Q4 2023 Allegiant Travel Co Earnings Call

Thank you. Thank you.

Hello, and welcome to the Allegiant travel company fourth quarter and full year 2023 earnings call. All lines have been placed on mute to prevent any background noise.

Operator: Hello and welcome to the Allegiant Travel Company 4th quarter and full year conference call. All lines have been placed on mute to prevent any Speaker's Remarks. There will be a question and answer session, and if you would like, simply press star one. I will now turn the conference over to Sherry Wilson, Managing Director. Thank you, Sarah.

After the Speakers' remarks, there will be a question and answer session and if he would like to ask a question simply press star one on your telephone keypad.

I'll now turn the conference over to Sherry Wilson, managing director of Investor Relations. Please go ahead.

Sherry Wilson: Good afternoon, everyone, and welcome to the Allegiant Travel Company's fourth quarter and full year 2023 earnings call. On the call with me today are Maury Gallagher, the company's Executive Chairman and CEO, Greg Anderson, President, Scott DeAngelo, our EVP and Chief Marketing Officer, Drew Wells, our SVP and Chief Revenue Officer, Robert Neal, SVP and Chief Financial Officer, and a handful of others to help answer 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.

Sherry Wilson: Thank you Sarah good afternoon, everyone and welcome to the Allegiant travel company's fourth quarter and full year 2023 earnings call on the call with me today are Maury Gallagher, the company's executive Chairman and CEO, Greg Anderson, President, Scott, Hey, Angelo, our EVP and Chief Marketing Officer drew wells our.

Sherry Wilson: Our SVP and Chief revenue Officer, Robert meal, SVP, and Chief Financial Officer, and a handful of others to help answer. Your question. 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.

Sherry Wilson: The company's comments today will contain forward-looking statements concerning our future performance and strategic plan. Various risk 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.

Sherry Wilson: Strategic plan various risk 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.

Sherry Wilson: Any forward-looking statements are based on information available to us today. We undertake no obligation to update publicly 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, feel free to visit the company's investor relations site at ir.allegiantair.com. And with that, I'll turn it to Maury.

Sherry Wilson: We undertake no obligation to update publicly 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 this.

Sherry Wilson: Call feel free to visit the company's Investor Relations site at IR Dot Allegiant Air Dot com and with that I'll turn it to Maury.

Maurice J. Gallagher: Thank you, Sherry, and good afternoon, ladies and gentlemen. Thank you for your time today and welcome from Super Bowl headquarters here in Las Vegas. As you saw in our release, we continued to move ahead in our efforts to return to pre-pandemic performances. I'm happy to report on a number of areas that we're moving forward on all fronts. Sunseeker opened on December 15th. It's a terrific destination for fun and

Maurice J. Gallagher: Thank you Sharon and good afternoon, ladies and gentlemen, thank you for your time today.

Maurice J. Gallagher: Welcome from Super Bowl headquarters here in Las Vegas.

Maurice J. Gallagher: As you saw in our release, we continued to move ahead in our efforts to return to pre pandemic performance.

Maurice J. Gallagher: I'm happy to report a number of areas that we're moving forward on all fronts.

Maurice J. Gallagher: Sunseeker opened on December 15th terrific destination of foreign Sean Michael <unk> Who's on the call with us today and as a partner in crime, Jason Scott and her team have done yeoman's work completed.

Maurice J. Gallagher: Michael Richens, who's on the call with us today, and his partner in crime, Jason Scarupa, and their team have done yeoman's work completing and operating this magnificent and destination resort. Stay tuned for more updates in the coming months. Our operational performance front this year, and last year, our completion factor and on time mirrored our 2019 industry-leading stats, and we were among the top three in operating margin for the year. Aircraft deliveries will be delayed based on recent news and comments. We are excited about our introduction of the MAX 8200 aircraft. It's one of the most reliable airplanes in the world. Its performance profile as well will provide us with enhanced economic benefits in the coming years. On the labor front, we've been plagued for the past three years by a number of labor issues, particularly with our pilots. However, I'm cautiously optimistic about our recent progress, and updated labor agreements will allow us to continue to do what we do best to grow Allegiant in our non-competitive markets in the coming months and years. As I mentioned, it's Super Bowl week here in Las Vegas. The town is on fire, and amazing stuff is going on.

Maurice J. Gallagher: Operating this might give us in destination resort stay tuned for more updates in the coming months.

Maurice J. Gallagher: Our operational performance for this year.

Maurice J. Gallagher: Our completion factor on time mirrored our 2019 industry, leading Scotts and we were among the top three the operating margin for the year.

Ralph deliveries, while Boeing deliveries will be delayed based on recent news and comments. We are excited about our introduction of the Max 8200 aircraft. It's one of the most reliable airplanes in the world. It's performance profile as well will provide us enhanced economic benefits in the coming years.

Maurice J. Gallagher: On the labor front, we've been plagued for the past three years by a number of labor issues, particularly with our pilots. However, im cautiously optimistic with our recent progress and updated labor agreements will allow us to continue to do what we do best to grow allegiance.

Maurice J. Gallagher: Non competitive markets in the coming months and years.

As I mentioned, the Super Bowl week here in Las Vegas, the town is on fire and the amazing stuff is going on this week will be a large payback for our investment in the naming rights for the Las Vegas Raiders Stadium.

Maurice J. Gallagher: This week will be a large payback for our investment in the naming rights for the Las Vegas Raiders Stadium. The exposure, the impressions we have already received and will continue to receive this next week have been and will be exceptional. Allegiant Stadium has a nice ring to it.

Closure of the impressions, we have already received and we will continue to receive in this next week have been or will be exceptional Allegiant stadium has a nice ring to it.

Maurice J. Gallagher: We've made this investment in 2019 a big step for us. But it was part and parcel of our efforts to separate ourselves from the crowd and promote our Allegiant brand. As I mentioned, our operations this past year were industry-leading. This level of performance in today's social media world is critical. Consumer products are continuously on stage. There is nowhere to hide.

Maurice J. Gallagher: We have made this we made this investment in 2019, a big step for us.

Maurice J. Gallagher: But it was part and parcel of our efforts to separate ourselves from the crowd and promote our Allegiant brand.

Maurice J. Gallagher: As I mentioned our operations. This past year were industry, leading this level of performance in today's social media World is critical consumer products are continuously on stage there is nowhere to hide.

Maurice J. Gallagher: Seems simple. We're on a reliable, on-time airline with friendly people. But easy to say, but tough to do.

Maurice J. Gallagher: Seems simple reliable on time airline with friendly people easy to say, but it's tough to do.

Maurice J. Gallagher: But our focus on this approach for the past many years is paying dividends. Our net promoter scores are industry leading, and in recent surveys of our own customers, they gave us what we believe to be the top of the field, an NPS of 51, coming in ahead of all of the domestic carriers as far as we know. Our results compare extremely well when compared to other low-cost players, some of whose scores are meaningfully negative.

Maurice J. Gallagher: I'll focus on this approach for the past many years is paying dividends. Our net promoter scores are industry, leading and in recent surveys of our own customers. They assigned us what we believe to be the top of the field an NPS of 51.

Maurice J. Gallagher: Coming in ahead of all of the domestic carriers as far as we know our results compare extremely well when compared to other low cost players some of whose scores are meaningfully negative.

Maurice J. Gallagher: In the past 12 to 24 months, as you all are aware, competition has become much more intense for a number of the welfare carriers. The majors have come down market and have a low-priced competing product and a better reputation; again, the NPS scores tell the tale. Being the carrier of last choice in today's world is a stiff hill to climb.

Maurice J. Gallagher: In the past 12 months to 24 months as you all are aware competition has become much more intense for a number of the low fare carriers.

Maurice J. Gallagher: Majors have come down market and have a low priced competing product and a better reputation against again, the NPS scores tell the tale being.

Being the carrier of last choice in today's world, There's a scheduled decline.

Maurice J. Gallagher: Over the past 20 years, there's been a generic low fare labeling or ULCC moniker assigned to a number of us carriers. Practically, this label is for the startups since the 2000s, specifically us, Frontier Spirit, and more recently carriers such as Sun Country, Breeze, and Abello. Well, we all have this timeline in common.

Maurice J. Gallagher: Over the past 20 years theres been a generic low fare labeling or your LCC marker assigned to a number of us carriers.

Maurice J. Gallagher: Practically this labels for the startups since for 2000, and specifically us frontier spirit and more recently <unk>.

Maurice J. Gallagher: Areas, such as Sun country breeds in the Belo.

Maurice J. Gallagher: While we all as timeline and common what we don't have in common is the same model and how the companies have been managed.

Maurice J. Gallagher: What we don't have in common is the same model and how the companies have been managed. Unlike the other carriers in this grouping, our model has allowed us to build a robust moat around our business. Over the years, we have focused on building that non-competitive, non-stop network. Today, 75% of our routes do not have any direct competition.

Maurice J. Gallagher: Unlike the other carriers in this grouping our model has allowed us to build a robust moat around our business over the years, we have focused on building that noncompetitive non stop network today, 75% of our routes do not have any direct competition. This approach is paying substantial dividends in today's more confrontational environment.

Maurice J. Gallagher: This approach is paying substantial dividends in today's more confrontational environment. With most of our routes operating just two to three times a day, we can support a much larger network of cities and routes. 124 cities today with 555 routes, 450 of which are non-competitive.

Maurice J. Gallagher: With most of our routes operating just two to three times four times per week, we can support a much larger network of cities and routes.

Maurice J. Gallagher: 124 cities today with 555 routes 450 of which are noncompetitive.

