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Allegiant Travel CO (ALGT)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered adjusted diluted EPS of $1.23, beating S&P Global consensus $0.85*, on $689.4M revenue (+3.5% YoY) and adjusted consolidated operating margin of 7.3%; GAAP EPS was a loss of $(3.62) driven by $103.3M Sunseeker special charges .
  • Airline-only performance remained resilient: adjusted airline-only EPS $1.86, adjusted airline-only operating margin 8.6% (above initial guide), CASM-ex down 6.7% YoY; operational reliability at 99.9% controllable completion and record 37,000 flights .
  • Guidance reset: Q3 2025 implies a loss with airline-only margin of (3%)–(6%) and EPS of ($1.25)–($2.25); full-year 2025 reinstated to >$3.25 airline-only EPS and >$2.25 consolidated EPS—materially lower than the initial FY guide given in Feb (and withdrawn in Q1) .
  • Strategic catalyst: sale of Sunseeker Resort to Blackstone for $200M expected to close in Q3, simplifying the business and enabling deleveraging; management highlights Navitaire-enabled pricing, Allegiant Extra expansion, and credit card tailwinds as drivers into 2026 .
  • Stock reaction catalysts: near-term caution (Q3 loss guide, TRASM down 11.2% YoY) vs. clear cost execution (CASM-ex down, utilization up) and balance sheet strengthening (net leverage 2.6x); Sunseeker exit and 737 MAX ramp (20% of ASMs in 2026) support medium-term margin expansion .

What Went Well and What Went Wrong

What Went Well

  • “We operated 37,000 flights — the highest quarterly total in company history…[and] achieved a remarkable 99.9% controllable completion factor,” underscoring operational excellence and reliability .
  • Adjusted airline-only operating margin of 8.6% exceeded initial expectations; CASM-ex fell 6.7% YoY to 7.68¢, reflecting strong cost control and asset productivity (utilization up ~17% YoY in 1H) .
  • Commercial initiatives gaining traction: Navitaire “revenue headwinds…behind us” and Allegiant Extra expansion yielding ancillary uplift (~$3 per passenger in 1H25); MAX fleet leading reliability and margin advantage .

What Went Wrong

  • Revenue quality headwinds: TRASM down 11.2% YoY and yield down 17.7% YoY amid softer domestic leisure demand and increased off-peak mix .
  • Guidance points to seasonal weakness and loss in Q3: airline-only operating margin (3%)–(6%) and consolidated EPS ($1.75)–($2.75), reflecting overweight July capacity and limited benefit from sequential demand improvement .
  • Sunseeker-related special charges of $102.2M in Q2 (write-down to fair value less costs to sell) depressed GAAP results; adjusted Sunseeker operating loss remained $(7.3)M .

Financial Results

Quarterly Financial Overview

MetricQ4 2024Q1 2025Q2 2025
Total Operating Revenue ($USD Millions)$627.7 $699.1 $689.4
GAAP Diluted EPS ($)$(12.00) $1.73 $(3.62)
Adjusted Diluted EPS ($)$2.10 $1.81 $1.23
Adjusted Airline-only Diluted EPS ($)$3.00 $2.11 $1.86
Adjusted Consolidated Operating Margin (%)10.2% 9.1% 7.3%
Adjusted Airline-only Operating Margin (%)13.2% 9.3% 8.6%
Adjusted Consolidated EBITDA ($USD Millions)$129.2 $126.1 $118.7

Q2 2025 vs Q2 2024 and vs Consensus

MetricQ2 2024Q2 2025 ActualConsensus Estimate
Total Operating Revenue ($USD Millions)$666.3 $689.4 $684.36*
Adjusted Diluted EPS ($)$1.77 $1.23 $0.85*
Adjusted Consolidated EBITDA ($USD Millions)$118.3 $118.7 $103.57*
TRASM (cents)13.03¢ 11.57¢ —
CASM-ex (cents)8.23¢ 7.68¢ —
Values retrieved from S&P Global.*

Segment Breakdown (Q2 2025)

