Q2 2023 Allegiant Travel Co Earnings Call

August 2, 2023

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<unk> recorded I would now like to hand, the conference over to your speaker today Sherry Wilson.

Managing director of Investor Relations. Please go ahead.

Thank you Michelle and welcome to the Allegiant travel company's second quarter 2023 earnings call on the call with me today are John Redmond, The company's Chief Executive Officer, Greg Anderson, President Scott D'angelo, our EVP and Chief Marketing Officer drew wells, our SVP and Chief revenue Officer.

Okay.

Yeah.

Good afternoon, and thank you for standing by and welcome to the second quarter 2023.

Robert meal, SVP, and Chief Financial Officer, and a handful of others to help answer questions. We will start the call with commentary and then open it up to questions. We ask that you. Please limit yourself to one question and one follow up the company's comments today will contain forward looking statements concerning our future performance and strategic plan various risks.

Travel Company earnings Conference call.

This is fine.

It depends are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone you wouldn't didn't hear an automated message advising your hands raised.

Factors could cause the underlying assumptions of these statements and our actual results to differ materially from those expressed or implied by our forward looking statements. These risk factors and others are more fully disclosed in our filings with the SEC any forward looking statements are based on information available to US today, we undertake no obligation to update publicly.

Your question. Please press Star one again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today Sherry Wilson.

Managing director of Investor Relations. Please go ahead.

Thank you Michelle welcome to the Allegiant travel company's second quarter 2023 earnings call on the call with me today are John Redmond, The company's Chief Executive Officer, Greg Anderson, President Scott D'angelo, our EVP and Chief Marketing Officer drew wells, our SVP and Chief revenue Officer.

This earnings release as well as the rebroadcast of the call. Please feel free to visit the company's Investor Relations site at IR Dot Allegiant Air Dot com and with that I'll turn it over to John .

Robert meal at VP, and Chief Financial Officer, and a handful of others to help answer questions. We will start the call with commentary and then open it up to questions. We ask that you. Please limit yourself to one question and one follow up the company's comments today will contain forward looking statements concerning our future performance and strategic plan various.

Thank you very much here and good morning, everyone.

I am thrilled to report an 18% operating margin and 99, 7% controllable completion for the second quarter among the highest in the industry during the quarter, both operationally and financially.

In the face of high demand and operational complexity the team continues to deliver.

This is their exceptional efforts that have allowed us to meet and exceed our customers' expectations over.

Over the last year, we have increased our NPS scores by an average of 10 points and are now at the highest scores since the pandemic.

Any forward looking statements, whether as a result of future events, new information or otherwise the company cautions investors not to place undue reliance on forward looking statements, which may be based on assumptions and events that do not materialize to view this earnings release as well as the rebroadcast of the call. Please feel free to visit the company's investor relation.

I could not be prouder of the work our team members do each and every day.

Thank you very much for your continued passion and dedication.

Our commitment to enhancing the travel experience remains a key driver of our success over.

Over the years, we have invested on our services and our brand ensuring we not only meet the evolving needs of our customers, but also create new opportunities for growth and expansion.

<unk> site at IR Dot Allegiant Air Dot com and with that I'll turn it over to John .

Thank you very much Gary and good morning, everyone.

One area that continues to pay dividends as our co branded credit card.

I am thrilled to report an 18% operating margin and 99, 7% controllable completion for the second quarter among the highest in the industry during the quarter, both operationally and financially.

600000 credit cards issued the program continues to surpass expectations.

Card holders spend has increased by 220% since 2019 and shows no signs of slowing.

And the pace of high demand and operational complexity the team continues to deliver.

This is their exceptional efforts that have allowed us to meet and exceed our customers' expectations over.

We believe the opening of Sunseeker resort later this year, we will provide further value propositions for our card holders and guests.

Over the last year, we have increased our NPS scores by an average of 10 points and are now at the highest scores since the pandemic.

Drive call cardholder sign ups well into the future.

Last quarter I spoke about the key strategic initiatives of this management team.

I could not be prouder of the work our team members do each and every day.

To provide a quick update on our progress.

Thank you very much for your continued passion and dedication.

First and foremost finalizing our outstanding labor contracts remains our top priority.

Our commitment to enhancing the travel experience remains a key driver of our success over.

Greg will provide additional detail around our status.

Over the years, we have invested on our services and our brand and ensuring we not only meet the evolving needs of our customers, but also create new opportunities for growth and expansion.

But it is of the utmost importance that we continue making progress and delivered contracts that our teams are proud to support.

Secondly, we are committed to continuing to deliver high operational performance. It is our obligation to our guests to strive for industry leading performance.

One area that continues to pay dividends as our co branded credit card.

600000 credit cards issued the program continues to surpass expectations.

On our Q2 results.

It is unnecessary pillar and ensuring we can protect the investments we've made over the years and our brand.

Card holders spend has increased by 220% since 2019 and shows no signs of slowing.

Finally, I'm happy to report remain we remain on track to open Sunseeker resort and Port Charlotte, Florida in mid October This has been a long time coming.

We believe the opening of Sunseeker resort later this year, we will provide further value propositions for our card holders and guests and helped drive called cardholder sign us well into the future.

Project full of challenges and delays outside of our control so to see the end insight is remarkable.

Last quarter I spoke about the key strategic initiatives of this management team.

Bookings for <unk> Zika continue coming in from all corners of the country 42 States all toll which speaks volumes of the breath of the database.

I'll provide a quick update on our progress.

First and foremost finalizing our outstanding labor contracts remains our top priority.

To date, excluding group bookings, we have sold approximately 3300 transient room nights and in average room rate of $410 per night.

Greg will provide additional detail around our status.

It is of the utmost importance that we continue making progress and delivered contracts that our teams are proud to support.

This transient room nights booked to date.

Our impressive and most people book Hotel room inside 50 days of arrival.

Secondly, we are committed to continuing to deliver high operational performance. It is our obligation to our guests to strive for industry, leading performance as shown on our Q2 results.

Regarding group bookings over 50 groups have contracted or in the process of contracting nearly 40000 room nights.

It is unnecessary pillar and ensuring we can protect the investments we've made over the years and our brand.

The team continues to bring in high quality groups and I fully expect this group room nights booked number to grow to roughly 75000 by year end covering all years book.

Finally, I'm happy to report remain we remain on track to open Sunseeker resort and Port Charlotte, Florida in mid October This has been a long time coming.

These are incredible group numbers for our property and brand that has never existed in the market.

Project full of challenges and delays outside of our control so to see the end insight is remarkable.

The team in Florida is in full hiring mode looking to onboard a targeted head count of around 1200 personnel.

Bookings for Sunseeker continue coming in from all corners of the country 42 States all toll which speaks volumes of the breath of the database.

We received over 5700 applications with over 70% of those applicants residing within a 50 mile radius of the resort demonstrating our commitment to supporting the local economy.

To date, excluding group bookings, we have sold approximately 3300 transient room nights and on average remain a $410 per night.

Underpinning this influx and applications is unique retention bonus we announced in early July for our inaugural Nonmanagement Sunseeker resort team members.

This transient room nights booked to date.

Our impressive and most people book Hotel room inside 50 days of arrival.

Provides an annual retention bonus of $10000 for 10 years. After completing 10 years of continuous full time employment.

Regarding group bookings over 50 groups have contracted or in the process of contracting nearly 40000 room nights.

Interestingly, we have received applications from people resigning in 49 states.

The team continues to bring in high quality groups and I fully expect this group room nights booked number to grow to roughly 75000 by year end covering all year is booked.

Given the early response, we would expect the application pool to exceed 7000 people.

With an application pool that continues to grow this innovative program should help us attract and retain the very best hospitality professionals and we already see evidence of this within the pool.

These are incredible group numbers for our property and brand that has never existed in the market.

The team in Florida is in full hiring mode looking to onboard a targeted head count of around 1200 personnel.

From a financial perspective, the sunseeker resort budget remains at $695 million.

We received over 5700 applications will over 70% of those applicants residing within a 50 mile radius of the resort demonstrating our commitment to supporting the local economy.

<unk> indicated in prior calls costs will ramp in the third quarter due to Preopening expenses, we estimate the total cost impact will be roughly $15 million this quarter.

Underpinning this influx of applications is unique retention bonus we announced in early July for our inaugural Nonmanagement Sunseeker resort team members.

Consistent with last quarter, the full year impact to consolidated EPS remains at $1 25 loss.

Provides an annual retention bonus of $10000 for 10 years. After completing 10 years of continuous full time employment.

I continue to be encouraged by the long term value creation of Sunseeker resorts.

Upon completion of the project the team will shift focus to begin laying the groundwork for our asset light growth trajectory.

Interestingly, we have received applications from people resigning in 49 states.

With the opening around the corner. Some of you will continue to speculate about our future intentions regarding expansion plans or future projects requiring material capital outlays, we will not pursue any such projects without an equity partner.

Given the early response, we would expect the application pool to exceed 7000 people.

With an application pool that continues to grow this innovative program should help us attract and retain the very best hospitality professionals and we already see evidence of this within the pool.

In closing I could not be happier, where we sit today, our upward guidance revisions reflect our conviction about the balance of the year and to continue to deliver strong performance in the coming years.

From a financial perspective, the sunseeker resort budget remains at $695 million.

<unk> indicated in prior calls costs will ramp in the third quarter due to Preopening expenses, we estimate the total cost impact will be roughly $15 million this quarter.

Such I am pleased to announce that the Allegiant travel board of directors has.

<unk> horizon annual dividend of $2 40.

Payable in equal amounts quarterly beginning September one for the second quarter 2023.

Consistent with last quarter, the full year impact to consolidated EPS remains at $1 25 loss.

We remain committed to growing profitably, while enhancing our offerings driving customer satisfaction and delivering increased value to our shareholders.

I continue to be encouraged by the long term value creation of Sunseeker resorts.

Upon upon completion of the project the team will shift focus to begin laying the groundwork for our asset light growth trajectory.

With that I'll turn it over to Greg Anderson.

John Thank you over the past year the industry has faced a uniquely challenging operating environment. Despite these many obstacles team allegiant is delivering exceptional results and our business everything begins and ends with operations in here at Allegiant, We're only days away from having the heaviest flying periods of the year behind Us March in summer.

