On this page of StockholderLetter.com we present the 5/10/2023 shareholder letter from Allegiant Travel CO — ticker symbol ALGT. Reading current and past ALGT letters to shareholders can bring important insights into the investment thesis.
2022
Annual Report
Dear Allegiant Shareholders:
The years following COVID have been nothing short of a whirlwind. 2022 was no different. We
finished the year with an adjusted earnings per share of $3.13. During the first half of the year, the
industry faced unprecedented operating challenges stemming from personnel issues due to COVID
spikes, supply chain issues, and labor shortages, to name a few. These challenges led to operational
results that fell short of expectations. All-in, the financial impact of irregular operations during the first
half of 2022 was roughly $100 million.
Adjusting to these challenges, our planning, finance, and operations teams worked side by side to
schedule the airline to prioritize reliability while optimizing profitability. I could not be prouder of their
efforts. We saw sizable improvements in controllable completion and on-time performance during the
back half of 2022. These improvements led to a steep reduction in irregular operations costs. We
exited 2022 with a fourth quarter adjusted operating margin of nearly 16 percent, a vast improvement
over the first half of 2022.
This momentum has carried into 2023. Our controllable completion to date is trending at an industryleading 99.8 percent. This operational performance, coupled with a strong demand environment, is
yielding solid financial results. Our first quarter operating margin of nearly 15 percent is among the
best in the industry.
As we have noted, in 2023 we took a measured approach to capacity growth to ensure we maintain
our operational reliability. Although improved, the industry is still facing a challenging operating
environment. As we move forward, we are committed to delivering a safe, reliable product for our
guests and our front-line team members.
In addition to reliability, finalizing labor contracts that our employees are proud to support remains the
top priority. We remain in active negotiations with both our flight attendants and pilots. Negotiations
with our flight attendants opened 8 months ago, and we are closing in on the final open items. On the
pilot front, we had our first mediation session with the IBT in late April. We are encouraged by the
possibility of finding a path to an expedited deal. The mediators have already provided numerous
additional dates to continue to work together toward a resolution. Finally, in early May, we reached a
tentative agreement on a contract extension with our dispatchers, represented by the IBT. This
agreement will modify the final pay rate increases in the CBA and provide a two-year extension on
their current CBA.
In the post-COVID years, we have made significant capital investments in the business that leave us
spring coiled and ready to grow into the incremental 1400 routes identified by our planning team.
Most notably, in December 2021 we opportunistically entered into a purchase agreement with Boeing
for 50 MAX aircraft and optionality for an additional 50. We expect to take delivery of our first aircraft
late this year with the bulk of the fleet delivery during 2024 and 2025. The operating economics of this
aircraft will enable us to grow our network and improve profitability without sacrificing flexibility in our
approach.
We continue to make progress with our systems transformation. We are progressing toward best-inclass systems such as SAP, Navitaire, TRAX, and NAVBLUE. We will go live with Navitaire during
the second quarter. This system will enhance our ancillary revenue capabilities through dynamic
pricing functionality. Additionally, Navitaire is expected to facilitate the initiation and operation of our
international expansion through a joint alliance with Viva Aerobus. We expect to launch later this
year, pending DOT anti-trust immunity approval. This alliance will leverage our direct-to-consumer
distribution system adding transborder routes between the US and Mexico to many of the cities that
currently lack nonstop service.
The final significant capital investment is our Sunseeker Resort located in Port Charlotte, Florida. The
resort is scheduled to open on October 16 of this year. The property will feature approximately 500
hotel rooms, more than 180 suites, 55,000 square feet of meeting and conference space, 20 worldclass restaurants and bars, two pools, a state-of-the-art fitness center and spa, and retail outlets
along a harbor walk. This resort will be a nice addition to our ecosystem of travel offerings.
At the heart of this leisure travel ecosystem is the Allegiant brand that we have worked hard and
successfully to strengthen. In recent years, we have increasingly woven the brand, which we refer to
as living the    nonstop life,    into the fabric of leisure by partnering with leading sports and
entertainment entities. This includes Allegiant Stadium (the world   s highest profile and top-selling
stadium in 2022), Live Nation (the largest provider of live music concerts and festivals), and other
targeted partnerships in key markets like the Indianapolis Colts, Detroit Pistons, and FC Cincinnati.
These partnerships have helped make Allegiant a household name and strengthened our position as
a provider of leisure travel experiences. In addition, we launched our Allegiant Allways Rewards
cobrand credit card in 2016, and I am continually astounded at the rate of growth we have seen. 2022
marked another record-setting year for the card in terms of new cardholder acquisitions and total
compensation to Allegiant. To date, 2023 is trending to surpass that record. We expect this program
to contribute more than $100 million in annual revenue this year. As the Company grows into the
1400 incremental routes we have identified, this program will continue to grow in lockstep.
No doubt, 2023 will be transformational for Allegiant. We are well on our way in strengthening our
foundation through the strategic initiatives noted above. This will better provide our valued guests with
more destinations, frictionless products, and convenient services to create those treasured
experiences.
None of this would be possible without the best team in the industry, Team Allegiant. You always
come together to ensure consistent and exceptional service. Your efforts in taking care of our guests
and to one another are truly inspiring. While we have our work cut out for us this year, there is not a
better team to get the job done. Thank you.
Together we fly.
John Redmond
CEO
Allegiant Travel Company
 • shareholder letter icon 5/10/2023 Letter Continued (Full PDF)
 • stockholder letter icon 5/10/2024 ALGT Stockholder Letter
 • stockholder letter icon More "Airlines" Category Stockholder Letters
 • Benford's Law Stocks icon ALGT Benford's Law Stock Score = 67


