Allegiant Travel Company (ALGT, Financial) (“ALGT” or “Company) is a Las Vegas, NV – based ultra low cost airline. Its business model is quite different from the rest of the top US airlines as it offers low frequency flights for leisure travelers, made economical by deployment of used planes. Because of that advantage, 75% of the company’s routes are non-competitive8 and the company has been quite successful at selling non-flight travel accommodations, which now comprise the majority of the company’s profits. At the end of 2018, the company fully retired its aging MD-80 fleet and switched to the Airbus A320 family and introduced a number of operational and service improvements. Its new fleet is more economical and versatile.
In its November 2019 investment day, the company provided guidance estimates of 22% earnings growth in 2020 based on the mid-point of earnings guidance range.
From FPA Capital Fund (Trades, Portfolio)'s fourth-quarter 2019 commentary.