Through July we are running an impressive 99, 8% controllable completion factor and Thats year to date.

In addition, during the month of June we are amongst the industry leaders in on time performance.

Such I am pleased to announce that the Allegiant travel board of directors has authorized an annual dividend of $2 40.

The results, we're seeing today represent a significant improvement over where we were a year ago. This improvement has driven our year to date irregular operation costs down by $80 million compared to the same period in 2022.

Payable in equal amounts quarterly beginning September one for the <unk>.

Quarter 2023.

Obviously, an unreliable operation is much more expensive to run it also leads to unnecessary disruption and frustration for our guests and our frontline team members.

We remain committed to growing profitably, while enhancing our offerings driving customer satisfaction and delivering increased value to our shareholders with that I'll turn it over to Greg Anderson.

Overly ambitious scheduling may lead to higher revenues, but when its result in excessive delays and cancellations the juice isn't worth the squeeze we're committed to maintaining a balanced scheduling approach. This approach has executed jointly by our planning and operational teams as together. They expertly manage are scheduled to meet the leisure demand environment while.

John Thank you over the past year the industry has faced a uniquely challenging operating environment. Despite these many obstacles team allegiant is delivering exceptional results.

And our business everything begins and ends with operations in here at Allegiant, We're only days away from having the heaviest flying periods of the year behind us marching summer.

Maintaining operational integrity, our unique ability in adjusting capacity is differentiated by our low fixed cost structure. One of the interesting themes. You are hearing from other carriers has been around leisure traffic. Moreover, some carriers are reshaping their network and adjusting their schedules accordingly by lowering off peak capacity.

Through July we are running an impressive 99, 8% controllable completion factor and that two year to date.

In addition, during the month of June we are amongst the industry leaders in on time performance.

This leisure focus and focus flowing on peak days has been our approach for over 20 years. We are ideally suited for this leisure peak flying approach and you can see this in our results and going forward. We believe this approach will continue to pay dividends.

Obviously, an unreliable operation is much more expensive to run it also leads to unnecessary disruption and frustration for our guests and our frontline team members.

In addition to our operational and financial performances. There is also an incredible amount of work being accomplished behind the scenes to strengthen our foundation and to be able to support a 200 plus aircraft airline and roughly five years.

Our major system implementations are a key step in getting there and I am happy to report that went live on July one a major milestone along this journey. This once in a generation system changeover will help drive internal efficiencies across our back office teams.

Maintaining operational integrity, our unique ability in adjusting capacity is differentiated by our low fixed cost structure. One of the interesting themes. You are hearing from other carriers has been around leisure traffic. Moreover, some carriers are reshaping our network and adjusting their schedules accordingly by lowering off peak capacity.

Additionally, we plan to cut over to now mature in late August we delayed. It's go live date to move any potential operational disruption to outside of our peak summer travel period.

<unk> is expected to drive incremental ancillary revenue due to its dynamic pricing capabilities. In addition, this system will support our expansion into Mexico with our joint venture partner Viva Air booths.

This leisure focus and focus flying on peak days has been our approach for over 20 years. We are ideally suited for this leisure peak flying approach and you can see this in our results and going forward. We believe this approach will continue to pay dividends. In addition to our operational and financial performances. There is also an incredible amount of work being accomplished.

However, due to recent actions undertaken by Mexico affecting U S carrier operations at Mexico City Airport, our ATI application with the Dod has been temporarily put on hold.

We want to be clear, though that this does not affect the merits of our application and it's also worth noting that we have readied the areas within our control to be able to launch once ATI is approved.

And this seems to strengthen our foundation and to be able to support a 200 plus aircraft airline and roughly five years.

The execution of the incredible team members at Allegiant truly Amazes me.

Not only do they continue to strengthen our foundation, but their efforts delivered industry, leading controllable completion and operating margins during the first half of 2023.

This triggered the maximum profit share amount paying out over $12 million to our airline team members, we could not be prouder of the work team Allegiant us and thank you.

Go live date to move any potential operational disruption to outside of our peak summer travel period.

We believe we are incredibly well positioned for the future inter uniquely set up to be a destination airline for all of our team members are key element of this is to ensure we maintain competitive labor contract.

Due to recent actions undertaken by Mexico affecting U S carrier operations at Mexico City Airport, our ATI application with the Dod has been temporarily put on hold.

Last quarter, our dispatchers, whom are represented by the IGT ratified a two year contract extension in more than a year before the amendable date of their CBA, which included pay rate increases at the higher end of the industry.

We want to be clear, though that this does not affect the merits of our application and it's also worth noting that we have ready the areas within our control to be able to launch once ATI is approved.

Similarly, we are happy to have reached a formal tentative agreement with our mechanics also represented by the IGT more than three years prior to their amendable date. This ta provides for significant increases in rates and as a two year extension to the current contract the ta subject to approval by the mechanics in the coming weeks.

The execution of the incredible team members at Allegiant truly Amazes me.

Not only do they continue to strengthen our foundation, but their efforts delivered industry, leading controllable completion and operating margins during the first half of 2023.

In June we announced the tentative agreement with the TWU, which represent our flight attendants. While this initial ta was unfortunately voted down we remained focused and committed to reaching a deal with our flight attendants and regain re engaging at the table with the TWU in short order.

This triggered the maximum profit share amount paying out over $12 million to our airline team members, we could not be prouder of the work team Allegiant us and thank you.

Regarding our pilot group, who are represented by the IDT, we remain in mediation and working towards pathways to a deal.

Given the uncertainty around the timing of a deal we felt it necessary to address pilot compensation outside of bargaining and recognize the importance our pilots play in our ongoing success as.

As such in early June we were pleased to announce a retention bonus for all pilots that remain with the company to ratification of the deal we began banking a 35% increase to their current rates, except for first year first officers, which accrue at an even higher rate of 82%.

These retention bonuses are intended to bring our pilot pay more in line with the industry with the understanding final pay rates will continue to be negotiated through the mediation process.

In June we announced the tentative agreement with the TWU, which represent our flight attendants. While this initial ta was unfortunately voted down we remain focused and committed to reaching a deal with our flight attendants and regain re engaging at the table with the TWU in short order.

We are pleased the IBP supported this retention bonus as we continue to work with them towards a contract that our pilots deserve in closing I want to thank all of team Allegiant you are the best in the business.

We appreciate everything you do with that I'll turn it over to Scott. Thanks, Greg Our second quarter saw continued strong domestic leisure travel demand and capture that remain near our historic highs in 2022.

Regarding our pilot group, who are represented by the IGT, we remain in mediation and working towards pathways to a deal given.

Given the uncertainty around the timing of the deal we felt it necessary to address pilot compensation outside of bargaining and recognize the importance our pilots play in our ongoing success as such in early June we were pleased to announce a retention bonus for all pilots that remain with the company to ratification of the deal we began banking a 35.

Thanks to improved operations, a testament to the strong leadership of our Chief operating officer kidney Wilbur along with his expert leadership team and the great work by all of the Allegiant family. This year's controllable completion rate being far above last year's level means we're keeping and recognizing a much greater portion of book revenue year to date.

<unk> increased to their current rates, except for first year first officers, which accrue at an even higher rate of 82%.

Looking forward, while there is no shortage of opinions with regards to macroeconomic conditions and their impact on consumer domestic leisure travel behavior, we spend less time trying to predict the future and more time, ensuring we are prepared to succeed in it. It all starts with keeping our fingers on the pulse of customer sentiment and their leisure travel intention.

These retention bonuses are intended to bring our pilot pay more in line with the industry with the understanding final pay rates will continue to be negotiated through the mediation process.

We are pleased the IGT supported this retention bonus as we continue to work with them towards a contract that our pilots deserve in closing I want to thank all of team Allegiant you are the best in the business.

Just as we did following the past two quarters, we surveyed a representative sample from both our most frequent flying repeat customers as well as those who fluids for the first time this past quarter. The results remained strong and unchanged from the past two quarters among both groups about 50% said that economic.

Great. We appreciate everything you do with that I'll turn it over to Scott. Thanks, Greg Our second quarter saw continued strong domestic leisure travel demand and capture that remain near our historic highs in 2022.

Conditions, we will have no impact on their flying behavior with the Legion in the next 12 months and more than 30%. So that economic considerations will actually make them more likely to fly with the Legion in the next 12 months the market is moving toward us for our most frequent flying repeat customers the rationale for their unchain.

Sentiment and intention stems from the fact that the vast majority of them are either flying to visit family are relatively more than 40% of the group or are flying between their primary residence and their vacation home just under 40% of the group. These remain the most resilient forms of leisure travel during any macroeconomic environment.

Just as we did following the past two quarters, we surveyed a representative sample from both our most frequent flying repeat customers as well as those who flew us for the first time this past quarter. The results remained strong and unchanged from the past two quarters among both groups about 50% said that economic.

Coronary rewarding our most frequent flying repeat customers, along with engaging new customers and turning them into repeat customers is our always rewards loyalty program year to date, nearly 90% of our customer bookings have come from always rewards members.

The number of members with activity year to date is up nearly 30% versus last year and the number of new members with their first activity is up nearly 15% versus last year.

Conditions will have no impact on their flying behavior with the Legion in the next 12 months and more than 30%. So that economic considerations will actually make them more likely to fly with the Legion in the next 12 months the market is moving toward us for our most frequent flyer repeat customers the rationale for their unchain.

Ultimately, having such broad coverage was always rewards enables us to reward the vast majority of our customers with points that can be easily use this currency and any amount at any time for anything sold at Allegiant Dot com year.

Sentiment and intention stems from the fact that the vast majority of them are either flying to visit family are relatively more than 40% of the group or are flying between their primary residents and their vacation home just under 40% of the growth. These remain the most resilient forms of leisure travel during any macroeconomic environment.

Year to date on average always rewards members are one five times more valuable than nonmembers, most notably this value was largely driven by them spending 60% more on air ancillary products than non members do their take rates of core air ancillary products seats and bags are 10% to 20 percentage point.

Quarter rewarding our most frequent flying repeat customers, along with engaging new customers and turning them into repeat customers is our always rewards loyalty program year to date, nearly 90% of our customer bookings have come from always rewards members.

