Allegiant Travel Company

Welcome to the second quarter 2002 Allegiant Travel Company earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Sherry Wilson, Managing Director of Investor Relations.

Thank you, Liwei. Welcome to the Allegiant Travel Company's second quarter 2022 earnings call. On the call with me today are John Redman, the company's Chief Executive Officer, Greg Anderson, President and Chief Financial Officer, Scott D'Angelo, our EBP 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, whether 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 at the company's investor relations site. With that, I'll turn it over to John.

Thank you very much, Sherry, and good afternoon, everyone. I should probably advise that Scott Sheldon is not here today, but obviously we'll still take whatever questions you have. This is, of course, the first earnings call in the history of Allegiant. Maury has not participated or provided his opening comments. No one in the industry has the depth of knowledge and awareness of the industry that Maury has. So as long as your questions are more present-day focused, we'll get by. I have started every earnings call thanking our amazing, dedicated, and passionate employees, so would be remiss if that commentary was not repeated. Thank you all. You are the best. With this new chapter beginning, it's only fitting I announce the promotions of Scott Sheldon and Greg Anderson to president, effective 8-1. Every one of you on the call know them, so they need no introduction. We have the best management team in the industry, and this is one of many steps we are taking to ensure consistency, continuity, and execution. Scott Gregg, Scott D'Angelo, our CMO, and Rob Wilson, our CTO, have all signed employment agreements through December 2026. In regards to our operations, Q2 is not our best, or an industry best for that matter, but we're reacting fast to this ever-changing environment. July, we started to get back within reach of where we should be with a 99% controllable completion, and we expect Q3 to be at the same performance level or better than July. July was better than June on every metric, from Star D0 to A14 and controllable cancellations. We have always been a margin-focused company, and that won't change going forward. With strong load factors and improving operations, margins will grow, given reduced IROPS. We are in negotiations with our pilot, but have no updates regarding financial impact or timing. Maury did mention in the Q1 earnings call he was personally involved in those negotiations, so having a decision maker like him with his intimate knowledge of the issues and understanding of the business model is invaluable for all parties. In addition, we are having partnership conversations with several flight schools to ensure a predictable stream of pilots into the future. There has been plenty of dialogue and commentary out there regarding how people see 2023 unfold. We have never been ones to over-promise and under-deliver, but trying to make any predictions or forecasts in this environment, given the many variables, is not something we will do. We have a history of year-over-year growth but that history provides no crystal ball during times of multiple variables moving in unpredictable ways with no line of sight. Having said that, our model was built to handle times like this, and our DNA is to remain very flexible and act or react based on changing circumstances, and we will continue to do that as we always have done. This approach has served us very well to date. As for Sunseeker Resort Shiloh Harbor, We are still targeting the open May of 2023, but will not finalize the opening month until early Q4. To date, we have booked 1,100 transient room nights at an ADR of $390, which is impressive in that most of these reservations are in the May through September timeframe, which is historically the slowest month of the year. In addition, we've booked 31 groups, totaling 31,300 room nights. The total contracted rooms, food, and beverage revenue for these groups is roughly $13.4 million. An interesting point to make here is we have already booked 5.6% of the total room nights for 2024, none of which are transient bookings, and stopped taking group reservations for February of 24. This impressive book percentage will only increase as we move closer to opening. Allegiant has a direct relationship with its guests, meaning we don't use GDS or OTAs to book travel. Sunseeker, of course, follows the same high-margin approach, which requires a significant number of emails to perform at the level we expect to. To date, we have roughly 3.1 million emails in the Sunseeker database, and project this number will grow to over 4 million by opening. These numbers are unprecedented in the resort or hotel world and show the power and synergy of the Allegiant model and Sunseeker Resort. They also speak volumes about our excitement and opportunities in the asset light space. Building an email database is absolutely critical and foundational to success in this space. After all, how can you fill a hotel if you don't have a database to market to you? I can't think of a more efficient and cost-effective approach to fill a resort or a plane than email marketing. You are starting to see the pieces coming together of what we refer to as Allegiant 2.0. Last but not least, we have made the decision to pay off our CARES Act-related government debt of $24.6 million before month end. We appreciate the assistance the CARES Act provided during the unprecedented early stages of the COVID pandemic. Given the guidance and decisions of our board, the untold number of analyses and conversations between management teams, and the sacrifices made by all of our employees, we find ourselves in the amiable position of paying off this loan well before its maturity date. And with that, I'll turn it over to Scott D'Angelo.