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What changed in Allegiant Travel CO's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Allegiant Travel CO's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+363 added−357 removedSource: 10-K (2024-02-29) vs 10-K (2023-02-27)

Top changes in Allegiant Travel CO's 2023 10-K

363 paragraphs added · 357 removed · 259 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

114 edited+40 added−21 removed82 unchanged
Biggest changeWe have coined this next stage of our Company strategy as "Allegiant 2.0" which includes the following Company goals: – maintaining our foundation of providing affordably accessible air travel while refining and strengthening our air travel product; – expanding our already broad domestic network as we have identified more than 1,400 incremental routes of which approximately 80 percent currently have no nonstop service; – seeking to offer (subject to government approval) transborder international scheduled service into Mexico through our partnership with VivaAerobus; – utilizing our customer data to capture accretive, asset-light direct-to-consumer revenue opportunities; – transforming our eCommerce strategy to create a frictionless experience for our customers and drive increased air ancillary and third party revenue generation; – expanding our co-branded credit card program and our non-card loyalty program; – expanding our travel company focus and offerings with the construction of Sunseeker Resort at Charlotte Harbor (the "Resort" or "Sunseeker Resort") (expected to open in late 2023). – refining our marketing investment dollars by entering into dynamic agreements, such as the naming rights agreement with the Raiders of the National Football League for Allegiant Stadium in Las Vegas Our principal executive offices are located at 1201 N.
Biggest changeWe have coined this next stage of our Company strategy as "Allegiant 2.0" which includes the following Company goals: • maintaining our foundation of providing affordably accessible all-nonstop air travel while refining and strengthening our air travel product; • expanding our already broad domestic network as we have identified more than 1,400 incremental routes of which approximately 77 percent currently have no nonstop service; • expanding our travel company focus and offerings with the operation of Sunseeker Resort at Charlotte Harbor (the "Resort" or "Sunseeker Resort"); • seeking to offer (subject to government approval) transborder international scheduled service to premier beach destinations in Mexico through our partnership with VivaAerobus; • utilizing our customer data to capture accretive, asset-light direct-to-consumer revenue opportunities by offering vacation packages that include hotel stay and car rental; • transforming our eCommerce strategy to create a frictionless experience for our customers and drive increased air ancillary and third party revenue generation; • expanding our award-winning co-brand credit card program and our non-card loyalty program; • maximizing return from our marketing investment dollars by entering into dynamic agreements, such as the naming rights agreement with the Raiders of the National Football League for Allegiant Stadium in Las Vegas Our principal executive offices are located at 1201 N.
The principal competitive factors in the airline industry are price, nonstop flights, schedule, customer service, routes served, types of aircraft, safety record and reputation, code-sharing relationships, and frequent flyer or loyalty programs. Our competitors include legacy airlines, low cost carriers ("LCCs"), ultra-low cost carriers ("ULCC"), regional airlines, new entrant airlines, and other forms of transportation to a much lesser extent.
The principal competitive factors in the airline industry are price, nonstop flights, schedule, customer service, routes served, types of aircraft, safety record and reputation, code-sharing relationships, and frequent flyer or loyalty programs. Our competitors include legacy airlines, low cost carriers ("LCCs"), ultra-low cost carriers ("ULCC"), regional airlines, new entrant airlines, and to a much lesser extent, other forms of transportation.
The policies principally provide coverage for public liability, war-risk, passenger liability, baggage and cargo liability, property damage, including coverages for loss or damage to our flight equipment and directors and officers, workers’ compensation. We also maintain what we believe to be customary insurance on Sunseeker Resort and as required by the terms of our construction loan.
The policies principally provide coverage for public liability, war-risk, passenger liability, baggage and cargo liability, property damage, including coverages for loss or damage to our flight equipment, directors and officers insurance and workers’ compensation. We also maintain what we believe to be customary insurance on Sunseeker Resort and as required by the terms of our construction loan.
The legacy airlines are larger, have significantly greater financial resources, are better known, and have more established reputations than us. In a limited number of cases, following our 10 entry into a market, competitors have chosen to add service, reduce their fares, or both. Competitors may also choose to enter after we have developed a market.
The legacy airlines are larger, have significantly greater financial resources, are better known, and have more established reputations than us. In a limited number of cases, following our entry into a market, competitors have chosen to add service, reduce their fares, or both. Competitors may also choose to enter after we have developed a market.
Our management of seat capacity also includes changes in weekly frequency of certain markets based on identified peak and off-peak travel demand throughout the year. Unlike other carriers which provide a fairly consistent number of flights every day of the week, we manage our capacity with a goal of being profitable on each route.
Our management of seat capacity also includes changes in weekly frequency of certain markets based on identified peak and off-peak travel demand throughout the year. Unlike other carriers which typically provide a fairly consistent number of flights every day of the week, we manage our capacity with a goal of being profitable on each route.
Environment The aviation industry accounts for roughly two percent of global greenhouse gas emissions, almost all of which is attributable to aircraft fuel. In 2013, we began the process of transitioning our fleet from a mixture of MD-80 aircraft and Boeing 757 aircraft to an all-Airbus fleet with the transition concluding in November 2018.
Environment The aviation industry accounts for roughly two percent of global greenhouse gas emissions, almost all of which is attributable to aircraft fuel. Back in 2013, we began the process of transitioning our fleet from a mixture of MD-80 aircraft and Boeing 757 aircraft to an all-Airbus fleet with the transition concluding in November 2018.
We believe we are operating in compliance with applicable DOT and FAA regulations, interpretations and policies and we hold all necessary operating and airworthiness authorizations, certificates and licenses. The FAA periodically conducts extensive or targeted audits of our operations. We have satisfactorily responded to all findings on all Certificate Holder Evaluation Process and other inspections conducted. Security .
We believe we are operating in compliance with applicable DOT and FAA regulations, interpretations and policies and we hold all necessary operating and airworthiness authorizations, certificates and licenses. 16 The FAA periodically conducts extensive or targeted audits of our operations. We have satisfactorily responded to all findings on all Certificate Holder Evaluation Process and other inspections conducted. Security .
We and Sun Country Airlines are the only mainline domestic scheduled carriers serving Phoenix Mesa Gateway Airport, Punta Gorda Airport, and St. Petersburg-Clearwater Airport. Although no other mainline domestic scheduled carriers operate in these airports, most U.S. airlines serve the major airport for Orlando, Phoenix, Fort Myers, and Tampa. In addition, many U.S. airlines serve our other leisure destinations.
We and Sun Country Airlines are the only mainline domestic scheduled carriers serving Phoenix Mesa Gateway Airport, Punta Gorda Airport, and St. Petersburg-Clearwater International Airport. Although no other mainline domestic scheduled carriers operate in these airports, most U.S. airlines serve the major airport for Orlando, Phoenix, Fort Myers, and Tampa. In addition, many U.S. airlines serve our other leisure destinations.
As fuel consumption is greatest during take-off, the ability to travel to the destination with a single take-off, as opposed to at least two take-offs on connecting flights, is more fuel efficient. Aircraft Fuel The cost of fuel is volatile, as it is subject to many economic and geopolitical factors we can neither control nor predict.
As fuel consumption is greatest during take-off, 12 the ability to travel to the destination with a single take-off, as opposed to at least two take-offs on connecting flights, is more fuel efficient. Aircraft Fuel The cost of fuel is volatile, as it is subject to many economic and geopolitical factors we can neither control nor predict.
Technicians employed by us have appropriate experience and hold required licenses issued by the FAA. We provide them with comprehensive training and maintain our aircraft in accordance with FAA regulations. The maintenance performed on our aircraft can be divided into three general categories: line maintenance, major maintenance, and component and engine overhaul and repair.
Technicians employed by us have appropriate experience and hold required licenses 14 issued by the FAA. We provide them with comprehensive training and maintain our aircraft in accordance with FAA regulations. The maintenance performed on our aircraft can be divided into three general categories: line maintenance, major maintenance, and component and engine overhaul and repair.
These include the following: Environmental: Agreed to purchase 50 Boeing 737MAX aircraft, which are expected to burn up to 20 percent less fuel on a per passenger basis compared to certain of the older Airbus A320 Series aircraft in our fleet, with the option to purchase an additional 50 Boeing 737MAX aircraft.
These include the following: Environmental : Agreed to purchase 50 Boeing 737MAX aircraft, which are expected to burn up to 20 percent less fuel on a per passenger basis compared to certain of the older Airbus A320 Series aircraft in our fleet, with the option to purchase an additional 80 Boeing 737MAX aircraft.
Data Security We continue to invest heavily in cybersecurity, cyber risk, vendor risk, and privacy initiatives. We employ experienced staff dedicated to cybersecurity and cyber risk analysis, process, and technology. We continue to evaluate and proactively implement 12 new preventive and detective processes and technologies including forward looking threat intelligence and data centric security measures.
Data Security We continue to invest heavily in cybersecurity, cyber risk, vendor risk, and privacy initiatives. We employ experienced staff dedicated to cybersecurity and cyber risk analysis, process, and technology. We continue to evaluate and proactively implement new preventive and detective processes and technologies including forward looking threat intelligence and data centric security measures.
Navitaire’ s passenger service system is expected to improve the way the airline manages customer interactions, reservations, and allows for dynamically priced ancillary products. Navitaire is also expected to facilitate the initiation and operation of our joint alliance with VivaAerobus.
Navitaire’ s passenger service system is expected to improve the way the airline manages customer interactions, reservations, and allows for dynamically priced ancillary products. Navitaire is also expected to facilitate the initiation and operation of our planned joint alliance with VivaAerobus.
We also hold DOT authority to engage in scheduled air transportation of passengers, property and mail between the United States and Mexico. We hold DOT authority to engage in charter air transportation of passengers, property, and mail on a domestic and international basis. 15 FAA.
We also hold DOT authority to engage in scheduled air transportation of passengers, property and mail between the United States and Mexico. We hold DOT authority to engage in charter air transportation of passengers, property, and mail on a domestic and international basis. FAA.
Insurance We maintain insurance policies we believe are of types customary in the airline industry and as required by the DOT, and are in amounts we believe to be adequate to protect us against material loss.
Insurance 15 We maintain insurance policies we believe are of types customary in the airline industry and as required by the DOT, and are in amounts we believe to be adequate to protect us against material loss.
We anticipate that in 2023 and thereafter, legislative and regulatory concern with the environmental impacts of the air transportation industry will increase, and that the longer-term effects on our fleet and operating costs may be substantial. According to a September 2021 White House announcement, civil aviation accounts for 11 percent of emissions by the U.S. transportation sector as a whole.
We anticipate that in 2024 and thereafter, legislative and regulatory concern with the environmental impacts of the air transportation industry will increase, and that the longer-term effects on our fleet and operating costs may be substantial. According to a September 2021 White House announcement, civil aviation accounts for 11 percent of emissions by the U.S. transportation sector as a whole.
During the Persian Gulf War of 1990-91 and on other occasions, CRAF carriers were required to permit the military to use their aircraft in this manner. As a result of our CRAF participation, we are eligible to bid on and be awarded peacetime airlift contracts with the military on a preferential basis. 17
During the Persian Gulf War of 1990-91 and on other occasions, CRAF carriers were required to permit the military to use their aircraft in this manner. As a result of our CRAF participation, we are eligible to bid on and be awarded peacetime airlift contracts with the military on a preferential basis. 18
Our strong revenue production from ancillary items, coupled with our ability to rapidly adjust capacity, has allowed us to consistently operate profitably and in many cases, produce industry leading margins in challenging macro environments, including periods of high fuel prices, economic recession and a pandemic.
Our strong revenue production from ancillary items, coupled with our ability to rapidly adjust capacity, has allowed us to consistently operate profitably and in many cases, produce among the industry leading margins in challenging macro environments, including periods of high fuel prices, economic recession and a pandemic.
These restrictions can include limiting nighttime operations, directing specific aircraft operational procedures during takeoff and initial climb, and limiting the overall number of flights at an airport. None of the airports we serve currently impose such restrictions on the number of flights or hours of operation that have a meaningful impact on our operations.
These restrictions can include limiting nighttime operations, directing specific aircraft operational procedures during takeoff and initial climb, and limiting the overall number of flights at an airport. Few of the airports we serve currently impose such restrictions on the number of flights or hours of operation that have a meaningful impact on our operations.
We offer third party travel products such as hotel rooms and ground transportation (rental cars and hotel shuttle products) for sale to our passengers. The marketing component of revenue related to our co-branded credit card is also included in this category. Fixed fee contract air transportation.
We offer third party travel products such as hotel rooms and ground transportation (rental cars and hotel shuttle products) for sale to our passengers. The marketing component of revenue related to our co-brand credit card is also included in this category. Fixed fee contract air transportation.
The revenue for ancillary air-related products and services is reflected in the passenger revenue income statement line item, along with scheduled service air transportation revenue and travel point redemptions from our co-branded Allegiant credit card and our non-card loyalty program. Third party products and services.
The revenue for ancillary air-related products and services is reflected in the passenger revenue income statement line item, along with scheduled service air transportation revenue and travel point redemptions from our co-brand Allegiant credit card and our non-card loyalty program. Third party products and services.
This means we must be under the actual control of U.S. citizens and we must satisfy certain other requirements, including that our president/chief executive officer and at least two-thirds of our board of directors and other managing officers are U.S. citizens, and that not more than 25 percent of our voting stock is owned or controlled by non-U.S. citizens.
This means we must be under the actual control of U.S. citizens and we must satisfy certain other requirements, including that our president and at least two-thirds of our board of directors and other managing officers are U.S. citizens, and that not more than 25 percent of our voting stock is owned or controlled by non-U.S. citizens.
The TSA has enforcement powers similar to the DOT’s and FAA’s described above. It also has the authority to issue regulations, including in cases of emergency, the authority to do so without advance notice, including issuance of a grounding order as occurred on September 11, 2001.
The TSA has enforcement powers similar to the DOT’s and FAA’s described above. It also has the authority to issue regulations, including in cases of emergency, the authority to do so without advance notice, including issuance of a grounding order as occurred on September 11, 2001. Aviation Taxes and Fees .
It is possible one or more such airports may impose additional future restrictions with or without advance notice, which may impact our operations. Foreign Ownership .
It is possible one or more such airports or others may impose additional or future restrictions with or without advance notice, which may impact our operations. 17 Foreign Ownership .
As an integrated travel company with an expanding airline business, we believe that solidifying our commitment to ESG efforts is a natural integration into our long-term corporate strategy and will enable us to better serve our stakeholders.
Environmental, Social and Governance (ESG) As an integrated travel company with an expanding airline business, we believe that solidifying our commitment to ESG efforts is a natural integration into our long-term corporate strategy and will enable us to better serve our stakeholders.
We believe this alliance is consistent with the DOT's goal of providing maximum benefits to the public, as the alliance is expected to increase competition, reduce transborder fares and provide increased nonstop service for our consumers traveling between the US and Mexico.
We believe this alliance is consistent with the DOT's goal of providing maximum benefits to the public, as the alliance is expected to increase competition, reduce transborder fares and provide increased nonstop service for our consumers traveling between the U.S. and Mexico.
We believe our under-served city strategy and less than daily service has reduced the intensity of competition we might otherwise face. As of February 1, 2023, we are the only mainline domestic scheduled carrier operating out of the Orlando Sanford International Airport and at 11 other airports in our network.
We believe our under-served city strategy and less than daily service has reduced the intensity of competition we might otherwise face. As of February 1, 2024, we are the only mainline domestic scheduled carrier operating out of the Orlando Sanford International Airport and at 12 other airports in our network.
Our developed nation-wide route network, pricing philosophy, direct distribution, advertising, and product offerings built around relationships with premier leisure companies, are all intended to appeal to leisure travelers and make it attractive for them to purchase air travel and related services and products from us.
Our developed nation-wide route network, pricing philosophy, direct distribution, award-winning loyalty programs, advertising, and product offerings built around relationships with premier leisure companies, are all intended to appeal to leisure travelers and make it attractive for them to purchase air travel and related services and products from us.
Significant increases in fuel costs could materially affect our operating results and profitability. We have not used financial derivative products to hedge our exposure to fuel price volatility in over 15 years, nor do we have any plans to do so in the future. Our largely variable cost structure allows us to adjust capacity accordingly based on the fuel environment.
Significant increases in fuel costs could materially affect our operating results and profitability. We do not use financial derivative products to hedge our exposure to fuel price volatility, nor do we have any plans to do so in the future. Our largely variable cost structure allows us to adjust capacity accordingly based on the fuel environment.
Only after this process has been exhausted may either party resort to self-help, such as a work stoppage by the union and its members. In January 2023, we and the union that represents our pilots jointly requested the appointment of a mediator through the NMB. The NMB has appointed a mediator and the parties are participating in mediated negotiations.
Only after this process has been exhausted may either party resort to self-help, such as a work stoppage by the union and its members. In 2023, we and the union that represents our pilots jointly requested the appointment of a mediator through the NMB. The NMB has appointed a mediator and the parties continue to participate in mediated negotiations.
For example, we utilize predictive maintenance to identify necessary aircraft maintenance before a problem arises, thereby avoiding unscheduled maintenance events which are costly and disruptive to our schedule. In addition, our direct to consumer distribution method results in enhanced data which helps us deepen our relationship with our customers and increase sales. Highly productive workforce.
For example, we utilize predictive maintenance to identify necessary aircraft maintenance before a problem arises, thereby avoiding unscheduled maintenance events which are costly and disruptive to our schedule. In addition, our direct to consumer distribution method results in enhanced data which helps us deepen our relationship with our customers and increase sales. Simple product.
