Allegiant Travel Co., parent of Allegiant Air, reported $22.6 million in net income for the first quarter. Operating revenue was up 19.4% to $169.6 million. Average aircraft in operation increased by seven to 46, lifting seat capacity 16.9% from the year-ago quarter to 1.56 billion ASMs while RPMs increased 17.7% to 1.37 billion. Load factor was 88.2%, up 0.6 point, the "eighth consecutive quarter of load factors near or above 90%," Gallagher said.
"We are pleased to announce our 29th consecutive profitable quarter with the results of the first quarter of 2010," stated Maurice J. Gallagher, Jr., Chairman and CEO of Allegiant Travel Company. "Our first quarter results continue to reaffirm the stability and strength of our model. This is the fifth year in a row where our first quarter operating profit percentage has been double digit. The 31% operating margin we achieved in the first quarter of 2009 benefited from the lowest quarterly fuel prices in over five years ($1.47 per gallon). This year, in spite of a 48% increase in fuel price to $2.17 per gallon, we nonetheless achieved a 21% operating margin.
"We continued growing during this quarter. Average aircraft in operation increased by seven (46 vs 39) versus the prior year. On a system basis, we generated 17% more ASMs, 10% more departures and 11% more passengers. Southern California flying and other longer routes drove a 6.5% increase in our scheduled service average stage length from 887 in the first quarter of last year to 945 miles this year.
"This quarter also marked our eighth consecutive quarter of load factors near or above 90%. Beginning in the second quarter of 2008, we increased our focus on filling aircraft to take advantage of strong ancillary revenues and reduce per-passenger costs by spreading costs, particularly fuel, over more passengers. This strategy has worked well and we plan to continue this approach indefinitely.
"Looking forward, we are excited about our prospects. Our Team Members continue to perform exceptionally well. We were able to reward all eligible employees with profit-sharing checks in the first quarter - our third year running for this company-wide program. We began service to Orlando International Airport on February 1st and most recently announced plans to begin Hawaii service. To that end, we entered into a contract to purchase six Boeing 757-200 series aircraft and closed on the first two aircraft in March. We are targeting operational authority by the end of 2010 and we expect to begin service shortly thereafter," concluded Gallagher.
Andrew C. Levy, President and Chief Financial Officer stated, "We remain pleased with our cost management. Operating expense per passenger, excluding fuel, was up only 6.6% to $52.89 despite the increase in average stage length and a 6.3% decline in departures per aircraft. The increase in fuel price and the longer stage length resulted in a $14 increase in fuel expense per passenger from $25.80 to $39.91.
"Lastly, we are pleased with our performance in the third party ancillary segment. Gross ancillary revenue was up 26.2% to $22.5 million, mostly driven by a year-over-year increase in non-Las Vegas hotels and transportation (rental cars and hotel shuttles). Our margin declined largely due to the diminution in net revenue contribution from a merchant that provides us with a commission based on sales of an online subscription coupon product, combined with lower margins on transportation products. Net revenue increased 3.9% on a year-over-year basis," concluded Levy.