Maurice J. Gallagher: In contrast, Spirit and The Frontier have on average just 300 routes each, each rather, but only 30 are non-competitive, or a 10% factor. One might analogize the ULCC crowd by comparing them and us to the famous bank robber Willie Sutton. When asked why he robbed banks, his answer was, "because that's where the money is."

Maurice J. Gallagher: Contrast, spirit and frontier have on average just 300 routes each each rather but only 30 are noncompetitive or a 10% factor.

Maurice J. Gallagher: Analogize VLCC crowd by comparing them and us to the famous bank robber Willie Sutton.

Maurice J. Gallagher: Asked why Rob banks his answer was because thats, where the money is well in today's airlines space, the banks or the big cities in the major air carrier hubs in networks.

Maurice J. Gallagher: Well, in today's airline space, the banks are the big cities and the major air carrier hubs and networks. Virtually all of the ULCC-labeled airlines are focused on these big banks. Historically, they've been easy money, but not anymore. The banks have developed ferocious tools to fight off their historic robbers.

Maurice J. Gallagher: Nearly all of the LCC labeled airlines are focused on these big banks.

Maurice J. Gallagher: Historically, they've been easy money, but not anymore.

<unk> have developed ferocious tools to fight off their historic Roberts.

Maurice J. Gallagher: We at Allegiant have stayed away from those big banks. Allegiant is focused on earning its money the old-fashioned way by creating its own customers, those that heretofore have gone unnoticed. Said another way, we've created our own private swim lane and are proud to be in it. In the coming months and years, we will continue to grow our model. It is strong, it works, and it has a great deal of room to run.

Maurice J. Gallagher: We have a reason to stay away from those big banks lesion is focused on earning its money the old fashion way by creating our own customers.

Maurice J. Gallagher: Heretofore have gone unnoticed set.

Maurice J. Gallagher: Said another way, we've created our own private swim lane and are proud to be on it.

Maurice J. Gallagher: In the coming months and years, we will continue to grow our model with a strong it works and it has a great deal of room to run lastly.

Maurice J. Gallagher: Lastly, I want to thank our team members. This has been a difficult three to four years. As we all know, you have been supporting our passengers with safe, reliable, and friendly service, and you have run the best airline this year, an industry-leading 99.8% controllable completion factor. Well done.

Maurice J. Gallagher: Lastly, I want to thank our team members. This has been a difficult three years to four years as we all know you have been supporting our passengers safe reliable and friendly service in Europe run the best airline this year, an industry, leading 99, 8% controllable completion factor well done in today's era poor service and cancel flights.

Maurice J. Gallagher: In today's era of poor service and canceled flights, you have put us back where we belong, at the top of the pack. Thank you. Thank you, Maury.

Maurice J. Gallagher: Put us back where we belong at the top of the pack. Thank you Greg.

Gregory C. Anderson: Thank you Maury.

Gregory C. Anderson: Entering 2023, one of our primary objectives was to step up our operational game and drive down Naira. Team Allegiant delivered a MEDSA, closing out the year with an industry-leading 99.8% controllable completion and a reduction in IROP costs of nearly $100 million. These results didn't go unnoticed as the Wall Street Journal ranked Allegiant one of the best performing airlines of 2020, trailing only Delta in Alaska. This turnaround performance isn't possible without a dedicated and highly talented workforce. I know I'm unbiased, but I think you're the best in the business. Throughout 2023, I had the great privilege of traveling through our system to visit most of our 24 bands. The passion of Team Allegiant is truly a sight to behold. Our base structure, coupled with our out-and-back model, allows us to provide our front-line team members with a rare industry perk. Their work shifts begin and end in their homes.

Gregory C. Anderson: Entering 2023, one of our primary objectives was to step up our operational game and drive down our op costs.

Allegiant delivered and that's.

Gregory C. Anderson: Closing out the year with an industry, leading 99, 8% controllable completion and a reduction in Iraq cost of nearly $100 million.

Gregory C. Anderson: These results didn't go unnoticed at the Wall Street Journal ranked Allegiant one of the best performing Airlines, a 2023 trailing only delta and Alaska.

Gregory C. Anderson: This turnaround performance is impossible without a dedicated and highly talented team I know I'm biased, but I think they're the best in the business throughout 2023, I had the great privilege of traveling our systems to visit most of our 24 basis.

Gregory C. Anderson: Passionate team Allegiant is truly a sight to be seen or.

Gregory C. Anderson: Our base structure, coupled with our Outback model allows us to provide our frontline team members with the rare industry hurt their work shifts to begin and end in their home cities.

Gregory C. Anderson: This unique feature plays a key role in helping us retain and grow our flight crew ranks, as evidenced by the increase of more than 100 net new pilots during the back half of 2023. While being home every night is a value benefit, we are overdue in getting our in-flight and flight operations groups updated labor contracts. This remains a top priority, and it is in the best interest of all parties.

Gregory C. Anderson: This unique feature plays a key role in helping us retain and grow our flight crew ranks as evidenced by the increase of more than 100 net new pilots during the back half of 2023.

Gregory C. Anderson: While being home every night is a value benefit we are overdue and getting our in flight and flight ops groups updated labor contracts. This remains a top priority and is in the best interest of all parties. Once in place these agreements should help unlock meaningful value.

Gregory C. Anderson: Once in place, these agreements should help unlock meaningful value. And as mentioned last quarter, an area of value to keep an eye on is our restoration of utilization during peak leisure demand periods. We have been strengthening our foundation to begin ratcheting up our peak day flying, which should provide us with a decent tailwind in 2024. We expect this tailwind to gain momentum into 2025 with the potential of increasing peak utilization by as much as 20% compared to 2023. As you know, one of Allegiant's key differentiators is our adherence to peak season and peak day of the week flying patterns, something that will continue with the new Boeing MAX aircraft. We are confident that the recent issues facing the MAX will be solved by Boeing and the FAA.

And as mentioned last quarter, an area of value to keep an eye on is our restoring of utilization during peak leisure demand periods.

Gregory C. Anderson: We have been strengthening our foundation to begin ratcheting up our peak day flying which should provide us a decent tailwind in 2024, we expect this tailwind to gain momentum into 2025 with the potential of increasing peak utilization by as much as 20% compared to 2023.

Gregory C. Anderson: As you know one of Allegiant key Differentiators is our adherence to peak season, and peak day week flying patterns.

Gregory C. Anderson: That will continue even with the new Boeing Max aircraft.

Gregory C. Anderson: We are confident the recent issues facing the Max will be solved by Boeing and the FAA. The continued uncertainty around the timing of our Max deliveries means we are being extra flexible with our 2024 capacity plans.

Gregory C. Anderson: The continued uncertainty around the timing of our MAX deliveries means we are being extra flexible with our 2024 capacity. Each MAX delivery will come equipped with Allegiant Extra, and we are concurrently reconfiguring our A320 aircraft to carry this premium product. This improved cabin layout should continue to be a big hit among our customers through our expansive domestic network of roughly 124 communities and 555 routes. Interestingly, we are the only nonstop option on roughly 450 of the routes we currently serve. Surprisingly, Allegiant serves more unique nonstop domestic routes than JetBlue, Alaska, Spirit, Frontier, Hawaiian, Sun Country, Freeze, and Avelo combined.

Gregory C. Anderson: Each Max deliveries will come equipped with Allegiant extra and we are concurrently reconfiguring, our <unk> hundred 20 aircraft to carry this premium product.

Gregory C. Anderson: This improved cabin layouts should continue to be a big hit among our customers through our expansive domestic network of roughly 124 communities and 555 routes.

Gregory C. Anderson: Interestingly, we are the only non stop option on roughly 450 of the routes. We currently serve surprisingly Allegiant serves more unique nonstop domestic routes Jetblue, Alaska Spirit Frontier Hawaiian Sun country freeze and <unk> combined.

Gregory C. Anderson: And we are positioned to meaningfully grow our number of unique nonstop flights via the 1,400 incremental routes we have identified, including the many unique nonstop routes we expect to serve in New Mexico's premier beach destination alongside our JV partner, Viva Aerobics. While the timing of governmental approval of our ATI application is uncertain, we remain confident its approval is a matter of when, not if. In addition, we have upgraded our systems by transitioning to Navitaire, which will help support our long-term growth plans, including, in turn, International Expansion. We migrated our legacy passenger service system to Navitaire in the back half of 2023 and have dedicated teams working to further seize on its capabilities by improving our dynamic pricing for auxiliary products and unlocking further efficiency. We expect these enhancements to be in place by the first half of 2020. Our Sunseeker Resort opened in mid-December. It is elegantly designed and features popular amenities, as well as a spectacular service-oriented staff. Guests are having a wonderful experience.

Gregory C. Anderson: And we are positioned to meaningfully grow our number of unique non stop flights via the <unk> thousand 500 incremental routes, we have identified including the many unique nonstop routes, we expect to serve into Mexico as Premier Beach destination, alongside our JV partner Veeva Airbus.

Gregory C. Anderson: While the timing of governmental approval of our ATI application is uncertain, we remain confident its approval as a matter of land.

Gregory C. Anderson: In addition, we have upgraded our systems by transitioning to <unk>, which will help support our long term growth plans, including <unk>.

Gregory C. Anderson: Including international expansion.

Gregory C. Anderson: We migrated our legacy passenger service system, an avatar in the back half of 2023 and a dedicated team working two feet further seized on its capabilities by improving our dynamic pricing led products and unlocking further efficiencies.

Gregory C. Anderson: We expect these enhancements in place by the first half of 2024.

Gregory C. Anderson: Our Sunseeker resort opened in mid December it as elegantly designed and features popular amenities as well as a spectacular service oriented staff.