We do this by flying only on days with sufficient market demand. In 2022, we were able to profitably fly a disproportionately low 12 percent of our scheduled ASMs on off-peak days (Tuesdays and Wednesdays).
We do this by flying only on days with sufficient market demand. In 2023, we were able to profitably fly a disproportionately low 11 percent of our scheduled ASMs on off-peak days (Tuesdays and Wednesdays).
Allegiant partners with the organization to offer “Wings for All” educational programs in communities we serve, helping make travel accessible for individuals with autism and other developmental disabilities. Allegiant supports Science, Technology, Engineering and Mathematics ("STEM") education programs that provide access to careers in aeronautical sciences in under-served communities.
We partner with the organization to offer “Wings for All” educational programs in communities we serve, helping make travel accessible for individuals with autism and other developmental disabilities. We support Science, Technology, Engineering and Mathematics ("STEM") education programs that provide access to careers in aeronautical sciences in under-served communities.
Competition The airline industry is highly competitive. Passenger demand and fare levels have historically been influenced by, among other things, the general state of the economy, international events, fuel prices, industry capacity, and pricing actions taken by other airlines.
Passenger demand and fare levels have historically been influenced by, among other things, the general state of the economy, international events, fuel prices, industry capacity, and pricing actions taken by other airlines.
Based on survey and interview results, we identified the following topics as material to Allegiant: – Environmental: Emissions, Energy, Waste and Hazardous Materials – Social: Product Quality and Safety, Accident and Safety Management, Human Rights, Benefits and Work-Life Balance, Non-Discrimination, Employee Health and Safety, Employment, Diversity, Equity and Inclusion, Employee Training and Development, Labor Management, Local Job Creation, Response to COVID – Governance: Business Ethics and Integrity, Anti-Corruption, Competitive Behavior, Data Security, Customer Privacy These material topics will guide the development of our ESG targets and annual ESG reports, including the inaugural ESG report published in December 2022.
Based on survey and interview results, we identified the following topics as material to Allegiant: • Environmental - Emissions, Energy, Waste and Hazardous Materials 11 • Social - Product Quality and Safety, Accident and Safety Management, Human Rights, Benefits and Work-Life Balance, Non-Discrimination, Employee Health and Safety, Employment, Diversity, Equity and Inclusion, Employee Training and Development, Labor Management, Local Job Creation • Governance - Business Ethics and Integrity, Anti-Corruption, Competitive Behavior, Data Security, Customer Privacy These material topics will continue to guide the development of our annual ESG reports.
For example, in 2022 during our peak demand period in July, we averaged 8.2 system block hours per aircraft per day while in September, we averaged only 4.7 system block hours per aircraft per day when leisure demand is seasonally lower.
For example, in 2023 during our peak demand period in July, we averaged 7.4 system block hours per aircraft per day while in September, we averaged only 4.5 system block hours per aircraft per day when leisure demand is seasonally lower.
We provide scheduled air transportation on limited-frequency, nonstop flights predominantly between under-served cities and popular leisure destinations. As of February 1, 2023, our operating fleet consisted of 122 Airbus A320 series aircraft. As of that date, we were selling travel on 573 routes to 125 cities.
We provide scheduled air transportation on limited-frequency, nonstop flights predominantly between under-served cities and popular leisure destinations. As of February 1, 2024, our operating fleet consisted of 126 Airbus A320 series aircraft. As of that date, we were selling travel on 555 routes to 124 cities.
As of this same date, we were selling 573 routes. In most of these cities, we provide service to more than one of our leisure destinations which are offered either on a year-round or seasonal basis. Our vast network footprint, coupled with our low frequency scheduling, provides us with a diversified, resilient network.
In most of these cities, we provide service to more than one of our leisure destinations which are offered either on a year-round or seasonal basis. Our vast network footprint, coupled with our low frequency scheduling, provides us with a diversified, resilient network.
This has resulted in our being able to generate as much as 60 percent of our operating income in the peak periods of March, summer (June and July) and the holiday seasons. Our core business model manages seat capacity by increased utilization of our aircraft during periods of high leisure demand and decreased utilization in low leisure demand periods.
This has resulted in our being able to generate a disporportionate portion of our operating income in the peak periods including March, summer (June and July) and the holiday seasons. Our core business model manages seat capacity by increased utilization of our aircraft during periods of high leisure demand and decreased utilization in low leisure demand periods.
The pricing of each product and our margin can be adjusted based on customer demand because our customers purchase travel directly through our booking engine. 8 Financial position As of December 31, 2022, we had $1.02 billion of unrestricted cash, cash equivalents and investment securities, and total debt and finance lease obligations (net of related costs) of $2.10 billion.
The pricing of each product and our margin can be adjusted based on customer demand because our customers purchase travel directly through our booking engine. Financial position As of December 31, 2023, we had $870.7 million of unrestricted cash, cash equivalents and investment securities, and total debt and finance lease obligations (net of related costs) of $2.26 billion.
We currently expect to switch over to SAP, Trax and Navitaire in 2023 with the Navblue cutover projected in 2024. Human Capital As part of our human capital resource objectives, we seek to recruit, retain, and develop our existing and future workforce.
We successfully switched over to SAP and Navitaire in 2023, with the Trax cutover projected in 2024. 13 Human Capital As part of our human capital resource objectives, we seek to recruit, retain, and develop our existing and future workforce.
Our third party offerings are available to customers based on our agreements with various travel and leisure companies. For example, we have partnered exclusively with Enterprise Holdings Inc. for the sale of rental cars packaged with air travel.
Our third party product offerings give our customers the opportunity to purchase hotel rooms, rental cars and airport shuttle service. Our third party offerings are available to customers based on our agreements with various travel and leisure companies. For example, we have partnered exclusively with Enterprise Holdings Inc. for the sale of rental cars packaged with air travel.
The CBAs covering our pilots and flight attendants became amendable in 2021 and 2022, respectively, and we are currently engaged in collective bargaining with the respective representatives of those employees for successor agreements.
The CBAs covering our dispatchers and maintenance technicians do not become amendable until 2026 and 2028, respectively. The CBAs covering our pilots and flight attendants became amendable in 2021 and 2022, respectively, and we are currently engaged in collective bargaining with the respective representatives of those employees for successor agreements.
In addition, snacks and beverages are sold individually on the aircraft, allowing passengers to purchase only items they value. Our direct to consumer distribution method enables a variety of added revenue opportunities with direct “one-stop” shopping solutions and managed product offerings. We offer various bundled ancillary products whereby customers can elect to purchase multiple ancillary products at a discount.
In addition, snacks and beverages are sold individually on the aircraft, allowing passengers to purchase only items they value. Our direct to consumer distribution method enables a variety of added revenue opportunities with direct “one-stop” shopping solutions and managed product offerings.
Our non-card loyalty program, Allways Rewards®, launched in August 2021, allows us to develop and maintain direct, long-term relationships with our customers. Similar to our cardholder program, we provide greater value to our Allways members through personalized promotions and targeted communications which we expect will result in customer loyalty and increased revenues over time.
Allways Rewards®, with more than 17 million members at December 31, 2023, allows us to develop and maintain direct, long-term relationships with our customers. Similar to our cardholder program, we provide greater value to our Allways members through personalized promotions and targeted communications which we expect will result in customer loyalty and increased revenues over time.
We believe leisure travelers are generally less concerned about departure and arrival times than business travelers, so we are able to schedule flights at times that enable us to reduce costs while remaining desirable to our leisure customers. Ancillary product offerings We believe many leisure travelers are concerned primarily with purchasing air travel at the least expensive price.
We believe leisure travelers are generally less concerned about departure and arrival times than business travelers, so we are able to schedule flights at times that enable us to reduce costs while remaining desirable to our leisure customers. Ancillary product offerings We believe leisure travelers are generally more price-sensitive than other travelers.
As of December 31, 2022, the composition of our fleet included a mix of A319 and A320 aircraft with seat configurations ranging from 156 to 186 seats, some of which are fitted with fuel-efficient Sharklets.
As of December 31, 2023, the composition of our fleet included a mix of A319 and A320 aircraft with seat configurations ranging from 156 to 186 seats, some of which are fitted with fuel-efficient Sharklets. We expect to see further fuel efficiency once the 737 MAX aircraft are added to our fleet.
As a result, there is potential for increased competition on our routes. As of February 1, 2023, we face mainline competition on approximately 22 percent of our operating and announced routes.
As a result, there is potential for increased competition on our routes. As of December 31, 2023, we face mainline non-stop competition on approximately 23 percent of our operating and announced routes.
Our agreement with Boeing and CFM International to purchase 50 Boeing 737MAX aircraft powered by LEAP 1-B engines, with deliveries beginning before the end of 2023, will provide us with new aircraft and more environmentally friendly engines.
Our agreement with Boeing and CFM International to purchase 50 Boeing 737 MAX aircraft powered by LEAP 1-B engines, with deliveries beginning in 2024, will provide us with new aircraft and more environmentally friendly engines.
Our annual report, quarterly reports, current reports and amendments to those reports are made available free of charge through the investor relations section on our website as soon as reasonably practicable after electronically filed with or furnished to the Securities and Exchange Commission (“SEC”). 4 Unique Business Model We have developed a unique business model that primarily focuses on leisure travelers in under-served cities.
Our annual report, quarterly reports, current reports and amendments to those reports are 4 made available free of charge through the investor relations section on our website as soon as reasonably practicable after electronically filed with or furnished to the Securities and Exchange Commission (“SEC”).
We achieve low aircraft ownership costs by opportunistically acquiring aircraft and by primarily owning our aircraft. As of February 1, 2023, we own or finance lease all but 17 of the aircraft in our operating fleet.
We achieve low aircraft ownership costs by opportunistically acquiring aircraft and by primarily owning our aircraft. As of February 1, 2024, we own or finance lease all but 17 of the aircraft in our operating fleet. In addition, we believe that we properly balance lower aircraft acquisition costs and operating costs to minimize our total costs.
Despite the significant fuel efficiencies gained over the past decade, we recognize we have a responsibility to do more. We have an internal Fuel Steering Committee that meets monthly to discuss various alternatives to conserve fuel.
Despite the significant fuel efficiencies gained over the past decade, we recognize we have a responsibility to do more, and one of our ESG goals is to reduce emissions through the end of this decade. We have an internal Fuel Steering Committee that meets monthly to discuss various alternatives to conserve fuel.
In this document, references to "Airbus A320 series aircraft" are intended to describe both Airbus A319 and A320 aircraft. Ancillary air-related products and services. We provide unbundled air-related services and products in conjunction with air transportation for an additional cost to customers.
Of these routes, 428 of them are unique routes which do not have any current nonstop competition. In this document, references to "Airbus A320 series aircraft" are intended to describe both Airbus A319 and A320 aircraft. Ancillary air-related products and services. We provide unbundled air-related services and products in conjunction with air transportation for an additional cost to customers.
We also face indirect competition from legacy carriers offering hub-and-spoke connecting flights to our markets, although these fares tend to be substantially higher, with much longer elapsed travel times. Several airlines also offer competitive one-stop service from the cities we serve. In our fixed fee operations, we compete with other scheduled airlines in addition to independent passenger charter airlines.
Indirectly, we compete with various carriers that provide nonstop service to our leisure destinations from airports near our cities. We also face indirect competition from legacy carriers offering hub-and-spoke connecting flights to our markets, although these fares tend to be substantially higher, with much longer elapsed travel times. Several airlines also offer competitive one-stop service from the cities we serve.
This finding may be a precursor to increased EPA regulation of commercial aircraft emissions in the United States, as has taken effect for operations within the European Union under EU legislation.
This finding may be a precursor to increased EPA regulation of commercial aircraft emissions in the United States, as has taken effect for operations within the European Union under EU legislation. In January 2021 the EPA adopted regulations setting emissions standards for newly-designed aircraft, with immediate effect, and for in-production aircraft, effective 2028.
In addition, we sponsored a month-long nationwide blood drive to further support relief efforts. During the COVID-19 pandemic and periodically, we provide additional support in our home community of Las Vegas, donating surplus in-flight food and beverage items such as juices, sodas and snacks to a local community food bank for distribution to families in need.
Periodically, we provide additional support in our home community of Las Vegas, donating surplus in-flight food and beverage items such as juices, sodas and snacks to a local community food bank for distribution to families in need.
Protecting business data and our customers’ privacy is critical to our continued operations and we intend to continue investing resources in cyber security accordingly. Employees As of December 31, 2022, we employed 5,315 full-time equivalent employees.
Protecting business data and our customers’ privacy is critical to our continued operations and we intend to continue investing resources in cyber security accordingly. For further information on our cybersecurity practices, see Item 1C - Cybersecurity. Employees As of December 31, 2023, the airline employed 5,643 full-time equivalent employees.
We also compete with aircraft owned or controlled by large tour companies. The basis of competition in the fixed fee market is cost, equipment capabilities, service, reputation, and schedule flexibility. Environmental, Social and Governance (ESG) We recognize our responsibility to reduce environmental impact from our operations.
In our fixed fee operations, we compete with other scheduled airlines in addition to independent passenger charter airlines. We also compete with aircraft owned or controlled by large tour companies. The basis of competition in the fixed fee market is cost, equipment capabilities, service, reputation, and schedule flexibility.
There are also FAA-approved Passenger Facility Charges ("PFCs") imposed by most of the airports we serve. Like FET, air carriers are required to collect these fees from passengers and pass them through to the respective federal agency or airport authority. These fees do not need to be reauthorized, although their amounts may be revised periodically.
Department of Agriculture's Animal and Plant Health Inspection Service ("APHIS"). There are also FAA-approved Passenger Facility Charges ("PFCs") imposed by most of the airports we serve. Like FET, air carriers are required to collect these fees from passengers and pass them through to the respective federal agency or airport authority.
By way of illustration, in 2022, during our peak demand period in July, we averaged 8.2 system block hours per aircraft per day while in September, our lowest month for demand, we averaged only 4.7 system block hours per aircraft per day.
By way of illustration, in 2023, during our peak demand period in July, we averaged 7.4 system block hours per aircraft per day while in September, our lowest month for demand, we averaged only 4.5 system block hours per aircraft per day, which is almost 40 percent less than the average system block hours in July.
Although the DOT process has progressed substantially and is continuing, there is no assurance when or whether DOT will ultimately approve the agreement and grant antitrust immunity.
The dispute remains unresolved and there is no assurance when or whether the DOT will ultimately approve the agreement and grant antitrust immunity.
Our airline operating CASM, excluding fuel (that is, excluding Sunseeker) was 7.33 ¢ in 2022, which was 25.0 percent lower than the Industry average of 9.77 ¢ for 2022. We continue to focus on maintaining low operating costs through the following tactics and strategies: Low aircraft ownership costs.
Our airline operating CASM, excluding fuel, special charges, and Sunseeker Resort) was 8.12 ¢ in 2023, which we believe is significantly lower than the Industry average. We continue to focus on maintaining low operating costs through the following tactics and strategies: 7 Low aircraft ownership costs.
We overlap with Southwest Airlines on 73 routes, Frontier Airlines on 38 routes, Spirit Airlines on 32 routes, American Airlines on 19 routes, Delta Airlines on 13 routes, Breeze Airways on 14 routes, United Airlines on nine routes, JetBlue Airlines on six routes, Sun Country Airlines on five routes and Alaska Airlines on three routes.
We overlap with Southwest Airlines on 77 routes, Spirit Airlines on 34 routes, Frontier Airlines on 33 routes, American Airlines on 17 routes, Breeze Airways on 17 routes, Delta Airlines on 16 routes, United Airlines on nine routes, JetBlue Airways on seven routes, Sun Country Airlines on five routes and Alaska Airlines on three routes.
The geographic diversity of our route network protects us from regional variations in the economy and helps insulate us from competitive actions, as it would be difficult for a competitor to materially impact our business by targeting one city or region. Our widespread route network also contributes to the continued growth of our customer base.
Our 24 bases spread throughout the country provide us the flexibility to redeploy capacity to best match demand trends around the country. 5 The geographic diversity of our route network protects us from regional variations in the economy and helps insulate us from competitive actions, as it would be difficult for a competitor to materially impact our business by targeting one city or region.
Similarly, in December 2022, the EPA adopted particulate matter emission standards and test procedures for newly-designed aircraft, with immediate effect, and for in-production aircraft, effective 2028. 16 These new standards and procedures harmonize with ICAO requirements. At present, the aircraft we operate are not affected by these standards.
Similarly, in December 2022, the EPA adopted particulate matter emission standards and test procedures for newly-designed aircraft, with immediate effect, and for in-production aircraft, effective 2028. In February 2024, the FAA adopted regulations implementing these EPA requirements. These new EPA and FAA standards and procedures harmonize with International Civil Aviation Organization ("ICAO") requirements.
The business model has evolved as our experienced management team has looked differently at the traditional way business has been conducted in the airline and travel industries.
Unique Business Model We have developed a unique business model that primarily focuses on leisure travelers in under-served cities. The business model has evolved as our experienced management team has looked differently at the traditional way business has been conducted in the airline and travel industries.
More than 250 new potential nonstop route opportunities have been identified as part of the DOT application, though specific routes targeted for service wilI be announced at a later date, following the application's approval. 14 We and VivaAerobus currently expect to offer flights under the alliance beginning in the first half of 2023, pending governmental approval of the applications.
The alliance is anticipated to add new transborder routes and nonstop competition where currently only connecting service is available. More than 250 new potential nonstop route opportunities have been identified as part of the DOT application, though specific routes targeted for service wilI be announced at a later date, following the application's approval.
