Allegiant Travel Company, the parent of ultra-low-cost carrier Allegiant Air, sees a post-coronavirus recovery “on the horizon” with customer travel intention steadily rising following almost a year of coronavirus-driven inertia.
The Las Vegas-based company on 3 February reports a $28.8 million loss for the fourth quarter of 2020, compared to a profit of $60.5 million for the same quarter in 2019. That brings the airline’s full-year loss to $184 million, from a full-year profit of $232 million in 2019.
“With the close of the fourth quarter, we completed the most challenging year the industry has faced in its history,” says chief executive Maury Gallagher on the company’s quarterly earnings call. “We still have a long road ahead to a full recovery, but we are gaining momentum and moving in the right direction.”
Revenue for the last three months of 2020 was $246.6 million, down 46.5% year-on-year during the fourth quarter of 2020. During the full year, revenue fell 46.2% to $990 million.
But in the final quarter of the year, passenger volume rose by 7% and the airline’s load factor rose 9 points to 58%. Executives point to these statistics as signs of a budding recovery. The carrier says that increasing revenue from the fourth quarter is carrying over into the new year, and it saw an average of 3.5 million new bookings per day during January.
The airline, which is known for connecting secondary cities and airports to warm-weather vacation spots on point-to-point routes for primarily leisure travellers, says that it believes it will be one of the first US airlines to pull out of the stall brought upon by the global pandemic. Customers continue to be wary about travelling through highly-frequented hubs where the risk of being exposed to the coronavirus is perceived to be greater, Allegiant’s executives say.
In addition, much of the airline’s flying is done on peak days around the weekends, with Tuesdays and Wednesdays – days when leisure travellers tend not to travel – bearing the airline’s lightest schedules.
“Our model continues to be the key to our success,” says Gallagher. Other competing carriers, looking to optimise their schedules and their incomes to focus on the leisure market in the wake of the crisis, are now “playing our game”.
Executives say that according to surveys it has conducted amongst customers and potential customers, about half say they intend to travel this spring, and two-thirds altogether plan to do so into the summer.
They add that Florida – where the airline serves nine destinations – is doing a good job at attracting tourists and encouraging vacation travel, especially since the US government imposed a mandatory coronavirus test requirement for all inbound passengers from abroad. That has made travel to popular beach resorts in Mexico and the Caribbean complicated, so customers are choosing to travel to beaches in the US.
“Although the exact timing of a full recovery is unknown, the improvements observed in the fourth quarter coupled with the vaccine rollout suggest recovery is on the horizon,” Gallagher says.
Allegiant operates an all-Airbus fleet and says it ended the year with 108 aircraft in service. Two aircraft that were to be purchased in the fourth quarter of 2020 were deferred to the first quarter 2021 and capital expenditure for 2021 will amount to “roughly $200 million” Allegiant says.
