Allegiant Travel Co (ALGT) SEC Filing 10-K Annual report for the fiscal year ending Wednesday, December 31, 2008

ALLEGIANT TRAVEL COMPANY REPORTS FOURTH QUARTER AND
FULL YEAR 2008 FINANCIAL RESULTS,
ANNOUNCES $25 MILLION SHARE REPURCHASE PROGRAM

FOURTH QUARTER EPS INCREASE 283%, OPERATING MARGIN EXCEEDS 23%

Las Vegas, Nev., January 26, 2009 /PRNewswire/ – Allegiant Travel Company (NASDAQ: ALGT), parent company of Allegiant Air and Allegiant Vacations, today reported the following financial results for the fourth quarter and full year 2008 and comparisons to prior year equivalents:

*Total system includes scheduled service, fixed fee contract and non-revenue flying

Allegiant Travel Company also reported the following balance sheet information:

“We had an outstanding fourth quarter, leading to a double-digit operating margin for the year,” stated Maurice J. Gallagher, Jr., CEO and President of Allegiant Travel Company. “Similar to prior quarters, we had tuned the airline to handle high fuel prices in the fourth quarter, as evidenced by the year-over-year reduction in capacity, and substantial increases in passengers per departure, load factor and total average air fare. We were therefore well-positioned to benefit from the dramatic collapse in oil prices during the second half of the year. Our fourth quarter fuel price per gallon was down 21% year over year and a stunning 40% sequentially. The resulting reduction in fourth quarter operating cost helped pave the way to a record operating margin, with operating profit surging close to 400% year over year. Once again our team members have risen to the occasion, successfully rolling out 18 new routes in the fourth quarter alone.”

Gallagher continued, “Looking forward, we are seeing a tighter booking curve, reduced passenger yields and thus a softer base air fare for our scheduled service operation. We estimate that for the first quarter of 2009 scheduled total average air fare (the sum of air fare plus ancillary revenue per passenger), will be down 4% to 6% over the prior year or between $4 and $7. But this decline in revenue per passenger should be more than offset by our expected reduction in fuel cost per passenger and non-fuel cost per passenger (due to increased aircraft utilization) in the first quarter. Our December fuel cost per passenger was less than $30 compared to an average of $60 during the second and third quarters of 2008 and $55 per passenger in first quarter of 2008. We will continue with our policy of maximizing passengers per departure, and will aim to achieve load factors in-line or, where possible, above those of last year.”

Gallagher concluded, “Our Board of Directors has authorized a share repurchase program to acquire up to $25 million of the Company’s common stock. This replaces a prior program the Board authorized last year at this time which is expiring. Our financial strength and cash flow generation allows us to continue to judiciously return cash to shareholders. Details of the stock repurchase program can be found in a separate SEC filing to be made tomorrow.”

Andrew C. Levy, CFO & Managing Director – Planning, stated, “Our financial performance in the fourth quarter was exceptional, with a helping hand from more reasonable fuel prices. We ended our fuel hedging program about 18 months ago and are therefore fully participating in the rapid decline of fuel prices. Our fuel cost per gallon in December was $1.65.

“We continued to post very high load factors, ancillary revenue per passenger continued to climb, and average scheduled air fare declined proportionally with the reduction in average stage length, driving a total RASM increase of almost 24%. Demand for our product remains robust and we are well positioned to generate strong earnings and free cash flow going forward, assuming fuel prices remain moderate.

“We improved our already excellent balance sheet and liquidity position. We ended the quarter with unrestricted cash and short-term investments of $174.8 million, up from $138.6 million at the end of the prior quarter. Excluding air traffic liability, cash increased from $60.8 million to $105.8 million sequentially. Year-end 2008 total debt was $64.7 million, down from $70.1 million at the end of the prior quarter. We expect 2009 year-end total debt to decline by $25.3 million.

“The rapid deterioration in the global aircraft market has put even more pressure on MD-80 prices and we are able to acquire high quality aircraft at even lower prices than before. Our strong liquidity position enables us to purchase MD-80 aircraft for cash without external financing, so the current credit crisis does not constrain our ability to grow.”