It's higher than that of nonmembers.

Our most loyal and engaged segment within the always rewards program is of course, our co brand credit card holders, who are three times more valuable than non members currently about two 5% of our total active customer database of $17 million has the card as such we believe there is significant growth potential.

The number of members with activity year to date is up nearly 30% versus last year and the number of new members with their first activity is up nearly 15% versus last year.

Seven years, we've grown the program into a $100 million business unit and we expect to double that in the next three years to that end I am excited to announce an upcoming change to our program.

Later this month, we will be transitioning our co brand credit card network partner from Mastercard to be soft.

Year to date on average always rewards members are one five times more valuable than non members. Most notably this value is largely driven by them spending 60% more on air ancillary products than non members do their take rates of core air ancillary products seats and bags are 10 to 20 percentage point.

Our Allegiant World Mastercard will be renamed and rebranded as the Allegiant always rewards visa card.

While bank of America remains our issuing partner and know the cardholder benefits will change we made the decision to move to be the nation's leading brand and credit card issuance and acceptance because we believe it will enable us to drive higher levels of both new cardholders and cardholder spend the two largest ways that we derive.

It's higher than that of nonmembers.

<unk> revenue from the program.

We ask the Allegiant customers, who do not currently have our co brand credit card, which card they would be most likely to apply for 60% said visa while only 25% said Mastercard. In addition, one of the nation's largest retailers Costco only accepts visa and more than 40% of our customers say they regularly.

As such we believe there is significant growth potential in seven years, we have grown the program into a $100 million business unit and we expect to double that in the next three years to that end I am excited to announce an upcoming change to our program.

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It's more visa will provide stronger financial technical and analytical support for growing value Allegiant always rewards visa card program and in providing additional benefits through their exclusive partnerships and proprietary capabilities.

Later this month, we will be transitioning our co brand credit card network partner from Mastercard to be soft.

Our Allegiant World Mastercard will be renamed and rebranded as the Allegiant always rewards visa card.

Wrapping up year to date and as much as demand is slightly below last year's historic high levels. We believe this simply represents a continued return to normalized pre pandemic peak and Nonpeak season on travel patterns, we continuing to view domestic leisure travel in the cities and among the customers we serve as strong.

While bank of America remains our issuing partner and no existing cardholder benefits will change we made the decision to move to be the nation's leading brand and credit card issuance and acceptance because we believe it will enable us to drive higher levels of both new cardholders and cardholder spend the two largest ways that we derive.

But we remain close to our customers and as has been the hallmark of our company throughout its history, we stand ready to adapt to any changes in the demand environment and with that I'll turn it over to our Chief revenue Officer Drew wells. Thank you Scott and thanks, everyone for joining us this morning I'm extremely.

<unk> revenue from the program.

Really pleased with our record second quarter performance of $684 million in total revenue growth of nearly 9% on system ASM growth of one 3%.

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It's more visa will provide stronger financial technical and analytical support for growing value Allegiant always rewards visa card program and in providing additional benefits through our exclusive partnerships and proprietary capabilities.

This combination produces traveling a $13 six four which vested any previous second quarter by a half cent.

<unk> grew year over year by seven 5%.

As Greg mentioned, we achieved a remarkable operational results in the second quarter on top of financial results among the best in the industry.

Wrapping up year to date and as much as demand is slightly below last year's historic high levels. We believe this simply represents a continued return to normalized pre pandemic peak and non peak seasonal travel patterns. We continue to view domestic leisure travel in the cities and among the customers we serve as strong.

The current operating environment has proven challenging and we are not immune to this.

Three months ago, we talked about trimming about two five points of capacity from the summer schedule and we believe it was absolutely worth it.

I want to reiterate how impressed I am with the planning and operations teams coming together to do an incredible job aligning our schedule with available resources and anticipating risk areas to help mitigate potential issues, both controllable and uncontrollable alike.

The buffers added into our schedule enabled better recovery options when faced with the regular operations, including ATC related concerns, especially out of Florida.

We've done the commercial piece as well or better than anyone else in the world as measured by margins and returns, but candidly often at the expense of operational excellence.

Really pleased with our record second quarter performance of $684 million in total revenue growth of nearly 9% on system ASM growth of one 3%.

In the first half of 2023, we showed that we could do the operational piece, while maintaining that industry, leading financial position.

This combination produces <unk> of $13 64, which bested any previous second quarter by a half cent.

Those two in harmony as an elite combination.

And grew year over year by seven 5%.

We still have more work to do to continually improve but this summer will serve as a great foundation going forward to ensure operational reliability in conjunction with the appropriate deployment of capacity.

As Greg mentioned, we achieved a remarkable operational results in the second quarter on top of financial results among the best in the industry.

The current operating environment has proven challenging and we are not immune to this.

Diving into revenue a bit the strength in the quarter was well balanced as yields and ancillary products each contributed roughly $5 incremental per passenger versus the second quarter in 2022.

Three months ago, we talked about trimming about two five points of capacity from the summer schedule and we believe it was absolutely worth it.

We exceeded $70 per passenger and ancillary revenue once again in large part thanks to Allegiant Xtra and continued success with our bundled ancillary product as well as the Allegiant to co brand program, which continues to thrive.

The buffers added into our schedule enabled better recovery options when faced with a regular operations, including ATC related concerns, especially out of Florida.

Allegiant extra is now featured on 14 aircraft and continues to exceed expectations.

While we don't expect any incremental aircraft with this layout in 2023, all boeing's coming in 2024, we'll have the allegiant extra option.

We've done the commercial piece as well or better than anyone else in the world as measured by margins and returns, but candidly often at the expense of operational excellence.

Additionally, the strength of our operations and diligence from the charters team allowed us to capitalize on additional fixed fee business from both new and current clients to grow fixed fee revenue over 30%.

In the first half of 2023, we showed that we could do the operational piece, while maintaining that industry, leading financial position.

Those two in harmony as an elite combination.

As previously mentioned, we are still maintaining the expectation of traveling over the last nine months to be up mid single digits.

Now expected to narrow as the lower side of the mid single digit range.

In addition to the continued story of incredible demand the upside factors for Allegiant remain the same continued operational stability and an expanded allegiant extra product we've talked about and.

Diving into revenue a bit the strength in the quarter was well balanced as yields and ancillary products each contributed roughly $5 incremental per passenger versus the second quarter in 2022.

Another upside factor is on historically mature network.

We exceeded $70 per passenger and ancillary revenue once again in large part thanks to Allegiant Xtra and continued success with our bundled ancillary products as well as the Allegiant co brand program, which continues to thrive.

But that doesn't mean zero out the development five new routes and three reintroduced routes started service this summer including growth in Portland, Oregon, Provo, Utah and Denver among other cities.

I am extremely happy that all eight held their own with some even exceeding system average profitability from the start.

Allegiant extra is now featured on 14 aircraft and continues to exceed expectations.

While we don't expect any incremental aircraft with this layout in 2023, all Boeing is coming in 2024, we'll have the allegiant extra option.

Additionally, last month, we announced six new routes for the winter season, mainly focused on Florida with one added to our Mesa base.

These announcements are booking above average compared to prior announcements, which is continued evidence of a strong leisure demand presence.

Lastly, <unk> should provide lift to our ancillary program. However, given the integration delay we will not see the previously anticipated upside in the third quarter. So we're still baking that lift into the fourth.

As previously mentioned, we are still maintaining the expectation of traveling over the last nine months to be up mid single digits.

Furthermore, we did see some yield compression through the heart of the summer booking curve somewhat offset by atypical close in demands.

Now expected to narrow as the lower side of the mid single digit range.

In addition to the continued story of incredible demand the upside factors for Allegiant remain the same continued operational stability and an expanded allegiant extra product we've talked about.

As you well know Allegiant prides itself on matching capacity with demand for more than 20 years, our daily and monthly levels of flying a fluctuated meaningfully.

Another upside factor is on historically mature network.

We have a great understanding of the leisure customer and when they most want to fly.

The third quarter will be no different as roughly 80% of our ASM will fall on our peak leisure days and September ASM look to be roughly 55% of July flying both generally in line with the third quarter of 2022.

I am extremely happy that all eight held their own with some even exceeding system average profitability from the start.

Scheduled service ASM are expected to be very slightly negative in the quarter, while the full year guide remains intact of flat to up 3%.

Additionally, last month, we announced six new routes for the winter season, mainly focused on Florida with one added to our Mesa base.

With that I'd like to turn it over to Robert.

These announcements are booking above average compared to prior announcements, which is continued evidence of our strong leisure demand presence.

Thanks drew and thank you to everyone for joining us on the call today.

Lastly, <unk> should provide lift to our ancillary program. However, given the integration delay we will not see the previously anticipated upside in the third quarter, but we are still baking that lift into the fourth.

We're pleased to report another quarter of on financial results.

Allegiant produced $76 9 million of consolidated adjusted net income for the second quarter, resulting in adjusted EPS of $4 35.

Furthermore, we did see some yield compression through the heart of the summer booking curve somewhat offset by atypical close in demand.

In line with 2019 earnings we recognized record total operating revenue in the quarter of $684 million of $8 six over the prior year on one 3% higher capacity.

As you well know Allegiant prides itself on matching capacity with demand for more than 20 years, our daily and monthly levels of flying a fluctuated meaningfully.

Our non fuel unit cost increased 12, 9% year over year.

We have a great understanding of the leisure customer and when they most want to fly.

With four points of that increase attributable to pilot payroll accruals and other frontline labor cost increases, which as Greg noted we announced in June but were effective beginning may one.

The third quarter will be no different as roughly 80% of our ASM will fall on our peak leisure days in September ASM look to be roughly 55% of July flying both generally in line with the third quarter of 2022.

Similar to our last call.

Unit costs were pressured in comparison to the same period last year by lower productivity, which accounts for about three points of the increase.

Scheduled service ASM are expected to be very slightly negative in the quarter, while a full year guide remains intact at flat to up 3%.

Improved operational performance drove a nice tailwind by reducing irregular operations expense in the quarter that was largely offset by inflationary cost pressure in stations.

With that I'd like to turn it over to Robert.

Thanks drew and thank you to everyone for joining us on the call today.

We're pleased to report another quarter of strong financial results.

