Allegiant Reports First Quarter 2008 Financial Results

[chperplt]

Looks like they hedge fuel to me.

And it looks like they had a profit of $0.47 per share off the derivatives, which exactly matches their earnings per share for the quarter. So yes, it appears that without the fuel hedges, Allegiant would have broke even or been slightly in the red. Even that would have been a good quarter in this environment.

The entire story....




Allegiant Travel Company provides the following guidance to investors, which is subject to revision in the event of changes in our operating environment, including, without limitation, changes in fuel prices:


-- We expect second quarter 2008 year-over-year departure growth of at
least 33% (previously 35%) and ASM growth of at least 25%.
-- By the end of 2008, Allegiant Air expects to operate at least 37
(previously 40) MD-80 aircraft.
-- We expect 2008 capital expenditures of $45 million, with an estimated
$36 million for six aircraft and $9 million for engines and other.
Capex in the first quarter amounted to $8.0 million.


We have no fuel hedges in place and our current policy is not to hedge fuel prices.


Allegiant Travel Company
Non-GAAP Presentations
Quarters Ended March 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:

 

[tico]

I agree, but they also have unusually low pilot labor costs. Consider the following:

Roughly 255 pilots
Current CA pay yrs 1-5: $61,$85,$90,$96,$101
Current FO pay yrs 1-5: $41,$51,$53,$56,$56
Give CA a $30 per hr raise & FO a $10 per hr raise
If you do the math it works out to $1.4M per quarter

IOW, part of Allegiant's success is because their pilots are severely underpaid compared to other MD80 pilots. I understand it's necessary to keep costs under control when an airline is just starting. However, once an airline is comfortably established they need to start paying their pilots a more industry standard wage. It's time for Allegiant management to pay up. If they can make money in this environment they can afford a decent raise for the pilots.

Out of sheer boredom and a little bit of curiosity I spent the last hour doing an earnings comparison on Allegiant vs. Alaska...........

Given that Allegiant upgrades are likely to lengthen, I figured 4 years as a co-pilot and took that out to 12 years and used their premium pay calculation which appears to be the norm for them.
Given the historical average of 5 years on reserve as a co-pilot and first upgrade at 8 years, I used that as my basis for Alaska

So not accounting for retirement.......

When the Allegiant co-pilot upgrades after 4 years he will have out earned his Alaska counterpart by 12,000.00 in payroll. When the Alaska copilot upgrades at 8 years the Allegiant(now capt) copilot will have out earned his Alaska counterpart by 162,000 in payroll compensation. And at the end of 12 years(end of payscale) the Allegiant captain will still be ahead of the Alaska captain by 154,000 in payroll compensation......Now to retirement. I inquired of the ALPA retirement specialist what my A-plan would be worth at the end of year 12 for me if I were to quit....Lump sump worth 50% of total around 154,000 and about 600.00 a month in payout.......I have no concept of what the Allegiant guys have or what a 401K can be worth......I can say this. I started at Alaska right after flight 261 went in the ocean...We had about 113 airplanes...In 2009 we will have 116 and when I finish my 12 th year we will have 116 airplanes.....So our times to get off reserve as a copilot and upgrade to captain are not going to change...And i will not be off reserve as a captain at the end of 12 years either....We have little periods where copilots get lines out of training and guys have upgrade after 4 years but those come around as often as a big payoff on slot machines..........I would venture that the Allegiant guy will have spent a lot more time at home in 12 years the I will have. Makes a person wonder

 

[Fubijaakr]

tico,

Don't forget Alaska has been around 75 years. How long was the last "good idea" airline that solely served LAS around? 5 years? Do you remember their name?

I wouldn't give a plugged nickel for Allegiant's long term survival flying MD-80s in this environment. Additionally, do you really WANT to be a pariah among other airline pilots? Someone who goes to work for a non-Union carrier who undercuts YOUR salary by $50 an hour?