Segment MetricQ2 2024Q2 2025 GAAPQ2 2025 Adjusted
Airline Operating Revenue ($M)$649.5 $668.8 $668.8
Airline Operating Income ($M)$47.0 $43.2 $57.8
Sunseeker Revenue ($M)$16.8 $20.6 $20.6
Sunseeker Operating Income (Loss) ($M)$(12.1) $(110.6) $(7.3)
Consolidated Operating Income (Loss) ($M)$34.9 $(67.5) $50.4

KPIs and Operating Statistics

KPIQ4 2024Q1 2025Q2 2025
TRASM (cents)13.01¢ 12.29¢ 11.57¢
CASM-ex (cents)8.29¢ 8.07¢ 7.68¢
Load Factor (Scheduled)80.2% 80.5% 81.9%
Scheduled Service ASMs (thousands)4,503,059 5,305,191 5,629,040
Average Fuel Cost per Gallon ($)$2.49 $2.63 $2.43
Scheduled Departures28,617 32,133 36,056
Block Hours per Aircraft per Day6.3 7.5 7.7

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
System ASMs YoYFY 2025~16.0% ~12.0% Lowered
Scheduled ASMs YoYFY 2025~17.0% ~13.0% Lowered
Adjusted Airline-only EPS ($)FY 2025$7.75–$10.25 (withdrawn in Q1) >$3.25 Lowered/Reinstated
Adjusted Consolidated EPS ($)FY 2025N/A / Withdrawn >$2.25 Reinstated
Interest Expense ($M)FY 2025$150–$160 $140–$150 Lowered
Capitalized Interest ($M)FY 2025($15)–($25) ($15)–($25) Maintained
Interest Income ($M)FY 2025$30–$40 $30–$40 Maintained
Aircraft-related CAPEX ($M)FY 2025$260–$280 $260–$280 Maintained
Deferred Heavy Maint. ($M)FY 2025$50–$70 $50–$70 Maintained
Other Airline CAPEX ($M)FY 2025$95–$115 $95–$115 Maintained
Recurring Principal Payments ($M)FY 2025$165–$175 $160–$170 Lowered
Fuel Cost per Gallon ($)Q3 2025—$2.55 New
Airline-only Operating Margin (%)Q3 2025—(3.0%)–(6.0%) New
Airline-only EPS ($)Q3 2025—($1.25)–($2.25) New
Consolidated EPS ($)Q3 2025—($1.75)–($2.75) New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Operations reliabilityPeak flying restoration; controllable completion 99.7% in Dec 99.9% controllable completion; record flights Improving
Navitaire & digitalReintroduced bundles; ancillary per pax up Navitaire headwinds resolved; recaptured $2/pax and gained first incremental $1; conversion and load factor benefits Improving
737 MAX ramp & costMAX deliveries planned; training ramp MAX ~10% ASMs in Q2, >15% by YE; 20% of ASMs in 2026; cost leverage and fuel burn benefits ahead Improving
Domestic leisure demandSofter demand; Q1 guide withdrawn Cautiously optimistic; Q3 seasonal trough; sequential TRASM improvement expected but overweight July dampens benefit Mixed/Cautious
Capacity strategy (“peaking the peaks”)2025 capacity growth via utilization Q3 ASM growth cut >10 pts; September ASMs ~flat YoY More disciplined
Sunseeker dispositionLaunched process; impairment in Q4 Sale to Blackstone for $200M; closing expected Q3 Executed
Loyalty/credit cardStrong remuneration; cardholders growth $33.3M remuneration in Q2; >$140M annual tailwind; program review underway Tailwind building

Management Commentary

  • CEO: “We achieved an adjusted airline-only operating margin of 8.6% in the second quarter, surpassing our initial projections… aircraft utilization up nearly 17 percent year over year… industry leading reduction in unit costs… nearly eight percent year over year.”
  • CFO: “Adjusted airline non-fuel unit costs (CASM-ex) were 7.68 cents, down 6.7% year-over-year… Airline segment reported adjusted EBITDA of $122.5M… EPS outperformance attributable to solid cost execution.”
  • CCO: “TRASM: 11.57¢, down 11.2% YoY, in line with expectations… Peak days outperformed off-peak by ~4.5pts… Navitaire traction building – $2/pax recapture complete, now delivering first incremental $1 benefit.”
  • Strategy: “We are simplifying the business… pending sale of our Sunseeker Resort… Navitaire enables dynamic pricing… Allegiant Extra deployed on 70% of fleet by Jan ’26… MAX fleet share >20% of ASMs, driving savings.”

