Allegiant Air’s parent organisation, Allegiant Travel Company, has announced a 12.4% increase in its net income for 2008 over its 2007 result. Last year, the company’s net income was $35.4 million, up from $31.5 million in 2007.
The operating income of $55.8 million was 26.8% up on 2007’s figure of $44.1 million. The operating margin, however, decreased by 1.1 percentage points from 12.2% to 11.1%.
“We had an outstanding fourth quarter, leading to a double-digit operating margin for the year,” stated Maurice Gallagher Jr, CEO and president of Allegiant Travel Company. “Similar to prior quarters, we had tuned the airline to handle high fuel prices in the fourth quarter, as evidenced by the year-over-year reduction in capacity, and substantial increases in passengers per departure, load factor and total average air fare.
“Looking forward, we are seeing a tighter booking curve, reduced passenger yields and thus a softer base air fare for our scheduled service operation,” Gallagher continued. “We estimate that for the first quarter of 2009 scheduled total average air fare (the sum of air fare plus ancillary revenue per passenger), will be down 4% to 6% over the prior year or between $4 and $7. But this decline in revenue per passenger should be more than offset by our expected reduction in fuel cost per passenger and non-fuel cost per passenger (due to increased aircraft utilisation) in the first quarter.”
CFO and managing director–planning, Andrew Levy, noted that the deterioration in the global aircraft market has put even more pressure on MD-80 prices. “We are able to acquire high quality aircraft at even lower prices than before,” he remarked. “Our strong liquidity position enables us to purchase MD-80 aircraft for cash without external financing, so the current credit crisis does not constrain our ability to grow.”
At 31 December 2008, the company had 36 owned MD-80s on its books plus two on lease.
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