Allegiant Air

Allegiant posts 27% drop in earnings in 35th consecutive profitable quarter

Following everyone else in the industry, Allegiant reported falling profits on rising revenues as it posted a 27.9% decline in profits to USD9.5 million on a 17% increase in operating revenues to USD191.5 million. Net as a percent of total operating revenue dropped three points to 5%.

Its EBITDA margin, still healthy at 14.4%, was down 2.9 points while its operating margin was down 3.2 points to 8.7%. 

CEO Maurice Gallagher reported revenues continuing to perform well on most metrics in the quarter, which were up 15% or more year on year.

Allegiant will be one of the bidders for the slots being made available from the US Airways-Delta slot swap but has not expressed interest at this stage in the Washington National slots.

US airlines to report increasing revenue and strong demand

The distressing economic news this summer made September important in signaling how the US airline industry is performance. Judging from the early operational reports and 3Q2011 guidance issued, traffic and demand are defying the gloom offered by Wall Street and Washington. Indeed, air travel demand is expected to remain strong, which bodes well for the industry's bottom line given the fact capacity continues to tighten.

Still, US airlines are not sanguine about the state of the industry, with most not only pulling capacity in the fourth quarter but signaling the same for 2012 when a number of carriers will be taking delivery of new aircraft but keeping capacity flat. That capacity discipline, in evidence since early Spring when fuel continued its climb, meant the USD6-10 fare hike imposed in mid-September stuck and will likely segue into future hikes as demand remains strong on increasingly tight capacity. For now the hike applies to last minute tickets.

Spirit Airlines launches travel packaging in bid to further grow industry-leading ancillaries

Spirit Airlines is following the Allegiant Air model in offering vacation/travel packaging, adding to its already impressive array of ancillary revenue streams. By offering hotels and travel packages, Spirit is expected to further increase its ancillary business, which already accounts for 35% of total revenues, making it one of the leading ancillary revenue generators in the industry. Executive Vice President, Finance and Chief Marketing Officer Barry Biffle announced the addition of vacation/travel packaging to Spirit’s ancillary product offering during last week’s Dahlman Rose Transportation conference.

US airline yields and profits benefit from tight demand-supply conditions

US airlines are continuing to benefit from relatively tight demand-supply conditions and the capacity caution is set to continue. The major US network airlines are now forecasting low single-digit capacity growth in FY2011, as high fuel prices and economic jitters pressure profits.