In addition, we believe that we properly balance lower aircraft acquisition costs and operating costs to minimize our total costs. 7 Throughout our history, we have primarily purchased used aircraft with meaningful remaining useful lives, at reduced prices. As of February 1, 2023, our operating fleet consists of 122 Airbus A320 series aircraft, of which 109 were acquired used.
Throughout our history, we have primarily purchased used aircraft with meaningful remaining useful lives, at reduced prices. As of February 1, 2024, our operating fleet consists of 126 Airbus A320 series aircraft, of which 113 were acquired used and 13 were acquired new.
In conjunction with the focused efforts and contributions of our pilots, dispatchers, and stations personnel, we have implemented several fuel conservation practices, which include the following: • Single engine taxi in and out, as time permits • Constant descent angle approach, as permitted by air traffic • Flaps 3 for landing, an Airbus green procedure creating less drag during the landing process, conditions permitting • Idle thrust reverse for landing, conditions permitting • Auxiliary power unit fuel optimization • Route optimization • Data collection by aircraft to identify performance deterioration and rectify where necessary • Trial of several electric ground handling equipment • Optimization of the amount of contingency and dispatch fuel • Deployment of process to find optimal winds aloft while inflight In addition to the above initiatives, the Fuel Steering Committee is currently researching sustainable aviation fuel to see if this could be a viable option on some of our routes.
Building on the dedicated efforts and teamwork of our pilots, dispatchers, and station personnel, we are actively advancing our fuel conservation practices across all flights, which include the following: • Single engine taxi in and out, as time permits • Constant descent angle approach, as permitted by air traffic • Flaps 3 for landing, an Airbus green procedure creating less drag during the landing process, conditions permitting • Idle thrust reverse for landing, conditions permitting • Auxiliary power unit fuel optimization • Route optimization • Data collection by aircraft to identify performance deterioration and rectify where necessary • Optimization of the amount of contingency and dispatch fuel • Deployment of process to find optimal winds aloft while inflight In addition to the initiatives above, we are currently assessing sustainable aviation fuels as part of our sustainability strategy for reaching our emissions intensity reduction goal by the end of 2030 and offsetting requirements under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).
In addition to FET, there are federal fees related to services provided by the TSA, and, in the case of international flights, U.S. Customs and Border Protection ("CBP"), U.S. Citizenship and Immigration Services (“CIS”), and the U.S. Department of Agriculture's Animal and Plant Health Inspection Service ("APHIS").
All carriers are required to collect these taxes from passengers and pass them through to the federal government. In addition to FET, there are federal fees related to services provided by the TSA, and, in the case of international flights, U.S. Customs and Border Protection ("CBP"), U.S. Citizenship and Immigration Services (“CIS”), and the U.S.
The scheduled service routes we are selling as of February 1, 2023 are summarized below (includes 571 routes we are currently serving, and two new announced routes on which will begin service in 2023): Routes to Orlando 67 Routes to Las Vegas 61 Routes to Tampa/St.
The scheduled service routes as of February 1, 2024 are summarized below (includes 543 active routes, and 12 newly announced routes as of February 1, 2024, which will begin service in 2024): Routes to Orlando (MCO & SFB) 72 Routes to Las Vegas 61 Routes to Tampa/St.
VivaAerobus Alliance In December 2021, we announced plans for a fully-integrated commercial alliance agreement with VivaAerobus, designed to expand options for nonstop leisure air travel between our markets in the United States and Mexico. We and VivaAerobus have submitted a joint application to the DOT requesting approval of and antitrust immunity for the alliance.
Our management supervises all maintenance functions performed by our personnel and contractors employed by us, and by outside organizations. VivaAerobus Alliance In December 2021, we announced plans for a fully-integrated commercial alliance agreement with VivaAerobus, designed to expand options for nonstop leisure air travel between our markets in the United States and Mexico.
Database marketing opportunities span the full customer journey including the time of travel purchase, between purchase and travel, and after travel is complete. To this end, we are working to strengthen customer engagement, while affording a more elastic, reliable information technology infrastructure with significant development advantages for marketing as well as for other business units across the company.
To this end, we are working to strengthen customer engagement, while affording a more elastic, reliable information technology infrastructure with significant development advantages for marketing as well as for other business units across the company. Beyond allegiant.com, we market our products and services through a combination of traditional advertising, including radio, television as well as digital advertising.
We own and manage our own eCommerce platform, which gives us the ability to modify our system to enhance third party product offerings 6 based on specific needs.
We have increased revenue related to these ancillary items from $5.87 per passenger in 2004 to $72.90 per passenger in 2023. We own and manage our own eCommerce platform, which gives us the ability to modify our system to enhance third party product offerings based on specific needs.
Throughout this transition period and continuing through 2022, we saw significant improvement in fuel efficiency. During 2022, we consumed 219 million gallons of fuel averaging 84.3 available seat miles (ASMs) per gallon of fuel, a 34 percent improvement when compared to 2012.
During this period, we saw significant improvement in fuel efficiency. During 2023, we consumed 225 million gallons of fuel averaging 83.4 ASMs per gallon of fuel, a 32 percent improvement when compared to 2012.
We were also recognized as a "Certified Most Loved Workplace" by Best Practice Institute, a Partner of Newsweek Magazine. Community Involvement Allegiant has worked with the Make-A-Wish® Foundation since 2012 by flying "wish kids" and their families to their desired destinations, at no cost, and donating a portion of proceeds from our in-flight Wingz Kids Snack Pack to the organization.
Community Involvement We have worked with the Make-A-Wish® Foundation since 2012 by flying "wish kids" and their families to their desired destinations, at no cost, and donating a portion of proceeds from our in-flight Wingz Kids Snack Pack to the organization. To kick off 2023, we celebrated a special milestone welcoming our 2000th wish kid on board an Allegiant flight.
Particularly since FAA reauthorization expires September 30, 2023, during the current year Congress may consider legislation that could increase the amount of FET and/or one or more of the other federally imposed or approved fees identified above. Increasing the overall price charged to passengers could lessen demand for air travel.
These fees do not need to be reauthorized, although their amounts may be revised periodically. In 2024 or thereafter, Congress may consider legislation that could increase the amount of FET and/or one or more of the other federally imposed or approved fees identified above. Increasing the overall price charged to passengers could lessen demand for air travel.
This strategy allows us to generate additional passenger revenues from our customers' decisions to purchase these ancillary products. We have established a broad route network with a national footprint, providing service on 571 routes between 93 origination cities and 32 leisure destinations, and serving 42 states as of February 1, 2023.
This strategy allows us to generate additional passenger revenues from our customers' decisions to purchase these ancillary products. We have established a broad route network with a national footprint.
In lieu of the GDS distribution points used by most airlines, allegiant.com is our primary distribution method. This low-cost strategy results in significant cost savings by avoiding fees associated with GDS. It also enables a variety of added revenue opportunities with direct “one-stop” shopping solutions and managed product offerings.
Marketing and Distribution Core to Allegiant’s business model is our direct-to-customer distribution. In lieu of the Global Distribution System (GDS) distribution points used by most airlines, allegiant.com is our primary distribution method. This low-cost strategy results in significant cost savings by avoiding fees associated with GDS.
In developing a unique business model, our ancillary offerings (ancillary air-related items included in passenger revenue as well as the sale of third party products and services) have been a significant source of our revenue growth. We have increased revenue related to these ancillary items from $5.87 per passenger in 2004 to $67.74 per passenger in 2022.
We have identified more than 1,400 additional domestic routes which we could target in the future to further expand our network. 6 In developing a unique business model, our ancillary offerings (ancillary air-related items included in passenger revenue as well as the sale of third party products and services) have been a significant source of our revenue growth.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe are subject to a Nevada statute (NRS 78.411 to 78.444) that prohibits us from engaging in any “combinations” with any “interested stockholder,” as such terms are defined in that statute, meaning generally that a stockholder who is the beneficial owner of 10 percent or more of our stock cannot acquire, or engage in certain significant transactions with us for a period of up to four years after the date that person became an interested stockholder unless various conditions are met, such as approval of the transaction by our board of directors and by at least 60 percent of disinterested stockholders.
Biggest changeWe are subject to a Nevada statute (NRS 78.411 through 78.444) that prohibits us from engaging in certain “combinations,” including mergers, consolidations, sales and leases of assets, issuances of securities and similar transactions, with a stockholder who is the beneficial owner of 10 percent or more of our stock (an “interested stockholder”), for a period of up to four years after the date that person became an interested stockholder, unless either our board of directors approves, in advance, the transaction by which the person became an interested stockholder, or such combination is approved at a meeting by at least 60 percent of voting power of our stock that is not beneficially owned by the interested stockholder, or its affiliates or associates.
If we are unable to refinance our indebtedness or find alternative means of financing our operations, we may be required to take actions that are inconsistent with our current business practices or strategy. Covenants in our senior secured notes, revolving credit facility and construction loan could limit how we conduct our business, which could affect our long-term growth potential.
If we are unable to refinance our indebtedness or find alternative means of financing our operations, we may be required to take actions that are inconsistent with our current business practices or strategy. 22 Covenants in our senior secured notes, revolving credit facility and construction loan could limit how we conduct our business, which could affect our long-term growth potential.
As a result of these restrictive covenants, we may be limited in how we conduct business, and we may be unable to raise additional debt or equity financing to operate during difficult times or to take advantage of new business opportunities. 22 Any inability to obtain financing for aircraft under contract could harm our fleet growth plan.
As a result of these restrictive covenants, we may be limited in how we conduct business, and we may be unable to raise additional debt or equity financing to operate during difficult times or to take advantage of new business opportunities. Any inability to obtain financing for aircraft under contract could harm our fleet growth plan.
Increased taxes and fees per passenger may impact our load factors more than other airlines as our lower fares are designed to stimulate demand for our services, and taxes and fees often represent a higher proportion of our overall price than for other airlines. FAA limitations could impact our ability to grow in the future.
Increased taxes and fees per passenger may impact our load factors more than other airlines as our lower fares are designed to stimulate demand for our services, and taxes and fees may represent a higher proportion of our overall price than for other airlines. FAA limitations could impact our ability to grow in the future.
Non-U.S. citizens will be able to own and vote shares of our common stock only if the combined ownership by all non-U.S. citizens does not violate these requirements. 27 Item 1B. Unresolved Staff Comments None. 28
Non-U.S. citizens will be able to own and vote shares of our common stock only if the combined ownership by all non-U.S. citizens does not violate these requirements. 28 Item 1B. Unresolved Staff Comments None.
We have pledged our assets to secure the Senior Secured Notes and revolving credit facility with the exceptions of aircraft and aircraft engines, the Sunseeker Resort and certain other exceptions. The Sunseeker Resort is pledged to secure the $350.0 million construction loan agreement to finance the completion of the construction of the Resort.
We have pledged our assets to secure the Senior Secured Notes and revolving credit facility with the exceptions of aircraft and aircraft engines, the Sunseeker Resort and certain other exceptions. The Sunseeker Resort is pledged to secure the $350.0 million construction loan agreement to finance the construction of the Resort.
The market price of our common stock may fluctuate substantially due to a variety of factors, many of which are beyond our control, including: – the impact of pandemics and other communicable diseases on air travel and any related government restrictions impacting air travel – fuel price volatility, and the effect of economic and geopolitical factors and worldwide oil supply and consumption on fuel availability – announcements concerning our competitors, new market entrants, the airline industry, or the economy in general – strategic actions by us or our competitors, such as acquisitions or restructurings – media reports and publications about the safety of our aircraft or the aircraft types we operate – new regulatory pronouncements and changes in regulatory guidelines – announcements concerning our business strategy – our ability to grow service in the future as rapidly as the market anticipates as we continue to add more cities to our network – general and industry-specific economic conditions – changes in financial estimates or recommendations by securities analysts – substantial sales of our common stock or other actions by investors with significant shareholdings – additional issuances of our common stock – labor costs or work actions – general market conditions The stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of particular companies.
The market price of our common stock may fluctuate substantially due to a variety of factors, many of which are beyond our control, including: • the impact of pandemics and other communicable diseases on air travel and any related government restrictions impacting air travel • fuel price volatility, and the effect of economic and geopolitical factors and worldwide oil supply and consumption on fuel availability • announcements concerning our competitors, new market entrants, the airline industry, or the economy in general • strategic actions by us or our competitors, such as acquisitions or restructurings • media reports and publications about the safety of our aircraft or the aircraft types we operate • new regulatory pronouncements and changes in regulatory guidelines • announcements concerning our business strategy • our ability to grow service in the future as rapidly as the market anticipates • general and industry-specific economic conditions • changes in financial estimates or recommendations by securities analysts • substantial sales of our common stock or other actions by investors with significant shareholdings • additional issuances of our common stock • labor costs or work actions • general market conditions The stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of particular companies.
The future cost of complying with these and other laws, rules and regulations, including new federal legislative and DOT regulatory requirements in the consumer-protection area, cannot be predicted and could significantly increase our costs of doing business. Over the past 14 years the DOT has adopted revisions and expansions to a variety of its consumer protection regulations and policies.
The future cost of complying with these and other laws, rules and regulations, including new federal legislative and DOT regulatory requirements in the consumer-protection area, cannot be predicted and could significantly increase our costs of doing business. Over the past 15 years the DOT has adopted revisions and expansions to a variety of its consumer protection regulations and policies.
We (i.e., our airline subsidiary) and VivaAerobus, a Mexican airline, submitted to DOT in late 2021 a joint application requesting approval of and antitrust immunity for a comprehensive alliance agreement applicable to all routes we and/or Viva may operate between points in the United States and points in Mexico.
We (i.e., our airline subsidiary) and VivaAerobus, a Mexican airline, submitted to DOT in December 2021 a joint application requesting approval of and antitrust immunity for a comprehensive alliance agreement applicable to all routes we and/or Viva may operate between points in the United States and points in Mexico.
During difficult economic times, we may be unable to raise prices in response to fuel cost increases, labor, or other operating costs, which could adversely affect our results of operations and financial condition. The successful development of our first Sunseeker Resort is dependent on commercial and economic factors, some of which are beyond our control.
During difficult economic times, we may be unable to raise prices in response to fuel cost increases, labor, or other operating costs, which could adversely affect our results of operations and financial condition. The successful operation of our Sunseeker Resort is dependent on commercial and economic factors, some of which are beyond our control.
We anticipate that in 2023 and thereafter, legislative and regulatory concern with the environmental impacts of the air transportation industry will increase, and that the longer-term effects on our fleet and operating costs may be substantial. In the 24 past, legislation to address climate change issues as they relate to the transportation industry has been introduced in the U.S.
We anticipate that in 2024 and thereafter, legislative and regulatory concern with the environmental impacts of the air transportation industry will increase, and that the longer-term effects on our fleet and operating costs may be substantial. In the past, legislation to address climate change issues as they relate to the transportation industry has been introduced in the U.S.
These loan agreements as well as our revolving credit facility contain covenants limiting our ability to, among other things, make certain types of restricted payments, including paying dividends, incur debt or liens, merge or consolidate with others, dispose of assets, enter into certain transactions with affiliates, engage in certain business activities or make certain investments.
These loan agreements as well as one of our revolving credit facilities contain covenants limiting our ability to, among other things, make certain types of restricted payments, including paying dividends, incur debt or liens, merge or consolidate with others, dispose of assets, enter into certain transactions with affiliates, engage in certain business activities or make certain investments.
Additional expanded regulations have recently been proposed by DOT and may take effect in 2023 or thereafter, as may new consumer protection legislation proposed in Congress. We are not able to predict the impact of new consumer protection rules on our business, though we monitor the progress of potential laws and rulings.
Additional expanded regulations have been proposed by DOT and may take effect in 2024 or thereafter, as may new consumer protection legislation proposed in Congress. We are not able to predict the impact of new consumer protection rules on our business, though we monitor the progress of potential laws and rulings.
The average age of our aircraft as of February 1, 2023, is 14.8 years, which is older than the fleets of many other carriers. In general, the cost to maintain aircraft increases as they age, and exceeds the cost to maintain newer aircraft. FAA regulations, including aging aircraft airworthiness directives, require additional and enhanced maintenance inspections for older aircraft.
The average age of our aircraft as of February 1, 2024, is 15.5 years, which is older than the fleets of many other carriers. In general, the cost to maintain aircraft increases as they age, and exceeds the cost to maintain newer aircraft. FAA regulations, including aging aircraft airworthiness directives, require additional and enhanced maintenance inspections for older aircraft.
In January 2021 the EPA adopted regulations setting emissions standards equivalent to ICAO’s for newly-designed aircraft, with immediate effect, and for in-production aircraft, effective 2028. Similarly, in December 2022, the EPA adopted particulate matter emission standards and test procedures for newly-designed aircraft, with immediate effect, and for in-production aircraft, effective 2028. These new standards and procedures harmonize with ICAO requirements.
In January 2021 the EPA adopted regulations setting emissions standards equivalent to ICAO’s for newly-designed aircraft, with immediate effect, and for in-production aircraft, effective 2028. Similarly, in December 2022, the EPA adopted particulate matter emission standards and test procedures for newly-designed aircraft, with immediate effect, and for in-production aircraft, effective 2028.
Unfavorable U.S. economic conditions have historically driven changes in travel patterns and have resulted in reduced discretionary spending for leisure travel. Unfavorable economic conditions could impact demand for airline travel in our under-served cities to our leisure destinations.
