Allegiant Travel Co., which entered the Hawaii market in late June, posted its 39th consecutive profitable quarter Wednesday as earnings soared 78 percent partly due to its entry into the islands.
The Las Vegas-based company said net income rose to $16.9 million, or 87 cents a share, from $9.5 million, or 49 cents a share, a year ago. Revenue increased 13.2 percent to $216.9 million from $191.5 million.
Its airline subsidiary, Allegiant Air, began service to Honolulu in June from Las Vegas and Fresno, Calif., and plans to add routes to the islands from seven more mainland cities over the next four months. Earlier this month, it canceled planned service to Honolulu from Monterey, Calif., because of low demand.
"The third quarter is typically our weakest quarter of the year, and yet we were able to produce the highest third-quarter earnings per share in the company’s history," Allegiant Chairman and CEO Maurice Gallagher said in a statement. "This is particularly noteworthy to have done this in a quarter with the average oil price at $92 per barrel and in a demand environment that has been slightly weaker than historical norms."
Fuel costs rose just 6.9 percent to $89.9 million from $84.1 million in the year-ago period.
Allegiant President Andrew Levy said the company’s first full quarter in Hawaii — the third quarter — was "very profitable."
"Three-quarters of our flights, namely the Vegas market, is a market that has a lot of competitive capacity in there," he said on an earnings conference call. "And the fact that we had a very short booking window, 60 days approximately before our first flight, makes us feel really, really good about Hawaii. Normally we want to have that booking window open for six to nine months for Hawaii because typically bookings are made a little bit further in advance. So, all things considered, we think Hawaii is off to a terrific start."
He said the airline is pleased with bookings in the two markets it is currently serving —Las Vegas and Fresno — as well as the five new routes that are going to start in mid-November.
Next month, the airline will begin offering two flights a week from Bellingham, Wash., to both Honolulu and Maui; a second weekly flight to Honolulu from Fresno; and weekly flights to Honolulu from Eugene, Ore., and the California cities of Santa Maria and Stockton.
In February, Allegiant starts once-a-week service from Boise, Idaho, and Spokane, Wash., and three-times-a-week service from Phoenix.
"It’s a little too soon to be able to really have a whole lot of clarity on the three routes we’re starting up in February," Levy said. "We don’t want to hazard a guess there, but so far with what we have, we do feel really good about it. So we feel Hawaii is going to be extremely additive and it has been so far. We think that’ll continue as we go forward. At the same time, we’re going to learn about demand trends there and we’re going to be able to adjust both capacity and pricing decisions in the future as we get smarter with experience."
Allegiant ended the third quarter with 181 routes in service and expects to end the year with 196 routes, with most of that growth coming in Florida and Hawaii.
Levy said that Hawaii’s contribution to Allegiant’s earnings is still relatively small. Hawaii represented 1 percent of departures, 2.5 percent of passengers and 3.8 percent of capacity last quarter. But it will grow in the fourth quarter to 2.1 percent of departures, 2.7 percent of passengers and 8 percent of capacity.
Allegiant’s stock, which is up 28.7 percent this year, fell $1.04, or 1.5 percent, to $68.64 on Wednesday. The earnings were announced after the market closed.
