Allegiant Travel Company

Q1 2022 Allegiant Travel Company earnings conference call. My name is John, I'll be your operator for today's call. At this time, all participants are on listen-only mode. Later, we will conduct a question and answer session. During a question and answer session, if you do have a question, press zero and one on your touchtone phone. As a reminder, conference is being recorded. And now I'll turn the call over to Sherry Wilson.

Thank you, John. Welcome to the Allegiant Travel Company's first quarter 2022 earnings call. On the call with me today are Maury Gallagher, the company's chairman and chief executive officer, John Redman, the company's president and incoming chief executive officer, Greg Anderson, our EVP and chief financial officer, Scott Sheldon, our EVP and chief operating officer, Scott D'Angelo, our EVP and chief marketing officer, Drew Wells, our SVP of revenue and planning, and a handful of others to help answer questions. We will start the call with commentary and then open it up to questions. We ask that you please limit yourself to one question and one follow-up. The company's comments today will contain forward-looking statements concerning our future performance and strategic plan. Various risk factors could cause the underlying assumptions of these statements and our actual results to differ materially from those expressed or implied by our forward-looking statements. These risk factors and others are more fully disclosed in our filings with the SEC. Any forward-looking statements are based on information available to us today. We undertake no obligation to update publicly any forward-looking statements as a result of future events, new information or otherwise. The company cautions investors not to place undue reliance on forward-looking statements, which may be based on assumptions and events that do not materialize. To view this earnings release, as well as the rebroadcast of the call, feel free to visit the company's investor relations site at ir.allegionair.com. With that, I'll turn it over to John Redmond.

Thank you, Sherry, and good afternoon, everyone. Our dedicated and passionate team members are the reason for the stellar results and industry-leading margins we are reporting today. To come out of the throes of Omicron, 600 weather cancellations out of 1,800 total cancellations, ATC issues, and high fuel and still produce a 10.7% and 1.4% EBITDA and operating margins, respectively, is rather amazing. This spring was the busiest and best spring in a company's history, and this incredible demand continued into April and shows no end. Very strong load factors, especially March at 87%, helped offset the run-up in fuel prices and and those high load factors are now expected to continue through the year. Again, I can only say thank you very much to each and every team member. Our priority for the rest of the year is operational integrity. It is paramount not only for our guests but our employees, our long-term vision, and our brand. Our business model and DNA have always been to match capacity with demand and fuel prices. We have shown over the years no one in the industry is better at it. Our Q2 guidance reflects this imperative, adjusting our capacity to up roughly 12% year over three year and total operating revenue increase of roughly 30% year over three year. 2022 is a foundational year for our company. Significant investments are being made in various initiatives, including IT, that will set us up well into the future and drive focus to where it matters most, continuing to differentiate our business model, improve the customer experience and interaction with Allegiant, and, of course, drive more revenue streams. Strategic initiatives don't happen overnight, but the benefits can be transformational. Always Allegiant World MasterCard was an initiative that launched in 2016 and is really starting to hit its stride, helping to drive total average fare. The cash benefit of the card was $53 million in 2021. We have roughly 320,000 cardholders to date, which will further accelerate in the out years given our partnerships, relationships, and resorts. Our credit card, along with our Always Rewards program, are intended to increase share wallet through greater interaction with the Allegiant Travel Portfolio. Our joint venture with Viva Airboost is a piece of that foundation that is being laid this year. But for that relationship and other IT initiatives, We would be years off entering the Mexican leisure market, and the financial benefits would not have been the same as our joint venture. Sunseeker, of course, started in 2017, and after a pandemic interruption, will be completed over the next year. That project, in turn, will lead to further asset light opportunities. We have our work cut out, but our team members are up to the challenge. All of these initiatives will set the foundation for Allegiant 2.0. Even with all the foundation work being done, we should still end the year with total liquidity in the neighborhood of $1.1 billion. With that, I'll turn it over to Scott Sheldon.