Variable team member compensation related to improved financial performance drove roughly two five points of the increase over the second quarter last year and two points of CASM increase in the quarter came from some onetime nonrecurring costs, which included a cancellation fee related to the transition of our co brand credit card for Mastercard and visa.

Allegiant produced $76 9 million of consolidated adjusted net income for the second quarter, resulting in adjusted EPS of $4 35.

In line with 2019 earnings we recognized record total operating revenue in the quarter of $684 million of $8 six over the prior year on one 3% higher capacity.

And the remainder of our ex fuel unit cost increase was related to various other items.

Fuel cost came in below our expectations at $2 69 per gallon, helping to drive an airline operating margin of 18, 6%.

Our non fuel unit cost increased 12, 9% year over year.

With four points of that increase attributable to pilot payroll accruals and other frontline labor cost increases, which as Greg noted we announced in June but were effective beginning may one.

Shifting to full year guidance, we are increasing our estimated airline earnings per share by 75 at the midpoint to $11 75.

Similar to our last call.

<unk> costs were pressured in comparison to the same period last year by lower productivity, which accounts for about three points of the increase.

The increase in expected full year EPS is fully attributable to a 10% decrease in our full year estimated fuel cost per gallon from $3 to $2 90.

Improved operational performance drove a nice tailwind by reducing irregular operations expense in the quarter that was largely offset by inflationary cost pressure in stations.

As John noted, we continue to expect a full year loss related to sunseeker resort of $1 25 per share.

We expect preopening costs to ramp during the third quarter at approximately $15 $15 million ahead of opening the property early in the fourth quarter.

When taken in conjunction and using the midpoint of our guide we expect a consolidated full year adjusted earnings per share of roughly $10 50.

Turning to the balance sheet, we ended the June quarter with $1 4 billion in available liquidity.

And the remainder of our ex fuel unit cost increase was related to various other items.

Just over $1 billion in cash and investments and $356 million in capacity and Undrawn revolvers and PDP financing facilities. After a prepayment of $61 million in aircraft secured debt in late June .

Fuel cost came in below our expectations at $2 69 per gallon, helping to drive an airline operating margin of 18, 6%.

Shifting to full year guidance, we are increasing our estimated airline earnings per share by 75 at the midpoint to $11 75.

Net debt remained consistent with last quarter at $1 1 billion our.

Our net debt was down to two two turns a reduction from $3 seven at year end driven by strong EBITDA production during the first six months of the year.

The increase in expected full year EPS is fully attributable to a 10% decrease in our full year estimated fuel cost per gallon from $3 to $2 90.

We do expect to add some incremental debt leading up to delivery of our first 737 Max aircraft late in the fourth quarter and would expect net leverage to be up just slightly above the current level at the end of the year.

As John noted, we continue to expect a full year loss related to sunseeker resort of $1 25 per share.

We expect preopening costs to ramp during the third quarter at approximately $15 $15 million ahead of opening a property early in the fourth quarter.

Second quarter capital expenditures included $147 million related to aircraft purchases inductions pre delivery deposits and other fleet related costs.

When taken in conjunction and using the midpoint of our guide we expect our consolidated full year adjusted earnings per share of roughly $10 50.

We spent an additional $29 million in other airline capital expenditures and deferred heavy maintenance Capex came in at $21 7 million <unk>.

Turning to the balance sheet, we ended the June quarter with $1 4 billion in available liquidity.

Capex for our Sunseeker resort property was $92 million during the quarter.

Just over $1 billion in cash and investments and $356 million in capacity and Undrawn revolvers and PDP financing facilities. After a prepayment of $61 million in aircraft secured debt in late June .

Moving to fleet, we inducted two Airbus <unk> hundred 20 aircrafts into operation and ended the quarter with 91, <unk> hundred $20 million and $35 to <unk> hundred 19 aircraft in service. We had one additional <unk> hundred 20 aircraft owned and undergoing induction work as of the quarter end and expect to purchase two additional <unk> hundred 20 aircraft during the remainder of 2012.

Net debt remained consistent with last quarter at $1 1 billion our.

Our net debt was down to two two turns a reduction from $3 seven at year end driven by strong EBITDA production during the first six months of the year.

Three.

And on the 737 fleet updates from Boeing indicate that our first two Max aircraft, which are scheduled for delivery at the end of this year will each be delayed by approximately four weeks.

Leaving one aircraft for delivery to us in 2023 and moving the second into 2024.

Second quarter capital expenditures included $147 million related to aircraft purchases induction pre delivery deposits and other fleet related costs.

While the follow on effect on the remainder of our 2024 delivery schedule is still under discussion. Our 2023 capacity plans are not impacted by this delay.

We spent an additional $29 million in other airline capital expenditures and deferred heavy maintenance Capex came in at $21 7 million <unk>.

As we've shared previously we expect to begin operating our first 737 aircraft in the first quarter of next year and expect to take delivery of approximately two aircraft per month throughout 2024.

Capex for our Sunseeker resort property was $92 million during the quarter.

Moving to fleet, we inducted two Airbus <unk> hundred 20 aircrafts into operation and ended the quarter with 91, <unk> hundred $20 and 35% to <unk> hundred 19 aircraft in service. We had one additional <unk> hundred 20 aircraft owned and undergoing induction work as of the quarter end and expect to purchase two additional <unk> hundred 20 aircraft during the remainder of 2012.

Our updated full year Capex guide today implies just under $500 million in aircraft engine and induction related spend this year with the reduction from prior guidance related to timing of pre delivery deposits and timing of aircraft deliveries.

All in we expect full year airline capex to be roughly $640 million.

Three.

And on the 737 fleet updates from Boeing indicate that our first two Max aircraft, which are scheduled for delivery at the end of this year will each be delayed by approximately four weeks.

I'm very pleased with the financial trajectory, we've seen in the past few quarters and excited for the earnings potential in our businesses. We can start to unlock the benefits of the infrastructure investments we've been making.

EBITDA in the trailing 12 months is approximately $4 5 million per aircraft on a trailing 12 month fuel cost of $3 38 per gallon adjusting.

Leaving one aircraft for delivery to us in 2023 and moving the second into 2024.

While the follow on effect on the remainder of our 2024 delivery schedule is still under discussion. Our 2023 capacity plans are not impacted by this delay.

Adjusting for fuel, we would be back to our 2019 level of $6 million in EBITDA per aircraft notwithstanding some of the added cost pressures I mentioned earlier.

As we've shared previously we expect to begin operating our first 737 aircraft in the first quarter of next year and expect to take delivery of approximately two aircraft per month throughout 2024.

While I recognize there are certainly many moving parts here, we expect continued improvement on this metric as our numerous numerous initiatives come online.

Running a reliable operation has been paramount to achieving the results that we're sharing today, we're extremely proud of our team members and the way that they have worked together to schedule and operate the airline during a time that remains challenging.

I wanted to just end by thanking our 5400 team members for all of their contribution during this busy peak summer travel season.

All in we expect full year airline capex to be roughly $640 million.

Michelle we're ready to begin taking analyst questions. Okay.

I'm very pleased with the financial trajectory, we have seen in the past few quarters and excited for the earnings potential in our businesses. We can start to unlock the benefits of the infrastructure investments we've been making.

As a reminder to ask a question. Please press star one one when your telephone and wait for your name to be announced.

EBITDA in the trailing 12 months is approximately $4 $5 million per aircraft on a trailing 12 month fuel cost of $3 38 per gallon adjusting.

Your question. Please press star one again.

We ask you to please limit to one question and one follow up please standby, while we compile the Q&A roster.

Adjusting for fuel, we would be back to our 2019 level of $6 million in EBITDA per aircraft notwithstanding some of the added cost pressures I mentioned earlier.

Sure.

The first question comes from Duane <unk>.

While I recognize there are certainly many moving parts here, we expect continued improvement on this metric as our numerous numerous initiatives come online.

Then Nick works with Evercore Your line is open.

Hey, Thanks, good morning.

John what would you envision the.

Segmentation mix.

For some secret to be I mean, if you had to guess how much would be group versus transient.

The groups that you have contracted with what do those rates look like relative to the transient rate that you cited.

I wanted to just end by thanking our 5400 team members for all of their contribution during this busy peak summer travel season.

Hi, Duane.

Michelle we're ready to begin taking analyst questions. Okay.

Good questions I think when you look at that you have to kind of look at it by year.

As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced.

<unk> and 'twenty.

Four we will start with a full year of 2004, you're probably looking at something in the range of.

Your question. Please press star one again.

I'd say, maybe 12 to it can be a wide range, just because we'll be booking into the year, but probably in the range of like 12% to 18% could get as high as 20, but probably in that range of 12 to 18.

We ask you to please limit to one question and one follow up please standby, while we compile the Q&A roster.

Sure.

The first question comes from Duane <unk>.

When youre looking at.

The out years, starting with 25, you're probably looking at 20% to 25% would be more more normal.

Clinic work with Evercore Your line is open.

Hey, Thanks, good morning.

John what would you envision the.

As we move forward.

Just to give you.

Segmentation mix.

Some color on that when you look at the roughly 40000 group room nights room nights out of our inland book.

For some secret to be I mean, if you had to guess how much would be group versus transient.

26300 of those fall into 2004.

The groups that you have contracted with what do those rates look like relative to the transient rate that you cited.

So that's roughly.

More than 10% slightly over 10% of the total room nights that we would have in a given year. So.

Hi, Duane.

Good questions I think when you look at that you have to kind of look at it by year.

<unk> and 'twenty.

That kind of gives you a good barometer, that's why I think that's where it's going to fall, but again, we're dealing with a brand on a property. It hasnt existed to run these percentages as we are.

Four we will start with a full year of 24, you're probably looking at something in the range of.

I'd say, maybe 12 to it can be a wide range, just because we'll be booking into the year, but probably in the range of like 12% to 18% could get as high as 20 would probably be in that range of 12 to 18.

Is incredibly impressive, but I think thats kind of like the 25% range would be where it starts to peak in 'twenty five.

And John on the on the group rates there too.

When you're looking at.

250 to 300 or thereabouts, yes.

The out years, starting with 25, you're probably looking at 20% to 25% would be more more normal.

Averaging around $2 90 ish.

