Allegiant Lifts Adjusted Earnings as Sun Country Adds Scale
Second-quarter revenue reached a record $943.5 million after the Sun Country acquisition.
Allegiant Travel Co. (ALGT), the leisure airline operator, posted a 78.0% increase in adjusted diluted earnings to $2.19 a share as stronger pricing lifted its core airline business.
The quarter marked Allegiant’s first results incorporating Sun Country, adding roughly seven weeks of operations after the acquisition closed May 13. That contribution made year-over-year consolidated comparisons less direct and introduced cargo as a new revenue stream.
Consolidated operating revenue rose 36.9% from a year earlier, while operating expenses increased 21.9% to $922.4 million. Operating results swung to income of $21.1 million from a $67.5 million loss, and the net loss narrowed to $4.9 million, or $0.21 a share, from $65.2 million, or $3.62 a share.
Standalone Allegiant revenue increased 16.1% to a quarterly record of $776.2 million despite a 6.8% capacity reduction. Total revenue per available seat mile rose 24.6% to a record 14.42 cents, supported by a 47.3% increase in average scheduled-service fares and a 3.8-percentage-point improvement in load factor to 85.7%.
That pricing strength helped standalone Allegiant’s adjusted operating margin expand 0.4 percentage point to 9.0%, even as fuel cost per gallon rose 73% and nonfuel unit costs increased 6.4%. Reported operating income fell 30.3% to $30.1 million as airline special charges grew to $39.5 million from $14.6 million.
Sun Country contributed $167.3 million of revenue during the period and recorded a $9.0 million operating loss. Its operations added $27.6 million of cargo revenue and $31.2 million of fixed-fee-contract revenue, while consolidated aircraft-fuel expense rose 85.6% to $307.7 million as average fuel cost climbed to $4.14 a gallon.
Management introduced combined-company full-year adjusted EPS guidance of more than $6.00 a share. For the third quarter, it expects adjusted EPS ranging from a loss of $1.00 a share to break-even, an adjusted operating margin of 1% to 3% and system capacity down about 6.5%, with unit-revenue growth roughly matching standalone Allegiant’s second-quarter pace.
Allegiant also set a target of at least $140 million in annual run-rate acquisition synergies within three years and expanded distribution through its first authorized online-travel-agency agreement with Expedia. Complimentary inflight beverages began in August, while an Allegiant First premium seating tier is planned for spring 2027.