• Does not include five aircraft owned but not yet placed in service, three of which are currently leased to a third party

During the fourth quarter of 2008, we placed one aircraft in service previously leased to a third party. We expect to place two more such aircraft in service in the first quarter, one more in the second quarter and the last two in the first quarter of 2010. In addition, earlier this month we purchased an additional MD-80 which we expect to place in service late this quarter.

We summarize the state of our scheduled route network below. We added eighteen new scheduled routes during the fourth quarter. In addition, Allegiant Air entered into a one year contract to provide thrice-weekly charter service for the Beau Rivage Resort between Tampa Bay/St. Petersburg and Gulfport, MS. We initiated service on this contract in January.

• includes cities served seasonally

At this time, Allegiant Travel Company provides the following guidance to investors. All of these items are subject to revision:

At this time we have no fuel hedges in place.

Allegiant Travel Company will host a conference call with analysts at 1 pm East Coast time tomorrow, January 27, 2009, to discuss its fourth quarter and full-year 2008 financial results. A live broadcast of the conference call will be available via the Company’s Investor Relations website homepage at http://ir.allegiantair.com. The webcast will also be archived in the “Events & Presentations” section of the website.

About the Company
Las Vegas-based Allegiant Travel Company (NASDAQ: ALGT), is focused on linking travelers in small cities to world-class leisure destinations such as Las Vegas, Nev., Phoenix-Mesa, Ariz., Fort Lauderdale, Fla., Orlando, Fla. and Tampa Bay/St. Petersburg, Fla. Through its subsidiary, Allegiant Air, LLC the Company operates a low-cost, high-efficiency, all-jet passenger airline offering air travel both on a stand-alone basis and bundled with hotel rooms, rental cars and other travel related services.  ALGT/G

Media Inquiries: Tyri Squyres +1-702-851-7370
mediarelations@allegiantair.com

Investor Inquiries: Robert Ashcroft +1-702-430-3275
ir@allegiantair.com

Under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, statements in this press release that are not historical facts are forward-looking statements. These forward-looking statements are only estimates or predictions based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include our statements regarding future revenues, debt balance, load factors, ASM growth, departure growth, fleet growth, fuel cost per passenger, non-fuel cost per passenger, increased aircraft utilization and expected capital expenditures, as well as information concerning future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, the effects of future regulation and the effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate”, “project” or similar expressions.

Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in the forward-looking statements. Important risk factors that could cause our results to differ materially from those expressed in the forward-looking statements generally may be found in our periodic reports filed with the Securities and Exchange Commission at www.sec.gov. These risk factors include, without limitation, the effect of the economic downturn on leisure travel, increases in fuel prices, terrorist attacks, risks inherent to airlines, demand for air services to Las Vegas, Orlando, Tampa/St. Petersburg, Phoenix-Mesa and Ft. Lauderdale from the markets served by us, our ability to implement our growth strategy, our fixed obligations, our dependence on our leisure destination markets, our ability to add, renew or replace gate leases, our competitive environment, problems with our aircraft, dependence on fixed fee customers, our reliance on our automated systems, economic and other conditions in markets in which we operate, governmental regulation, increases in maintenance costs and insurance premiums and cyclical and seasonal fluctuations in our operating results.

Any forward-looking statements are based on information available to us today and we undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise.

Detailed financial information follows:

1

Allegiant Travel Company
Consolidated Statements of Income
Three Months Ended December 31, 2008 and 2007
(in thousands, except per share amounts)
(Unaudited)

2

Allegiant Travel Company
Operating Statistics
Three Months Ended December 31, 2008 and 2007
(Unaudited)

* except load factor and percent of sales through website, which is percentage point change

3

Allegiant Travel Company
Non-GAAP Presentations
Three Months Ended December 31, 2008 and 2007
(in thousands, except per share and per ASM amounts)
(Unaudited)

We do not qualify for fuel hedge accounting treatment under FAS 133. To facilitate investor comparisons with airlines that do qualify for fuel hedge accounting, we provide adjusted non-GAAP measures of net income and operating expense as if we did qualify for fuel hedge accounting, by excluding the mark-to-market non-cash gains or losses on fuel derivatives from net income and by treating cash gains or losses realized on fuel derivatives as part of aircraft fuel expense. We believe use of these non-GAAP measures assists investors in understanding the underlying economic performance of the Company without regard to different accounting treatment for fuel hedging activities.