ALGT 5/10/2023 Shareholder/Stockholder Letter Transcript:

2022
Annual Report

Dear Allegiant Shareholders:
The years following COVID have been nothing short of a whirlwind. 2022 was no different. We
finished the year with an adjusted earnings per share of $3.13. During the first half of the year, the
industry faced unprecedented operating challenges stemming from personnel issues due to COVID
spikes, supply chain issues, and labor shortages, to name a few. These challenges led to operational
results that fell short of expectations. All-in, the financial impact of irregular operations during the first
half of 2022 was roughly $100 million.
Adjusting to these challenges, our planning, finance, and operations teams worked side by side to
schedule the airline to prioritize reliability while optimizing profitability. I could not be prouder of their
efforts. We saw sizable improvements in controllable completion and on-time performance during the
back half of 2022. These improvements led to a steep reduction in irregular operations costs. We
exited 2022 with a fourth quarter adjusted operating margin of nearly 16 percent, a vast improvement
over the first half of 2022.
This momentum has carried into 2023. Our controllable completion to date is trending at an industryleading 99.8 percent. This operational performance, coupled with a strong demand environment, is
yielding solid financial results. Our first quarter operating margin of nearly 15 percent is among the
best in the industry.
As we have noted, in 2023 we took a measured approach to capacity growth to ensure we maintain
our operational reliability. Although improved, the industry is still facing a challenging operating
environment. As we move forward, we are committed to delivering a safe, reliable product for our
guests and our front-line team members.
In addition to reliability, finalizing labor contracts that our employees are proud to support remains the
top priority. We remain in active negotiations with both our flight attendants and pilots. Negotiations
with our flight attendants opened 8 months ago, and we are closing in on the final open items. On the
pilot front, we had our first mediation session with the IBT in late April. We are encouraged by the
possibility of finding a path to an expedited deal. The mediators have already provided numerous
additional dates to continue to work together toward a resolution. Finally, in early May, we reached a
tentative agreement on a contract extension with our dispatchers, represented by the IBT. This
agreement will modify the final pay rate increases in the CBA and provide a two-year extension on
their current CBA.
In the post-COVID years, we have made significant capital investments in the business that leave us
spring coiled and ready to grow into the incremental 1400 routes identified by our planning team.
Most notably, in December 2021 we opportunistically entered into a purchase agreement with Boeing
for 50 MAX aircraft and optionality for an additional 50. We expect to take delivery of our first aircraft
late this year with the bulk of the fleet delivery during 2024 and 2025. The operating economics of this
aircraft will enable us to grow our network and improve profitability without sacrificing flexibility in our
approach.
We continue to make progress with our systems transformation. We are progressing toward best-inclass systems such as SAP, Navitaire, TRAX, and NAVBLUE. We will go live with Navitaire during
the second quarter. This system will enhance our ancillary revenue capabilities through dynamic
pricing functionality. Additionally, Navitaire is expected to facilitate the initiation and operation of our
international expansion through a joint alliance with Viva Aerobus. We expect to launch later this
year, pending DOT anti-trust immunity approval. This alliance will leverage our direct-to-consumer
distribution system adding transborder routes between the US and Mexico to many of the cities that
currently lack nonstop service.

The final significant capital investment is our Sunseeker Resort located in Port Charlotte, Florida. The
resort is scheduled to open on October 16 of this year. The property will feature approximately 500
hotel rooms, more than 180 suites, 55,000 square feet of meeting and conference space, 20 worldclass restaurants and bars, two pools, a state-of-the-art fitness center and spa, and retail outlets
along a harbor walk. This resort will be a nice addition to our ecosystem of travel offerings.
At the heart of this leisure travel ecosystem is the Allegiant brand that we have worked hard and
successfully to strengthen. In recent years, we have increasingly woven the brand, which we refer to
as living the    nonstop life,    into the fabric of leisure by partnering with leading sports and
entertainment entities. This includes Allegiant Stadium (the world   s highest profile and top-selling
stadium in 2022), Live Nation (the largest provider of live music concerts and festivals), and other
targeted partnerships in key markets like the Indianapolis Colts, Detroit Pistons, and FC Cincinnati.
These partnerships have helped make Allegiant a household name and strengthened our position as
a provider of leisure travel experiences. In addition, we launched our Allegiant Allways Rewards
cobrand credit card in 2016, and I am continually astounded at the rate of growth we have seen. 2022
marked another record-setting year for the card in terms of new cardholder acquisitions and total
compensation to Allegiant. To date, 2023 is trending to surpass that record. We expect this program
to contribute more than $100 million in annual revenue this year. As the Company grows into the
1400 incremental routes we have identified, this program will continue to grow in lockstep.
No doubt, 2023 will be transformational for Allegiant. We are well on our way in strengthening our
foundation through the strategic initiatives noted above. This will better provide our valued guests with
more destinations, frictionless products, and convenient services to create those treasured
experiences.
None of this would be possible without the best team in the industry, Team Allegiant. You always
come together to ensure consistent and exceptional service. Your efforts in taking care of our guests
and to one another are truly inspiring. While we have our work cut out for us this year, there is not a
better team to get the job done. Thank you.
Together we fly.
John Redmond
CEO
Allegiant Travel Company



shareholder letter icon 5/10/2023 Letter Continued (Full PDF)
 

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