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The call highlights strong underlying operating performance: record revenue and TRASM, industry-leading adjusted operating margin, outstanding operational reliability, a healthy balance sheet, commercial momentum (co-brand card and Allegiant Extra), and progress on the Sun Country acquisition. However, near-term headwinds from sharply higher and volatile jet fuel prices materially pressure second-quarter profitability, have prompted a ~6.5% ASM reduction for Q2 and raise uncertainty around some network and synergy timing. Overall, the company presents resilient fundamentals and strategic levers to manage the environment but acknowledges meaningful short-term fuel-driven earnings pressure.
Allegiant’s guidance for Q2 (stand‑alone) calls for ASMs down roughly 6.5% year‑over‑year, with management expecting TRASM to be up sequentially and year‑over‑year unit revenue growth to exceed the 16.4% Y/Y TRASM gain delivered in Q1 (Q1 TRASM was 14.31¢); at the midpoint of the Q2 range the company expects an operating margin of ~1% and a loss per share of about $0.50, based on an assumed jet fuel price of $4.35/gal (which they say drives roughly $120M of incremental operating expense versus prior expectations). They warned Q2 CASM ex will be the most elevated of the year (Q1 non‑fuel unit costs were 8.64¢, up 7.1% Y/Y; Q1 fuel averaged $3.04/gal; ASMs per gallon were 86.7, +1.2% Y/Y) but reiterated full‑year CapEx guidance (Q1 CapEx $176M, including $155M aircraft) and highlighted a strong liquidity and balance sheet position entering Q2 ($1.2B total liquidity, $933.5M cash & investments, $250M undrawn revolver; total debt ~$1.8B; net debt $858M; net leverage ~1.8x), noting the Q2 guide is standalone ahead of the expected Sun Country close in mid‑May and that the combined company expects $140M of run‑rate synergies post‑close.
Total revenue of $732.4M in Q1, up 9.6% year over year; first quarter TRASM of 14.31¢, up 16.4% YoY. Company reported both total revenue and TRASM as first-quarter records and the strongest quarterly performance in its history (revenue ~7% higher than any prior quarter).
Adjusted operating margin of 14.9% in Q1, up nearly 6 percentage points year over year and the highest Q1 adjusted operating margin since pre-COVID; management expects industry-leading margin for the second quarter as well.
Controllable completion factor of 99.9% in Q1 despite higher peak-day flying and winter storms, underscoring operational execution and reliability.
Net income of $69.6M and EPS of $3.77 in Q1 (up nearly 80% vs prior-year airline-only); EBITDA of $168M and EBITDA margin of 22.9%. Net debt down to $858M and net leverage of 1.8x.
Total liquidity of $1.2B at quarter end (including $933.5M cash & investments and $250M undrawn revolver); cash & investments equal to 36% of trailing twelve-month revenues; unencumbered fleet assets market value ~ $1.3B.
Co-branded credit card >600k cardholders; card remuneration represents just over 5% of annual revenue with bank compensation up 9% YoY in Q1; average third-party revenue per passenger up 20% YoY; Allegiant Extra premium seating outpaced expectations and contributed to TRASM and repeat customers.
Fixed-fee revenue of $18.1M in Q1, up 11.5% YoY, contributing meaningfully to results and providing fuel-agnostic revenue in volatile energy environment.
Fleet of 123 aircraft at quarter end; delivered one 737 MAX in Q1 and plan for three MAX deliveries in Q2; MAX offers >20% fuel burn improvement (ASM-per-gallon improvement ~30% due to seating), and MAX already producing a meaningful share of ASMs (~20% this year, ramping toward ~50% by 2028).
DOT approval received; shareholder votes expected May 8 with closing targeted ~May 13; management remains confident in $140M run-rate synergies (expect ~half in first full year post-close) and highlights complementary fleet ownership, fixed-fee and cargo businesses that carry contractual fuel pass-throughs.
Leisure demand described as resilient: load factor +4 points YoY in Q1, yields up 21% YoY, multiple record sales days, and cash sales running up double digits through April with healthy booking trends.
Ladies and gentlemen, thank you for standing by. My name is Colby, and I will be your conference operator today. At this time, I would like to welcome you to the Allegiant Travel Company First Quarter 2026 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, we will conduct a question and answer session. We please ask that you limit yourself to one question and one follow-up if needed. Thank you. If you would like to ask a question at that time, please press star then the number one on your keypad to raise your hand and enter the queue.
If you would like to withdraw your question at any time, please press star 1 again. I will now turn the call over to Sherry Wilson. You may begin. Thank you, and welcome to the Allegiant Travel Company First Quarter 2026 Earnings Call.
We will begin today’s call with Greg Anderson, CEO, providing a high level overview of the quarter along with an update on our business. Drew Wells, Chief Commercial Officer, will walk through demand commentary and revenue performance, and finally, Robert Neal, President and Chief Financial Officer, will speak to our financial results and outlook. Following commentary, we will open it up to questions. We ask that you please limit yourself to one question and one follow-up if needed. The company’s comments today will contain forward-looking statements concerning our future performance and strategic plan. Various risk factors could cause the underlying assumptions of these statements and our actual results to differ materially from those expressed or imp...