Allegiant Air profits leap 213 percent in 3rd quarter

Allegiant Air's third-quarter net profit increased by 213 percent compared with the same time last year. [JIM DAMASKE | Times]
Allegiant Air's third-quarter net profit increased by 213 percent compared with the same time last year. [JIM DAMASKE | Times]
Published October 22 2015
Updated October 23 2015

Labor troubles. Questions about safety. Complaints about passenger fees seemingly on steroids.

Allegiant Air's troubles are not proving to be much of a drag on the low-cost airline whose net profit, spurred by lower fuel prices, took a 213 percent leap in the third quarter ending Sept. 30 to $44.5 million, up from $14.2 million in the third quarter of 2014.

And the company forecasts continued success through the end of the year.

Las Vegas-based Allegiant is responsible for record passenger growth at St. Pete-Clearwater International Airport, where the airline carries 95 percent of all passenger traffic and is thought to be driving regional tourism. The airport expects a record 1.6 million passengers by the end of 2015.

"Our financial performance continues to benefit from lower energy costs and the profitable growth of our network," Maurice Gallagher Jr., Allegiant's CEO, said as the results were released this week.

Third quarter revenue climbed to $300 million from $265 million the same period last year. Earnings totaled $2.62 per diluted share.

It was a tough summer for Allegiant from a public relations perspective. Three Allegiant aircraft made emergency landings at St. Pete-Clearwater in June and July, including a June 8 landing in which evacuation slides were deployed with four passengers suffering minor injuries. One passenger later filed suit against the airline.

Allegiant has been dogged by other high-profile incidents, including an aborted August takeoff in Las Vegas. That aircraft's elevator — a control surface used to help the plane ascend and descend — suffered a potentially catastrophic failure. Had the aircraft taken off, maintenance experts said, it could have crashed.

The pilot's union said the airline skimps on safety to fatten profits. Allegiant officials say that is absurd and say the airline has one of the best safety records in the industry.

Allegiant is profiting by essentially throwing the standard airline business model out the window. It flies from smaller cities that are not served or that have been abandoned by other airlines, bringing travelers to vacation destinations like Tampa Bay. Its aircraft typically fly only a few days a week.

And the company boosts profits by helping passengers book hotels, rental cars and even tickets to entertainment.

"We operate largely without competition," Jude Bricker, Allegiant's senior vice president of planning, told analysts Wednesday. "So, we are out there without consideration of what other airlines are doing. … We're growing overall capacity as fast as we can operationally manage."

With a fleet of just 74 aircraft — Delta has more than 600 — Allegiant said it hopes to expand to 83 by the end of 2016 and to 120 in coming years.

Gallagher told analysts all airlines are looking smart these days with fuel savings inflating profits.

"When you've got this much cash running around," he said, "everybody's chest (pushes) out a little bit, and we all feel real good, real smart and real tough in many cases."

Allegiant Air's stock price was $201.01, down nearly 7 percent, at the close of market Thursday.

Contact William R. Levesque at levesque@tampabay.com. Follow @Times_Levesque.

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