LAS VEGAS - Allegiant Travel Company (NASDAQ: NASDAQ:ALGT), currently valued at $1.54 billion, has provided an updated guidance for the fourth quarter of 2024, projecting an improvement in earnings and operating margins based on recent booking trends and operational adjustments. According to InvestingPro data, six analysts have revised their earnings upwards for the upcoming period, reflecting growing confidence in the company's trajectory. The airline reported a 17% increase in December capacity year-over-year and anticipates a 1.5% decrease in fourth quarter total revenue per available seat mile (TRASM), an improvement from the previously expected 4.5% drop.
Despite a decrease in passengers and revenue passenger miles in November 2024 compared to the previous year, the company has seen a faster recovery in demand to regions affected by hurricanes and strong bookings for the December holiday period. This recovery is particularly notable given the company's significant debt burden of $2.28 billion, as reported in InvestingPro's latest financial health assessment. Allegiant's Chief Commercial Officer, Drew Wells, expressed that the demand recovery and holiday bookings have surpassed initial expectations.
Allegiant also announced the acquisition of two additional 737-MAX aircraft in November, bringing the total number of MAX aircraft to be in service by year-end to four, exceeding the initial projection of one. The company's Chief Financial Officer, Robert Neal, highlighted a transaction in the fourth quarter that resulted in a $15 million gain from the sale of underutilized CFM engines. This transaction, along with other operational efficiencies, is expected to contribute to a 3.5% year-over-year decrease in cost per available seat mile (CASM), excluding fuel and special charges.
The updated fourth quarter guidance includes an airline-only operating margin between 13.0% to 14.0%, compared to the previously forecasted 6.0% to 8.0%. Additionally, the airline-only earnings per share, excluding special charges, are projected to be between $2.50 and $3.00, a significant increase from the initial estimate of $0.50 to $1.50. The consolidated earnings per share, also excluding special charges, are now expected to range from $1.75 to $2.25, up from the earlier $0.00 to $1.00 range.
The company's preliminary passenger traffic results for November 2024 showed a decline in passengers by 6.9% and a decrease in revenue passenger miles by 5.9% compared to November 2023. However, the load factor remained strong at 80.2%, despite being 3.6 percentage points lower than the same period last year. With the stock trading near its 52-week high and showing strong momentum, investors seeking deeper insights can access comprehensive analysis and 12 additional ProTips through InvestingPro's detailed research reports, available for over 1,400 US stocks.
This financial and operational update is based on a press release statement from Allegiant Travel Company.
In other recent news, Allegiant Travel Company has been the subject of analysis by UBS and Goldman Sachs (NYSE:GS), both resuming coverage with a neutral rating. UBS cites pressure from lower aircraft utilization and increased staffing costs due to delays in Boeing (NYSE:BA) MAX aircraft deliveries as impacting Allegiant's profit and loss statement. These factors, along with losses from its Sunseeker resort, are expected to improve in the coming year. Goldman Sachs also anticipates significant profitability improvement by 2025, based on expected pilot staffing enhancements and reduced financial burden from the Sunseeker hotel business.
On the earnings front, Allegiant reported a slight dip in its third-quarter revenue to $562.2 million, down from $565.4 million in the previous year. Despite this, the company's loyalty programs and ancillary revenue initiatives saw a 20% increase. Allegiant anticipates a Q4 airline operating margin of around 7%.
However, recent developments include a decrease in passenger traffic and revenue passenger miles, largely due to the impact of hurricanes Helene and Milton. These weather disruptions resulted in nearly 1,000 flight cancellations. In addition, Allegiant's pilots, represented by the Teamsters union, voted in favor of a strike to negotiate better compensation and work conditions, which could potentially affect pilot retention and the anticipated improvements in aircraft utilization.
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