The SEC has adopted rules (Regulation G) regulating the use of non-GAAP financial measures. Because of our use of non-GAAP financial measures, adjusted net income and adjusted aircraft fuel expense, to supplement our consolidated financial statements presented on a GAAP basis, Regulation G requires us to include in this press release a presentation of the most directly comparable GAAP measures, which are net income (which reflects the mark-to-market non-cash loss or gain on fuel derivatives), and aircraft fuel expense (which is not impacted by the cash gain or loss on fuel derivatives), and a reconciliation of the non-GAAP measures to the most comparable GAAP measures.  Our utilization of non-GAAP measurements is not meant to be considered in isolation or as a substitute for net income, aircraft fuel expense and other measures of financial performance prepared in accordance with GAAP. Adjusted net income and adjusted aircraft fuel expense are not GAAP measurements and our use of them may not be comparable to similarly titled measures employed by other companies in the airline industry. The reconciliations to GAAP measures follow.

Derivation of adjusted net income (excluding non-cash mark-to-market loss on fuel derivatives) from net income:

Derivation of adjusted aircraft fuel expense:

Derivation of CASM treating cash gain on fuel derivatives as a reduction in operating expense:

Split of gain on fuel derivatives into cash-settled portion and mark-to-market non-cash portion:

4

Allegiant Travel Company
Consolidated Statements of Income
Years Ended December 31, 2008 and 2007
(in thousands, except per share amounts)
(Unaudited)

5

Allegiant Travel Company
Operating Statistics
Years Ended December 31, 2008 and 2007
(Unaudited)

* except load factor and percent of sales through website, which is percentage point change

6

Allegiant Travel Company
Non-GAAP Presentations
Years Ended December 31, 2008 and 2007
(in thousands, except per share and per ASM amounts)
(Unaudited)

We do not qualify for fuel hedge accounting treatment under FAS 133. To facilitate investor comparisons with airlines that do qualify for fuel hedge accounting, we provide adjusted non-GAAP measures of net income and operating expense as if we did qualify for fuel hedge accounting, by excluding the mark-to-market non-cash gains or losses on fuel derivatives from net income and by treating cash gains or losses realized on fuel derivatives as part of aircraft fuel expense. We believe use of these non-GAAP measures assists investors in understanding the underlying economic performance of the Company without regard to different accounting treatment for fuel hedging activities.

The SEC has adopted rules (Regulation G) regulating the use of non-GAAP financial measures. Because of our use of non-GAAP financial measures, adjusted net income and adjusted aircraft fuel expense, to supplement our consolidated financial statements presented on a GAAP basis, Regulation G requires us to include in this press release a presentation of the most directly comparable GAAP measures, which are net income (which reflects the mark-to-market non-cash loss or gain on fuel derivatives), and aircraft fuel expense (which is not impacted by the cash gain or loss on fuel derivatives), and a reconciliation of the non-GAAP measures to the most comparable GAAP measures.  Our utilization of non-GAAP measurements is not meant to be considered in isolation or as a substitute for net income, aircraft fuel expense and other measures of financial performance prepared in accordance with GAAP. Adjusted net income and adjusted aircraft fuel expense are not GAAP measurements and our use of them may not be comparable to similarly titled measures employed by other companies in the airline industry. The reconciliations to GAAP measures follow.

Derivation of adjusted net income (excluding non-cash mark-to-market loss or gain on fuel derivatives) from net income:

Derivation of adjusted aircraft fuel expense:

Derivation of CASM treating cash gain on fuel derivatives as a reduction in operating expense:

Split of (gain) loss on fuel derivatives into cash-settled portion and mark-to-market non-cash portion:

7