Speaker Change: Yes, they are having a wonderful experience.

Gregory C. Anderson: The resort is still in its infancy, as it has only been open for roughly 45 days. However, encouragingly, each week we see meaningful improvements in booking trends as we continue to build further awareness of the Sunseeker brand. While we are still very early, we expect the resort could contribute as much as $15 million in EBITDA in 2024. In closing, we are extremely proud of the team at Team Allegiant for taking back our rightful spots at the top of the industry, both operationally and financially, in addition to the great progress made in strengthening our foundation. We have positioned ourselves to enhance utilization during peak lease or demand periods. Our brand has never been stronger.

Speaker Change: The resort is still in its infancy as it has only been opened for roughly 45 days encouragingly each week, we see meaningful improvements to booking trends as we continue to build further awareness of the sunseeker brand.

Speaker Change: We are still very early we expect the resort to contribute as much as $15 million in EBITDA in 2024.

Speaker Change: In closing we are extremely proud of the team of team Allegiant, taking back our rightful spots at the top of the industry, both operationally and financially. In addition to the great progress made in strengthening our foundation.

Speaker Change: We have positioned ourselves to enhance utilization during peak leisure demand periods.

Speaker Change: Our brand has never been stronger the number of unique routes to further expand our network has never been greater.

Gregory C. Anderson: The number of unique routes to further expand our network has never been greater. Aspirational products such as Allegiant Extra and our Always Loyalty program remain in high demand. Sunseeker is open and contributing. Many more opportunities remain on the horizon, including our international expansion with Viva Aerobus. We will continue to build on this momentum to strengthen our competitive advantages and further reshape the leisure travel space. With that, I'll turn it over to Scott. Thanks, Greg.

Speaker Change: Aspirational products, such as Allegiant Xtra and are always loyalty program remain in high demand.

Speaker Change: Sunseeker is opening contributing.

Speaker Change: Many more opportunities remain on the horizon, including our international expansion with Veeva Airbus. We will continue to build off this momentum to strengthen our competitive advantages and further reshape the leisure travel fits with that I'll turn it over to Scott. Thanks, Greg fourth quarter completed a year that saw post pandemic normalization of domestic leisure travel demand.

Scott DeAngelo: The fourth quarter completed a year that saw post-pandemic normalization of domestic leisure travel demand, but with Allegiant, nonetheless, driving booking and passenger levels that slightly surpassed the historic highs of 2022, despite minimal capacity growth. This has been achieved thanks to our continued distinctive ability to match capacity with demand and, in particular, to generate and fulfill demand for peak travel periods. Demand has never been greater for our Allegiant brand, which differentiates itself on the two factors that matter most to leisure travelers, low fares and nonstop flights. As Maury referenced, this week, a good portion of those nonstop flights will be Super Bowl bound here in Las Vegas, where the Allegiant brand stands to gain an unprecedented boost in awareness from the more than 100 million U.S. viewers expected to tune in to Super Bowl 58 at Qualcomm Stadium on Sunday.

Scott: But with Allegiant, Nonetheless, driving booking and passenger levels that slightly surpassed the historic highs of 2022. Despite minimal capacity growth. This was achieved thanks to our continued distinctive ability to match capacity with demand and in particular to generate and fulfill demand for peak travel periods.

Scott: Demand has never been greater for our Allegiant brand, which differentiates itself on the two factors that matter most to leisure travelers low fares and nonstop flights.

Scott: <unk> already referenced this week a good portion of those non stop flights will be Super Bowl bound to here in Las Vegas, where the Allegiant brand stands to gain an unprecedented boost and awareness for no more than $100 million USB or is expected to tune into Super Bowl 58 at Allegiant Stadium on Sunday, and we stand ready to capitalize on this brand awareness booth.

Scott DeAngelo: And we stand ready to capitalize on this brand awareness boost during one of our busiest booking periods as leisure travelers book in earnest for the spring break and even early summer peak travel season. For full year 2023, we retained nearly one third of customers who flew with us the prior year, and those customers accounted for nearly half of our total revenue for the year. This year-to-year customer retention rate was 16% higher than it was in 2022. Our loyalty programs, Always Rewards, and the Always Rewards Visa card, continue to engage a greater portion of customers and motivate those engaged customers to travel and spend more with Allegiant year after year. 2023 was the fifth consecutive year that the Allegiant Co-Brand Credit Card was named Best Airline Credit Card in USA Today's Reader's Choice Awards.

Scott: Boost during one of our busiest booking periods as leisure travelers book in earnest for the spring break and even early summer peak travel season for.

Scott: For full year 2023, we retained nearly one third of customers who flew off the prior year and those customers accounted for nearly half of our total revenue for the year.

This year to year customer retention rate was 16% higher than it was in 2022, our loyalty programs always rewards and the always rewards visa card continue to engage a greater portion of customers and motivate those engage customers to travel and spend more with the Legion year after year.

Scott: 2023 was the fifth consecutive year that the Allegiant co brand credit card was named best airline credit card in USA. Today's readers' Choice Awards. We ended the year with 484000 cardholders up 16% versus 2022, and total co brand credit card compensation was nearly $120 million for the year.

Scott DeAngelo: We ended the year with 484,000 cardholders, up 16% versus 2022, and total Co-Brand Credit Card compensation was nearly $120 million for the year, up 18% versus 2022. We expect similar growth rates to continue for both new cardholders and program compensation in 2024. In addition to the direct compensation we received from the program, our cardholders continue to exhibit strong travel frequency and spend. During 2023, cardholders flew and spent more than two times that of non-cardholders.

Scott: Up 18% versus 2022, we expect similar growth rates to continue for both new cardholders and program compensation in 2024.

Scott: In addition to the direct compensation, we received from the program. Our cardholders continued to exhibit strong travel frequency and spend during 2023 cardholders flu and spent more than two times that of non cardholders. We also continue to see strong impact from our always rewards non credit card program to $8 million.

Scott DeAngelo: We also continue to see strong impact from our Always Rewards non-credit card program. 2.8 million Always Rewards members had activity during 2023, 25% more than the prior year. And these members flew 24% more and spent 69% more than non-members. Our ever-increasingly loyal customer base is enabling us to further differentiate by showing interest in premium economy products such as Allegiant Extra and buy-on-board products, as well as our third-party hotel and rental car products, and now Sunseeker Resort Charlotte Harbor, which, as noted, opened this past December. Nearly three-quarters of our customers say they are aware of the resort, and nearly half of those in cities with Allegiant service in southwest Florida say they would consider staying there. Today, nearly two-thirds of Sunseeker bookings have come from Allegiant customers, 40% are Always Rewards members, and 20% are Allegiant co-brand credit card holders. Sunseeker is a welcomed addition to the Allegiant Travel Company family and enables us to give our customers more leisure travel products and rewards, enabling them to, as we like to say, live their best nonstop life with Allegiant.

Scott: Always rewards members had activity during 2023, 25% more than prior year and these members grew 24% more than 69% more than non members.

Scott: Our ever increasingly loyal customer base is enabling us to further differentiate by showing interest and premium economy products, such as the lesion Xtra and buy onboard products as well as our third party hotel and rental car products and now Sunseeker resorts Charlotte Harbor, which as was noted opened this past December nearly <unk>.

Scott: Three quarters of our customers say they are aware of the resort and nearly half of those in cities with a lesion service in the southwest, Florida said, they would consider staying there.

Scott: Nearly two thirds of sunseeker bookings have come from Allegiant customers with 40% of always rewards members and 20% our Allegiant co brand credit card holders Sunseeker is a welcomed addition to the Allegiant travel company family and enables us to give our customers more leisure travel products and rewards and then enabling them to.

Drew Wells: <unk> as we like to say live their best nonstop life, with Allegiant and with that I'll turn it over to drew.

Drew Wells: And with that, I'll turn it over to Drew. Thank you, Scott. And thanks to everyone for joining us today. A strong fourth quarter capped off our first full year revenue figure of over two and a half billion dollars. While our 4Q Trasm of $0.1316 was down 6.2% versus the prior year, it was still more than 4% better than any fourth quarter before that.

Drew Wells: Thank you Scott and thanks to everyone for joining us today.

Drew Wells: Our strong fourth quarter capped off our first full year revenue figure over $2 5 billion.

Drew Wells: While our <unk> of $13, one <unk> was down six 2% versus the prior year.

Drew Wells: So more than 4% better than any fourth quarter before that.

Drew Wells: Further, the full-year TRASM of $13.38 was nearly 6% better than any prior year, punctuated by record ancillary performance more than $5 better year over year. The fourth quarter featured some modest ASM growth at plus 5.7% and ended on a high note with incredible close-in demand for the holiday period. These weeks were, these were weeks with already high expectations, and they exceeded those lofty goals.

Drew Wells: Further the full year travelers 13, three eight was nearly 6% better than any prior year punctuated by record ancillary performance more than $5 better year over year.

Drew Wells: The fourth quarter featured some modest ASM growth at plus five 7% and ended on a high note with incredible close in demand for the holiday periods. These weeks work.

Drew Wells: These were weeks with already high expectations and they exceeded those lofty goals.

Drew Wells: And, as expected, the resilience in the peak weeks was met with normalizing peak to off-peak variance, as in a typical leisure environment. Lastly, for 2023, on the heels of a monthly record in September, fixed fee strength continued to ramp up, and both the fourth quarter and full year set revenue records. Really a great all-around effort to achieve $611 million in total revenue for the quarter and a sincere thank you to all our Allegiant team members for making it. As we shift attention to the first quarter, growth will be back to muted at roughly 1%. Across the industry, weather took a toll in mid-January, and the impact to Allegiant was approximately a half-point ASM headwind for the quarter and about $2.5 million of revenue.