The airline industry is particularly sensitive to changes in economic conditions. Unfavorable U.S. economic conditions have historically driven changes in travel patterns and have resulted in reduced discretionary spending for leisure travel. Unfavorable economic conditions could impact demand for airline travel in our under-served cities to our leisure destinations.
Our debt and finance lease obligations as of December 31, 2022 totaled $2.10 billion net of related costs. In addition, in December 2021, we entered into a purchase agreement with The Boeing Company to purchase 50 Boeing 737 MAX aircraft to deliver in 2023 to 2025.
Our debt and finance lease obligations as of December 31, 2023 totaled $2.26 billion net of related costs. In addition, in December 2021, we entered into a purchase agreement with The Boeing Company to purchase 50 Boeing 737 MAX aircraft which are expected to deliver in 2024, 2025, and 2026.
At present, the aircraft we operate are not affected by these standards, although as noted, we anticipate an ever-increasing legislative and regulatory focus on aviation’s impacts on the environment. These developments and any additional legislation or regulations addressing climate change are likely to increase our costs of doing business in the future and the increases could be material.
As noted, however, we anticipate an ever-increasing legislative and regulatory focus on aviation’s impacts on the environment. These developments and any additional legislation or regulations addressing climate change are likely to increase our costs of doing business in the future and the increases could be material.
These regulations can directly impact the frequency of inspections as an aircraft ages, and vary by aircraft or engine type, depending on the unique characteristics of each aircraft and/or engine. In addition, we may be required to comply with any future law changes, regulations, or airworthiness directives. We cannot assure investors our maintenance costs will not exceed our expectations.
These regulations can directly impact the frequency of inspections as an aircraft ages, and vary by aircraft or engine type, depending on the unique characteristics of each aircraft and/or engine. In addition, we may be required to comply with any future law changes, regulations, or airworthiness directives.
Since the onset of the COVID-19 pandemic, federal, state and local authorities have at various times instituted measures such as imposing self-quarantine requirements, requiring testing before entry into certain states; issuing directives forcing businesses to temporarily close, restricting air travel and issuing shelter-in-place and similar orders limiting the movement of individuals.
During the COVID-19 pandemic, these resulted in federal, state and local authorities instituting measures such as imposing self-quarantine requirements, requiring testing before entry into certain states; issuing directives forcing businesses to temporarily close, restricting air travel and issuing shelter-in-place and similar orders limiting the movement of individuals.
Our business depends upon the efforts of our chief executive officer, John Redmond, president, Gregory Anderson, and a small number of executive management and operating personnel. We do not currently maintain key-man life insurance on Mr. Redmond, Mr. Anderson or any other executives.
Our business could be harmed if we lose the services of key personnel. Our business depends upon the efforts of our chief executive officer, Maury Gallagher, president, Gregory Anderson, and a small number of executive management and operating personnel. We do not currently maintain key-man life insurance on Mr. Gallagher, Mr. Anderson or any other executives.
The extent of any future impact of the COVID-19 pandemic on our business and our financial and operational performance will depend on future developments, including the duration, spread, severity and recurrences of the COVID-19 or similar viruses; the possible imposition of testing requirements before domestic travel; the duration and scope of related federal, state and local government restrictions; the availability and effectiveness of vaccines against COVID-19 and any variants of the virus; the extent of the impact of the COVID-19 pandemic on overall demand for air travel; and our access to capital during the affected periods, all of which are highly uncertain and cannot be predicted.
The extent of impact of any future pandemic or contagion on our business and our financial and operational performance will depend on the duration, spread, severity and recurrences of the disease; the possible imposition of testing requirements before domestic travel; the duration and scope of any federal, state and local government restrictions; the availability and effectiveness 24 of vaccines; the extent of the impact of the outbreak on overall demand for air travel; and our access to capital during the affected periods, all of which could be highly uncertain and cannot be predicted.
Airlines are often affected by factors beyond their control, including air traffic congestion, weather conditions, increased security measures, and a reduction in demand to any particular market, any of which could harm our operating results and financial condition.
Such suits are costly to defend and could result in sizeable liability exposure for any air carrier. 26 Airlines are often affected by factors beyond their control, including air traffic congestion, weather conditions, increased security measures, and a reduction in demand to any particular market, any of which could harm our operating results and financial condition.
Additionally, from time to time legislative proposals have been made to re-regulate the airline industry in varying degrees - for example, to specify minimum seat-size and legroom requirements - which if adopted could affect our costs materially.
Additionally, from time to time legislative proposals have been made to re-regulate the airline industry in varying degrees - for example, to specify minimum seat-size and legroom requirements - which if adopted could affect our costs materially. Such legislation may be proposed and could be adopted in 2024, particularly in the course of FAA reauthorization.
Although we have entered into an agreement for a financing commitment of up to $200.0 million of required pre-delivery deposits for our Boeing order, we have secured revolving lines of credit for up to $275.0 million to offset the risk that financing may not be available on acceptable terms when needed and while we believe debt financing will be available for the aircraft we will acquire, we cannot provide assurance that we will be able to secure such financing on terms attractive to us or at all.
Although we have entered into agreements which had undrawn financing commitments of $25.1 million for our Boeing order at February 1, 2024, we have secured revolving lines of credit for up to $275.0 million to offset the risk that financing may not be available on acceptable terms when needed and while we believe debt financing will be available for the aircraft we will acquire, we cannot provide assurance that we will be able to secure such financing on terms attractive to us or at all.
As of December 31, 2022, the principal balances of our Senior Secured Notes due 2024 and Senior Secured Notes due 2027 (collectively the "Senior Secured Notes") totaled $700.0 million and the principal balance of our Sunseeker construction loan was $350.0 million.
As of December 31, 2023, the principal balance of our Senior Secured Notes due 2027 (the "Senior Secured Notes") was $550.0 million and the principal balance of our Sunseeker construction loan was $350.0 million.
Delivery schedules for newly built aircraft frequently slip which could delay deliveries to us. Our planned initiation of service with these aircraft in the future could be adversely affected if Boeing or other third parties fail to perform as contractually obligated.
Our planned initiation of service with these aircraft in the future could be adversely affected if Boeing or other third parties fail to perform as contractually obligated.
Due to the high percentage of our operating costs represented by fuel, a relatively small increase in the price of fuel could have a significantly negative impact on our operating costs.
Due to the high percentage of our operating costs represented by fuel, a relatively small increase in the price of fuel could have a significantly negative impact on our operating costs. A fuel supply shortage or higher fuel prices could result in reduction of our service during the period affected.
Actual or perceived risk of infection on our flights could have a material adverse effect on the public's comfort with air travel, which could harm our reputation and business.
Actual or perceived risk of infection could have a material adverse effect on the public's comfort with air travel, in general or on our flights, which could harm our reputation and business. The airline industry is highly competitive and future competition in our under-served markets could harm our business. The airline industry is highly competitive.
Although we are working with a recognized consultant in this area and we intend to comply with any SEC requirements, our brand and reputation may suffer if our stakeholders are not satisfied with our ESG disclosures, the goals we set in that area or our progress toward meeting those goals once established. 23 Risks Associated with the Airline and Travel Industry Our operating results could be affected by outbreaks of communicable diseases.
Although we are working with a recognized consultant in this area and we intend to comply with any SEC requirements, our brand and reputation may suffer if our stakeholders are not satisfied with our ESG disclosures, the goals we have set in that area or our progress toward meeting those goals.
Flight crews have filed class action lawsuits against air carriers in a number of states with varied results and, in many cases, the results have been appealed. We have been sued in California by a flight attendant seeking class action certification on claims involving these issues.
Flight crews have filed class action lawsuits against air carriers in a number of states with varied results and, in many cases, the results have been appealed.
Although there are no generic restrictions on growth in place at the current time, future limitations from the FAA could potentially hinder our growth. 21 Our indebtedness, debt service obligations and other commitments could adversely affect our business, financial condition and results of operations as well as limit our ability to react to changes in the economy or our industry and prevent us from servicing our debt and operating our business.
Our indebtedness, debt service obligations and other commitments could adversely affect our business, financial condition and results of operations as well as limit our ability to react to changes in the economy or our industry and prevent us from servicing our debt and operating our business.
Any disruption to these systems could result in the loss of important data and revenue, increase in expenses, and harm to our business. Unfavorable economic conditions may adversely affect travel from our markets to our leisure destinations. The airline industry is particularly sensitive to changes in economic conditions.
Substantial or repeated website, reservations system, or telecommunication system failures could decrease the attractiveness of our services. Any disruption to these systems could result in the loss of important data and revenue, increase in expenses, and harm to our business. Unfavorable economic conditions may adversely affect travel from our markets to our leisure destinations.
The pilot agreement is now amendable and the parties, after negotiations for several months, have jointly sought mediation through the National Mediation Board. Pilot pay scales have increased significantly in the industry and we expect our next contract with this work group to reflect industry competitive rates which will be significantly higher than our current pilot rates.
Pilot pay scales have increased significantly in the industry and we expect our next contract with this work group to reflect industry competitive rates which will be significantly higher than our current pilot rates.
In-flight emergencies affecting our aircraft, and resulting media attention, could also contribute to a public perception regarding safety concerns and a loss of business. 19 The FAA could suspend or restrict the use of our aircraft in the event of actual or perceived mechanical problems or safety issues while it conducts its own investigation, whether involving our aircraft or another U.S. or foreign airline’s aircraft.
The FAA could suspend or restrict the use of our aircraft in the event of actual or perceived mechanical problems or safety issues while it conducts its own investigation, whether involving our aircraft or another U.S. or foreign airline’s aircraft.
In addition, another Nevada statute (NRS 78.378 to 78.3793) may eliminate voting rights of “control shares” in a Nevada corporation with at least 200 stockholders of record (of which at least 100 have addresses in Nevada) to the extent they are acquired by a holder in connection with an acquisition of shares that causes such holder to exceed certain thresholds (one-fifth, one-third and a majority or more) of the voting power of such corporation.
In addition, another Nevada statute (NRS 78.378 through 78.3793) may eliminate the voting rights of shares of our stock to the extent the shares are acquired by a holder in connection with, or within 90 days prior to, an acquisition of a “controlling interest” 27 that causes such holder to exceed certain thresholds (one-fifth, one-third and a majority or more) of the total voting power of our stock.
This would result in increased overall costs and may adversely impact our results of operations. Our reputation and financial results could be harmed in the event of an accident or restrictions affecting aircraft in our fleet. As of February 1, 2023, our operating fleet consists of 122 Airbus A320 series aircraft, of which all but 13 were acquired used.
This would result in increased overall costs and may adversely impact our results of operations. Our reputation and financial results could be harmed in the event of an accident or restrictions affecting aircraft in our fleet.
A breach in the security of personal information, breach in credit card data, or system disruptions caused by security breaches or cyberattacks – including attacks on those parties we do business with – could harm our ability to conduct our operations and could have a material adverse effect on our financial position or results of operations.
Our business could also be significantly harmed if the public avoids flying our aircraft due to an adverse perception of the aircraft we utilize because of safety concerns or other problems, whether real or perceived, or in the event of an accident involving these aircraft. 20 A breach in the security of personal information, breach in credit card data or system disruptions caused by security breaches or cyberattacks – including attacks on those parties we do business with – could harm our ability to conduct our operations and could have a material adverse effect on our financial position or results of operations.
Resulting decreases in passenger volume would harm our load factors, could increase our cost per passenger and adversely affect our operating results. The airline industry is highly competitive and future competition in our under-served markets could harm our business. The airline industry is highly competitive.
Resulting decreases in passenger volume would harm our load factors, could increase our cost per passenger and adversely affect our operating results.
Prior to offering international service on our website, we will need to implement the necessary systems to accommodate international travel and to meet the various requirements imposed by the U.S. and Mexico. There is no assurance that these requirements will be met in time for the expected launch of these services.
The initiation of this service from these airports will depend on the airport satisfying the requirements for international service, for which we can provide no assurance. Prior to offering international service on our website, we will need to implement the necessary systems to accommodate international travel and to meet the various requirements imposed by the U.S. and Mexico.
The trading price of our common stock could decline due to any of these risks, and investors may lose all or part of their investment. Risks Related to the COVID-19 Pandemic The COVID-19 pandemic has materially and adversely affected, and may continue to materially and adversely affect, our results of operations, financial position and liquidity.
The trading price of our common stock could decline due to any of these risks, and investors may lose all or part of their investment.
Although the DOT process has progressed substantially and is continuing, there is no assurance as to when or whether DOT will ultimately approve the agreement and grant antitrust immunity. While Mexican regulatory approval was issued in late 2022, both parties have stated they do not intend to proceed under the agreement in the absence of antitrust immunity issued by DOT.
While Mexican regulatory approval was issued in late 2022, that approval will require renewal (which is not assured) and both parties have stated they do not intend to proceed under the agreement in the absence of antitrust immunity issued by DOT.
Our automated systems cannot be completely protected against events that are beyond our control, such as natural disasters, telecommunications failures, malware, ransom ware, security breaches or cyber-security attacks.
Our automated systems cannot be completely protected against events that are beyond our control, such as natural disasters, telecommunications failures, malware, ransom ware, security breaches or cyber-security attacks. Although we have implemented security measures and have information systems disaster recovery plans in place, we cannot assure investors that these measures are adequate to prevent disruptions or losses.
A fuel supply shortage or higher fuel prices could result in reduction of our service during the period affected. 18 We have made a business decision not to purchase financial derivatives to hedge against increases in the cost of fuel. This decision may make our operating results more vulnerable to the impact of fuel price increases.
We have made a business decision not to purchase financial derivatives to hedge against increases in the cost of fuel. This decision may make our operating results more vulnerable to the impact of fuel price increases. Increased labor costs could result from industry conditions and could be impacted by labor-related disruptions.
These cancellations resulted in unusually high irregular operations costs as we compensate passengers on company-cancelled flights for inconvenience suffered in addition to the ticket price. Moreover, the ability to attract and retain passengers depends, in part, upon the perception and reputation of our company and the public’s concerns regarding the health and safety of air travel generally.
Moreover, the ability to attract and retain passengers depends, in part, upon the perception and reputation of our company and the public’s concerns regarding the health and safety of air travel generally.
We rely on third parties to provide us with aircraft, facilities and services that are integral to our business. We rely on Boeing and the owners of used aircraft under contract to be able to deliver aircraft in accordance with the terms of executed agreements in a timely manner.
We rely on Boeing and the owners of used aircraft under contract to be able to deliver aircraft in accordance with the terms of executed agreements in a timely manner. Delivery schedules for newly built aircraft frequently slip which could delay deliveries to us.
To the extent in effect in the future, such measures may depress demand for air travel, disrupt our operations, and materially adversely affect our business. Instances of actual or perceived risk of infection among our employees, or our service providers’ employees, could further negatively impact our operations.
To the extent in effect to address communicable diseases in the future, such measures could depress demand for air travel, disrupt our operations, and materially adversely affect our business.
We may not be able to maintain or grow our ancillary revenues . Our business strategy includes expanding our ancillary products and services. We cannot ensure that passengers will pay for additional ancillary products and services we offer in the future, or that they will continue to pay for the ancillary products and services we currently offer.
We cannot ensure that passengers will pay for additional ancillary products and services we offer in the future, or that they will continue to pay for the ancillary products and services we currently offer. Regulatory changes could also adversely affect our ancillary revenue opportunities.
We will be able to implement the joint alliance with VivaAerobus as planned only if the DOT grants us antitrust immunity and we receive similar approval from Mexican authorities. Although we believe we should qualify for these approvals, there can be no assurance we will be able to obtain them on a timely basis, or at all.
The success of our alliance with VivaAerobus will depend on our ability to obtain necessary government approvals and other factors. We will be able to implement the joint alliance with VivaAerobus as planned only if the DOT grants us antitrust immunity and we receive similar approval from Mexican authorities.
In 2023, Congress may consider legislation that could increase the amount of Federal Excise Tax (“FET”) and/or one or more of the other government fees imposed on air travel. By increasing the overall price charged to passengers, any additional taxes or fees could lessen the demand for air travel or force carriers to lower fares to maintain demand.
By increasing the overall price charged to passengers, any additional taxes or fees could lessen the demand for air travel or force carriers to lower fares to maintain demand.
Our aircraft range from 4 to 25 years from their manufacture date at February 1, 2023, with an average age of 14.8 years. An accident involving one of our aircraft, even if fully insured, could result in a public perception that we are less safe or reliable than other airlines, which would harm our business.
An accident involving one of our aircraft, even if fully insured, could result in a public perception that we are less safe or reliable than other airlines, which would harm our business. Further, there is no assurance that the amount of insurance we carry would be sufficient to protect us from material loss.
Fuel costs constituted approximately 36.9 percent of our total operating expenses in 2022 and the average cost per gallon increased by 73.5 percent in 2022 over 2021. Significant increases in fuel costs have negatively affected our operating results in the past, and future fuel cost volatility could materially affect our financial condition and results of operations.
Although average fuel cost per gallon was lower in 2023 than 2022, the price per gallon as of early 2024 remains significantly higher than in prior years. Significant increases in fuel costs have negatively affected our operating results in the past, and future fuel cost volatility could materially affect our financial condition and results of operations.
If we are unable to maintain and grow these revenues, we may be unable to execute our strategy to continue to offer low base fares in order to stimulate demand. Management changes could impact our success in the future. Within the last year, we have a new chief executive officer, president, chief financial officer and chief operating officer.
Failure to maintain our ancillary revenues could have a material adverse effect on our results of operations, financial condition and stock price. If we are unable to maintain and grow these revenues, we may be unable to execute our strategy to continue to offer low base fares in order to stimulate demand.