If you do, you'd better move to LAS because more and more Union pilots are refusing to give jumpseat rides to people who are stabbing us in the back.

 

[learflyer]

umm most Allegiant guys are home everynight, and don't have to jumpseat. Unplug that nickel, and insert one of those swords.

 

[anewunion]

Retirement here sucks..... plain and simple.

Retirement Sucks Everywhere...

 

[BRA]

tico,

Don't forget Alaska has been around 75 years. How long was the last "good idea" airline that solely served LAS around? 5 years? Do you remember their name?

I wouldn't give a plugged nickel for Allegiant's long term survival flying MD-80s in this environment. Additionally, do you really WANT to be a pariah among other airline pilots? Someone who goes to work for a non-Union carrier who undercuts YOUR salary by $50 an hour?

If you do, you'd better move to LAS because more and more Union pilots are refusing to give jumpseat rides to people who are stabbing us in the back.

Soley served LAS? This is a funny post!

 

[Daytonaflyer]

tico,

Don't forget Alaska has been around 75 years. How long was the last "good idea" airline that solely served LAS around? 5 years? Do you remember their name?

I wouldn't give a plugged nickel for Allegiant's long term survival flying MD-80s in this environment. Additionally, do you really WANT to be a pariah among other airline pilots? Someone who goes to work for a non-Union carrier who undercuts YOUR salary by $50 an hour?

If you do, you'd better move to LAS because more and more Union pilots are refusing to give jumpseat rides to people who are stabbing us in the back.

Um...in fact, Allegiant does fly MD-80s, and we have already proven that we can make money in this environment. So what point were you trying to make?

Also, we serve much more than just Las Vegas. We have 9 bases and we serve almost as many destinations as Southwest Airlines.
But we don't compete on any routes that the major airlines fly. We don't even compete on routes with most regional airlines.

If you're going to threaten to refuse jumpseats to people who make less money than you, you're going to have to deny boarding to:

-Air Wisconsin
-Allegiant
-Amerijet
-American Eagle
-ASA
-Champion Air
-Colgan Air
-Comair
-Commut Air
-Compass
-Era
-ExpressJet
-GoJet (f*ck GoJet)
-Great Lakes
-Gulfstream
-Horizon
-Island Air
-JetBlue
-Kalitta Air
-Lynx
-Mesa
-Mesaba
-Miami Air
-Midwest
-North American
-Omni Air
-Piedmont
-Pinnacle
-PSA
-Republic
-Ryan Int'l
-Skywest
-Spirit
-Sun Country
-Trans States
-USA 3000
-US Air
-USA Jet
-Virgin America
-Xtra Airways
-and many other 135, charter, and cargo operators

And by the way, we've been around for 11 years; more than your 5 year limit.

 

[chperplt]

tico,

Don't forget Alaska has been around 75 years. How long was the last "good idea" airline that solely served LAS around? 5 years? Do you remember their name?

I wouldn't give a plugged nickel for Allegiant's long term survival flying MD-80s in this environment. Additionally, do you really WANT to be a pariah among other airline pilots? Someone who goes to work for a non-Union carrier who undercuts YOUR salary by $50 an hour?

If you do, you'd better move to LAS because more and more Union pilots are refusing to give jumpseat rides to people who are stabbing us in the back.

Hey bub.... Might want to research Allegiant before opening up the pie hole.

First of all, only 47ish% of our operations run out of Vegas. Secondly, we're making the money we're making in this environment because of our MD80s.

Get a clue...

 

[BEECH-SLAPPED]

Don't forget Alaska has been around 75 years. How long was the last "good idea" airline that solely served LAS around? 5 years? Do you remember their name?

I wouldn't give a plugged nickel for Allegiant's long term survival flying MD-80s in this environment. Additionally, do you really WANT to be a pariah among other airline pilots? Someone who goes to work for a non-Union carrier who undercuts YOUR salary by $50 an hour?

