Allegiant Travel (NASDAQ:ALGT) reported what executives described as a record-setting first quarter, driven by strong peak-period leisure demand, higher yields, and continued momentum in the company’s co-branded credit card and premium seating products. Management also emphasized that a sharp rise in fuel costs is shaping near-term capacity plans and second-quarter expectations, even as the company prepares to close its acquisition of Sun Country.
First-quarter performance and operations
CEO Greg Anderson said the company “started the year on a very strong note,” posting a 14.9% adjusted operating margin that was “up nearly 6 points year-over-year and slightly above our guided range.” Anderson said it was Allegiant’s highest first-quarter adjusted operating margin since pre-COVID and that the company believes its margin will be “industry-leading for the second quarter in a row.”
Revenue strength sets quarterly records
Chief Commercial Officer Drew Wells said Allegiant generated $732.4 million in total revenue in the first quarter, up 9.6% year over year despite 5.9% less capacity. First-quarter TRASM was $0.1431, up 16.4% year over year. Wells said both total revenue and TRASM were first-quarter records, and described the quarter as “the strongest quarterly performance in our history,” with revenue “approximately 7% higher than any previous quarter.”
Wells said demand was “exceptional” during the quarter, with load factors up 4 points and yields up 21% year over year—performance he said was rivaled only by the “revenge travel surge of early 2023.” He said schedule deployment also benefited unit revenue, noting that while overall ASMs declined, “peak day of week capacity grew very slightly versus 1Q 2025.”
The company’s fixed-fee results also contributed, with fixed-fee revenue of $18.1 million, up 11.5% year over year, which Wells called “an incredible performance.”
Co-branded card and Allegiant Extra cited as key contributors
Anderson said Allegiant has invested for several years in technology and is now positioned to “accelerate our commercial strategy.” He said the co-branded credit card has more than 600,000 cardholders and that card remuneration represents “just over 5% of our annual revenue” while serving as “a significant contributor to our profits.” In the first quarter, Anderson said compensation from the bank increased 9% year over year.
Wells said co-brand performance helped drive a 20% year-over-year increase in average third-party revenue per passenger. He added that account acquisition remained strong, with “7 of the last 8 months being double-digit higher on a year-over-year basis,” and said both new-account metrics and card spend exceeded 15% year over year in each month of the quarter.
Anderson also said the company’s premium seating product, Allegiant Extra, continues to “outpace expectations” and is supporting TRASM growth and loyalty, with repeat purchasing trends strengthening.
Fuel volatility drives capacity cuts and second-quarter outlook
Management said jet fuel is the key near-term pressure point. Anderson said crack spreads rose sharply to about $1.70 per gallon in early April before falling to about $1.20, which he said is still roughly double the pre-conflict level of about $0.60. Wells said Allegiant’s cash sales remained strong, running up double digits through April, and management said peak flying has not been reduced, but off-peak exposure is being cut back.
Anderson said Allegiant reduced off-peak capacity where margin pressure is most acute and also reduced service on some longer stage-length routes where fuel costs create a higher hurdle. He said the company is planning a 6.5% year-over-year reduction in second-quarter ASMs, down from its initial plan.
In response to an analyst question, Wells said the capacity decision has “zero impact from Sun Country” and is “purely a fuel-related decision.” Wells also said the company expects further adjustments heading into the third quarter: while Allegiant previously anticipated modest third-quarter growth, it now expects capacity to be “flat to perhaps slightly down year-over-year,” with reductions focused on off-peak and shoulder-season flying.
Wells said he expects second-quarter year-over-year unit revenue growth to exceed the 16.4% delivered in the first quarter, but declined to provide a specific TRASM target. UBS analyst Atul Maheswari asked about the cadence of RASM growth; Wells said he “ha[s] to imagine the second quarter will be the high water mark,” while adding, “never say never” given the fluid environment. On the components, Wells said he expects continued load factor expansion but said yields will “probably lead the way.”
President and CFO Vijay (referred to as “BJ” in Q&A) provided second-quarter guidance on a standalone basis for Allegiant. At the midpoint, he said the company expects an operating margin of 1% and a loss per share of approximately $0.50, assuming a fuel price of $4.35 per gallon. He said the fuel assumption drives nearly $120 million of incremental operating expense relative to expectations at the time of the prior call.
Profitability, balance sheet, fleet, and Sun Country update
Vijay said first-quarter net income was $69.6 million, with earnings per share of $3.77, “just above our mid-March updated guidance” and up nearly 80% versus prior-year airline-only results. He reported adjusted operating margin of 14.9%, EBITDA of $168 million, and an EBITDA margin of 22.9%.
On costs, Vijay said first-quarter non-fuel unit costs were $0.0864, up 7.1% year over year, driven primarily by the capacity decline and slightly above expectations. Fuel averaged $3.04 per gallon versus an initial guide of $2.60. He said ASMs per gallon increased 1.2% year over year to 86.7, the fifth consecutive quarter of improvement, and pointed to continued contribution from the 737 MAX fleet.
Vijay said Allegiant ended the quarter with total liquidity of $1.2 billion, including $933.5 million in cash and investments and $250 million of undrawn revolver capacity. Total debt was $1.8 billion, and net debt was $858 million, down more than $100 million from the fourth quarter due to strong cash generation. He said the company expects to refinance its 2027 senior secured notes in the coming months, subject to market conditions.
On the fleet, Allegiant ended the quarter with 123 aircraft in operation after taking delivery of one 737 MAX and retiring one A320. For the second quarter, Vijay said the company expects to take delivery of three 737 MAX aircraft and retire one A320. Anderson said the MAX provides more than a 20% improvement in fuel burn efficiency, while noting that on an ASMs-per-gallon basis it is closer to 30% due to seat configuration. He said just over 20% of ASMs are expected to be produced by MAX aircraft this year, rising to about 50% by 2028.
Regarding the Sun Country transaction, Vijay said the U.S. Department of Transportation approved the deal in April and that shareholder votes for both companies are scheduled for May 8. Assuming approval, he said the transaction “should close around May 13th.” Anderson said the deal is expected “in the coming weeks,” and pointed to the value of Sun Country’s charter and cargo businesses, which he said include contractual fuel pass-through structures that are “even more beneficial in today’s volatile fuel environment.”
Vijay reiterated confidence in the previously announced $140 million synergy target, and said the company expects to provide updated guidance for the combined entity as soon as practical after closing, once it has insight into Sun Country’s financials. He added that the company is still working through how it expects to report and guide post-close.
About Allegiant Travel (NASDAQ:ALGT)
Allegiant Travel Company is a holding company that operates Allegiant Air, a low‐cost leisure airline offering scheduled and charter air service. The company focuses on connecting underserved secondary markets with popular vacation destinations across the United States. By targeting price‐sensitive leisure travelers, Allegiant Air operates a point‐to‐point network that avoids the traditional hub‐and‐spoke model, providing non‐stop flights from smaller cities to resort and entertainment hubs.
In addition to its core flight operations, Allegiant Travel Company offers packaged travel services that include hotel accommodations, rental cars and attraction tickets through its online portal.