When you look at all 40000 room nights.

Yeah.

As we move forward.

And I would expect those to ramp up to us as there is.

To give you.

Some color on that when you look at the roughly 40000 group room nights room nights out of our inland book.

A greater awareness of the property and we're not selling into an unknown celebrates we're selling into.

26300 of those fall into 2004.

The rates, we're getting are more than we expected again selling into an unknown properties, but those will continue to ramp up.

So that's roughly <unk>.

More than 10% slightly over 10% of the total room nights that we would have in a given year. So.

Yours as.

As we get into 'twenty five 'twenty six.

This is another data point, some we have group room nights that have already been booked into 2007.

That kind of gives you a good barometer and that's why I think that's where it's going to fall, but again, we're dealing with a brand on a property that hasnt existed to run these percentages as we are.

Got it I appreciate the thoughts I know, it's somewhat hypothetical at this point and then just on the Opex run rate.

Is incredibly impressive, but I think thats kind of like the 25% range would be where it starts to peak in 'twenty five.

Can you give us a little help in the quarter I know you got some insurance reimbursement. So what was kind of the opex run rate for sunseeker, and <unk> and how do you see that kind of ramping into <unk> and <unk>. Thanks for taking the questions.

And John on the on the group rates.

250 to 300 thereabouts, yes.

Turning around $2 90 ish.

When you look at all 40000 room nights.

I think that.

<unk> number I think <unk>, we're talking about a $15 million.

Yeah.

And I would expect those to ramp up to us as there is.

<unk>, which of course are all preopening as Youre talking about the <unk> number I don't have off the top of my head what that was but obviously would be.

A greater awareness of the property and we're not selling into an unknown celebrates we're selling into.

<unk> for sure.

Even though the rates, we're getting are more than we expected again selling into an unknown property, but those will continue to ramp up in the out years.

Less than half that number yes, I think we had.

So like $5 million to $7 million I want to say between the first and second quarter per quarter.

As we get into 'twenty five 'twenty six.

And sorry that $15 million, when you're sort of up and running with a full fourth quarter, what does that what does that look like.

This is another data point, we have group room nights that have already been booked into 2007.

Well once we're up and operating.

Got it I appreciate the thoughts I know, it's somewhat hypothetical at this point and then just on the Opex run rate.

We haven't put out any financial data from a from an operating standpoint, we intend to do that.

Probably at the same time, we provide guidance for the airline which would be historically, we do after Q4. So we would provide operating guidance for the resort at that same time. So right now we are only providing the opex of <unk>.

I think that.

<unk> number I think <unk>, we're talking about a $15 million.

Before opening small just a preopening numbers.

Which of course are all preopening as Youre talking about the <unk> number I don't have off the top of my head what that was but obviously would be probably for sure.

There is public numbers that we put out there a few years ago, obviously, <unk> and I would expect results to be significantly better because I think the ADR in those projections was something around the $2 50 range $250, a night and as you can see we're running much better than <unk>.

Less than half that number yes, I think we had.

Like $5 million to $7 million I want to say between the first and second quarter per quarter.

And sorry that $15 million, when you're sort of up and running with a full fourth quarter, what does that what does that look like.

Blend group and transient.

Okay. Thank you.

Please standby for the next question.

Well once we're up and operating.

We haven't put out any financial data from a from an operating standpoint, we intend to do that.

The next question comes from Savi <unk> with Raymond James Your line is open.

Probably at the same time, we provide guidance for the airlines, which would be historically, we do after Q4. So we would provide operating guidance for the resort at that same time. So right now we are only providing the opex of <unk>.

Hey, guys good morning.

Just if I could.

Talk a little bit about the pilot bonus that youre offering and has that improved kind of the attrition rates that youre seeing there and if you could talk a little bit about.

The retention and hiring capabilities today.

Before opening small just a preopening numbers.

There is public numbers that we put out there a few years ago, obviously, there David and I would expect results to be significantly better because I think the ADR in those projections was something around the $2 50 range $250, a night and as you can see we're running much better than <unk>.

Hey, Savi sure it's Greg Thanks for the question.

The bonus that in general as we came up and moving forward with it is just that it has to hit on was the right thing to do we have so many of our pilots that want to be at Allegiant that we were talking to it providing us feedback to say.

How is it.

Blend group and transient.

<unk> difficult to want to stay here when the rates are so low I mean, we want to be here, but the rates are low.

Okay. Thank you.

Please standby for the next question.

Fair to the industry. So we felt overall this was the right thing to do for our pilots because they do want to be here and they understand the unique setup that allegiant has in terms of that out and bad quality of life I don't get me wrong that this is one step to contracts ultimately, where we need to get and we need to make a lot of improvements in certain areas, including quality of life.

The next question comes from Savi <unk> with Raymond James Your line is open.

Hey, guys good morning.

Just if I could.

Talk a little bit about the pilot bonus that youre offering and has that improved kind of the attrition rates that youre seeing there and if you could talk a little bit about.

Rates retirement, and so forth in terms of staffing now maybe lets just I'll break it down into two pieces.

Schoolhouse being one savvy and then I'll talk about kind of the net pilots in attrition that we've been seeing but schoolhouse as we've seen over the past couple of months a terrific increase in the number of pilots coming through this go out I mean classes are full I think beginning the last three or four classes have been full.

The retention and hiring capabilities.

Capabilities today.

Hey, Savi sure it's Greg Thanks for the question.

So about $20 to 25 per class before that perspective in the first part of the year. We were seeing roughly 12 to 14 per class. So really encouraged by what we're seeing there our team led by Tyler Hollingsworth has really kind of turn that around and focus on a lot of several different pathway programs and recruiting the right type of pilots that want to be at Allegiant.

Difficult to want to stay here when the rates are so low I mean, we want to be here, but the rates are low compared to the industry. So we felt overall this was the right thing to do for our pilots because they do want to be here and they understand the unique setup that allegiant has in terms of that out and back quality of life don't get me wrong that this is one step to contracts ultimately.

It is this.

This unique quality of life setup, so and as we look forward to the rest of the year. We still remain really encouraged about the classes those that have signed up and continuing to maintain kind of that full class status. If you will but in terms of staffing just to maybe put some.

Where we need to get and we need to make a lot of improvements in certain areas, including quality of life pay rates retirement.

And so forth in terms of staffing now maybe lets just I'll break it down into two pieces.

Guardrails around that and around the attrition or the notices that we were receiving so I would say like an April may it was roughly we were receiving notice about nearly a pilot a day I mean, just to put it into simple terms and since June since early June that number has been cut down to a quarter of that number so we've <unk>.

<unk> House being one savvy and then I'll talk about kind of the net pilots in attrition that we've been seeing but schoolhouse as we've seen over the past couple of months a terrific increase in the number of pilots coming through fiscal outstanding classes are full I think beginning the last three or four classes have been full.

Certainly seen some.

<unk> trends along those lines some of that's probably seasonal some of it hopefully is due not just to the retention bonus but.

About $20 to 25 per class before that perspective in the first part of the year, we were seeing roughly $12 14 per class. So really encouraged by what we're seeing there our team led by Tyler Hollingsworth has really kind of turn that around and focus on a lot of several different pathway programs and recruiting the right type of pilots that want to be at Allegiant.

US going out there and trying to make the improvements we can outside of collective bargaining and also but again I want to reiterate the most important thing we can do and a big step is getting that deal done and then go from there to continue to make this a destination airlines not just for all of our pilots, but all of our team members.

Let's see this.

Unique quality of life set up so and as we look forward to the rest of the year. We still remain really encouraged about the classes those that have signed up and continuing to maintain kind of that full class status. If you will but in terms of staffing just to maybe put some color.

That's super helpful color and if I might.

On the map.

Max deliveries and just.

Early thoughts on 2020 for US is 2024 are going to be another year, where capacity is somewhat constrained as you make these investments to operate well and kind of the Max uncertainty here. How are you thinking about like what what type of kind of capacity growth EBIT target in 2024, recognizing it's still very early.

<unk> is around that and around the attrition or the notices that we were receiving so I'd say like an April may it was roughly we were receiving notice about nearly a pilot a day I mean, just to put it into simple terms and since June since early June that number has been cut down to a quarter of that number so we have certain.

Hey, Savi drew here.

First and foremost one one of the biggest components will be timing of getting a CVA done with our flight crews.

<unk> seen.

The encouraging trends along those lines some of that's probably seasonal some of it hopefully is due not just to the retention bonus but us.

Above and beyond the back delivery.

As we focus on the Max as though in the constraints. We have today will still have training requirements that that will drive through all of <unk> 24, So I would expect there to be a little bit of a ceiling relative to the fleet, we're bringing on in terms of what we're able to produce ASM wise.

Until maybe the end of the year.

Yes.

Can start to get a lot closer tourists toric run rate about I pull that back a little bit.

That's super helpful color and if I might.

Max deliveries and just early thoughts on 2020 for US is 2024 going to be another year, where capacity is somewhat constrained.

Yes, obviously, Jay the only other thing I would mention there that we haven't yet confirmed our retirement schedule on some of the <unk> hundred <unk>, we expect to take out of the fleet and so that just gives us a little bit of flexibility. So we haven't come out with a 2024 fleet plan specifically is we want to wait the gains uncertainty around the Max delivery schedule.

These investments to operate well and kind of the Max uncertainty here. How are you thinking about like what what type of kind of capacity growth EBIT target in 2024, recognizing it's still very early.

And Savi I'm, just kind of and this is Greg I would add one more quick comment.

Hey, Savi drew here.

I mentioned in my remarks over the next five years, we're planning to be 200, plus aircrafts. So I just want to reorient around that and west what we're doing we're building a strong foundation to support an airline of that size. We're strengthening that foundation. We're looking at long term growth, we're investing in all the right things and most important in our people.

First and foremost one of the biggest components will be timing of getting a CVA done with our flight crews.

Above and beyond the back delivery.

We believe we're going to we have a path to get there. It may not be at this we don't know the exact cadence, but that's what we're planning on and so a lot of the moves we are seeing is us getting prepared for that and we believe it we're able to continue to grow and grow profitably as we hit that 200 plus aircraft number in the next five years.