Drew Wells: And as expected the resilience and the peak weeks was met with normalizing peaked off peak variance as a typical leisure environment.

Lastly for 2023 on the heels of a monthly record in September fixed fee strength continued to ramp in both the fourth quarter and full year set revenue records.

Drew Wells: Really a great all around effort to achieve $611 million total revenue for the quarter and a sincere. Thank you to all our allegiant team members for making that happen.

Drew Wells: As we shift attention to the first quarter growth will be back to muted at roughly 1%.

Drew Wells: Across the industry, whether took a toll on mid January and the impact to Allegiant was approximately a half point ASM headwind for the quarter and about $2 $5 million of revenue impact.

Drew Wells: Hats off to our operations teams for their excellent performance in keeping the airline on track amid the chaos of the storm. I expect many of the same attributes discussed last quarter to persist. The peak weeks will remain incredibly strong, likely in line to higher than prior years, because Easter shifts into March.

Drew Wells: It's off to our operations team for their excellent performance in keeping the airline on track amid the chaos of the storms.

Drew Wells: I expect many of the same attributes discussed last quarter to persist.

Drew Wells: The peak weeks will remain incredibly strong likely in line to higher than prior year in fact.

Drew Wells: Easter shifts into March although it should be a traveling good guide the final week of the month the shift is generally negative overall.

Drew Wells: While it should be a traveling good guy to the final week of the month, the shift is generally negative overall. A meaningful portion of spring break travel is compressing to one week, and we have only so much capacity to deploy. Good for unitized figures in that week at the expense of some total potential and the contribution of the other, including weeks earlier in March featuring Spring Break's Moving to Align with East. Continuing the overarching theme of normalcy in my remarks recently, I expect the first quarter sequential increase in TRASM to look normal relative to the 4Q23 TRASM. As with most first quarters, revenue will hinge on the peak weeks at the end, and with more than 50% of the revenue left to book, there is still a long way to go.

A meaningful portion of spring break travel is compressing to one week and we have only so much capacity to deploy.

Drew Wells: Good for unit types figures in that week at the expenses in total potential and the contribution of the other weeks, including weeks earlier in March Easter spring breaks moving to align with Easter This year.

Drew Wells: Continuing the overarching theme of normalcy in my remarks recently I expect the first quarter sequential increase in traveling to look normal relative to the <unk> 23 <unk>.

Drew Wells: As with most first quarters revenue will hinge on the peak weeks at the end and with more than 50% of the revenue left to book there is still a long way to go.

Drew Wells: Another result of the Easter shift will be a decent pulldown of April capacity, around 10% year-over-year. However, we're excited to bring much more capacity into our summer plan than originally anticipated. Our June through August capacity should see each month's ASMs of mid to high single digits versus the same month in 2023, with utilization increases of 21 hours per aircraft per day. We still have a hill to climb to get all the way back to our peak utilization levels, but accomplishing these gains while still having the Boeing Max transition training headwind is incredibly exciting.

Drew Wells: Another result of the Easter shift will be a decent pulled out of April capacity around 10% year over year. However.

Drew Wells: However, we're excited to bring much more capacity into our summer plan than originally anticipated are June through August capacity shifts each month's ASN up mid to high single digits versus the same month in 2023 utilization.

Drew Wells: One hour per aircraft per day.

Drew Wells: We still have a hill to climb to get all the way back to our peak utilization levels, but accomplishing these gains while still having the Boeing Max transition training headwind is incredibly exciting.

Drew Wells: And for some additional context, our plan, starting around June, is largely in line with our 2018 utilization. One, for a reminder of how large our 18 to 19 utilization jump was, and two, in line with Greg's comments around our 20, 25 to 10. We also anticipate that we'll begin retrofitting existing 186-seat A320s with our popular Allegiant Extra Seating configuration in the second quarter, as well as introduce a new-to-us travel insurance product to our partners at Ogg. Both should help bolster our already strong but still improving ancillary program. For the full year, we are guiding an ASM range of positive 2 to 6% year over year. This will include a more conservative approach to planning capacity in the back half of the year to provide downside risk mitigation if Boeing MAX deliveries are delayed and upside if they are on time.

Drew Wells: And for some additional context our plan starting around June is largely in line with our 2018 utilization levels.

Drew Wells: One for a reminder of how larger 18 to 19 utilization utilization jump was in line.

Drew Wells: With Greg's comments on our 2025 potential.

Drew Wells: We also anticipate that we'll begin retrofitting existing 180, <unk> <unk> hundred twenty's with our popular allegiant extra seating configuration in the second quarter as well as introduce a new to us travel insurance product through our partners.

Drew Wells: Both should help bolster our already strong, but still improving ancillary program.

Drew Wells: For the full year, we're guiding an ASM range of positive 2% to 6% year over year.

Drew Wells: This will include a more conservative approach to planning capacity in the back half of the year to provide downside risk mitigation at Boeing Max deliveries are delayed and upside if on time.

Drew Wells: There's a lot of unknown and we wanted to be prudent in our process.

Drew Wells: There's a lot of unknowns, and we want it to be proven in our profit. I'll turn it over to Robert Neal to provide a bit more color on this and so much, Chance Drew, and good afternoon, everyone. Today, we reported our fourth full year 2023 financial results, which included an adjusted consolidated debt income of $2.4 million and an adjusted earnings per share of $0.11 for the fourth quarter. This number includes approximately $12.8 million in pre-opening expenses for Sunseeker Resort. The airline recorded $15.9 million in adjusted net income for the quarter, yielding an adjusted airline-only EPS of $86 million.

Drew Wells: I'll turn it over to Robert Neal to provide a bit more color on this and so much more.

Thanks drew and good afternoon, everyone today.

Robert Neal: Today, we reported our fourth and full year 2023 financial results, which included an adjusted consolidated net income of $2 4 million and an adjusted earnings per share of <unk> <unk> for the fourth quarter.

Robert Neal: This number includes approximately $12 $8 million in Preopening expenses for Sunseeker resort.

Robert Neal: The airline recorded $15 9 million and adjusted net income for the quarter, yielding an adjusted airline only EPS of <unk> 86.

Robert Neal: Adjusted consolidated net income for the full year 2023 was roughly $137 million, yielding an adjusted earnings per share of $7 31, including approximately $33 million in expense related to <unk>.

Robert Neal: Adjusted Consolidated Net Income for the full year 2023 was roughly $137 million, yielding an adjusted earnings per share of $7.31, including approximately $33 million in expenses related to Sunday. eBidOp's full year revenue was $472 million, excluding special charges, which is a 45% increase over 2022. The airline recorded an adjusted net income of $165 million for the year, yielding an adjusted airline four-year EPS of $8.82, which was slightly ahead of our initial expectations, and the airline generated over $500 million in EBITDA, excluding special items during the year. Fuel cost came in at $3.09 per gallon for the full year, approximately 17% below the 2022 level. Our adjusted non-fuel airline unit costs ended 10.8% higher at 8.12 cents for the full year, which was driven primarily by wage increases for frontline labor groups.

Robert Neal: EBITDA for the full year was $472 million, excluding special charges, which is a 45% increase over 2022.

Robert Neal: The airline recorded an adjusted net income of $165 million for the year, yielding an adjusted airline full year EPS of $8 80, Houston, which was slightly ahead of our initial expectations and the airline generated over $500 million in EBITDA, excluding special items during the year.

Robert Neal: Fuel cost came in at $3 <unk> per gallon for the full year approximately 17% below the 2022 levels.

Robert Neal: Our adjusted non fuel airline unit cost ended 10, 8% higher at $8 12 for the full year, which was driven primarily by wage increases for frontline labor groups. This accounted for about eight five points of the increase that's inclusive of our pilot retention bonus accrual, which was in effect may through December.

Robert Neal: The other main driver of unit cost increase was depreciation expense on a lower asset utilization, which drove a pointed out in the rest of the increase came from a handful of other items.

Robert Neal: This accounted for about 8.5 points of the increase. That's inclusive of our pilot retention bonus accrual, which was in effect from May through December. The other main driver of the unit cost increase was depreciation expense on lower asset utilization, which drove a point and a half. And the rest of the increase came from a handful of other. On the balance sheet, we ended the year with just over $1.1 billion in total liquidity comprised of $870 million in cash and investments and $275 million in undrawn revolvers. Net debt at year-end was just under $1.4 billion.

Robert Neal: On the balance sheet, we ended the year with just over $1 $1 billion in total liquidity comprised of $870 million in cash and investments and 275 million Undrawn revolvers.

Robert Neal: Net debt at year end was just under $1 4 billion during the year, we prepaid approximately $210 million in 2024 debt maturities, including a $150 million payoff of senior secured notes in the fourth quarter.

Robert Neal: Fourth quarter airline capital expenditures were $143 million comprised of $120 million for payments related to aircraft and engine and $23 million in other airline capex deferred heavy maintenance spend was $17 million during the quarter.

Robert Neal: During the year, we prepaid approximately $210 million in 2024 debt maturities, including a $150 million payoff of senior secured notes in the fourth quarter. Fourth quarter airline capital expenditures were $143 million, comprised of $120 million for payments related to aircraft and engines and $23 million in other airline capital. Deferred Heavy Maintenance Spend was $17 million during the quarter.

Robert Neal: Total airline Capex for the full year was $568 million in Capex for Sunseeker resort construction came in at $321 million, including $53 million in the fourth quarter.

Turning to fleet. We retired 100 <unk> hundred 19 aircraft during the fourth quarter and we took delivery of one <unk> hundred <unk>, which began revenue service during January of 'twenty four.

