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Allegiant sees a November dip in passengers but reports strong holiday demand and boosts guidance as fleet expansion and hurricane recovery drive optimism.
Allegiant Faces Passenger Decline but Outpaces Expectations in Holiday Travel
LAS VEGAS, NV—Allegiant Travel Company (NASDAQ: ALGT) reported a year-over-year decline in November 2024 passenger traffic but highlighted promising trends in holiday bookings and recovery in hurricane-impacted regions. While passenger counts dropped by 6.9% compared to November 2023, Allegiant’s leadership expressed optimism, citing higher-than-expected revenue metrics for the Thanksgiving period and strong bookings for December.
“Booking trends following the election continue to outpace our initial expectations,” said Drew Wells, Allegiant’s Chief Commercial Officer. “Demand recovery to hurricane-impacted destinations has been faster than expected. Close-in holiday demand exceeded our forecasts, and we expect December capacity to rise by 17% year-over-year.”
Fleet Expansion and Operational Adjustments Drive Optimism
Allegiant also announced significant fleet developments, taking delivery of two additional 737-MAX aircraft in November. This move brings the company’s expected year-end fleet size to 125 aircraft, including four 737-MAX planes—exceeding its original projection of just one.
Chief Financial Officer Robert Neal highlighted gains from a strategic sale of underutilized CFM engines, which added $15 million in profit to offset costs. “With heightened confidence in 737 deliveries, we opportunistically executed a transaction to enhance our fleet strategy,” Neal stated. The company now forecasts a 3.5% reduction in CASM (cost per available seat mile) excluding fuel and special charges for Q4 2024, boosting profitability.
Revised Guidance Signals Improved Profitability
Allegiant updated its fourth-quarter guidance based on strong holiday bookings and operational efficiencies:
- Airline operating margin is now forecasted between 13.0% and 14.0%, up from a prior range of 6.0% to 8.0%.
- Earnings per share (EPS) are projected at $2.50 to $3.00, significantly higher than the earlier estimate of $0.50 to $1.50.
However, fourth-quarter total revenue per available seat mile (TRASM) is expected to decline by 1.5% year-over-year, a notable improvement from the earlier forecast of a 4.5% decline.
November Traffic Numbers Highlight Challenges and Resilience
Despite positive forward-looking indicators, Allegiant’s November 2024 operational statistics revealed challenges:
- Passengers carried: 1.21 million, down 6.9% from 1.30 million in November 2023.
- Revenue passenger miles (RPM): Declined 5.9% year-over-year.
- Load factor: Fell to 80.2%, a 3.6-point drop from 83.8% in 2023.
- Departures: Decreased by 2.0%, reflecting slight operational scaling back.
While passenger volumes dipped, Allegiant maintained its position as a leading low-cost carrier, emphasizing affordability and access to vacation destinations from smaller U.S. cities.
Hurricane Recovery and Holiday Trends Bolster Prospects
The faster-than-anticipated recovery of demand to hurricane-affected destinations contributed to the company’s positive outlook. Allegiant also noted robust Thanksgiving travel demand, with revenue metrics during the week of the holiday matching 2023 levels. Looking ahead, the carrier expects strong holiday travel trends to buoy December performance.
Competitive Edge in Budget Travel
Allegiant continues to differentiate itself through low-cost airfare and a focus on underserved markets. Since its founding in 1999, the airline has built a loyal customer base by connecting travelers in smaller cities to popular vacation destinations via nonstop flights. Its average fares remain significantly lower than national competitors, positioning the company to capture a growing share of budget-conscious travelers.
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