Until maybe the end of the year I think we can start to get a lot closer to historic run rate about I pull that back a little bit.

Yes, obviously, Jay the only other thing I had mentioned the areas that we haven't yet confirmed our retirement schedule on some of the <unk> hundred <unk>, we expect to take out of the fleet and so that just gives us a little bit of flexibility. So we haven't come out with a 2024 fleet land specifically as we want to wait the gains uncertainty around the Max delivery schedule.

Very helpful. Thank you.

Please standby for the next question.

Yes.

Okay.

Please standby for the next question.

The next question comes from Andrew <unk> with Bank of America. Your line is open.

And Savi I'm, just kind of and this is Greg I would add one more quick comment.

As I mentioned in my remarks over the next five years, we're planning to be 200, plus aircrafts. So I just wanted to reorient around that and Wes what we're doing we're building a strong foundation to support an airline.

Good morning, everyone.

Questions.

I think you had been targeting kind of low double digit growth this year.

For the Pollo retention bonuses paid out in June .

That size, we're strengthening that foundation, we're looking at long term growth, we're investing in all the right things and most important in our people.

Of that number.

I think you were including maybe about a third of ascent from from the pilots.

We believe we're going to have a path to get there. It may not be at this we don't know the exact cadence, but that's what we're planning on and so a lot of the moves we are seeing is us getting prepared for that and we believe it we're able to continue to grow and grow profitably as we hit that 200 plus aircraft number in the next five years.

And that outlook any change to that number given cloud tentative agreements out there with others in the industry.

Hey, Andrew It's Vijay I'll start and Greg if you want to jump in on the second part of that.

No. We continue to think about it like around a third of a cent.

Very helpful. Thank you.

Will mentioned in the second quarter. We only included two months of those accruals and so moving throughout the rest of the year Youll get the burden through each of the three months in the quarter.

Please standby for the next question.

Yes.

Okay.

Please standby for the next question.

But yes, youre right kind of low low double digit growth year over year.

The next question comes from Andrew <unk> with Bank of America. Your line is open.

Unit costs for the back half of the year.

And Andrew just coupled.

Couple of maybe clarifying points, it's not paid out in June .

Hey, good morning, everyone.

Questions.

There's actually a retention bonus and it's paid out upon ratification of an agreement for those pilots that are still actively endpoint at that time, we have locked in the rates at that 35% for all.

<unk> I think you had been targeting kind of low double digit growth this year.

The new or the pilot retention bonuses paid out in June .

Of that number and then I.

I think you were including maybe about a third of assent.

All pilots with the exceptions in the first year first officers at 82% that's locked in over that period, but we will continue to negotiate final rates through the mediation process, but this is a retention bonus.

The pilots.

And that outlook any change to that number given cloud tentative agreements out there with others in the industry.

Hey, Andrew It's Vijay I'll start and Greg if you want to jump in on the second part of that.

Right understood look I know there are a lot of moving parts between timing of pilot deal training.

No. We continue to think about it like around a third of a cent.

<unk> for the for the Max's but.

Will mentioned in the second quarter. We only included two months of those accruals and so moving throughout the rest of the year Youll get the burden through each of the three months in the quarter.

You mentioned in response to <unk> question about maybe sub optimal slower than historical growth in 2024.

And that type of scenario, how should we think about CASM growth next year any puts and takes you can provide around that would be helpful.

But yes, youre right kind of low low double digit growth year over year.

Unit costs for the back half of the year.

Yes, Andrew Im sorry, I don't have a lot in front of me, but I'll just say, it's real early to give kind of CASM guidance on 'twenty four just there's a lot of moving parts like you mentioned around the actual delivery schedule of the Max that will determine how many pilots are useful and producing <unk> at each different period throughout the year and then what are we doing on retirements in the $3 20.

And Andrew just coupled.

A couple of maybe clarifying points, it's not paid out in June it is actually a retention bonus and it's paid out upon ratification of an agreement for those pilots that are still actively endpoint at that time, we have locked in the rates at that 35% for all.

All pilots with the exceptions in the first year first officers at 82% that's locked in over that period, but.

<unk>.

By the time of the next call, we've got a little bit more color to share with us sort of apologies a little early to give that kind of guidance.

We'll continue to negotiate final rates through the mediation process, but this is a retention bonus.

Got it and maybe if I could sneak one more housekeeping one.

So on your guidance interest expense came down a little bit I think in your prepared remarks, you said that youre going to take on a bit more debt through through year end as the Max's where deliver just just curious what was the driver of the lowest lower interest expense there.

Right understood.

Look I know there are a lot of moving parts between timing of pilot deal training.

<unk> for the for the Max's but.

You mentioned in response to <unk> question about maybe sub optimal.

Where the historical growth in 2024.

The driver of the lower interest expense.

That type of scenario, how should we think about kind of CASM growth next year any puts and takes you can provide around that would be helpful.

This year, yes, so a little bit of it is we prepaid 60 $61 million in some aircraft secured debt at the end of the second quarter, which gives us a bit of relief in the final two quarters of this year and then my comment on opening remarks that just like year end leverage was.

Yes, Andrew Im sorry, I don't have a lot in front of me, but I will just say, it's real early to give kind of CASM guidance on 'twenty four.

A lot of moving parts like you mentioned around the actual delivery schedule of the Max that will determine how many pilots are useful and producing <unk> at each different period throughout the year and then what are we doing on retirements in the $3 20.

Wanted to set expectations, we still will add a little bit of that as we continue making PDP payments and the final two quarters of the year and then there is still one Max delivery at the end of the year.

By the time of the next call, we've got a little bit more color to share with us sort of apologies a little early to give that kind of guidance.

Andrew I'm, just going to add just piggyback on that the equity value in those 737 aircraft day, one it's meaningful and it gives P J and the team the opportunity to effective and efficient financing, we're very comfortable being able to go out and finance those aircraft, but something else that I just want to remind our investors and our street is the opportunistic nature of the.

Got it maybe if I could sneak one more housekeeping one.

737 deal and the timing and particularly around the tax law and bonus depreciation.

Depreciation excuse me that we received I mean in essence, we're going to receive we estimate roughly $250 million in interest.

The driver of the lower interest expense.

This year, yes, so a little bit of it is we prepaid 60 $61 million in some aircrafts secured debt at the end of the second quarter, which gives us a bit of relief in the final few quarters of this year and then my comment on opening remarks that just like year end leverage was.

<unk> loan from the government.

Moving forward with this deal so that will offset cash taxes in the future.

Thank you.

Please standby for the next question.

Okay.

The next question comes from Ravi Shanker with Morgan Stanley . Your line is open.

Good afternoon, everyone. This is Katherine on for Ravi. Thank you for taking my question.

Wanted to follow up on a previous comment in which you said airlines is starting to favor peak periods and that Allegiant has done this for some time, but I was curious if you could provide some color around the competitive dynamics. During this period and if what you consider peak might be different than industry peers.

737 deal and the timing and particularly around the tax law and bonus depreciation.

So just curious if these dynamics might be different in Florida market specifically.

Depreciation excuse me that we received I mean in essence, we're going to receive we estimate roughly $250 million in interest.

Yes.

True here.

We refer to peak, where we are.

We'll be talking about domestic leisure peak, which is traditionally around school holidays right. So your spring break summer.

<unk> loan from the government.

Moving forward with this deal so that will offset cash taxes in the future.

And holiday timeframe.

Think most would describe leisure peak is the same and I think as and Im speculating a bit here as carriers are having a bit more leisure exposure.

Thank you.

Please standby for the next question.

They're kind of coming around to help those dynamics are working.

Okay.

The next question comes from Ravi Shanker with Morgan Stanley . Your line is open.

One of the great things about pizza, if there is an excess of demand generally and even in periods I think he pre pandemic when capacity was quite elevated particularly in the off peak capacity, sorry peak capacity could soak up that demand pretty well I don't anticipate.

Good afternoon, everyone. This is Catherine Clark on for Ravi. Thank you for taking my question.

Competitive dynamics to change meaningfully the peaks are peak for a reason.

And then in general.

Steve It's a good thing, but the demand patterns fit the Allegiant model, just exceedingly well and something like we mentioned that we've catered to for 20 plus years.

So just curious if these dynamics might be different in Florida market specifically.

Yes.

<unk>, where we're built for exactly this kind of dynamic.

Sure.

We refer to peak.

We'll be talking about domestic leisure peak, which is traditionally around school holidays right. So your spring break summer.

And just as a quick follow up you or Scott about how 50% of those surveyed stated economic conditions will have no impact on flying was interesting.

And holiday timeframe.

Think most would describe leisure peak is the same and I think and im speculating a bit here by the carriers are having a bit more leisure exposure.

Just curious how inelastic do you think demand really is and maybe how you've seen the youll see perform in past recessionary environments. Thank you. Thanks.

They're kind of coming around to how those dynamics are working.

Thanks for that question.

For our most frequent Flyers. The answer is it is pretty inelastic, because they're traveling to and from family where they are staying <unk> Joanne from their second and vacation homes, So and many of those instances right high interest rates inflation.

One of the great things about pizza, if there is an excess of demand generally and even in periods I think he pre pandemic when capacity was quite elevated particularly in the off peak capacity sorry at peak capacity could soak up that demand pretty well I don't anticipate.

It's not as meaningful as say a family vacation too and Orlando theme Park or a Las Vegas casino, so amongst our core customers.

Competitive dynamics to change meaningfully the peaks are peak for a reason.

And so in general.

It's a good thing, but the demand patterns fit the Allegiant model, just exceedingly well and something like we mentioned that we've catered to for 20 plus years.

<unk> fairly an elastic because theyre flying to and from family <unk> second home, yes, but more broadly the customer that we serve is generally still a very price sensitive customer.

<unk>, where we're built for exactly this kind of dynamic.

And just as a quick follow up you or Scott about how 50% of those surveyed stated economic conditions will have no impact on flying was interesting.

Less so in summer peaks or peaks in general when you have a thicker demand pool to choose from.

Certainly in the off peaks you still see that.

Just curious how inelastic do you think demand really is and maybe how you've seen the youll see us perform in past recessionary borrowings. Thank you. Thanks.