Robert Neal: Total airline capex for the full year was $568 million, and capex for Sunseeker Resort construction came in at $321 million, including $53 million in the fourth quarter. On the fleet, we retired one A319 aircraft during the fourth quarter, and we took delivery of one A320, which began revenue service during January of twenty four. We expect to take delivery of one additional A320 aircraft during the first quarter, which should enter service in the second quarter of 2020. As of now, we are planning to retire eight of our oldest A320 aircraft during the year, down from 11 previously. As you might expect, we are actively discussing with Boeing changes to our 737 MAX delivery schedule for 2024. At the time of our last investor update, we were expecting to take delivery of our first MAX aircraft in the first week of 2024. As of now, we are estimating that deliveries will begin in late March or early April.

Robert Neal: We expect to take delivery of one additional <unk> hundred 20 aircraft during the first quarter, which should enter service in the second quarter of 2004.

Robert Neal: As of now we are planning to retire eight of our oldest <unk> hundred 20 aircraft during the year down from 11 previously planned.

Robert Neal: And as you might expect we are actively discussing with Boeing changes to our 737 Max deliveries scheduled for 2024 at.

Robert Neal: At the time of our last Investor update we were expecting to take delivery of our first Max aircraft in the first week of 2024.

Robert Neal: As of now we are estimating that deliveries will begin in late March or early April.

Robert Neal: Our current estimates differ from contractual commitments as we are conservatively planning to take delivery of 12 and placed into service 10, 737, Max eight 200 aircraft by the end of this year.

Robert Neal: While the timing of these deliveries is uncertain, we are estimating capital expenditures by year end to be approximately $790 million for the airlines and $10 million for final payments related to sunseeker construction.

Robert Neal: Airline Capex is inclusive of $85 million for heavy maintenance spend and $160 million in non aircraft capex with the remaining $540 million attributable to aircraft and engine related payments.

Robert Neal: Our current estimates differ from contractual commitments as we are conservatively planning to take delivery of 12 and place 10 737 MAX A200 aircraft by the end of this year. While the timing of these deliveries is uncertain, we are estimating capital expenditures by year end to be approximately $790 million for the airline and $10 million for final payments related to Sunseeker construction. Airline CapEx is inclusive of $85 million for heavy maintenance spend and $160 million in non-aircraft CapEx, with the remaining $540 million attributable to aircraft and engine-related expenses.

Robert Neal: With respect to 2024 financial results given the uncertainty around timing of the estimated 12 aircraft deliveries. We are fully prepared to speak to the first quarter of 2024 at this time.

Robert Neal: We expect to record an airline operating margin between 8% and 10% on ASM growth of just over 1% in the March quarter.

Robert Neal: This guidance assumes an average fuel costs of $2 85 per gallon.

We do expect year over year non fuel unit cost pressure in the first quarter related to a pilot retention bonus accrual, which was not in place during the first quarter of 2023.

Robert Neal: With respect to 2024 financial results, given uncertainty around the timing of the estimated 12 aircraft deliveries, we are only prepared to speak to the first quarter of 2024. We expect to record an airline-only operating margin between 8% and 10% on ASM growth, just over 1% in the March quarter. This guidance assumes an average fuel cost of $2.85 per gallon.

Robert Neal: In closing I want to add my thanks to all of our Allegiant team members for all they've accomplished in 2023.

Robert Neal: Our people work tirelessly throughout the year in particularly managing various major systems implementations.

Robert Neal: Delivering a 99, 8% controllable completion is a key driver in improving financial performance and a stabilized operation provides us a strong foundation necessary for us to improve peak period fleet utilization and better leverage our investments.

Robert Neal: We do expect year-over-year non-fuel unit cost pressure in the first quarter related to our pilot retention bonus approval, which was not in place during the first quarter of 2020. In closing, I want to add my thanks to all of our Allegiant team members for all they've accomplished in 2023. Our people work tirelessly throughout the year, in particular, managing various major systems implementations.

Thank you and with that Sarah we can begin taking analyst questions.

Sarah: Thank you if you have a question star one on your telephone keypad.

We ask that you please limit yourself to one question and one follow up.

Sarah: Your first question comes from the line of Savi <unk> with Raymond James Your line is open.

Savi: Hey, good afternoon.

Speaker Change: If I might I can appreciate the AD.

Robert Neal: Delivering a 99.8% controllable completion is a key driver in improving financial performance, and a stabilized operation provides us with the strong foundation necessary for us to improve peak period fleet utilization and Better Leverage R&D. Thank you. And with that, Sarah, we can begin taking analysis. I... Hey, good afternoon.

Savi: Lack of clarity on the full year with capacity, but I was wondering if you can provide a little bit more color on you know.

Savi: What's a historical Q over Q4 unit revenue is in Los Angeles on the unit cost for what you're expecting for the first quarter on a year over year basis.

Savanthi Syth: If I might, I can appreciate the lack of clarity on the full year with capacity, but I was wondering if you could provide a little bit more color on, you know, what a historical Q over Q for unit revenue is and also just on the unit cost, like what you're expecting for the first quarter on a year over year basis. Cheryl, I'll take the first part of that. If you go back... Probably from 2011 through 2019.

Speaker Change: Sure I'll take the first part of that.

Speaker Change: If you go back.

Speaker Change: Probably 2011 through 2019.

Speaker Change: We've been right about two and a half give or take on traveling.

Speaker Change: Okay.

Speaker Change: And then he saw the on the on the cost side as I mentioned in the first quarter should be elevated on a year over year basis that should be the high point for a year over year comp.

Drew Wells: Yeah, the median has been right about two and a half, give or take on travel. And then, hey, Savi, on the cost side, as I mentioned, the first quarter should be elevated on a year-over-year basis. That should be the high point for a year-over-year comp, and that's nearly all driven by increases in wages for frontline labor groups. You will see some elevated unit costs throughout the year, but I would expect that on a full-year basis, we would have a unit cost level that's below what we currently have. That's helpful. And I might just follow up in terms of what you're seeing on the demand side. Is there or isn't there any improvement on the pricing?

Speaker Change: Nearly all driven by increases in wages for frontline labor labor groups.

Speaker Change: You will see some elevated costs unit costs throughout the year, but I would expect that on a full year basis, we would've had a unit cost level thats below what we printed in the first quarter.

Speaker Change: That's helpful and if I can.

Speaker Change: And I just can follow up.

Speaker Change: In terms of what Youre seeing on the demand side.

Speaker Change: Is there or is there any improvement on the pricing I know in the fourth quarter, you called that off peak pricing really week. It sounds like peak pricing still holding on and just curious if youre seeing any change in the offtake pricing or is the fact that youre pointing to normal historical Q over Q, then that may be not much of a change there.

Drew Wells: I know in the fourth quarter you called out off-peak pricing really weak. But it sounds like peak pricing is still holding on. Just curious if you're seeing any change in off-peak pricing or the fact that you're pointing to normal historical Q of Q, then maybe not much of a change there. Yeah, I would look back to just normal leisure seasonality right now, the spread we see between where peaks are and off-peak are. While obviously everything is meaningfully above pre-pandemic still, that spread looks about like it did before the pandemic.

Speaker Change: Yes, I would look back to just normal leisure seasonality right now the spread we see between where peaks are in off peaks are while obviously everything is meaningfully above pre pandemic still.

Speaker Change: That spread looks about like it did pre pandemic. So whatever you deem as as the normal variance there is kind of what we're seeing.

Drew Wells: So whatever you deem as the normal variance there is kind of what we're seeing. Thank you. Hey, good afternoon, and thanks for taking the questions.

Okay.

Thank you.

Speaker Change: Your next question comes from the line of Brandon <unk> with Barclays. Your line is open.

Brandon: Hey, good afternoon, and thanks for taking the questions maybe following up on <unk> line of questioning there I know you guys are only providing illinois guidance for the first quarter, but how do we think about <unk>.

Brandon Oglenski: Maybe following up on Savi's line of questioning there, I know you guys are only providing airline-only guidance for the first quarter, but how do we think about margin seasonality going into 2Q, maybe any initial indications on booking? Especially, you know, Greg, you said that your peak capacity is going to be up pretty significantly versus where you were in 23. Is that right? Hey, Brandon, it's Greg.

Margin seasonality going into <unk>, maybe any initial indications on bookings, especially.

Brandon: Greg You said that your peak capacity is going to be up pretty significantly versus where you were in 2003 is that right.

Gregory C. Anderson: Hey, Brandon it's Greg.

Gregory C. Anderson: I hit it at a high level, and then Drew can add any color kind of on peak capacity. My point on that, though, is that we've leveled operations to build back and fly more in the peak periods. I don't think in March it'll be a little bit more difficult for us to start ramping that up, particularly given the timing of the uncertainty around the Boeing deliveries. However, we have a clear line of sight to be able to start taking that up in the summer, this summer, and really hitting that, or at least the path to hit the 20% increase by 2025. And as I think about the full year, just kind of back to the uncertainty of the delivery of the MAX aircraft, as you know, for us, months matter in a year, right? 80% of our earnings come in March, the summer, and the holidays. So, we need to make sure that if we're planning, we're trying to get up and peak in those periods through hit on a little bit. But I would say the cadence second quarter, I would expect top margin.

Gregory C. Anderson: A high level and then <unk> can.

Gregory C. Anderson: Add any color kind of on the peak capacity.

Gregory C. Anderson: My point on that though is that we've level set operations to build back and fly more in the peak periods.

Gregory C. Anderson: I don't think in March it will be a little bit more difficult for us to start ramping that up, particularly given the timing of the uncertainty around the Boeing deliveries. However, we have clear line of sight to be able to start taking that up in the summer this summer, but really hitting that.