For Mexican routes to be operated by VivaAerobus, we will be relying on them to provide our customers with the quality flight experience our customers expect when traveling on our airline. Otherwise, the success of the joint alliance and our reputation may suffer. Increases in taxes could impact demand for our services.
In 2023, we implemented many of these systems. However, there is no assurance that these requirements will be met in time for the expected launch of these services. For Mexican routes to be operated by VivaAerobus, we will be relying on them to provide our customers with the quality flight experience our customers expect when traveling on our airline.
An agreement with the Transport Workers Union for the flight attendant group was approved in 2017 and became amendable in 2022. We are also in the process of negotiating a new labor agreement with this group.
An agreement with the Transport Workers Union for the flight attendant group was approved in 2017 and became amendable in 2022. We reached a tentative agreement with this union, but the tentative agreement was rejected by the flight attendants in July 2023 by a 39 percent to 61 percent vote. As such, we continue to negotiate with this work group.
Further, we have four employee groups (pilots, flight attendants, flight dispatchers and maintenance technicians) which have elected union representation. These groups represent approximately 64.6 percent of our employees. In 2016, we reached a collective bargaining agreement with the International Brotherhood of Teamsters, representing our pilots.
These groups represent approximately 53.4 percent of our employees. 19 In 2016, we reached a collective bargaining agreement with the International Brotherhood of Teamsters, representing our pilots. The pilot agreement is now amendable and in 2022 the parties jointly sought mediation through the National Mediation Board.
As with all scheduled airlines, the FAA must approve each aircraft we utilize and each airport we serve.
As with all scheduled airlines, the FAA must approve each aircraft we utilize and each airport we serve. Although there are no generic restrictions on growth in place at the current time, future limitations from the FAA could potentially hinder our growth.
In addition, full performance under the agreement is contingent upon Mexico reattaining Category 1 status under the FAA’s International Aviation Safety Assessment (“IASA”) program. While progress has reportedly been made, the IASA matter remains within the control of the FAA and the Government of Mexico.
In addition, full performance under the agreement is contingent upon Mexico retaining Category 1 status under the FAA’s International Aviation Safety Assessment (“IASA”) program. The FAA found Mexico to be noncompliant from May 2021 until September 2023, when Mexico’s IASA Category 1 status was reinstated.
The successful development of the project will be subject to various risks inherent in construction projects (such as supply chain issues, cost overruns and construction delays) as well as risks of gaining sufficient interest from vacationers to stay in our hotel and suites, the desirability of the project’s location, competition and the ability to profitably operate the hotel and related offerings once open.
The successful operation of the project will be subject to the usual risks of any new business, including risks of gaining sufficient interest from vacationers to stay in our hotel and suites, the desirability of the project’s location, competition, retention of the management team, unfavorable weather, the ability to attract, train and retain sufficient numbers of suitable line employees and the ability to profitably operate the hotel and related offerings at the rates offered.
The COVID-19 pandemic has caused public health officials to recommend precautions to mitigate the spread of the virus.
Future pandemics or contagions may cause public health officials to recommend precautions to mitigate the spread of the disease.
Many of the U.S. airports from which we hope to offer this service do not currently qualify to offer international service. The initiation of this service from these airports will depend on the airport satisfying the requirements for international service, for which we can provide no assurance.
DOT approval has now been held up indefinitely pending the outcome of diplomatic engagement on broader treaty issues. 21 Many of the U.S. airports from which we hope to offer this service do not currently qualify to offer international service.
Further, there is no assurance that the amount of insurance we carry would be sufficient to protect us from material loss. Because we are smaller than most airlines, an accident would likely adversely affect us to a greater degree than a larger, more established airline.
Because we are smaller than most airlines, an accident would likely adversely affect us to a greater degree than a larger, more established airline. In-flight emergencies affecting our aircraft, and resulting media attention, could also contribute to a public perception regarding safety concerns and a loss of business.
There is no assurance that passenger travel to our leisure destinations in Punta Gorda, Sarasota and Key West will not be impacted, or to what extent, as a result of the lingering effects of the damage and recovery from Hurricane Ian. 25 Risks Related to Our Stock Price The market price of our common stock may be volatile, which could cause the value of an investment in our stock to decline.
Risks Related to Our Stock Price The market price of our common stock may be volatile, which could cause the value of an investment in our stock to decline.
In such event, the holder only obtains voting rights in such control shares as are conferred by a resolution of the stockholders of the corporation at a special or annual meeting. These Nevada statutes may discourage certain persons potentially interested in acquiring control of us, or may inhibit certain types of acquisition offers.
In such event, the holder will only obtain such voting rights in the “control shares” so acquired as may be approved by a resolution of our stockholders of the corporation at a special or annual meeting. The statute also provides a mechanism for us to force the redemption of the control shares at the average price paid therefor.
Removed
In December 2019, an outbreak of COVID-19 was identified in Wuhan, China. The COVID-19 outbreak spread throughout the world. The COVID-19 pandemic materially and adversely affected passenger demand and bookings for air travel, thereby materially and adversely affecting operating income and cash flows from operations.
Added
Risks Related to Allegiant Regulatory review of Boeing’s operations could delay its production schedule, which could impact us as any delivery delays may result in lower profitability than expected and delayed growth as well as bad publicity and other consequences.
Removed
As a result, we incurred a net loss of $184.1 million in 2020, our first net loss since 2002.
Added
We are relying on Boeing to deliver our new 737 MAX aircraft to support airline growth and to replace aircraft we have designated for retirement.
Removed
We could also be materially adversely affected if we are unable to effectively maintain a suitably skilled and sized workforce, address employment-related matters, or maintain satisfactory relations with our employees or our employees’ labor representatives. Particularly during December 2021 and January 2022, widespread positive COVID tests resulted in flight crew absences which caused us to cancel numerous flights.
Added
The FAA is working with Boeing to address quality control procedures at Boeing and its suppliers in the aftermath of the recent emergency landing of an Alaska Airlines Boeing 737 MAX 9 aircraft and subsequent temporary grounding of all 737 MAX 9 aircraft pending inspections of the door plug which was the source of the issue.
Removed
We expect we will continue to incur COVID-19 related costs as we sanitize airplanes and implement additional hygiene-related protocol to airplanes, and take other action to limit infection among our employees and passengers. As COVID-19 infection rates and protective measures continue to evolve, the ultimate impact of the COVID-19 pandemic is highly uncertain and subject to change.
Added
As part of the focused attention on Boeing’s production, inspection and quality assurance processes, the FAA has indicated that aircraft production rates will be capped until they are fully satisfied with Boeing's quality practices. These factors could delay deliveries to us.
Removed
Many attractions in the leisure destinations we serve, such as Walt Disney World in Orlando, Florida and Las Vegas hotels, temporarily closed during the pandemic. Any recurrence of these closures will adversely impact travel to these destinations. Risks Related to Allegiant Increases in fuel prices or unavailability of fuel would harm our business and profitability.
Added
Delays in delivery will likely delay our ability to capitalize on the expected profitability from the addition of these aircraft to our fleet and increase our interest costs for funds borrowed for pre-delivery deposits.
Removed
Increased labor costs could result from industry conditions and could be impacted by labor-related disruptions. Labor costs constituted approximately 25.0 percent of our total operating costs in 2022, our second largest expense line item. Labor costs are generally rising and it has become more difficult to find suitable candidates in the current economic environment.
Added
In addition, our inability to add these aircraft to our operating fleet as planned may adversely impact our unit costs as fewer available seat miles will be produced without these aircraft in our operating fleet and given our announced plan to retire certain of our Airbus aircraft.
Removed
We also have agreements with the International Brotherhood of Teamsters for the flight dispatchers which was approved in May 2019 and for maintenance technicians which was approved in October 2021. These agreements will increase our costs over their respective five-year contract terms. Future union contracts with these, or other, work groups could put additional pressure on our labor costs.
Added
We are also counting on the timely addition of our firm 737 MAX order to meet environmental goals we have published in our 2022 sustainability report.
Removed
Our business could also be significantly harmed if the public avoids flying our aircraft due to an adverse perception of the aircraft we utilize because of safety concerns or other problems, whether real or perceived, or in the event of an accident involving these aircraft.
Added
Any subsequent FAA action or any future adverse 737 MAX events or safety concerns might disproportionately impact us as we rely on these new aircraft to augment our fleet as well as to replace aircraft to be retired. Our firm order with Boeing calls for the delivery of a mix of 737 MAX-8200 aircraft and 737 MAX-7 aircraft.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also lease and/or own other facilities in Las Vegas and Florida, with approximately 350,000 square feet of space used for training and other corporate purposes. These leases expire between 2024 and 2048. Sunseeker Resort We own approximately 28 acres on the harbor in Port Charlotte, Florida for the construction of Sunseeker Resort - Charlotte Harbor and related purposes.
Biggest changeWe also lease and/or own other facilities in Las Vegas and Florida, with approximately 350,000 square feet of space used for training and other corporate purposes. These leases expire between 2024 and 2048.
Ford International Airport Grand Rapids, Michigan Indianapolis International Airport Indianapolis, Indiana Lehigh Valley International Airport Allentown, Pennsylvania Los Angeles International Airport Los Angeles, California Harry Reid International Airport Las Vegas, Nevada McGhee Tyson Airport Knoxville, Tennessee Nashville International Airport Nashville, Tennessee Orlando Sanford International Airport Sanford, Florida Phoenix-Mesa Gateway Airport Mesa, Arizona Pittsburgh International Airport Pittsburgh, Pennsylvania Provo Municipal Airport Provo, Utah Punta Gorda Airport Punta Gorda, Florida Sarasota Bradenton International Airport Sarasota, Florida Savannah/Hilton Head International Airport Savannah, Georgia St.
Ford International Airport Grand Rapids, Michigan Indianapolis International Airport Indianapolis, Indiana Lehigh Valley International Airport Allentown, Pennsylvania Los Angeles International Airport Los Angeles, California Harry Reid International Airport Las Vegas, Nevada McGhee Tyson Airport Knoxville, Tennessee Nashville International Airport Nashville, Tennessee Orlando Sanford International Airport Sanford, Florida Phoenix-Mesa Gateway Airport Mesa, Arizona Pittsburgh International Airport Pittsburgh, Pennsylvania Provo Airport Provo, Utah Punta Gorda Airport Punta Gorda, Florida Sarasota Bradenton International Airport Sarasota, Florida Savannah/Hilton Head International Airport Savannah, Georgia St.
The following details the airport locations we utilize as operational bases as of February 1, 2023: Airport Location Asheville Regional Airport Fletcher, North Carolina Appleton International Airport Appleton, Wisconsin Austin-Bergstrom International Airport Austin, Texas Bellingham International Airport Bellingham, Washington Bishop International Airport Flint, Michigan Cincinnati/Northern Kentucky International Airport Hebron, Kentucky Des Moines International Airport Des Moines, Iowa Destin-Fort Walton Beach Airport Destin, Florida Ft.
The following details the airport locations we utilize as operational bases as of February 1, 2024: Airport Location Asheville Regional Airport Fletcher, North Carolina Appleton International Airport Appleton, Wisconsin Austin-Bergstrom International Airport Austin, Texas Bellingham International Airport Bellingham, Washington Cincinnati/Northern Kentucky International Airport Hebron, Kentucky Des Moines International Airport Des Moines, Iowa Flint Bishop International Airport Flint, Michigan Destin-Fort Walton Beach Airport Destin, Florida Ft.
Petersburg-Clearwater International Airport St. Petersburg, Florida We believe we have sufficient access to gate space for current and presently contemplated future operations at all airports we serve. 29 We use leased facilities at our operational bases to perform line maintenance, overnight parking of aircraft, and other operations' support.
Petersburg-Clearwater International Airport St. Petersburg, Florida We believe we have sufficient access to gate space for current and presently contemplated future operations at all airports we serve. 31 We use leased facilities at our operational bases to perform line maintenance, overnight parking of aircraft, and other operations' support.
Properties Aircraft The following table summarizes our total in-service aircraft as of December 31, 2022: Aircraft Type Number of In-Service Aircraft Seating Capacity (per aircraft) Age Range (years) Average Age in Years Airbus A319 35 156 16-19 17.4 Airbus A320 86 177/180/186 4-25 14.1 Total aircraft 121 Ground Facilities We lease facilities at the majority of our leisure destinations and several other airports we serve.
Properties Aircraft The following table summarizes our total in-service aircraft as of December 31, 2023: Aircraft Type Number of In-Service Aircraft Seating Capacity (per aircraft) Age Range (years) Average Age in Years Airbus A319 34 156 17-20 18.4 Airbus A320 92 177/180/186 5-26 14.4 Total aircraft 126 Ground Facilities We lease facilities at the majority of our leisure destinations and several other airports we serve.
In November 2021 we acquired an office building in Lake Suzy, Florida for Sunseeker administration. Additionally, we own a golf course (Aileron Golf Course) consisting of 156 acres in Lake Suzy, Florida. 30
Additionally, we own a golf course (Aileron Golf Course) consisting of 156 acres in Lake Suzy, Florida, which serves as an amenity to the Resort. 32
Added
Sunseeker Resort We own approximately 28 acres on the harbor in Port Charlotte, Florida where Sunseeker Resort - Charlotte Harbor is located which includes additional property available for related purposes and for possible future expansion. We also own an office building in Lake Suzy, Florida for Sunseeker administration.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings We are subject to certain legal and administrative actions we consider routine to our business activities. We believe the ultimate outcome of any pending legal or administrative matters will not have a material adverse effect on our financial position, liquidity, or results of operations. Item 4. Mine Safety Disclosures Not applicable. 31 PART II
Biggest changeItem 3. Legal Proceedings We are subject to certain legal and administrative actions we consider routine to our business activities. We believe the ultimate outcome of any pending legal or administrative matters will not have a material adverse effect on our financial position, liquidity, or results of operations.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeStock price performance for the historical periods presented is not necessarily indicative of future results. 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 ALGT $ 100.00 $ 66.57 $ 116.08 $ 126.36 $ 124.94 $ 48.01 Nasdaq Composite Index 100.00 96.12 129.97 186.69 226.63 151.61 AMEX Airline Index 100.00 77.65 94.17 71.15 69.91 45.24 The stock price performance graph shall not be deemed incorporated by reference by any general statement incorporating by reference this annual report on Form 10-K into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under such Acts. 33 Item 6.
Biggest changeThe stock price performance graph shall not be deemed incorporated by reference by any general statement incorporating by reference this annual report on Form 10-K into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under such Acts. 35 Item 6.
As a result, a maximum of 647,650 shares of restricted stock are remaining for future issuance under the 2022 Long-Term Incentive Plan. Dividend Policy We paid a quarterly dividend from 2015 through first quarter 2020 when we suspended all cash dividends upon the onset of the pandemic.
As a result, a maximum of 242,843 shares of restricted stock are remaining for future issuance under the 2022 Long-Term Incentive Plan. Dividend Policy We paid a quarterly dividend from 2015 through first quarter 2020 when we suspended all cash dividends upon the onset of the pandemic.
Stock Price Performance Graph The following graph compares the cumulative total shareholder return on our common stock with the cumulative total return on the Nasdaq Composite Index and the AMEX Airline Index since December 31, 2017.
Stock Price Performance Graph The following graph compares the cumulative total shareholder return on our common stock with the cumulative total return on the Nasdaq Composite Index and the NYSE ARCA Airline Index since December 31, 2018.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market for our common stock Our common stock is quoted on the Nasdaq Global Select Market (symbol: ALGT). On February 3, 2023, the last sale price of our common stock was $100.67 per share.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market for our common stock Our common stock is quoted on the Nasdaq Global Select Market (symbol: ALGT). On February 1, 2024, the last sale price of our common stock was $79.92 per share.
Securities Authorized for Issuance under Equity Compensation Plans The following table provides information regarding options, warrants and other rights to acquire equity securities under our equity compensation plans as of December 31, 2022: Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (2) Equity compensation plans approved by security holders (1) 42,000 $ 265.00 1,295,300 (1) There are no securities to be issued under any equity compensation plans not approved by our security holders.
Securities Authorized for Issuance under Equity Compensation Plans The following table provides information regarding options, warrants and other rights to acquire equity securities under our equity compensation plans as of December 31, 2023: Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (2) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (3) Equity compensation plans approved by security holders (1) 28,000 $ 245.54 485,686 (1) There are no securities to be issued under any equity compensation plans not approved by our security holders.
In addition, in connection with the Payroll Support Program Agreements we entered into with the Treasury, repurchases of common stock and the payment of cash dividends were prohibited through September 30, 2022. We have yet to recommence any cash dividends.
In addition, in connection with the Payroll Support Program Agreements we entered into with the U.S. Department of Treasury, repurchases of common stock and the payment of cash dividends were prohibited through September 30, 2022. In 2023, we recommenced the payment of cash dividends.
(2) Represents the remaining dollar amount of open market purchases of our common stock which has been authorized by our board under a share repurchase program. In January 2023, our board increased the stock repurchase authority to $100.0 million.
(2) Represents the remaining dollar amount of open market purchases of our common stock which has been authorized by our board under a share repurchase program.
The graph assumes that the value of the investment in our common stock and each index was $100 on December 31, 2017 and that all dividends are reinvested.
The graph assumes that the value of the investment in our common stock and each index was $100 on December 31, 2018 and that all dividends are reinvested. Stock price performance for the historical periods presented is not necessarily indicative of future results.
