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Allegiant (ALGT) Q3 Earnings Beat Estimates, Sales Miss

Allegiant Travel Company ALGT reported mixed results in the third quarter of 2017, reporting better-than-expected earnings per share and lower-than-expected revenues.

Markedly, this travel company’s third-quarter earnings per share came in at $1.39 per share, 2 cents above the Zacks Consensus Estimate. The bottom line, however, contracted 49.5% on a year-over-year basis, due to high costs. Hurricane Irma also hurt results as the company had to cancel multiple flights due to the calamity.

Quarterly revenues increased 4.6% year over year to $348.8 million, missing the Zacks Consensus Estimate of $350.1 million. Evidently, network growth led to a year-over-year increase in revenues. During September, Allegiant paid $11 million to shareholders through dividends. Currently, the company has a share repurchase authorization of up to $100 million.

Air traffic (measured in revenue passenger miles) in the reported quarter rose 1% for the total system and capacity (measured in available seat miles), which expanded 3.2% year over year. Nonetheless, load factor (percentage of seats filled by passengers) was 83%, down 170 basis points, as capacity expansion outweighed travel growth.

Cost per available seat miles (CASM), excluding fuel, increased 16.7% in the reported quarter driven by the new pilot agreement, transition costs among other factors. Total scheduled service revenue per available seat miles (TRASM) improved 0.7% to 10.61 cents, lower than the Zacks Consensus Estimate of 10.65 cents.

Allegiant Travel Company Price, Consensus and EPS Surprise

 

Allegiant Travel Company Price, Consensus and EPS Surprise | Allegiant Travel Company Quote

 

Guidance

For the fourth quarter of 2017, this Zacks Rank #5 (Strong Sell) company expects CASM (excluding fuel) to increase between 7% and 9%. In fact, Allegiant anticipates an increase in CASM to be primarily driven by the implementation of the new pilot agreement among other factors. The metric is still expected to rise in the band of 11% to 12% for full-year 2017.

TRASM for the fourth quarter is anticipated to decline between 0.5% and 3%. Hurricane Irma and the Las Vegas mass shooting are expected to hurt the metric. With the company having significant exposure to Florida and Las Vegas, it is natural that bookings for the fourth quarter have been hurt.

Furthermore, Irma and the Las Vegas mass shooting are expected to hurt fourth-quarter TRASM between 3 and 3.5 percentage points.

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Upcoming Releases

Investors interested in the broader Transportation sector are keenly waiting for third-quarter earnings reports from key players like GOL Linhas GOL, Copa Holdings, S.A. CPA and Expeditors International EXPD. While GOL Linhas and Copa Holdings will report third-quarter results on Nov 8, Expeditors will report the same on Nov 7.

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Gol Linhas Aereas Inteligentes S.A. (GOL): Free Stock Analysis Report
 
Copa Holdings, S.A. (CPA): Free Stock Analysis Report
 
Allegiant Travel Company (ALGT): Free Stock Analysis Report
 
Expeditors International of Washington, Inc. (EXPD): Free Stock Analysis Report
 
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