Gregory C. Anderson: Or at least the path to hit the 20% increase by 2025.

As I think about the full year, just kind of back to the uncertainty of the delivery of the Max aircraft as you know for us months matter a year right, 80% of our earnings come in March this summer and holidays, So we need to make sure that.

Gregory C. Anderson: As we're planning we're trying to get off the peak in those periods through hit on it a little bit, but I would say the cadence second quarter I would expect op margin thats, usually the best quarter for us. So I would expect second quarter sequentially to be higher than the first quarter and full year I expect us to be at or near industry, leading margins at our base case, I mean, maybe there's some upside in there, but we still think we can put out.

Gregory C. Anderson: That's usually the best quarter for us. So, I'd expect the second quarter sequentially to be higher than the 1st quarter and full year. I expect us to be at or near industry leading margins at our base case. I mean, maybe there's some upside in there, but we still think we can put out a strong 24, but there's some uncertainty with some of the timing and moving parts. Drew, do you want to hit anything on that? I'll add maybe just a little bit, just be mindful that Easter comes out of April, which will be a meaningful revenue headwind as well as ASM, like I mentioned about 10% coming out of April there. So that will be a headwind.

Speaker Change: Strong 24, but we just were there is some uncertainty with some of the timing and moving parts mature do you want to add anything on that I'll add maybe just a little bit just be mindful Easter comes out of April which will be a meaningful revenue headwind as well as the ASM like I mentioned about 10% coming out of April that will be a headwind.

Lift we see in terms of that summer capacity will start really at the end of may into early June.

Speaker Change: Kind of based on timing of when we had confidence around the the number corroborate. The pilot have you would have to be able to supply that we're a little bit closer to be able to realize that in March.

Drew Wells: The list we see in terms of that summer capacity will start really at the end of May into early June, and that's kind of. Based on the timing of when we had confidence around the number of crew hours and pilot heads we'd have to be able to fly that, we were a little bit close to being able to realize that in March. So we'll see that I think it'll be the good news will be kind of back halfway for the second quarter, all of that. Appreciate it, guys. And then a quick one for Robert.

Speaker Change: So we will see that I think it will be the good news will be kind of back half weighted for the second quarter, but.

Speaker Change: Of that agree with Greg Thompson.

Speaker Change: Okay, Great I appreciate it guys and then a quick one for Robert how are you guys looking at financing that capital spending this year.

Robert: What are our alternatives that you are looking at now.

Robert: Sure, Yes I'm.

Robert: I'm glad you asked we actually put out an RFP just in the first week of the year and have been really pleased with the results that came in to finance the Max aircraft.

Robert Neal: How are you guys looking at financing that capital spending this year? What are the alternatives that you're looking at now? Sure, yeah, I'm glad you asked. We actually put out an RFP just in the first week of the year, and I've been really pleased with the results that came in to finance the MAX aircraft. You'll probably recall our first four aircraft are already committed to a financing agreement that we signed last year, which is kind of a blend between a finance lease and a double ETC structure. So it has two tranches, and they're financing at 100% of their appraised value.

Robert: Recall, our first four aircraft are already committed to a financing agreement that we signed up last year, which is kind of a blend between.

The finance leads in like a double ATC structures at two tranches in their financing at a 100% of their appraised value.

Robert: And then after that I suspect, we will tap into debate market, a little bit and look at finance leases were pretty focused right now on products that gives us a lot of flexibility.

Robert: And then late in the year, depending on the number of deliveries, we have and what happens with the Max seven certification I think we could go into the WTC product as well, but I think what all of those things haven't commented those are financing products that lead the assets on our balance sheet.

Robert Neal: And then after that, I suspect we'll tap into the bank market a little bit and look at finance leases. We're pretty focused right now on products that give us a lot of flexibility. And then, late in the year, depending on the number of deliveries we have and what happens with the MAX 7 certification, I think we could go and look at the double ETC product as well. But I think what all of those things have in common is that they are financing products that lead the app. I appreciate it. Thank you. Hi everyone.

Speaker Change: I appreciate it thank you.

Speaker Change: Your next question comes from the line of Conor Cunningham with Melius Research. Your line is open.

Dan J. McKenzie: Hi, everyone. Thank you.

Dan J. McKenzie: You mentioned that your pilots and flight attendants are currently opened more spent a fair bit of movement with southwest and so on can you just level set on where discussions are today and heavier accruals changed at all given where the market is.

Connor: Thank you. You mentioned that your pilots and flight attendants are currently open. There's been a fair bit of movement with Southwest and so on. Can you just give an update on where discussions are today? And then have your accruals changed at all, given where the market is?

Conor Cunningham: <unk>.

Dan J. McKenzie: I'll I'll tee it up and then BJ may want to come in on the accruals.

In terms of where our labor agreements are at today Connor.

Speaker Change: One I mean, we're very eager to get both.

Gregory C. Anderson: I'll tie it up, and then B.J. may want to come in on the accruals. But, you know, in terms of where our labor agreements are at today, Connor, 1, I mean, we're very eager to get both agreements in place with our flight attendants. You may recall that went out to vote late last year. That was turned down, I think, by 60, 40%, 60%, you know, voted against.

Agreements in place with our flight attendants, you may recall that went out to vote late last year that was turned down I think by 60, 40%, 60% voted against so we've come back at the table to the table with the TWU leadership and really working to address some of the areas of which that we think will fly it was voted down and get that back out.

Gregory C. Anderson: So we've come back to the table with the TWU leadership and are really working to address some of the areas of which we think, you know, why it was voted down and get that back out for vote soon. So, we're happy with the progress there. In terms of pilots, we're actually in federal mediation.

Speaker Change: To vote soon so we're happy with the progress there on in terms of pilots were actually federal aviation and so we started that at the early part of last year I am encouraged by some of the progress that was made late in 'twenty, three and we actually ta than the past few months with Ta to couple of sections were about the Ta one or two more we think.

Gregory C. Anderson: And so we started that in the early part of last year. I'm encouraged by some of the progress that was made late in 23. We actually have completed a couple of sections in the past few months. We're about to 1 or 2 more.

Speaker Change: There's been changes to the union negotiating team on their side, which we're cautiously optimistic with that.

The company has and will continue to do we're ready and prepared and we want to get a deal done this for both our pipeline of tenants of pilots that they deserve.

Gregory C. Anderson: We think there's been changes to the union negotiating team on their side, which, you know, we're cautiously optimistic about that. The company has and will continue to do. We're ready and prepared, and we want to get a deal done for both our flight attendants and pilots that they deserve. B.J., do you have anything on the approvals or the, Not really just I'll just share the accrual for the pilot retention bonus at the end of the year, so that'll continue to build up until we have an agreement with our pilots, and then we haven't made any changes to that or started accruing for anything on the flight attendants, but I think we just need to have an agreement in place to pay out. Okay, that And then, you mentioned the Sunseeker contribution and how it's going to take a little bit to get to maturity, but can you just speak to what needs to change there? Is it really just an occupancy comment, or is there an induction cost? That really has part of this here. Just any thought process around that.

Speaker Change: Did you have anything on the deferrals are those timing.

Speaker Change: Not really just I'll just share the.

Speaker Change: The accrual for the pilot retention bonuses.

At the end of the year, so that will continue to build up until we until until we have an agreement with our pilots and then we haven't made any changes to that or started accruing for anything on the flight attendants.

Speaker Change: I mean in place to pay out any type of thoughts like that.

Speaker Change: Okay.

Okay. That's helpful and then.

Speaker Change: You mentioned, the sunseeker contribution and how it's going to take a little bit to get to maturity, but can you just speak what needs to change that does is it really just an occupancy comment or is the reduction in costs and are kind of hitting at the early part of this year.

Speaker Change: The thought process around that thank you.

Speaker Change: There's going to be some additional costs just to get it finalized while we opened.

Maurice J. Gallagher: Thank you. Um, there's going to be some additional costs just to get it finalized. Well, we opened probably quicker than we ideally would have liked, but they're doing very well putting all of it together. On just the revenue side, there's just a normal growth that you go through. We were unfortunate, again, that we slipped from a planned October opening date into December, and the advanced bookings, as a result, were being pushed into the most difficult times of the year.

Speaker Change: Probably quicker than we ideally would have liked but.

Theyre doing very well, putting all that together.

Speaker Change: On the <unk>.

Just the revenue side. There is just the normal growth that should go through.

Speaker Change: We were unfortunate again that we slipped from a planned October opening date into December and.

Speaker Change: So the advanced bookings as a result were being pushed in the most difficult.

Maurice J. Gallagher: You know, the end of the year, December is always your weakest sales month, but we're seeing an uptick and the like. I think the really good news is that it's been exceptionally well received on the food and beverage side, and there are very, very nice crowds and things down there. The rooms are coming. Micah, would you like to just give a quick overview of what's going on? Micah Richens is running the show for us down there.

Here the end of the year December is always weaker sales month.

But we're seeing an uptick in the like I think.

Speaker Change: The really good news is that it's been a substitute well.

Well received on the food and beverage side.

Very very nice crowds and things down there the rooms are coming.

Speaker Change: Mike you want to just given all the quick overview.

Micah: Go ahead Micah Richards is running the show force down there.

Maurice J. Gallagher: Happy to, Maury, and I appreciate the introduction on that. We've been doing a lot of things over the past 45 days here at the property. Maury mentioned that we opened with a couple of venues not ready to go that have recently come online or have come online already. One of them was the rooftop pool.

Micah Richards: Happy to do more and I appreciate the introduction on that.