Period High Low 2022 1st Quarter $ 195.66 $ 132.03 2nd Quarter 176.56 109.82 3rd Quarter 122.36 72.97 4th Quarter 84.89 62.94 2021 1st Quarter $ 271.29 $ 172.91 2nd Quarter 255.76 187.09 3rd Quarter 215.48 171.53 4th Quarter 206.40 163.60 As of February 1, 2023, there were approximately 200 holders of record of our common stock.
Period High Low 2023 1st Quarter $ 105.51 $ 68.31 2nd Quarter 129.00 86.91 3rd Quarter 130.93 73.96 4th Quarter 85.91 54.87 2022 1st Quarter $ 195.66 $ 132.03 2nd Quarter 176.56 109.82 3rd Quarter 122.36 72.97 4th Quarter 84.89 62.94 As of February 23, 2024, there were approximately 200 holders of record of our common stock.
(2) The shares shown as being issuable under equity compensation plans exclude unvested restricted stock awards of 429,868 as all restricted stock awards are deemed to have been issued. This number includes shares granted under our 2016 Long-Term Incentive Plan and 2022 Long-Term Incentive Plan.
(2) The shares shown as to be issued under equity compensation plans exclude 573,560 shares of unvested restricted stock awards as all restricted stock awards are deemed to have been issued.
Our Repurchases of Equity Securities The following table reflects repurchases of our common stock during the fourth quarter of 2022: 32 Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of our Publicly Announced Plan Approximate Dollar Value of Shares that May yet be Purchased Under the Plans or Programs (in thousands) (2) October 1,397 $ 72.99 None November 308,449 78.41 308,449 December 69,106 81.29 69,080 Total 378,952 $ 78.92 377,529 $ 24,825 (1) Includes shares repurchased from employees who vested a portion of their restricted stock grants.
Absent an event of default, this restriction does not constrain the continued payment of a quarterly dividend at the current level. 34 Our Repurchases of Equity Securities The following table reflects repurchases of our common stock during the fourth quarter of 2023: Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of our Publicly Announced Plan Approximate Dollar Value of Shares that May yet be Purchased Under the Plans or Programs (in thousands) (2) October 9,196 $ 73.92 None November 181,693 64.98 162,115 December 10,427 70.95 29,386 Total 201,316 $ 65.70 191,501 $ 75,697 (1) Includes shares repurchased from employees who vested a portion of their restricted stock grants.
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Our board established the annual dividend rate at $2.40 per share and dividends of $0.60 per share per quarter were declared, and paid, in the third and fourth quarters, bringing total regular cash dividends declared, and paid, in 2023 to $1.20 per share. Certain of our credit agreements limit the amount of dividends we may pay.
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The most restrictive agreement provides that absent an event of default, regularly scheduled dividends in any four-quarter period may be paid up to the lesser of $75.0 million or 20 percent of our consolidated EBITDA (as defined in the agreement) for the previous four-quarter period.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe effective tax rate for 2021 differed from the statutory federal income tax rate of 21.0 percent primarily due to state income taxes and the impact of ASU 2016-09 related to share-based payments. 2021 compared to 2020 The comparison of our 2021 results to 2020 results is included in our Annual Report on Form 10-K for the year ended December 31, 2021, under Part II Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations. 44 For the Year Ended December 31, Percent Change (5) Operating statistics (unaudited): 2022 2021 2020 2019 YoY Yo2Y Yo3Y Total system statistics: Passengers 16,796,544 13,637,405 8,623,984 15,012,149 23.2% 94.8% 11.9% Available seat miles (ASMs) (thousands) 18,419,045 17,490,571 13,125,533 16,174,240 5.3 40.3 13.9 Operating expense per ASM (CASM) (cents) (1) 12.00 ¢ 8.26 ¢ 9.68 ¢ 9.13 ¢ 45.3 24.0 31.4 Fuel expense per ASM (cents) 4.42 ¢ 2.52 ¢ 1.69 ¢ 2.65 ¢ 75.4 161.5 66.8 Operating CASM, excluding fuel (cents) (1) 7.58 ¢ 5.74 ¢ 7.99 ¢ 6.48 ¢ 32.1 (5.1) 17.0 Sunseeker Resort CASM (cents) (2) 0.25 ¢ 0.05 ¢ 1.12 ¢ 0.05 ¢ 400.0 (77.7) 400.0 Airline operating CASM, excluding fuel and Sunseeker Resort activity (cents) 7.33 ¢ 5.69 ¢ 6.87 ¢ 6.43 ¢ 28.8 6.7 14.0 Departures 118,069 117,047 87,955 110,542 0.9 34.2 6.8 Block hours 278,792 264,628 196,849 248,513 5.4 41.6 12.2 Average stage length (miles) 884 856 862 855 3.3 2.6 3.4 Average number of operating aircraft during period 114.2 103.0 97.4 85.6 10.9 17.2 33.4 Average block hours per aircraft per day 6.7 7.0 5.9 8.0 (4.3) 13.6 (16.3) Full-time equivalent employees at end of period 5,315 4,458 3,863 4,363 19.2 37.6 21.8 Fuel gallons consumed (thousands) 218,606 204,689 149,479 196,442 6.8 46.2 11.3 ASMs per gallon of fuel 84.3 85.4 87.8 82.3 (1.3) (4.0) 2.4 Average fuel cost per gallon $ 3.73 $ 2.15 $ 1.48 $ 2.18 73.5 152.0 71.1 Scheduled service statistics: Passengers 16,630,138 13,509,544 8,553,623 14,823,267 23.1 94.4 12.2 Revenue passenger miles (RPMs) (thousands) 15,224,346 11,963,715 7,626,470 13,038,003 27.3 99.6 16.8 Available seat miles (ASMs) (thousands) 17,909,190 17,027,902 12,814,080 15,545,818 5.2 39.8 15.2 Load factor 85.0 % 70.3 % 59.5 % 83.9 % 14.7 25.5 1.1 Departures 114,066 113,121 85,276 105,690 0.8 33.8 7.9 Block hours 270,516 256,991 191,732 238,361 5.3 41.1 13.5 Average seats per departure 175.7 174.2 172.8 171.1 0.9 1.7 2.7 Yield (cents) (3) 7.31 ¢ 6.61 ¢ 5.88 ¢ 7.00 ¢ 10.6 24.3 4.4 Total passenger revenue per ASM (TRASM) (cents) (2) 12.50 ¢ 9.78 ¢ 7.40 ¢ 11.28 ¢ 27.8 68.9 10.8 Average fare - scheduled service (4) $ 66.88 $ 58.50 $ 52.45 $ 61.58 14.3 27.5 8.6 Average fare - air-related charges (4) $ 61.67 $ 58.33 $ 53.02 $ 51.96 5.7 16.3 18.7 Average fare - third party products $ 6.07 $ 6.40 $ 5.43 $ 4.72 (5.2) 11.8 28.6 Average fare - total $ 134.62 $ 123.24 $ 110.91 $ 118.26 9.2 21.4 13.8 Average stage length (miles) 890 862 867 859 3.2 2.7 3.6 Fuel gallons consumed (thousands) 212,466 198,891 145,528 188,596 6.8 46.0 12.7 Average fuel cost per gallon $ 3.72 $ 2.13 $ 1.48 $ 2.18 74.6 151.4 70.6 Rental car days sold 1,447,708 1,361,123 1,132,173 1,921,930 6.4 27.9 (24.7) Hotel room nights sold 282,854 261,158 199,059 415,593 8.3 42.1 (31.9) Percent of sales through website during period 96.0 % 94.7 % 93.1 % 93.3 % 1.3 2.9 2.7 (1) Includes effect of special items in 2020, 2021 and 2022.
Biggest changeThe effective tax rates for 2023 and 2022 differed from the statutory federal income tax rate of 21.0 percent primarily due to state income taxes and the impact of ASU 2016-09 related to share-based payments. 2022 compared to 2021 The comparison of our 2022 results to 2021 results is included in our Annual Report on Form 10-K for the year ended December 31, 2022, under Part II Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations. 45 For the Year Ended December 31, Airline operating statistics (unaudited): 2023 2022 2021 2020 2019 Total system statistics: Passengers 17,342,236 16,796,544 13,637,405 8,623,984 15,012,149 Available seat miles (ASMs) (thousands) 18,772,110 18,419,045 17,490,571 13,125,533 16,174,240 Airline operating expense per ASM (CASM) (cents) 12.02 ¢ 11.75 ¢ 8.21 ¢ 8.56 ¢ 9.08 ¢ Fuel expense per ASM (cents) 3.71 ¢ 4.42 ¢ 2.52 ¢ 1.69 ¢ 2.65 ¢ Airline operating CASM, excluding fuel (cents) 8.31 ¢ 7.33 ¢ 5.69 ¢ 6.87 ¢ 6.43 ¢ Departures 120,525 118,069 117,047 87,955 110,542 Block hours 285,453 278,792 264,628 196,849 248,513 Average stage length (miles) 882 884 856 862 855 Average number of operating aircraft during period 125.2 114.2 103.0 97.4 85.6 Average block hours per aircraft per day 6.2 6.7 7.0 5.9 8.0 Full-time equivalent employees at end of period 5,643 5,306 4,432 3,819 4,130 Fuel gallons consumed (thousands) 224,996 218,606 204,689 149,479 196,442 ASMs per gallon of fuel 83.4 84.3 85.4 87.8 82.3 Average fuel cost per gallon $ 3.09 $ 3.73 $ 2.15 $ 1.48 $ 2.18 Scheduled service statistics: Passengers 17,143,870 16,630,138 13,509,544 8,553,623 14,823,267 Revenue passenger miles (RPMs) (thousands) 15,639,329 15,224,346 11,963,715 7,626,470 13,038,003 Available seat miles (ASMs) (thousands) 18,208,820 17,909,190 17,027,902 12,814,080 15,545,818 Load factor 85.9 % 85.0 % 70.3 % 59.5 % 83.9 % Departures 116,044 114,066 113,121 85,276 105,690 Block hours 276,313 270,516 256,991 191,732 238,361 Average seats per departure 176.3 175.7 174.2 172.8 171.1 Yield (cents) (1) 7.59 ¢ 7.31 ¢ 6.61 ¢ 5.88 ¢ 7.00 ¢ Total passenger revenue per ASM (TRASM) (cents) (2) 13.38 ¢ 12.50 ¢ 9.78 ¢ 7.40 ¢ 11.28 ¢ Average fare - scheduled service (3) $ 69.25 $ 66.88 $ 58.50 $ 52.45 $ 61.58 Average fare - air-related charges (3) $ 66.33 $ 61.67 $ 58.33 $ 53.02 $ 51.96 Average fare - third party products $ 6.57 $ 6.07 $ 6.40 $ 5.43 $ 4.72 Average fare - total $ 142.15 $ 134.62 $ 123.24 $ 110.91 $ 118.26 Average stage length (miles) 888 890 862 867 859 Fuel gallons consumed (thousands) 218,129 212,466 198,891 145,528 188,596 Average fuel cost per gallon $ 3.09 $ 3.72 $ 2.13 $ 1.48 $ 2.18 Percent of sales through website during period 95.8 % 96.0 % 94.7 % 93.1 % 93.3 % Other Data: Rental car days sold 1,377,710 1,447,708 1,361,123 1,132,173 1,921,930 Hotel room nights sold 249,933 282,854 261,158 199,059 415,593 (1) Defined as scheduled service revenue divided by revenue passenger miles (2) Various components of this measure do not have a direct correlation to ASMs.
Other expense includes travel and training expenses for crews and ground personnel, facility lease expenses, professional fees, personal property taxes, information technology consulting, non-salary expenses for non-airline initiatives (including, Sunseeker Resort, and the now discontinued Allegiant Nonstop family entertainment centers and Teesnap), the cost of passenger liability insurance, aircraft hull insurance and all other insurance policies excluding employee welfare insurance.
Other expense includes travel and training expenses for crews and ground personnel, facility lease expenses, professional fees, personal property taxes, information technology consulting, other expenses for non-airline initiatives (including Sunseeker Resort, and the now discontinued Allegiant Nonstop family entertainment centers and Teesnap), the cost of passenger liability insurance, aircraft hull insurance and all other insurance policies, excluding employee welfare insurance.
“Block hours” represents the number of hours during which the aircraft is in revenue service, measured from the time of gate departure until the time of gate arrival at the destination. “ Load factor ” represents the percentage of aircraft seating capacity utilized (revenue passenger miles divided by available seat miles).
“Block hours” represents the number of hours during which the aircraft is in revenue service, measured from the time of gate departure until the time of gate arrival at the destination. 46 “ Load factor ” represents the percentage of aircraft seating capacity utilized (revenue passenger miles divided by available seat miles).
Note 3 to our Consolidated Financial Statements provides a detailed discussion of our significant accounting policies. Critical accounting policies are defined as those policies that reflect significant judgments about matters that are inherently uncertain. Our actual results may differ from these estimates under different assumptions or conditions. We believe our critical accounting policies are limited to those described below.
Note 2 to our Consolidated Financial Statements provides a detailed discussion of our significant accounting policies. Critical accounting policies are defined as those policies that reflect significant judgments about matters that are inherently uncertain. Our actual results may differ from these estimates under different assumptions or conditions. We believe our critical accounting policies are limited to those described below.
Unless otherwise expressly stated, for discussion and analysis of 2021 and a comparison of our 2021 results to 2020 results, please refer to our Annual Report on Form 10-K for the year ended December 31, 2021, under Part II Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.
Unless otherwise expressly stated, for discussion and analysis of 2022 and a comparison of our 2022 results to 2021 results, please refer to our Annual Report on Form 10-K for the year ended December 31, 2022, under Part II Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.
We believe this new aircraft purchase is complimentary with our low cost strategy based on our intent to retain ownership of the aircraft, the longer useful life for depreciation purposes, expected fuel savings and operational reliability from the use of these new aircraft.
We believe this new aircraft purchase is complementary with our low cost strategy based on our intent to retain ownership of the aircraft, the longer useful life for depreciation purposes, expected fuel savings and operational reliability from the use of these new aircraft.
Also discussed is our financial position as of December 31, 2022 and 2021. Investors should read this discussion in conjunction with our consolidated financial statements, including the notes thereto, appearing elsewhere in this annual report. This discussion and analysis contains forward-looking statements.
Also discussed is our financial position as of December 31, 2023 and 2022. Investors should read this discussion in conjunction with our consolidated financial statements, including the notes thereto, appearing elsewhere in this annual report. This discussion and analysis contains forward-looking statements.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis presents factors that had a material effect on our results of operations during the years ended December 31, 2022 and 2021.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis presents factors that had a material effect on our results of operations during the years ended December 31, 2023 and 2022.
Revenue from the travel component is deferred based on its relative selling price and is recognized into scheduled service revenue when the points are redeemed by cardholders and transportation is provided. Revenue from the marketing component is considered earned in the period in which points are sold and is therefore recognized into third party products revenue in the same period.
Revenue from the travel component is deferred based on its relative selling price and is recognized into revenue when the points are redeemed by cardholders and the related service is provided. Revenue from the marketing component is considered earned in the period in which points are sold and is therefore recognized into third party products revenue in the same period.
(2) Includes aircraft and engine acquisition obligations under existing purchase agreements, which are not reflected on our balance sheet. 48 CRITICAL ACCOUNTING POLICIES AND ESTIMATES The discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.
(2) Includes aircraft and engine acquisition obligations under existing purchase agreements. These amounts are not reflected on our balance sheet. 49 CRITICAL ACCOUNTING POLICIES AND ESTIMATES The discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.
We will continue to consider raising funds through debt financing to finance aircraft purchases and also on an opportunistic basis. Debt Our debt and finance lease obligations balance, without reduction for related issuance costs, increased from $1.77 billion as of December 31, 2021 to $2.12 billion as of December 31, 2022.
We will continue to consider raising funds through debt financing to finance aircraft purchases and also on an opportunistic basis. Debt Our debt and finance lease obligations balance, without reduction for related issuance costs, increased from $2.12 billion as of December 31, 2022 to $2.28 billion as of December 31, 2023.
All of the aircraft in our fleet as of December 31, 2022 are owned by us except as indicated in the footnotes to the table: As of December 31, 2022 2021 2020 A320 (1)(2) 86 73 61 A319 (3) 35 35 34 Total 121 108 95 (1) Does not include five aircraft of which we have taken delivery as of December 31, 2022 and were not in service as of that date.
All of the aircraft in our fleet as of December 31, 2023 are owned by us except as indicated in the footnotes to the table: As of December 31, 2023 2022 2021 A320 (1)(2) 92 86 73 A319 (3) 34 35 35 Total 126 121 108 (1) Does not include one aircraft of which we have taken delivery as of December 31, 2023 and which was not in service as of that date.
“Total passenger revenue per ASM” or “TRASM” represents total passenger revenue divided by scheduled service available seat miles. 46 LIQUIDITY AND CAPITAL RESOURCES Current liquidity Cash, cash equivalents and investment securities (short-term and long-term) decreased to $1.02 billion at December 31, 2022, from $1.19 billion at December 31, 2021. Investment securities represent highly liquid marketable securities which are available-for-sale.
“Total passenger revenue per ASM” or “TRASM” represents total passenger revenue divided by scheduled service available seat miles. 47 LIQUIDITY AND CAPITAL RESOURCES Current liquidity Cash, cash equivalents and investment securities (short-term and long-term) decreased to $870.7 million at December 31, 2023, from $1,018.4 million at December 31, 2022. Investment securities represent highly liquid marketable securities which are available-for-sale.
