Las Vegas-based airline Allegiant cuts profit outlook on rising costs
Shares of Allegiant Air’s parent company tumbled in after-hours trading Monday after the budget airline gave a disappointing preview of its second-quarter earnings that it said were undercut by higher costs, including fuel.
Allegiant Travel Co. said after the market closed that it expects to report earnings of 62 cents per share. The company had previously forecast profit of 92 cents per share, and analysts had been even more bullish, expecting $1.36 per share, according to a FactSet survey.
Its shares traded down more than 18% in extended trading on Monday.
Allegiant’s woes echoed what bigger airlines have been saying the past two weeks: Demand for tickets remains strong as people want to travel following more than two years of pandemic, but costs are rising rapidly for fuel, labor and other expenses.
The Las Vegas-based airline said revenue for the April-June quarter was about $629 million, up 28% from the same period in 2019, and strong sales have continued in July, with flights running slightly higher than 90% full on average.
However, Allegiant paid $4.32 per gallon for fuel in the quarter, higher than it has expected, and planes consumed $9 million in extra fuel that the airline blamed on hauling more passengers per flight, which makes the planes heavier. Costs other than fuel were up 14% per mile, compared with 2019.
Allegiant is scheduled to report quarterly results on Aug. 3.