Been doing a lot of things over the past 45 days here at the property more he mentioned that we opened with a couple of the venues not ready to go that have recently coming online or have come online already one of them was the rooftop pool. We brought that opened last week. We've got one of our one of our main restaurants Blue line, which will come on this week.

Micah Richens: We brought that open last week. We've got one of our main restaurants, Blue Lime, which will come on this week. And we opened in December without one of our towers, one of the suite towers, Iris. And that will also open. It actually opened on Friday.

Micah Richards: We opened in December without one of our towers, one of the suite towers Iris and that will also open up.

Micah Richards: It's actually opened up on Friday.

Micah Richens: We've been able to host several groups here in January, and we'll host several more in February. That bodes well for us. We need to be able to put group business through the house and then let them talk about the services they get.

Micah Richards: <unk> been able to host several groups here in January and will host several more in February that bodes well for us we need to be able to put our group business through the house and then let them talk about.

Micah Richards: The services they get so we feel like we're on the right track the property is performing well and the last thing I would say, it's a shout out to our employees literally every.

Micah Richens: So we feel like we're on the right track. The property is performing well. And the last thing I would say is a shout out to our employees. Literally, every bit of feedback that we get, even if someone is noticing a shortfall, they rave about our employees. They rave about how hard they work, how much they enjoy being here, and how attentive they are to customers.

Micah Richards: It seems like every bit of feedback that we get even if the even if someone is noticing a shortfall they rave about our employees. They rave about how hard they work how much they enjoying being here and how it tended they are to customers. So we like where we're headed and we're going in the right direction was skewed to keep building.

Micah Richens: So we like where we're headed. We're going in the right direction. We just need to keep building. Appreciate the thought. Thank you, Evercore ISI.

Speaker Change: I appreciate the thoughts thank you.

Speaker Change: Your next question comes from the line of Duane <unk> with Evercore ISI. Your line is open.

Duane Pfennigwerth: Hey, thanks. Maybe I'll stay right there. So, Um, can you just expand on what you were just saying, can you let us know when you get to the full operational room count of 750 or maybe like a room count by quarter until you're fully there? Absolutely, Duane. This is Micah.

Hey, Thanks, maybe I'll stay right there so.

Duane: Can you just just to expand on what you were just saying can you let us know when you get to the.

Duane: Full operational room count of 750, or maybe like a room count by quarter until Youre fully there.

Duane: Absolutely Duane this is micah will be will actually have about 700 rooms occupied as of tomorrow. We start to host a couple of groups and then will be the full <unk>.

Micah Richens: We'll actually have about 700 rooms occupied as of tomorrow. We start to host a couple of groups, and then we'll be at full 785 by probably the end of this month. That's great, thanks.

Duane: 785 by by probably the end of this month.

That's great. Thanks.

Micah Richens: And then maybe for you or Maury, any anecdotes you can share on, I know it's early, but on distribution so far, attach rates on AllegiantAir.com, you know, is this being purchased by customers who happen to be going to Punta Gorda anyway? Or are you able to convince people to kind of make the trip, given the proposition down there? And, you know, how do you think about other channels like OTAs and OTAs over time? Let me give you an overview of that. We have this very robust database for upwards of 15 million emails that we're sending out. And unfortunately, we didn't get started as soon as we probably should have, Duane.

Speaker Change: Then maybe for you or for Maury any anecdotes you can share on I know, it's early but on distributions so far.

Speaker Change: Catch rates on Allegiant Air Dot com.

Speaker Change: This being purchased by customers, who happen to be going upon our gorda anyway or are you able to convince people.

Speaker Change: To kind of make the trip.

Speaker Change: Given given the proposition down there and.

Speaker Change: How do you think about.

Speaker Change: Other channels like Otas overtime.

Speaker Change: Let me put an overview on that.

Speaker Change: We have this very robust database, we're upwards of $15 million.

Speaker Change: E mails that we're sending out and unfortunately, we didn't get started as soon as we probably should have Duane and so what we've been doing the last months six weeks as introduction stuff.

Maurice J. Gallagher: And so what we've been doing the last month, the six weeks, is introduction stuff, and I'll let Scott DeAngelo and Micah give you some overview of that. But we probably are going to see that start to really, I hope, take off.

Speaker Change: I'll, let Scott de Angelo and Mike I'll give you some overview on that but.

Speaker Change: We probably.

Speaker Change: We're going to see that start to really I hope grab.

Maurice J. Gallagher: And it's doing OK, and we see some good results when we have sales. For instance, the word sales seems to be very powerful with the guys we're purchasing. But it's just got to build.

Speaker Change: It's doing okay, and we see some good results when we have sales for instance toward sales teams are very powerful with regards we're purchasing.

Speaker Change: But.

Maurice J. Gallagher: We've got to find the right avenues and the like. We've decided to go with the OTA point right now just to make sure we can get ourselves going. The interesting thing when you look at the OTAs, they really aren't that impactful as a cost side in very much percentage-wise.

Speaker Change: It's just got to build we've got to find the right avenues and the like we've decided to go with the Opa.

Speaker Change: Point right now just to make sure we can get ourselves going.

Speaker Change: Interesting thing when you look at the Otas, they really arent that impactful as the cost side.

Maurice J. Gallagher: It's not like the entire place is going to be sold by online travel agencies, so that'll be a nice way to boost sales in the near term. Scott?

Very much percentage wise its not like the entire place is going to be sold by.

Speaker Change: So online travel agencies, so that'll be a nice way to boost the sales in the near term Scott Yeah. A couple of additional thoughts just reiterating one of the points I raised in my opening comments right now about two thirds of the bookings are coming from Allegiant customers. So customers that we can.

Scott DeAngelo: Yeah, a couple additional thoughts. I am just reiterating one of the points I raised in my opening comments. Right now, about two-thirds of the bookings are coming from Allegiant customers, so customers that we can match to the database, regardless of whether they bought them at Allegiant.com or the Sunseeker Resort website. And you can look back for the couple other stats I mentioned about how many are rewards members and cardholders. On the OTA front, the other thing we discovered, you know, in the last couple of months but early once it opened, was the amount of website traffic coming from big metro feeder markets like Atlanta, New York, and Chicago. And so when you think about the 15 million customer email database that Maury mentioned, while that does have strength in the Midwest and other feeder areas, right, we don't fly out of Atlanta, and we don't really serve New York City and Chicago in earnest.

Speaker Change: Matched to the database, regardless of whether they bought it at Allegiant dot com or the Sunseeker resort website.

You can look back for the couple of other SaaS I mentioned about how many are rewards members and cardholders.

Scott: On the OTT front the other thing we discovered.

Scott: No.

Scott: In the last couple of months, but early once it once it opened was the amount of website traffic coming from Big Metro feeder markets like Atlanta, New York, and Chicago, and so when you think about the $15 million customer email database Morry mentioned, Paul that does have strength in the Midwest.

Scott: Other feeder areas right, we don't fly out of Atlanta, and we don't really serve New York City and Chicago in earnest and so as a result, the OTT also became a great way to be able to reach those customers that we don't quote unquote, no and my guidance throw it over to you for any final thoughts.

Scott DeAngelo: And so, as a result, the OTA has also become a great way to be able to reach those customers that we don't quote-unquote know. And Mike, I throw it over to you for any final thoughts. No, I think that's exactly right, Scott. I think the final thing I would say to you, Duane, is something that I mentioned earlier. For us, a good chunk, about 33% or so of the business that we will have here at the property will be related to groups. And, you know, for us, January and February have been critical in housing and in handling those groups, and then making sure that we execute on them. It's easier said than done in a property that's been open for 45 days. It's important to note that they have gone well.

Scott: Okay.

Speaker Change: No I think Thats exactly right Scott I think the final thing I would say to you Duane.

Speaker Change: Mentioned is for us a good chunk of about 33% or so of the business that we will have here at the property will be related to groups and.

Speaker Change: In January and February have been critical.

Speaker Change: In housing and in handling those groups and then making sure that we execute on them.

Easier said than done.

Speaker Change: <unk> property Thats been opened for 45 days.

Speaker Change: It is important to note that they have gone well our clients have been very very happy and excited groups are notorious for trying to avoid.

Micah Richens: Our clients have been very, very happy and excited. You know, groups are notorious for trying to avoid new properties, specifically because they are challenging and there are all kinds of kinks that need to be worked out. But we're excited about the responses that we've gotten; those people have become raving fans, and we'll speak to other people who can bring us business that'll help us for what we think we'll see in the back half of 24 and certainly into 25. Okay, great. I have more questions about it, but I'll leave it there for now. Thank you. Sounds good. This next question comes from the line of Mike Linenberg. Oh, hey, just a couple here and maybe just to kind of continue this theme on Sunseeker.

Speaker Change: New properties, specifically, because they are challenging and there are all kinds of kinks that need to be worked out but we're excited about the responses that we've gotten those people become raving fans and we'll speak to.

Speaker Change: Two other people, who can bring us business that will help us when we think we'll see what the back half of 'twenty, four and certainly into 'twenty five.

Speaker Change: Okay, Great I have more questions on it but I'll leave it there for now thank you.

Speaker Change: Sounds good.

Speaker Change: Your next question comes from the line of Mike Lindenberg with Deutsche Bank. Your line is open.

Michael Linenberg: Oh, Hey, just a couple here and maybe just to kind of continue down this theme on sunseeker.

Michael Linenberg: You've given us the number of rooms, you've given us the occupancy rate, and the daily, you know, average daily rate. You know, as we sort of multiply that out to get to a top line number, what would be the gross up to get to a final number? Like what percent of total spend is, you know, does maybe the room piece represent like, you know, if you're staying there, is there another 50% on top of that that you ultimately spend at either the golf course, the restaurants, etc. I'm just trying to get to a top line number here for some. I feel like I think 50% is close. I guess it depends on the customer. It depends on how many people are in the room.