If you do, you'd better move to LAS because more and more Union pilots are refusing to give jumpseat rides to people who are stabbing us in the back.

Wow, this guy just totally put us in our place. I'm so ashamed. I will never try to jumpseat anywhere now. I'm too afraid of what the unionized captain will do to me. I'm gonna go apply to work at Mesa now because at least they're UNIONIZED. :crying:

 

[maxpayrollcruz]

tico,

Don't forget Alaska has been around 75 years. How long was the last "good idea" airline that solely served LAS around? 5 years? Do you remember their name?

I wouldn't give a plugged nickel for Allegiant's long term survival flying MD-80s in this environment. Additionally, do you really WANT to be a pariah among other airline pilots? Someone who goes to work for a non-Union carrier who undercuts YOUR salary by $50 an hour?

If you do, you'd better move to LAS because more and more Union pilots are refusing to give jumpseat rides to people who are stabbing us in the back.

What an idiot. Plain and simple.

 

[tico]

tico,

Don't forget Alaska has been around 75 years. How long was the last "good idea" airline that solely served LAS around? 5 years? Do you remember their name?

I wouldn't give a plugged nickel for Allegiant's long term survival flying MD-80s in this environment. Additionally, do you really WANT to be a pariah among other airline pilots? Someone who goes to work for a non-Union carrier who undercuts YOUR salary by $50 an hour?

If you do, you'd better move to LAS because more and more Union pilots are refusing to give jumpseat rides to people who are stabbing us in the back.

Dude,
Did I say anything about the 50 bucks an hour or hourly rates at all. I simply pointed out that at 12 years the allegiant dude will have earned more money than I will at Alaska.....Given the rates of pay that exist now.....Ours are not going up in the future and Allegiants probably will....It comes down to the work harder make more money concept.....We cant and dont get any more for 100 hrs of credit then 75 hours of credit.......It will come down to that for all of us eventually....If we want more we will have to sign a contract that lets us work more for a premium.......Why the he11 am I explaining that to you anyway......Geez

 

[labbats]

That's not adding in the already agreed on raises for the next two years at Allegiant.

Name one other LCC or major where you can upgrade in under 2-3 years. Particularly after this age 65 ruling.

This thread has one thing in common with every other FI Allegiant thread I've ever come across. Someone with no idea what Allegiant does yet has the need to put it down.

 

[Caveman]

Wow. I was totally misunderstood. I support the Allegiant pilots. I understand Allegiant's MO and business plan. All I'm saying is Allegiant is no longer a new start up. They are established. They are making money in a tough industry. They can afford to pay their pilots more and the captains in particular ARE severely underpaid.

Those of you trying to compare 10 year earnings at Allegiant to any other carrier are comparing apples to oranges. How much does a CA make at Allegiant? All but the most senior are making less than $100 bucks an hour. I don't care how fast you can upgrade, $85 an hour for an MD80 CA is ridiculous. Especially since the 1st quarter numbers show they can clearly afford to pay more.

I'll say it again. Allegiant has a unique business model. Comparing them head to head with a traditional airline is difficult because of the nature of their scheduling. If Allegiant was bleeding money and barely hanging on we wouldn't be having this conversation, but they aren't. They are successful and it's time for them to start paying their CA what a MD80 CA is worth.

 

[lookin4better]

Is Allegiant hiring?

Do any pilots commute or all live in base?

What is upgrade running and what base?

 

[Caveman]

This thread has one thing in common with every other FI Allegiant thread I've ever come across. Someone with no idea what Allegiant does yet has the need to put it down.

If you're referring to me you're wrong. I do know about Allegiant. I'm very familiar with them. I have two very close friends that work there. I live in LAS. I know and have flown GA airplanes with the guy that put their 121 certificate together. I considered applying there on more than one occasion. I like Allegiant's business plan. I am not putting them down. In previous threads on FI I've defended them. None of that changes the fact that now they are successful they need to pay the folks that made it happen a reasonable wage for flying a Maddog.