Maintenance and repairs expense includes all parts, materials and spares required to maintain our aircraft. Also included are fees for repairs performed by third party vendors. Sales and marketing expense includes all advertising, promotional expenses, sponsorships, travel agent commissions and debit and credit card processing fees associated with the sale of scheduled service and air-related ancillary charges.
Also included are fees for repairs performed by third party vendors. Sales and marketing expense includes all advertising, promotional expenses, sponsorships, travel agent commissions, debit and credit card processing fees associated with the sale of scheduled service and air-related ancillary charges, costs related to advertising and marketing for the Sunseeker Resort, and credit card processing fees for Resort bookings.
Also included is the amortization of major maintenance expenses on our Airbus A320 series aircraft and engines, which are capitalized under the deferral method of accounting and amortized as a component of depreciation and amortization expense over the estimated period until the next scheduled major maintenance event.
Also included is the amortization of major maintenance expenses on our aircraft and engines, which are capitalized under the deferral method of accounting and amortized as a component of depreciation and amortization expense over the estimated period until the next scheduled major maintenance event. Maintenance and repairs expense includes all parts, materials and spares required to maintain our aircraft.
We have not sought to use financial derivative products to hedge our exposure to fuel price volatility, nor do we have any plans to do so in the future.
Significant increases in fuel costs could materially affect our operating results and profitability. We have not sought to use financial derivative products to hedge our exposure to fuel price volatility, nor do we have any plans to do so in the future.
Aircraft lease rentals expense consists of the cost of leasing aircraft under operating leases with third parties as well as the cost for sub-service which may be contracted out in conjunction with operational disruptions.
Aircraft lease rentals expense consists of the cost of leasing aircraft under operating leases with third parties as well as the cost for sub-service which may be utilized in order to accommodate passengers in the event of operational disruption.
Cash used for investing activities was $491.4 million during 2022 compared to $593.3 million in 2021. During 2022, there was a $275.7 million increase in purchases of property and equipment, including $84.6 million related to aircraft pre-delivery deposits.
Cash used for investing activities was $721.9 million during 2023 compared to $491.4 million in 2022. During 2023, there was a $339.3 million increase in purchases of property and equipment, which includes a $245.6 million increase related to aircraft pre-delivery deposits.
(5) Except load factor and percent of sales through website, which is percentage point change. 45 The following terms used in this section and elsewhere in this annual report have the meanings indicated below: “ Available seat miles ” or “ ASMs ” represents the number of seats available for passengers multiplied by the number of miles the seats are flown.
The following terms used in this section and elsewhere in this annual report have the meanings indicated below: “ Available seat miles ” or “ ASMs ” represents the number of seats available for passengers multiplied by the number of miles the seats are flown.
Salaries and benefits expense includes wages, salaries, and employee bonuses, sales commissions for in-flight personnel, as well as expenses associated with employee benefit plans, stock compensation expense related to equity grants, and employer payroll taxes. The CARES Act employee retention tax credit was recorded as an offset to salaries and benefits expense in both 2021 and 2022.
Salaries and benefits expense includes wages, salaries, and employee bonuses, sales commissions for in-flight personnel and Sunseeker Resort personnel, as well as expenses associated with employee benefit plans, stock compensation expense related to equity grants, and employer payroll taxes.
Depreciation and amortization expense during 2022 increased $16.5 million or 9.1 percent including a $1.7 million increase in amortization of deferred heavy maintenance as compared to 2021 as there was an increase of 8.2 percent in the average number of aircraft owned and in service.
Depreciation and amortization expense during 2023 increased $25.6 million or 13.0 percent including an $11.7 million increase in amortization of deferred heavy maintenance as compared to 2022 and an increase of 3.8 percent in the average number of aircraft owned and in service.
The cost per gallon of fuel began to increase significantly in 2021 and the increases were exacerbated by the geopolitical impact of the war in Ukraine and increases in refinery costs added to our fuel cost. As a result, the average fuel cost per gallon increased by 73.5 percent in 2022 over 2021 and 71.1 percent over 2019.
The cost per gallon of fuel began to increase significantly in 2021, and the increases were exacerbated by the geopolitical impact of the war in Ukraine. Increases in refinery costs also added to our fuel cost.
We continually adjust our network through the addition of new markets and routes, adjusting the frequencies into existing markets, and exiting under-performing markets, as we seek to achieve and maintain profitability on each route we serve. As of February 1, 2023, and including recent service announcements, we were selling seats on 573 routes serving 125 cities in 42 states.
We continually adjust our network through the addition of new markets and routes, adjusting the frequencies into existing markets, and exiting under-performing markets, as we seek to achieve and maintain profitability on each route we serve.
Station operations expense. Station operations expense during 2022 increased $11.8 million or 4.9 percent over 2021 due to a 0.9 percent increase in departures, increased costs associated with irregular operations, and increased airport and landing fees.
Station operations expense during 2023 increased $1.4 million or 0.5 percent over 2022 due to increased costs associated with airport and landing fees and a 2.1 percent increase in departures, which were offset by a decrease in costs associated with irregular operations. Depreciation and amortization expense.
Refer to Part I - Item 2. Properties for further detail regarding our aircraft fleet. We continuously consider aircraft acquisitions on an opportunistic basis. 37 NETWORK We manage capacity and route expansion through optimization of our flight schedule to, among other things, better match demand in certain markets.
The timing of these deliveries is based on management's best estimates and differs from the contract in place. Refer to Part I - Item 2. Properties for further detail regarding our aircraft fleet. 39 NETWORK We manage capacity and route expansion through optimization of our flight schedule to, among other things, better match demand in certain markets.
Union Negotiations The collective bargaining agreement with our pilots is currently amendable and the parties have jointly requested the involvement of the National Mediation Board ("NMB") to assist with the negotiations. The mediation process with the NMB has begun. We are also in the process of negotiating a new contract with the union representing our flight attendants.
Union Negotiations The collective bargaining agreement with our pilots is currently amendable and the parties have jointly requested the involvement of the National Mediation Board ("NMB") to assist with the negotiations. The mediation process with the NMB began in early 2023 and is continuing.
Depreciation and amortization expense includes the depreciation of all owned fixed assets and assets recorded in connection with a finance lease, including aircraft and engines.
Station operations expense also includes most of our irregular operations costs. Depreciation and amortization expense includes the depreciation of all owned fixed assets, including aircraft and engines, Sunseeker Resort assets, and assets recorded in connection with finance leases.
VivaAerobus Alliance In December 2021, we announced plans for a fully-integrated commercial alliance agreement with VivaAerobus, designed to expand options for nonstop leisure air travel between our markets in the United States and Mexico. We and VivaAerobus have submitted a joint application to the DOT requesting approval of and antitrust immunity for the alliance.
We will be reporting annually on our progress toward meeting those goals. VivaAerobus Alliance In December 2021, we announced plans for a fully-integrated commercial alliance agreement with VivaAerobus, designed to expand options for nonstop leisure air travel between our markets in the United States and Mexico.
Affinity Credit Card Program The Allegiant co-branded credit card is issued by Bank of America through which arrangement points are sold and consideration is received under an agreement which expires in 2029.
Allways Rewards ® Credit Card Program Under the Allegiant co-brand credit card arrangement, points are sold and consideration is received under an agreement which expires in 2031.
Both the cost and availability of fuel are subject to many economic and political factors and therefore are beyond our control. “ Passengers ” represents the total number of passengers flown on all flight segments. “ Revenue passenger miles ” or “RPMs” represents the number of miles flown by revenue passengers.
This statistic provides management and investors the ability to measure and monitor our airline cost performance absent fuel price volatility. Both the cost and availability of fuel are subject to many economic and political factors and therefore are beyond our control. “ Passengers ” represents the total number of passengers flown on all flight segments.
Station operations expense includes the fees charged by airports for the use or lease of airport facilities and fees charged by third party vendors for ground handling services, commissary expenses, irregular operations, and other related services.
The CARES Act employee retention tax credit was recorded as an offset to salaries and benefits expense in both 2021 and 2022. Station operations expense includes the fees charged by airports for the use or lease of airport facilities and fees charged by third party vendors for ground handling services, commissary expenses, and other related services.
Sales and marketing expense. Sales and marketing expense during 2022 increased 38.4 percent compared to 2021, due to an increase in net credit card fees in 2022 as a result of a 35.4 percent increase in passenger revenue year-over-year.
Sales and marketing expense during 2023 increased 13.8 percent compared to 2022, primarily due to an increase in net credit card fees in 2023 as a result of an 8.7 percent increase in passenger revenue year-over-year, and due to a one-time fee to transition, and an associated relaunch campaign for our co-brand credit card.
Please refer to the section entitled “Disclosure Regarding Forward-Looking Statements” at the beginning of this annual report on Form 10-K for a discussion of the uncertainties, risks and assumptions associated with these statements. 35 2022 Highlights – Our highest ever annual total operating revenue of $2.3 billion, up 25.0 percent as compared to 2019, on a total system capacity increase of 13.9 percent – Full-year TRASM was 12.50 cents, up 10.8 percent as compared to 2019 on scheduled service capacity increases of 15.2 percent – Our highest ever annual average ancillary air related revenue per passenger of $67.74 – We made great progress to strengthen our system and operations by: – Adding more than 850 full-time equivalent employees – Adding 13 Airbus A320 Series aircraft to our operating fleet – Adding three new bases in Flint, Michigan, Appleton, Wisconsin and Provo, Utah, increasing the number of our bases to 24 – Investing in the systems implementations discussed in the Business section. – Planning to induct our new Boeing aircraft – Acquired over 150 thousand new Allegiant co-branded credit card holders during the year, with over 410 thousand active cardholders at year end – Added over 2 million Allegiant Allways Rewards ® members during 2022, with more than 15 million total members at year end – Allegiant co-branded credit card and Allegiant Allways Rewards ® were voted as the No. 1 Best Airline Credit Card and Best Frequent Flyer Program in USA Today's 10 Best 2022 Loyalty/Rewards Readers' Choice Awards.
Please refer to the section entitled “Disclosure Regarding Forward-Looking Statements” at the beginning of this annual report on Form 10-K for a discussion of the uncertainties, risks and assumptions associated with these statements. 37 2023 Highlights • Total operating revenue was a company record of $2.5 billion, up 9.0 percent as compared to 2022, on a total system capacity increase of 1.9 percent. • Full-year TRASM was 13.38 cents, a record annual TRASM, up 7.0 percent as compared to 2022 on scheduled service capacity increases of 1.7 percent. • Average total fare was $142.15, up 5.6 percent compared to 2022, including total average ancillary revenue of $72.90, up 7.6 percent from 2022. • Recorded highest fixed fee revenue in company history of $68.5 million. • Extended the collective bargaining agreement for flight dispatchers through May 2026 and the collective bargaining agreement for maintenance technicians through October 2028. • Opened Sunseeker Resort at Charlotte Harbor on December 15, 2023. • Ranked number 3 amongst major US carriers in the Wall Street Journal's "The Best and Worst Airlines of 2023". • Made great progress to strengthen our system and operations by: ◦ Adding more than 1,300 full-time equivalent employees, including approximately 1,000 newly hired Sunseeker Resort team members ◦ Investing in the systems implementations discussed in the Business section. ◦ Planning to induct our new Boeing aircraft • Acquired over 140 thousand new Allegiant co-brand credit card holders during the year, with over 485 thousand active cardholders at year end. • Received $119.6 million in total co-brand credit card remuneration from Bank of America, up 18 percent from 2022 • Added 2.1 million Allegiant Allways Rewards ® members during 2023, with more than 17 million total members at year end, a 13 percent increase over the year-end 2022 number. • Allegiant co-brand credit card and Allegiant Allways Rewards ® were voted as the No. 1 Best Airline Credit Card and No. 2 Best Frequent Flyer Program in USA Today's 10 Best 2023 Loyalty/Rewards Readers' Choice Awards.
We suspended share repurchases and our quarterly cash dividend in first quarter 2020, as part of cash conservation efforts in response to the effects of COVID-19 on our business. In connection with our receipt of financial support under the payroll support programs, we agreed not to repurchase shares or pay cash dividends through September 30, 2022.
In connection with our receipt of financial support under the payroll support programs, we agreed not to repurchase shares or pay cash dividends through September 30, 2022. We resumed our share repurchases in fourth quarter 2022 and have $75.7 million of unused authority at December 31, 2023.
Additionally, this 40 expense includes loss on disposals of aircraft and other equipment disposals, and all other administrative and operational overhead expenses not included in other line items above.
Additionally, this expense includes gain and loss on disposals of aircraft and other equipment disposals, and all other administrative and operational overhead expenses not included in other line items above. Special charges include charges taken in 2023 for accelerated retirements of 21 airframes for early retirement to coincide with planned 737 MAX aircraft deliveries.
As of December 31, 2022, we are party to forward purchase agreements for 54 aircraft with seven deliveries expected in 2023, 24 in 2024 and the remainder thereafter. Three of the aircraft scheduled for delivery in 2023 are the initial aircraft under our Boeing contract, which are scheduled to be delivered in fourth quarter 2023.
(3) Includes four aircraft under operating lease as of December 31, 2023, December 31, 2022, and December 31, 2021. As of December 31, 2023, we are party to forward purchase agreements for 51 aircraft with 13 deliveries expected in 2024, approximately 24 in 2025 and the remainder thereafter.
This increase was more than offset by a $327.6 million increase in proceeds from maturities, net of purchases, of investment securities during 2022. Proceeds from maturities exceeded purchases of investment securities in 2022, but not in 2021. Financing Activities. Cash provided by financing activities for 2022 was $33.1 million, compared to $285.5 million in 2021.
This increase was offset by a $51.9 million increase in proceeds from maturities of investment securities, net of purchases, and a $30.3 million increase in insurance proceeds from damages at the Sunseeker Resort. Financing Activities. Cash provided by financing activities for 2023 was $212.9 million, compared to $33.1 million in 2022.
As of February 1, 2023, we have $275.0 million of undrawn capacity under revolving credit facilities plus another $169.7 million of undrawn capacity under our PDP financing facility. Restricted cash represents escrowed funds under fixed fee contracts, escrowed project funds and cash collateral against letters of credit required by hotel properties for guaranteed room availability, airports and certain other parties.
Restricted cash represents escrowed funds under fixed fee contracts, escrowed project funds and cash collateral against letters of credit required by hotel properties for guaranteed room availability, airports and certain other parties. Under our fixed fee flying contracts, we require our customers to prepay for flights to be provided by us.
Both the cost and availability of fuel are subject to many economic and political factors beyond our control.
Excluding fuel on a per ASM basis provides management and investors the ability to measure and monitor our cost performance absent fuel price volatility. Both the cost and availability of fuel are subject to many economic and political factors beyond our control.
Excluding Sunseeker operating costs allows management and investors to better compare our airline unit costs with those of other airlines. 42 Year Ended December 31, Percent Change Unitized costs (in cents) 2022 2021 2019 YoY Yo3Y Aircraft fuel 4.42 ¢ 2.52 ¢ 2.65 ¢ 75.4 % 66.8 % Salaries and benefits 3.00 2.77 2.78 8.3 7.9 Station operations 1.39 1.39 1.06 — 31.1 Maintenance and repairs 0.64 0.61 0.57 4.9 12.3 Depreciation and amortization 1.07 1.04 0.96 2.9 11.5 Sales and marketing 0.55 0.42 0.49 31.0 12.2 Aircraft lease rentals 0.13 0.12 — 8.3 NM Other 0.61 0.47 0.62 29.8 (1.6) Payroll Support Programs grant recognition — (1.16) — NM NM Special charges 0.19 0.08 — NM NM CASM 12.00 ¢ 8.26 ¢ 9.13 ¢ 45.3 31.4 Operating CASM, excluding fuel 7.58 ¢ 5.74 ¢ 6.48 ¢ 32.1 17.0 Sunseeker Resort CASM 0.25 0.05 0.05 NM NM Airline operating CASM, excluding fuel and Sunseeker Resort activity 7.33 ¢ 5.69 ¢ 6.43 ¢ 28.8 14.0 NM - Not meaningful Our CASM performance was significantly impacted by lower utilization of our aircraft in 2022 as block hours per aircraft declined by 4.3 percent compared to 2021 and by 16.3 percent compared to 2019.
Year Ended December 31, Percent Change Unitized costs (in cents) 2023 2022 YoY Aircraft fuel 3.71 ¢ 4.42 ¢ (16.1) % Salaries and benefits 3.66 3.00 22.0 Station operations 1.37 1.39 (1.4) Maintenance and repairs 0.66 0.64 3.1 Depreciation and amortization 1.19 1.07 11.2 Sales and marketing 0.61 0.55 10.9 Aircraft lease rentals 0.13 0.13 — Other 0.71 0.61 16.4 Special charges, net of insurance recoveries 0.15 0.19 (21.1) CASM 12.19 ¢ 12.00 ¢ 1.6 Operating CASM, excluding fuel 8.49 ¢ 7.58 ¢ 12.0 Airline special charges CASM 0.19 — NM Sunseeker Resort CASM 0.18 0.25 (28.0) Airline operating CASM, excluding fuel and Sunseeker Resort activity 8.12 ¢ 7.33 ¢ 10.8 NM Not meaningful Aircraft fuel expense.
(2) Various components of this measure do not have a direct correlation to ASMs. These figures are provided on a per ASM basis so as to facilitate comparisons with airlines reporting costs and revenues on a per ASM basis. (3) Defined as scheduled service revenue divided by revenue passenger miles.
