Allegiant Travel CO Q4 FY2024 earnings call

• Extended condolences for the DCA accident. - Achieved adjusted airline-only operating margin over 13% in Q4 2024, driven by 16% capacity increase in Dec and 99.7% controllable completion rate. - Initiatives: restored peak utilization, upgraded commercial technology, introduced 4 MAX aircraft in-service by end of 2024. - Progress on Sunseeker: strategic review with competitive process for sale/stake sale, aim to conclude by summer. - Focus on balance sheet deleveraging, selling older underutilized aircraft. - Allegiant Always credit card expected to receive ~$140 million in 2025. - Fleet: ended 2024 with 125 aircraft, expecting 9 MAX deliveries in 2025, retire 12 aircraft, ending 2025 with 122 aircraft in service.

The airline segment was the key focus. In the fourth quarter, the adjusted airline-only operating margin was over 13%, a 6.5 point increase from the previous year. Fourth quarter airline revenue was nearly $610 million, up slightly year-over-year. For the full year 2024, the airline segment generated net income of $107.5 million, with earnings per share of $5.84. Ancillary per passenger was nearly $76, an improvement of almost $3 compared to 2023. Fixed fee revenue reached a record $81 million. The Allegiant Extra product saw 46% of the fleet equipped in 2024, with a plan to end 2025 at 70%. The Sunseeker resort had a total non-cash impairment of $322 million in the fourth quarter, with debt associated with Sunseeker assets fully repaid, and a competitive process for sale/stake sale ongoing.

• Airline full-year 2025 EPS guidance is $9, an improvement over 2024. - 2025 airline capacity expected to be up 17% year-over-year. - First quarter 2025 airline revenue guidance: TRASM down more than 6%, airline rev excluding fixed fee up about 7%. - Sunseeker expected to have EBITDA-positive in Q1 2025, with depreciation of ~$3 million per quarter. - 2025 all-in capital expenditures midpoint ~$515 million, including ~$300 million in aircraft and engine-related CapEx, $125 million in airline other capital expenditures, and $90 million in deferred heavy maintenance.

• Uncertainty in the Sunseeker sale process. - Fluctuations in fuel prices potentially impacting capacity and utilization. - Boeing aircraft delivery delays affecting fleet plans. - U.S. dollar strength against the Canadian dollar affecting origination cities.

Q: Savi Syth asks about capacity growth across quarters.

A: Drew Wells and Greg Anderson discuss quarter-by-quarter capacity growth, noting first quarter ~14% growth, second and third quarters likely ~20%+, fourth quarter lowest due to non-lapping comps, with peak months (March, June, July) accounting for about a third of growth and shoulder months driving most of the lift.

Q: Duane Pfennigwerth asks about Sunseeker debt repayment and sale process.

A: Robert Neal and Gregory Anderson talk about repaying Sunseeker debt, with proceeds from fleet equipment sales and improved earnings, and a competitive sale process for Sunseeker aiming to conclude by summer.

Q: Tom Fitzgerald asks about Spring Break booking and Allegiant Extra merchandising.

A: Gregory Anderson discusses Spring Break booking with Easter shift impact, and Drew Wells talks about Allegiant Extra merchandising, noting separation from fair class for flexibility but backend complications.

Q: Mike Linenberg asks about Sunseeker seasonality and pilot bonus.

A: Gregory Anderson mentions Sunseeker's strongest quarters are typically the first and fourth, and Robert Neal states pilot bonus accrual was ~$20 million per quarter in 2024, expected ~$22.5 million per quarter in 2025.

Q: Dan McKenzie asks about Sunseeker cash impact and M&A.

A: Robert Neal talks about Sunseeker cash impact not factored into deleveraging assumptions and minimal overlap with Spirit Airlines, with Allegiant focusing on organic growth.

Q: Scott Group asks about RASM, CASM, and engine gains.

A: Robert Neal and Drew Wells discuss RASM down more than 6% in Q1 2025, CASM down more than RASM, and engine gains being lumpy and minor in 2025.

Q: Ravi Shanker asks about Allegiant Extra strategy and Sunseeker timing.

A: Robert Neal talks about Allegiant Extra strategy of growing into infrastructure, and Gregory Anderson mentions Sunseeker sale process aiming to conclude by summer with promising interest from investors.

Q: Conor Cunningham asks about cost outlook and schedule building.

A: Drew Wells and Robert Neal discuss cost outlook lumpiness due to asset sales and aircraft utilization, and schedule building approach remaining similar with minor tweaks.

Q: Unidentified Analyst asks about Sunseeker drag and EBITDA.

A: Robert Neal states Sunseeker's EPS drag will be smaller in 2025 than 2024 but interest expense allocation still being worked through.

Q: Atul Maheswari asks about fuel price impact.

A: Drew Wells and Gregory Anderson discuss fuel price impact on capacity, with potential to pull capacity from off-peak periods and Boeing deliveries making the fleet more resilient.