24.6% second-quarter increase. Neal said consolidated non-fuel unit costs excluding cargo could rise approximately 10% to 12% year over year, while standalone Allegiant non-fuel unit costs could increase about 9% to 10%.
Based on an assumed fuel price of $3.80 per gallon, the company expects a third-quarter operating margin of roughly 2% at the midpoint and a consolidated loss per share of approximately $0.50. Management characterized the September quarter as the seasonally weakest period for both airlines.
For the full year, Allegiant expects adjusted consolidated earnings per share of more than $6, assuming fuel costs of $3.80 per gallon in the third quarter and $3.70 in the fourth quarter.
The combined fleet ended the quarter with 193 aircraft, including 105 Airbus A320-family aircraft, 66 Boeing 737 passenger aircraft and 22 Boeing 737 cargo aircraft. Allegiant expects six additional 737 MAX deliveries through year-end, with six MAX aircraft entering service in the second half and seven aircraft retiring, resulting in an expected year-end operating fleet of 192 aircraft.
Allegiant plans to hold an analyst day in Las Vegas on Dec. 7, where it expects to provide additional details on integration progress, Allegiant First and its longer-term financial framework.
About Allegiant Travel (NASDAQ:ALGT)
Allegiant Travel Company 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.
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