Q&A Highlights

  • Sunseeker sale details: Full sale to Blackstone with $200M proceeds at close; simplifying focus on airline .
  • Q3 setup: Overweight July ASMs (~42% of Q3) limits benefit from late-quarter demand uptick; sequential TRASM improvement expected but not “normal” yet .
  • Cost outlook: Temporary aircraft rent headwind persists into 2H25, normalizes in 2026; salaries/wages line not expected to rise materially absent lower utilization .
  • MAX leverage: Expect ~20% of ASMs from MAX in 2026; room to optimize deployment and training; ASMs per gallon expected to improve 2–4 points in 2026, further in 2027 .
  • Booking curve: July largely booked; ~35–40% left to book in Aug/Sep; ~85% left for Q4—management cautious given elevated industry capacity into leisure markets .

Estimates Context

  • Q2 2025 beats: Adjusted EPS $1.23 vs $0.85*; revenue $689.4M vs $684.36M*; adjusted EBITDA $118.7M vs $103.57M*—driven by cost execution and CASM-ex improvements despite TRASM pressure .
  • Q1 2025 also beat consensus (EPS $1.81 vs $1.55*, revenue $699.1M vs $694.95M*) .
  • Q4 2024 adjusted EPS $2.10 vs $2.07*; EBITDA miss due to Sunseeker special charges in GAAP EBITDA context (consensus included different treatment), but adjusted EBITDA aligned with operational strength .
    Values retrieved from S&P Global.*

Consensus vs Actual (select periods)

MetricQ4 2024Q1 2025Q2 2025
Primary EPS Consensus Mean ($)2.07*1.55*0.85*
Primary EPS Actual ($)2.10 1.81 1.23
Revenue Consensus Mean ($USD)$628.70M*$694.95M*$684.36M*
Revenue Actual ($USD)$627.71M $699.07M $689.38M
EBITDA Consensus Mean ($USD)$138.13M*$121.19M*$103.57M*
Adjusted Consolidated EBITDA Actual ($USD)$129.2M $126.1M $118.7M
Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Cost execution is the near-term anchor: CASM-ex down 6.7% YoY and utilization up; expect continued non-fuel unit cost discipline even as ASMs are moderated in off-peak .
  • Guidance reset warrants caution: Q3 negative margin/EPS guidance and reinstated minimal FY EPS (> $3.25 airline-only; > $2.25 consolidated) signal conservative stance amid softer leisure demand and elevated industry capacity .
  • Strategic simplification is a clear positive: Sunseeker sale for $200M reduces complexity and supports deleveraging; adjusted airline-only results better reflect core profitability .
  • Commercial levers gaining traction: Navitaire-driven pricing/merchandising and Allegiant Extra expansion support ancillary growth and conversion improvements, with credit card remuneration a growing tailwind .
  • Fleet transition should expand margins medium term: MAX share >20% of ASMs in 2026 plus Airbus retirements provide fuel/maintenance savings and ASM/gallon efficiency gains .
  • Near-term trading: Expect volatility around Q3 loss guide and demand headlines; watch booking trends into holiday peaks and route launches (RSW, Gulf Shores) as catalysts for TRASM trajectory .
  • Medium-term thesis: With Sunseeker exited, disciplined capacity (“peaking the peaks”), and digital/loyalty levers, ALGT is positioned for margin expansion and earnings normalization as leisure demand stabilizes .

Additional Relevant Press Releases (Q2 timeframe)

  • Announced multiple new nonstop routes in late July and August, expanding network breadth ahead of holiday peaks .
  • Blackstone to acquire Sunseeker Resort for $200M (transaction expected to close in Q3) .
  • USA TODAY Readers’ Choice: Allegiant tops low-cost airline category again, reinforcing brand affinity .