By way of example, we're already pricing higher closer in taking take advantage of relative Inelasticity. If you will the ability to pass through more was a bit muted right, especially in the face of $70 plus ancillary per passenger that we're trying to balance as we build load.

Thanks for that question.

There is a pretty heavy mix on our aircraft that can be tricky to revenue manage and I think it's a place where a product like allegiant extra can really help differentiate between the the customer segments that we have and find that right balance.

It's not as meaningful as say a family vacation too and Orlando theme Park or a Las Vegas casino, so amongst our core customers.

Allegiant highs premium experience versus the main cabin, that's right for all of our customers.

<unk> fairly an elastic because theyre flying to and from family <unk> second home, yes, but more broadly the customer that we serve is generally still a very price sensitive customer.

Okay.

Please standby for the next question.

The next question comes from Helane Becker with TV Cowen Your line is open.

Less so in summer peaks or peaks in general when you have a thicker demand pool to choose from.

Hi, This is Tom Fitzgerald on for Helane. Thanks, So much for the time and the question.

Certainly in the off peaks you still see that.

By way of example, we're already pricing higher closer in taking take advantage of relative Inelasticity. If you will the ability to pass through or more was a bit muted right, especially in the face of $70 plus ancillary per passenger that we're trying to balance as we build load.

Would you mind, providing any color on what youre seeing in Las Vegas, just given some of the runway challenges that have been happening more and then just any.

Any of the drivers will be operational performance just beyond having more of a buffering.

Some of the learnings that you are taking with you for next year that'd be great. Thank you.

There is a pretty heavy mix of our aircraft that can be tricky to revenue manage and I think it's a place where a product like allegiant extra can really help differentiate between the the customer segments that we have and find that right balance.

Yes, yes, great question, and we called out three months ago that Vegas had kind of an outsized portion of that two 5%.

April and May still have pockets of struggles as there were some concentrated.

Allegiant highs premium experience versus the main cabin, that's right for all of our customers.

Dave and periods.

The impact of that materially turnaround in June and July and.

Okay.

I think Vegas went exceedingly well performed exceedingly well through the summer so.

Please standby for the next question.

Outside of some heat related concerns that there's not a lot of anybody can do there.

Okay.

Yeah.

Extremely.

Yeah.

With with how Vegas panned out I think more broadly as we think about the schedule moving forward.

The next question comes from Helane Becker with TV Cowen Your line is open.

Reviewing things from fire breaks and adding some slack in the schedule that provides that recoverability, especially as you think about Florida and pretty routine thunderstorm coming through at 330 every afternoon, we were <unk>.

Hi, This is Tom Fitzgerald on for Helane. Thanks, So much for the time and the question.

Would you mind, providing any color on what youre seeing in Las Vegas, just given some of the runway challenges that have been happening.

Balanced about viewing that in its entirety.

And then just any.

Any of the drivers of the operational performance just beyond having more of a buffering some.

Thinking about how a firebreak relates to extended turn times and where those minutes actually matter.

Some of the learnings that you are taking with you for next year that'd be great. Thank you.

But perhaps at least to me one of the most impactful things well the thing about the overnight touched on for our mechanics.

Yes, yes, great question, and we called out three months ago that Vegas had kind of an outsized portion of that two 5%.

Crews and getting that play into the gate on time every morning. So we can start the airline correctly and give ourselves a chance to succeed.

April and May still had pockets of struggles as there were some concentrated.

So both starting on time and think about how it could recover through today when things start to go awry.

Dave and periods.

The impact of that materially turnaround in June and July and.

I think we got close to the right answer this year, but there's a lot more work for us to do to continue to refine and maintain.

I think Vegas went exceedingly well performed exceedingly well through the summer so.

Our place towards the top of the industry.

Outside of some heat related concerns that there's not a lot of anybody can do there.

And drew I just wanted to add just a quick comment here too and Thats, where we sit today, we feel really confident about the second half of the year and moving on from.

Extremely.

With with how Vegas panned out I think more broadly as we think about the schedule moving forward.

The commentary that we talked about the coordination between planning and option that drew in kidney welfare heading up but.

Reviewing things from fire breaks and adding some slack in the schedule that provides that recoverability, especially as you think about Florida and pretty routine Thunder storms coming through at $3 30. Every afternoon, we were better balanced about viewing that in its entirety.

Staffing levels are very solid in fact with the exception of pilot that's the best we've seen since 2019. So we're encouraged by that as we get out of as we exit the gauntlet of the summer peak flying that the teams all come together and do a postmortem of ground around the summer debrief and they look for a process efficiencies and ways to get better and that will be coming.

Thinking about how a firebreak relates to extended turn times, and where those minutes actually matter, but perhaps at least to me one of the most impactful thing well the thing about the overnight touched on for our mechanics.

It'll be just around the corner and we will continue to step up our game in any way we can.

Crews and getting that plane to the gate on time every morning. So we can start the airline correctly and give ourselves a chance to succeed.

Thanks, very much if I could squeeze one more in just you mentioned a little bit on the outlook for revenue the rest of the year I'm. Just wondering if you could unpack that and any color on the cadence for base fares and ancillary fees.

So both starting on time and think about how it could recover through the day when things start to go awry.

I think we got close to the right answer this year, but there's a lot more work for us to do to continue to refine and maintain.

But you can see from right now thanks very much.

Yes, I'll, probably disappoint, you a little bit as we get into kind of cadence related.

Our place towards the top of the industry.

The other two things I'll point out one.

And drew I just wanted to add just a quick comment here too and Thats, where we sit today, we feel really confident about the second half of the year and moving on from.

I would look towards last year's comp set and kind of ASM cadence to help guide how do you think about the third and fourth quarter.

The commentary that we talked about the coordination between planning and option that drew in kidney welfare heading up.

And the second I'll point out and maybe not one that that I communicated well or maybe even appreciated enough as we talked about the last nine months previously with the second quarter of 'twenty to cadence.

Staffing levels are very solid in fact with the exception of pilot that's the best we've seen since 2019. So we're encouraged by that as we get out of that as we exit the gauntlet of the summer peak flying that the teams all come together and do a postmortem around around the summer debrief and they look for a process efficiencies and ways to get better and that will be coming.

And I think there is still a fair amount of recovery from the variant that we experienced in the first half of that quarter.

Not to disparage the <unk> results at all but probably helped bolster the.

It'll be just around the corner and we will continue to step up our game in any way we can.

The relative year over year, they are a little bit.

So.

Kind of think about those two pieces and concurrent is as you think about the last nine months in totality.

Okay.

Please standby for the next question.

But you can see from right now thanks very much.

Okay.

Yeah, I'll, probably disappoint, you a little bit as we get into kind of cadence related.

The next question comes from Michael Lindenberg with Deutsche Bank. Your line is open.

The other two things I'll point out one.

I would look towards last year's comp set and kind of ASM cadence to help guide how do you think about the third and fourth quarter.

Oh, Hey, good morning, everyone. Just a few quick ones here John just in response to <unk> question on you're talking about sunseeker, where the numbers were better than I do.

And the second I'll point out and maybe not one that that I communicated well or maybe even appreciated enough as we talked about the last nine months previously was the second quarter of 'twenty to cadence.

Sure.

Turning to the rates.

How should we think about it just from with all the cost inflation. There. If we kind of go back to the original plan I think the guide was EBITDA margins sort of in that 30% range is that still a reasonable sort of ballpark.

And I think there was still a fair amount of recovery from the variant that we experienced in the first half of that quarter.

Not to disparage, the <unk> results at all but probably helped bolster.

Profit margin.

Michael I do I think those EBITA EBITA margins are still doable, it's kind of like when you see happen on the air side right with the Capex, our CASM ex increasing while revenue is outpacing the CASM ex growth.

The relative year over year, they are a little bit.

Kind of think about those two pieces and concurrent as you think about the last nine months in totality.

Please standby for the next question.

Seeing the same thing happened on the and the resort World, where the cost increases are way more than offset by the room rate increases increases in that market so very encouraging.

Okay.

The next question comes from Michael Lindenberg with Deutsche Bank. Your line is open.

Oh, Hey, good morning, everyone. Just a few quick ones here John just in response to <unk> question on you're talking about sunseeker, where the numbers were better than I do.

Florida in particular.

Okay.

It's been extremely strong obviously the hotel industry throughout the U S has been Florida.

Sure.

Turning to the rates.

Shining star when it comes to what's going on so.

I think the EBITDA margins that we were looking at early on and we're also on our projections.

I think theres a potential for those to be even much longer.

Very good and then just a second one for you John and probably Greg as well and maybe the team.

Profit margin.

Michael I do I think those EBIT EBITDA margins are still doable, it's kind of like when you see even though happened on the air side right with the Capex, our CASM ex increasing while revenue is outpacing the CASM ex growth. So you are seeing the same thing happened on the and the resort world.

We have seen an announcement by frontier.

To take up some of the assets of the Jetblue spirit.

Post merger assets that they would potentially divest at this point it looks like it's just laguardia slots.

Obviously, theres a lot more that.

That they've already indicated that they would be willing to divest maybe its runway timings at Newark, and Fort Lauderdale space in Boston.

Where the cost increases are way more than offset by the room rate increases increases in that market so very encouraging.

Is there any of that.

Interest to tow Allegiant.

Florida in particular.

Hey, Mike Michael its Greg.

It's just been.

Thanks Graeme.

<unk> strong obviously the hotel industry throughout the U S has been but Florida, it's a <unk>.

And to chat with you that the team continued drew and his team continue to look at all opportunities and airports.

Signing star when it comes to what's going on so.

We are aware of the situation, but I think where we sit today, there's nothing really to report on that front.

I think the EBITDA margins that we were looking at early on and we're out there and our projections I.

Very good and then just if I could squeeze in one quick last one for Scott.

I think theres a potential for those to be even much stronger.

We have heard other carriers talk about this.

Very good and then just a second one for you John and probably Greg as well and maybe the team.

Traffic patterns, where people are.

Spending a lot more time this summer going to Europe , rather than flying domestically and Scott you do a lot of different surveys.

We have seen an announcement by frontier.

To take up some of the assets of the Jetblue spirit.

Other carriers have said that they have surveyed their own customer base and some percentage are electing to go to Europe , what what.

Post merger assets that they would potentially divest at this point it looks like it's just laguardia slots.