These figures are provided on a per ASM basis so as to facilitate comparisons with airlines reporting revenues on a per ASM basis. (3) Reflects division of passenger revenue between scheduled service and air-related charges in our booking path.
Special charges of $34.6 million were recorded within operating expenses during 2022 compared to $14.0 million in 2021. The special charges in 2022 include estimated loss from property damage to Sunseeker Resort related to Hurricane Ian and two subsequent insurance events that occurred during the fourth quarter, offset by insurance recoveries recorded to date.
The special charges in 2022 include estimated loss from property damage to Sunseeker Resort related to Hurricane Ian and two subsequent insurance events in 2022, offset by amounts recovered under the company's insurance policies.
The terms of any new collective bargaining agreement will increase our costs over the term of the contract. Until new agreements are in place, attrition and difficulty hiring sufficient personnel in the affected work groups could have an adverse effect on our operations and growth.
Until new agreements are in place, attrition and difficulty hiring sufficient personnel in the affected work groups could have an adverse effect on our operations and growth. Pilot Scarcity The supply of pilots necessary for airline industry growth may be a limiting factor. The ability to hire and retain pilots will be critical to our and the industry’s growth.
The following table shows the number of leisure destinations and cities served as of the dates indicated (includes cities served seasonally): As of December 31, 2022 2021 2020 2019 Leisure destinations 32 33 28 27 Origination cities 93 99 96 97 Total cities 125 132 124 124 Total routes 572 595 497 466 38 TRENDS COVID-19 The COVID-19 pandemic significantly impacted our operating results in 2021 and into 2022.
The following table shows the number of leisure destinations and cities served as of the dates indicated (includes cities served seasonally): As of December 31, 2023 2022 2021 Leisure destinations 33 32 33 Origination cities 91 93 99 Total cities 124 125 132 Total routes 544 572 595 40 TRENDS Strong Demand Momentum While demand has normalized since the post-pandemic period, peak period demand remains at or near all-time highs.
“ Operating expense per ASM ” or “ CASM ” represents operating expenses divided by total system available seat miles. “ Operating CASM, excluding fuel ” represents operating expenses, less aircraft fuel expense, divided by total system available seat miles. This statistic provides management and investors the ability to measure and monitor our cost performance absent fuel price volatility.
“Airline o perating expense per ASM ” or “ CASM ” represents airline only operating expenses excluding Sunseeker divided by total system available seat miles. “Airline o perating CASM, excluding fuel ” represents airline only operating expenses excluding Sunseeker, less aircraft fuel expense, divided by total system available seat miles.
Aircraft fuel expense. Aircraft fuel expense increased $374.6 million, or 85.1 percent, in 2022 compared to 2021. This was primarily driven by a 73.5 percent increase in average fuel cost per gallon and increased refinery costs added to our cost of fuel (crack spread).
Aircraft fuel expense decreased $118.9 million, or 14.6 percent, in 2023 compared to 2022. This was primarily driven by a 17.2 percent decrease in average fuel cost per gallon offset by a 2.9 percent increase in gallons consumed on a 1.9 percent increase in ASMs. Salaries and benefits expense.
Allegiant's co-branded credit card was named the best airline co-branded credit card for the fourth consecutive year – Named to Newsweek's Top 100 Most Loved Workplaces® list for the second consecutive year – Donated $100,000 to the American Red Cross for critical disaster relief to communities in the aftermath of Hurricane Ian – Published the company's inaugural sustainability report 36 AIRCRAFT Operating Fleet The following table sets forth the number and type of aircraft in service and operated by us as of the dates indicated.
Allegiant's co-brand credit card was named the best airline co-brand credit card for the fifth consecutive year. • Published the company's second annual ESG report, which includes five company-wide targets, including an emissions intensity reduction goal. 38 AIRCRAFT Operating Fleet The following table sets forth the number and type of aircraft in service and operated by us as of the dates indicated.
We expect high fuel costs will continue to impact our total costs and operating results. Boeing Agreement In December 2021, we signed an agreement with The Boeing Company to purchase 50 newly manufactured 737MAX aircraft scheduled to be delivered in 2023 to 2025 with options to purchase an additional 50 737MAX aircraft.
Boeing Agreement Since December 2021, we have signed an agreement and multiple amendments with The Boeing Company to purchase 50 newly manufactured 737 MAX aircraft with options to purchase an additional 80 737MAX aircraft.
During this period we made principal payments of $701.6 million, including a $531.7 million prepayment of our term loan due 2024 and $24.7 million prepayment of our payroll support program loans. Sources and Uses of Cash Operating Activities. Operating cash inflows are primarily derived from providing air transportation and related ancillary products and services to customers.
Including this revolving credit facility, we had $275.0 million undrawn and available under our revolving credit facilities as of December 31, 2023. Sources and Uses of Cash Operating Activities. Operating cash inflows are primarily derived from providing air transportation and related ancillary products and services to customers.
Under our fixed fee flying contracts, we require our customers to prepay for flights to be provided by us. The prepayments are escrowed until the flight is completed and are recorded as restricted cash with a corresponding amount reflected as air traffic liability.
The prepayments are escrowed and are recorded as restricted cash with a corresponding amount reflected as air traffic liability until the flight is completed. We suspended share repurchases and our quarterly cash dividend in first quarter 2020, as part of cash conservation efforts in response to the effects of COVID-19 on our business.
The increase from 2021 was primarily the result of greater travel demand for rental cars and hotels and increased Allways ® Rewards Program revenues. Increased rental car and hotel rates combined with a 6.4 percent increase in rental car days sold and an 8.3 percent increase in room nights sold contributed to the substantial increase over 2021.
Third party products revenue. Third party products revenue for 2023 increased 11.5 percent over 2022. The increase was primarily the result of an increase in marketing revenue from our co-brand credit card program, offset by a 4.8 percent decrease in rental car days sold and an 11.6 percent decrease in hotel room nights sold. Fixed fee contract revenue.
Operating Revenue Passenger revenue. Passenger revenue increased 35.4 percent in 2022 compared with 2021 as scheduled service passengers were up 23.1 percent due to stronger passenger demand in general and when compared to lower passenger demand related to COVID-19 in 2021. In addition, stronger passenger demand resulted in a 14.3 percent increase in scheduled service average base fare.
Passenger revenue increased 8.7 percent in 2023 compared with 2022 as scheduled service passengers increased by 3.1 percent on a 1.7 percent increase in departures. In addition, stronger passenger demand resulted in a 3.5 percent increase in scheduled service base fares in 2023 compared to 2022. Ancillary air-related revenues also increased by 10.9 percent in 2023 over 2022.
We recorded a $2.5 million tax expense compared to a $44.8 million tax expense during 2022 and 2021 respectively. The effective tax rate for 2022 differed from the statutory federal income tax rate of 21.0 percent primarily due to state income taxes.
Income tax expense . We recorded a $41.5 million tax expense compared to a $2.5 million tax expense during 2023 and 2022 respectively.
Subsequent revisions to these estimates could be caused by changing market prices of our aircraft, changes in utilization of the aircraft, and other fleet events. To the extent a change in estimate for useful lives or salvage values of our property and equipment occurs, there could be an acceleration of depreciation expense associated with the change in estimate.
Subsequent revisions to these estimates could be caused by changing market prices of our aircraft, changes in utilization of the aircraft, and other fleet events. 50 RECENT ACCOUNTING PRONOUNCEMENTS See related disclosure in Note 2 to our Consolidated Financial Statements. 51
This was primarily due to a 10.9 percent increase in the average number of aircraft in service. 43 As compared to 2019, maintenance and repairs expense increased by $26.1 million or 28.5 percent as the number of aircraft in service increased by 33.4 percent, offset by the effect of a 16.3 percent decrease in utilization compared to 2019.
This was primarily due to a 9.6 percent increase in the average number of aircraft in service. Sales and marketing expense.
Of the five aircraft, one aircraft was acquired under forward purchase and four were acquired under finance leases. (2) Includes twenty aircraft under finance lease and thirteen aircraft under operating lease as of December 31, 2022. (3) Includes four aircraft under operating lease as of December 31, 2022.
(2) Includes 23 aircraft under finance lease and 13 aircraft under operating lease as of December 31, 2023, 20 aircraft under finance lease and 13 aircraft under operating lease as of December 31, 2022, and 11 aircraft under finance lease and 11 aircraft under operating lease as of December 31, 2021.
We have yet to announce an opening date, but we expect to make that announcement in second quarter 2023. Our Operating Expenses A brief description of the items included in our operating expense line items follows. Aircraft fuel expense includes the cost of aircraft fuel, fuel taxes, into plane fees and airport fuel flowage, storage or through-put fees.
Aircraft fuel expense includes the cost of aircraft fuel, fuel taxes, into plane fees and airport fuel flowage, storage or through-put fees.
Full year TRASM was 12.50 cents, up 10.8 percent as compared to 2019 despite a scheduled service capacity increase of 15.2 percent. Aircraft Fuel The cost of fuel is volatile, as it is subject to many economic and geopolitical factors we can neither control nor predict. Significant increases in fuel costs could materially affect our operating results and profitability.
Demand continues to compare favorably to 2019 as scheduled service load factors and total revenue per available seat mile ("TRASM") in 2023 were above 2019 and 2022 levels. Aircraft Fuel The cost of fuel is volatile, as it is subject to many economic and geopolitical factors we can neither control nor predict.
The $84.7 million in other financing activities is mostly attributable to $62.8 million of net deposit activity in the construction deposit account for Sunseeker Resort and as such, is a partial offset to $175.0 million of proceeds from the issuance of debt obligations for Sunseeker Resort during 2022. 47 OFF-BALANCE SHEET ARRANGEMENTS, COMMITMENTS AND CONTRACTUAL OBLIGATIONS The following table discloses aggregate information about our contractual cash obligations and off-balance sheet arrangements as of December 31, 2022 and the periods in which payments are due: Contractual obligations (in thousands) Less than 1 year 2-3 years 4-5 years More than 5 years Total Long-term debt obligations (1) $ 223,387 $ 610,317 $ 932,719 $ 266,565 $ 2,032,988 Finance lease obligations 66,751 102,816 102,216 402,094 673,877 Operating lease obligations 25,549 48,399 24,139 38,362 136,449 Aircraft acquisition obligations (2) 536,617 1,395,685 — — 1,932,302 Total future payments under contractual obligations $ 852,304 $ 2,157,217 $ 1,059,074 $ 707,021 $ 4,775,616 (1) Long-term debt obligations (including variable interest entities) include scheduled interest payments, using applicable reference rates as of December 31, 2022, and excludes debt issuance costs.
The increase in cash provided by these factors in 2023 was offset by a $213.9 million decrease in proceeds from the issuance of debt and finance lease obligations, net of issuance costs, and $22.1 million used to pay cash dividends in 2023, compared to none in the prior year. 48 OFF-BALANCE SHEET ARRANGEMENTS, COMMITMENTS AND CONTRACTUAL OBLIGATIONS The following table discloses aggregate information about our contractual cash obligations and off-balance sheet arrangements as of December 31, 2023 and the periods in which payments are due: Contractual obligations (in thousands) Less than 1 year 2-3 years 4-5 years More than 5 years Total Long-term debt obligations (1) $ 545,598 $ 478,024 $ 1,059,107 $ 143,782 $ 2,226,511 Finance lease obligations 51,408 102,516 117,016 336,168 607,108 Operating lease obligations 25,912 37,746 21,686 42,615 127,959 Aircraft acquisition obligations (2) 866,545 833,291 — — 1,699,836 Total future payments under contractual obligations $ 1,489,463 $ 1,451,577 $ 1,197,809 $ 522,565 $ 4,661,414 (1) Long-term debt obligations (including variable interest entities) include scheduled interest payments, using applicable reference rates as of December 31, 2023, and excludes debt issuance costs.
Fixed fee contract revenue for 2022 increased 48.0 percent compared with 2021 as a result of a 10.8 percent increase in fixed fee departures largely due to lower charter activity during the continuance of the pandemic in 2021.
Fixed fee contract revenue for 2023 increased 12.5 percent compared with 2022 as a result of a 19.8 percent increase in fixed fee departures. Operating Expenses The following table presents operating unit costs on a per ASM basis, defined as Operating CASM, for the indicated periods.
Removed
As comparisons of our 2022 results to 2021 reflect disproportionate changes due to the continued impact of the pandemic on air travel during 2021, we have also provided analysis of certain revenue and expense line items to 2019 results (the last year unaffected by the pandemic) where helpful to understand trends in our performance.
Added
As of February 1, 2024, and including service announcements through that date, we were selling seats on 555 routes serving 124 cities in 42 states.
Removed
This includes our recent announcements through February 1, 2023.
Added
Although the average fuel cost per gallon declined in 2023 when compared to 2022, the average fuel cost per gallon in 2023 remained 43.7 percent higher than in 2021. We expect high fuel costs will continue to impact our total costs and operating results.
Removed
In particular, we suffered numerous cancellations due to the effect of the Omicron variant on flight crews in late 2021 and early 2022. COVID-19 may continue to impact our operations into the future.
Added
In the interest of increased quality control at Boeing and its suppliers, the FAA has indicated that aircraft production rates will be capped until they are fully satisfied with Boeing's quality practices. These factors could delay deliveries to us.
Removed
Although demand has recovered during 2022, we believe that demand in the foreseeable future could fluctuate in response to fluctuations in COVID-19 cases, variants of the virus, hospitalizations, deaths, treatment efficacy, the availability of vaccines, CDC recommendations, and government restrictions.
Added
Separately from the ongoing collective bargaining agreement negotiations, and in an attempt to begin to address pilot pay issues, effective in May 2023, we are recognizing a retention bonus for pilots who continue employment with us until a new labor agreement is approved.
Removed
Strong Demand Momentum As concerns over COVID-19 have declined, we have seen significant increases in load factors and average total fare per passenger beginning in March 2022 and continuing into 2023.
Added
The amount being accrued is 35 percent of current pay for a minimum of 85 pay credit hours per month except for first year first officers for whom the percentage is 82 percent.
Removed
Total revenue per available seat mile ("TRASM") in the fourth quarter of 2022 was 14.03 cents, the highest quarterly TRASM in Company history, up 21.3 percent compared to fourth quarter 2019 despite a scheduled service capacity increase of 11.9 percent.
Added
We are also in the process of negotiating a new contract with the union representing our flight attendants after a tentative agreement negotiated with the union was rejected by the work group. The terms of any new collective bargaining agreement will increase our costs over the term of the contract.
Removed
Operations Staffing challenges continue to impact our operations and costs and we have pulled back some of our planned growth for 2023 as a result. We believe these issues are not unique to Allegiant nor do we believe they are systemic.
Added
Network Expansion We have identified more than 1,400 incremental routes as opportunities for future network growth, with approximately 77 percent of these additional routes having no current nonstop service. Our ability to add significant numbers of new routes has been temporarily stymied by flight crew staffing, high fuel costs, economic conditions and other factors.
Removed
Our irregular operations costs are also impacted by our unique approach to compensate passengers for their inconvenience in addition to the ticket price, not generally done in the airline industry.
Added
Once these conditions allow, we should be able to achieve meaningful growth with greater utilization of our fleet (and, in particular, during peak demand periods), and with projected growth of the fleet. Establishment of ESG Goals In our 2022 sustainability report, we established ESG goals in the areas of environmental, social and governance.
Removed
We are investing incrementally in our employee hiring and retention and our operations in an attempt to improve performance and this may put pressure on unit costs in the near term. However, if these problems persist, we may suffer reputational damage and incur higher costs for irregular operations.
Added
We and VivaAerobus have submitted a joint application to the DOT requesting approval of and antitrust immunity for the alliance.
Removed
Pilot Scarcity The supply of pilots necessary for airline industry growth may be a limiting factor. The pandemic resulted in more than 3,000 early pilot retirements across U.S. mainline and cargo carriers and the pipeline for new pilots does not appear at the present time to be sufficiently robust to replace retired pilots and to allow for projected industry growth.
Added
Although the DOT process has progressed substantially, their review of our application is currently suspended pending the outcome of diplomatic 41 engagement on broader treaty issues and, as a result, the timing of commencement of this service is uncertain as it will depend on when or if the DOT will ultimately approve the grant of antitrust immunity.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeInterest Rates As of December 31, 2022, we had $380.6 million of variable-rate debt, including current maturities and without reduction for $4.6 million in related costs.
Biggest changeInterest Rates As of December 31, 2023, we had $429.6 million of variable-rate debt, including current maturities and without reduction for $4.7 million in related costs. A hypothetical 100 basis point change in interest rates would have affected interest expense on variable rate debt by approximately $3.9 million during 2023. 52
Based on our fuel consumption during 2022, a hypothetical ten percent increase in the average price per gallon of fuel would have increased fuel expense by approximately $81.5 million. We have not hedged fuel price risk for many years.
Based on our fuel consumption during 2023, a hypothetical ten percent increase in the average price per gallon of fuel would have increased fuel expense by approximately $69.1 million. We have not hedged fuel price risk for many years.
Aircraft fuel expense during 2022 represented 36.9 percent of our total operating expenses. Increases in fuel prices, or a shortage of supply, could have a material impact on our operations and operating results.
Aircraft fuel expense during 2023 represented 30.4 percent of our total operating expenses. Increases in fuel prices, or a shortage of supply, could have a material impact on our operations and operating results.
Removed
As we had higher balances of variable rate debt prior to the repayment of our Term Loan B in August 2022, a hypothetical 100 basis point change in interest rates would have affected interest expense on variable rate debt by approximately $8.2 million during 2022. 52

Other ALGT 10-K year-over-year comparisons