Allegiant Travel Co., the parent company reported better than expected earnings. Allegiant posted a $28.2 million, or $1.37 per share, analysts only expected earnings of $1.26 per share. A year ago first quarter earnings were only $9.7 million, that’s a difference of 191.2%. Oh, and back track, I said only $9.7 million, that’s better than what most airlines have been reporting, aka losses. Allegiant has been consistently performing well in the market. Want more proof, check out Jonathan’s post here.
From Allegiant’s report:
“The first quarter was superb, with an all-time high 31.3% operating margin” stated Maurice J. Gallagher, Jr., CEO and President of Allegiant Travel Company. “This quarter marked a return to capacity growth after last year’s pullback, with modest growth in departures amplified by increases in passengers per departure and load factor. At over $108 per passenger, we slightly exceeded the range of total scheduled fare per passenger we guided for the quarter. Also consistent with guidance, we increased year-over-year total scheduled RASM by 2.1%. Costs were down substantially, driven by a nearly 50% drop in the per-gallon cost of fuel. The result was a near-tripling of operating margins and record EPS for the company.
It has been some time since I flew with Allegiant, but it was nice and fairly easy. Allegiant operates out of smaller “regional cities” and fly to warmer vacation locations. If anyone heard this business plan and did not know of Allegiant I think everyone would assume that airfare could not be cheap, and ultimately the company would fail. Sure Allegiant also includes options for car rentals and hotels to make extra profit. Is this the reason every time I look at allegiant airfares they look very reasonable? What is this magical way Allegiant makes profits. My bet, Allegiant bet on traveling to smaller cities and flying direct to vacation cities, they have found a niche no one else did, and they made flying simple. Well not super simple, but more simple…