What are you seeing amongst your customer base, which I know youre very close to or are you seeing something similar where you are just losing a lot of flow because theyre going maybe outside of the United States any color on that would be great. Thanks for taking my question.

Obviously, theres a lot more.

That they've already indicated that they would be willing to divest maybe its runway timings at Newark, <unk> in Fort Lauderdale space in Boston.

Absolutely and thank you Michael because the last several weeks, we have asked exactly that so I am prepared to tell you first we ask our customer base to make sure. They had the ability to travel internationally. It turns out that about 80% of allegiant customers have a passport, but we're seeing something very different than <unk>.

Is there any of that are of interest to total Egypt.

Hey, Mike Michael its Greg.

Hey, Graeme.

And to chat with you that the team continued drew and his team continue to look at all opportunities in airports and certainly aware of the situation, but I think where we sit today. There is nothing really to report on that front.

What frontier and others have reported when asked do you plan to travel internationally in the next six months or have you tracked both internationally and in the last six months. The answer is the same between like 16% to 19% say, yes that means the vast majority of our customers, 80% have no plans and have not.

Very good and then just if I could squeeze in one quick last one for Scott.

We have heard other carriers talk about.

This.

Traffic patterns, where people are spending a lot more time this summer going to Europe , rather than flying domestically and Scott you do a lot of different surveys and other.

Internationally in 2023.

Other carriers have said that they've survey their own customer base.

Maybe scott towards elaborating on to the <unk>, 16% to 19% you're talking about.

Some percentage are electing to go to Europe .

What are you seeing amongst your customer base, which I know you are very close to or are you seeing something similar where you are just losing a lot of flow because theyre going maybe outside of the United States any color on that would be great. Thanks for taking my question.

Unchanged.

It hasnt been a zero sum as much. As example, it's open and we've taken an additional trip great point for us it's not a displacement argument that all the percentages are consistent year on year out.

And thank you Michael because the last several weeks, we have asked exactly that so I'm prepared to tell you first we ask our customer base to make sure. They had the ability to travel internationally. It turns out that about 80% of allegiant customers have a passport, but we're seeing something very different than what fronts.

Great very helpful. Thanks, everyone.

Please standby for the next question.

The next question comes from Conor Cunningham with Melius Research your line is open.

Peter and others have reported when asked do you plan to travel internationally in the next six months or have you tracked both internationally and in the last six months. The answer is the same between like 16% to 19% say, yes that means the vast majority of our customers, 80% have no plans and have not travelled into.

Hi, everyone. Thank you.

On the double on the doubling of the always credit card contribution just trying to understand the cadence there I assume that Paul.

Our growth and spend but in your prepared remarks, you mentioned the potential of Santander contributing just curious about the ramp there going forward. Thanks.

Absolutely so the comment that in the next three years will in effect double from roughly where we ended last year at 97 million going to post over 100 million is largely based without sudden seeker assumed in it. So it is from the key things you mentioned increased cardholder growth.

And actually in 2023.

Maybe scott towards elaborating on to the <unk>, 16% to 19% you're talking about Hasnt changed.

It hasnt been a zero sum as much as example, it's open and we've taken an additional trip yes, great point for us it's not a displacement argument that all the percentages are consistent year on year out.

Compounded cardholder spend right as that portfolio grows and we achieve at or above the same spend per card holder. So I think John's comments in the beginning represent upside that could even make it faster.

Great very helpful. Thanks, everyone.

Please standby for the next question.

The next question comes from Conor Cunningham with Melius Research your line is open.

My comments were not based on any additional goodness, which will absolutely get from sunseeker opening.

Hi, everyone. Thank you.

I think this is John I think when you look at the I think a huge data points that Scott pointed out is the <unk>.

On the double on the doubling of the always credit card contribution just trying to understand the cadence there I assume that's false.

The channels that were in the past with a Mastercard program not available to our cardholder that are now or will be available to our cardholder.

Our growth and spend but in your prepared remarks, you mentioned the potential of Santander contributing just curious about the ramp there going forward. Thanks.

Most notably Costco is significant so that that type of increase then it doesn't require necessarily an increase in the number of although we are planning on that but just need the channels of use were going to expand significantly with moving to visa.

Absolutely so the comment that in the next three years will in effect double from roughly where we ended last year at 97 million.

Post over 100 million is largely based without sudden seeker assumed in it. So it is from the key things you mentioned increased cardholder growth.

Okay. That's helpful and then Hans.

Sunseeker, great commentary on <unk> in bookings and the question that I get and maybe this is.

Kind of Mike's point as well as just around the inflection point on profitability like I realize that you know youre working towards opening I'm just trying to get.

Some color on your on your path to profitability, there and one that we could expect a potential contribution overall again realized that still.

My comments were not based on any additional goodness, which will absolutely get from sunseeker opening.

Early days, but just any thoughts there would be helpful. Thank you.

I think this is John I think when you look at the I think a huge data points that Scott pointed out is the <unk>.

Okay.

You talked about a cash contribution or contribution of use that term and when you're talking about EBITDA, we don't intend to ever be negative.

The channels that were in the past with a Mastercard program not available till cardholder that are now or will be available to our cardholder.

On a quarterly basis, meaning there is no time.

Most notably Costco the significance of that that type of increase then it doesn't require necessarily an increase in the number of although we are planning on that but just need the channels of use were going to expand significantly with moving the visa.

We forecast any period that we would have a negative EBITDA. So I think from a cash standpoint, youre going to be positive throughout the year.

With the.

He added upside in the out years, so we've purposely priced the product.

Okay. That's helpful and then.

You see out there for 'twenty, three and 'twenty four below market. So even when you see these rates.

Sunseeker, great commentary on <unk> and bucking the.

Believe it or not we're below market, because we're putting a new brand and a new property into that market. So when you look at after we've been open for a period of time and I'm not talking years I'm talking months.

The question that I get and maybe this is kind of Mike's point as well as just around the inflection point on profitability like I realize that you know youre working towards opening I'm just trying to get.

Just some color on your on your path to profitability, there and one that we could expect a potential contribution overall again realized that still.

Youre going to start to see that rate those rates accelerate up.

So we purposely are underpriced and even with that purpose fault under pricing those ADR.

Early days, but just any thoughts there would be helpful. Thank you.

Okay.

You talked about a cash contribution or contribution to use that term and when you're talking about EBITDA, we don't intend to ever be negative.

But you will see those.

Ramp up significantly for sure in the 25 it out.

I appreciate it thank you.

On a quarterly basis, meaning there is no time.

Yes.

I would like to turn the call back to John Redman for closing remarks.

We forecast any period that we would have a negative EBITDA. So I think from a cash standpoint, youre going to be positive throughout the year.

Well I appreciate everyone's time, we're very proud of our team and the management here and what we've been able to accomplish year to date.

With the.

The other upside in the out years.

We purposely priced the product that you see out there for 'twenty, three and 'twenty four below market. So even when you see these rates.

We're very excited about the balance of this year.

An incredible amount of time and resources have gone into SR.

Believe it or not we are below market, because we're putting a new brand and a new property into that market. So when you look at after we've been open for a period of time and I'm not talking years I'm talking months.

Systems over the last couple of years, you're starting to see the rollout of all of that time and effort, let's start to happen this year, which really sets the backbone for this company going forward. So we will have no restrictions limitations what have you from a system standpoint, as we move into the 20 aircraft or two.

Youre going to start to see that rate those rates accelerate up.

So we purposely up under price and even with that purpose fault under pricing those ADR.

Aircraft environment, I should say that Greg referred to.

But you will see those.

<unk> is allowing us to do everything we need to and want to do going forward.

Ramp up significantly for sure in the 25% out.

Absolutely no restrictions.

I appreciate it thank you.

Our focus now is this.

Finishing up the last labor agreements were very encouraged by where we are today and where we're going to end up tomorrow with those agreements.

Yeah.

Okay.

I'd like to turn the call back to John Redman for closing remarks.

Well I appreciate everyone's time, we're very proud of our team.

So again very bullish about the out years for this company very exciting times ahead and stay tuned. Thank you very much.

On the management here and what we've been able to accomplish year to date.

This concludes today's conference call. Thank you for participating you may now disconnect.

We're very excited about the balance of this year.

An incredible amount of time and resources have gone into.

200, aircrafts environment, I should say that Greg referred to.

<unk> is allowing us to do everything we need to and want to do going forward.

Absolutely no restrictions.

And our focus now is this.

Finishing up the last labor agreements were very encouraged by where we are today and where we're going to end up tomorrow with those agreements.

So again very bullish about the out years for this company very exciting times ahead and stay tuned. Thank you very much.

This concludes today's conference call. Thank you for participating you may now disconnect.

Good job.

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Good afternoon, and thank you for standing by and welcome to the second quarter 2023, you Allegiant travel Company earnings Conference call.

At this time.

<unk> are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone you will then hear an automated message advising your hands. It's right to withdraw your question. Please press star one again.

Please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today Sherry Wilson.

Managing director of Investor Relations. Please go ahead.

Thank you Michelle welcome to the Allegiant travel company's second quarter 2023 earnings call on the call with me today are John <unk>, The company's Chief Executive Officer, Greg Anderson, President Scott D'angelo, our EVP and Chief Marketing Officer drew wells, our SVP and Chief revenue Officer.

Robert Neale, SVP, and Chief Financial Officer, and a handful of others to help answer questions. We will start the call with commentary and then open it up to questions. We ask that you. Please limit yourself to one question and one follow up the company's comments today will contain forward looking statements concerning our future performance and strategic plan various <unk>.

Factors could cause the underlying assumptions of these statements and our actual results to differ materially from those expressed or implied by our forward looking statements. These risk factors and others are more fully disclosed in our filings with the SEC any forward looking statements are based on information available to us today, and we undertake no obligation to update publicly.

Any forward looking statement, whether as a result of future events, new information or otherwise the company cautions investors not to place undue reliance on forward looking statements, which may be based on assumptions and events that do not materialize to view this earnings release as well as the rebroadcast of the call. Please feel free to visit the company's investor relation.

<unk> site at IR Dot Allegiant Air Dot com and with that I'll turn it over to John .

Thank you very much Harry and good morning, everyone.