Michael Linenberg: You've given us the number of rooms, he has given us the occupancy rate and the daily.

Average daily rate.

Michael Linenberg: As we sort of multiply that out to get to a top line number what would be the gross up to get to a final number like what percent of total spend.

Michael Linenberg: Is.

Michael Linenberg: Maybe the room piece.

Michael Linenberg: Represent if you are staying there or is there another 50% on top of that that you ultimately spend.

Michael Linenberg: The golf course, the restaurants et cetera, I'm, just trying to get to the top line number here first from Sega.

Michael Linenberg: Yes.

Michael Linenberg: Go ahead Mike.

Michael Linenberg: I feel like I think 50% is quotes but I guess it depends on the customer it depends on how many people are in the room, but by the time you look at the 2020 different venues that you've got on property to consume food and beverage.

Micah Richens: But by the time you look at the 20 different 20 different venues that you've got on property to consume food and beverage, which incidentally has been performing extremely well, when you add to that the opportunity for spa or retail and certainly for golf, I think that's a good number to use as a measure. Okay, great. And then just my second question, on the OTA piece, I mean, it's very, this is very unallegiant to actually do some distribution outside of your control. Is this just to get, you know, up and running with Sunseeker, and then, ultimately, you bring it all back in house? Or is this maybe the start of what I will refer to as maybe a bifurcated type model?

Michael Linenberg: Incidentally has been performing extremely well.

Michael Linenberg: You add to that the opportunity for spa for retail and certainly for golf I think thats a good number to use as a measure.

Speaker Change: Okay, Great and then just my second question on the LTA piece I mean, it is very this is very Allegiant Q2 actually do some distribution outside of your control is this just to get.

Speaker Change: Up and running with Sunseeker and then ultimately you bring it all back in house.

Speaker Change: Or is this maybe to start and what I will refer to as maybe.

Speaker Change: A bifurcated type model and I guess, just as kind of a corollary, let's see I go through an LTA and I book Sunseeker, how do I do the airline add on do I do I have to then separately go through the Allegiant website or can I actually now is it possible that I can buy the region airline piece.

Michael Linenberg: And I guess just as kind of a corollary, let's say I go through an OTA, and I book Sunseeker, how do I add on the airline? Do I have to then separately go through the Allegiant website? Or can I actually now? Is it possible that I can buy the Allegiant airline piece by way of the OTA?

Speaker Change: The MTA.

Maurice J. Gallagher: Just curious how that's going Michael, you're way ahead of us. Michael. Um, we didn't consciously think we'd be doing OTA going into this, but given, you know, just where we were, and more importantly, what really kind of made me think that we could go do it is, it's just not a big component of the sales. Okay. If you think of a normal hotel that just sells rooms, and 95% of their revenue, well, that 20% off the top is a big number. But, you know, we're, this is gonna be, I'm guessing, 10 to 20% of our room revenue type of thing. Okay. It's just not a big, huge number that's gonna be meaningful. And to get to Scott's point, you know, we need to have some.

Curious how that's for sure.

Speaker Change: Way ahead of Us Michael.

We didn't consciously think we'd be doing OTT going into this but given.

Speaker Change: Where we were and more importantly, what really kind of made me think that we could go do it is it's just not a big component of the sales.

Speaker Change: Think of a normal hotel adjust sells rooms, and it's 95% of their revenue.

20% off the top is a big number but we're.

Speaker Change: This is going to be I'm guessing, 10% to 20% of our room revenue type of thing, Okay got a cost, but it's just not a big huge number that's going to be meaningful.

Speaker Change: And we get so to Scott's point, we need to have some some distribution in some of these bigger cities. So Mike is very experienced we're working with these people in.

Speaker Change: He made the case and we thought it was a good idea.

Speaker Change: Yes, I would simply just to add to that we've taken a very vigilant approach of unlike air where you really lose your chance to sell third party indoor certain ancillary when you go through Otas.

Speaker Change: The hotel right as soon as you are there F&B golf Spa all of those things are sold directly and so we we grab that revenue without any.

Speaker Change: Chunk out there also very vigilant strategy too.

Speaker Change: Region or an airline it's not as highly ebb and engage purchases a resort of course, and so capturing someone's information and being able to target them directly for their second.

Speaker Change: That's something that is obviously going to be done throughout your resort stay right. We know who you are we have information. So we feel good about our chance even if you book through a third party. Your first say that youll be coming back in booking directly through a Legion, our sunseeker resorts Dot com your second.

Speaker Change: And Michael just just one just answer one of your question the airline Theres No plan our attention for the airline to be listed on the Otas that it'll all remain direct distribution and the package were to take place with the airline that what you've got currently generic dot com they get that package.

Speaker Change: I think it makes a lot of sense, Sean Whats Youre doing okay. Thanks, Thanks for answering my questions.

Speaker Change: No problem.

Speaker Change: Greg it's.

It's a good short term thing with just a little tidbit, we serve driving back in the early <unk> 2030, a third of our customers on our airplanes used to be do a buying a hotel we don't get a third of the customers now because the MGM. So the world has got their data and they go direct to them, which is will be attractive for us.

Speaker Change: Very good. Thank you. Thank you.

Speaker Change: Your next question comes from the line of Ravi Shanker with Morgan Stanley. Your line is open.

Ravi Shanker: Thanks, Good afternoon, everyone.

Ravi Shanker: So I think you guys have done a really good job on the airline side of improving operational reliability and.

Ravi Shanker: Basically getting the service back in the air.

Ravi Shanker: When do you think we get back to like a normalized level of EPS and kind of where does that look like compared to what you guys did in 2023 exactly 24 things I joined when he five kind of when does the normalization of <unk>.

Ravi Shanker: Ravi Hey, it's Craig, let Ron I'll kick it off here and then.

Now the restoration I think we have a clear path to restore our margins back to pre pandemic levels labor.

Ravi Shanker: Labor costs.

Ravi Shanker: That's a big headwind that we're facing today, not just us the industry, but.

Craig: But we think a lot of the tailwind utilization that we've talked about peaking the peaks, we think that can offset and then maybe even some on the on the labor cost you can talk about the Max aircraft, bringing those on they have a 20% economic advantage fuel burn advantage that we think <unk> be helpful. In that regard several revenue revenue initiatives co brand the insurance part.

That drew talked about attributable with Allianz Nabhan Terry Anderson.

Craig: <unk> efficiencies that we're working through that we think will be meaningful so I think all in all of Africa.

Craig: Yes, Dave as well, which will what we will see the timing on that I think all in all you're managing cost as well as key and our variable cost components, where we can make sure that we're matching capacity with demand, but the short answer is I think we step up we continue to step up and buy $25 26, I think those are yours.

Craig: If we were peak and the peak Thats really shows the power of the model and we think by 'twenty five in those peak periods, we can be back to that based on what we see today and thats only going to get there.

Craig: Okay.

Speaker Change: Got it Thats really helpful.

Speaker Change: Topic of Aviva and there were some headlines out of Mexico recently NFL any thoughts on what that does have the veeva relationship.

Speaker Change: No let me kick it off market.

Speaker Change: I'd say, we still are very confident that.

Our ATI approval will take place out of matter.

<unk>.

Speaker Change: It's very pro.

Speaker Change: Competition pro consumer and.

Speaker Change: And we're working.

Speaker Change: As diligently as we can to get approved as soon as possible, but to get caught up in some of the.

Speaker Change: Politics between Mexico, and the <unk> and everything, but youre pretty close to it as well.

Speaker Change: I think the.

Speaker Change: U S government Mexican government are squabbling over technical things candidly, a good bottle of tequila in a shutdown of a payroll will get solved but.

Speaker Change: That doesn't seem to be in the works in the next week or two so we also have a labor front, where we have to deal with it so.

Speaker Change: So hopefully we will get it by the back half of the year, but don't take that as a forecast, but I would like to see us move forward its going to be a terrific partnership.

Speaker Change: Thanks, Marty if you do that the Hela meet up at Sunseeker and.

Speaker Change: And by some of us as well.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Your next question comes from the line of Helane Becker with TD Cowen Your line is open.

Helane Becker: Thanks, very much operator, hi, everybody.

So as I look at the numbers for the airline only for now.

Helane Becker: Can you speak to how we get back to 2018 2019 margin.

Helane Becker: Okay.

Speaker Change: Okay Alright.

Speaker Change: Yes, it's pretty similar IC achalasia, just chatting with Ravi, but I'll try and give it from another perspective, one I think fuel 2019, I think Joel was at $2 12 per gallon thats, a little bit higher right now fuel can be somewhat of a pass through that lower price would be helpful.

Speaker Change: From a margin perspective, I think on the pilot situation where.

We talk about one hour.

Speaker Change: What RFP. In addition, sorry, what our increased utilization of those peak periods. The pilot situation is kind of that's been the largest constraint in off peak periods Thats listening itself up and so we're able to kind of layer that in on top and one hour more than peak flying is worth.

Speaker Change: Roughly in a full years worth of $100 million. So that's four points of margin right. There that you could add back keep in mind. We are accruing for the pilot cost. We started that in may of last year and then just some of the other initiatives that we talked about Legion extra co brand I mean, those are ways Veeva. We think those are ways that it will be accretive to where we sit today and continue to grow.

Speaker Change: It helps us restore our pre pandemic earnings.

Speaker Change: That's right.

Speaker Change: Then since Dave you mentioned fuel it's directly related to how much you want to operate the airline in off peak periods as well.

Speaker Change: We are constrained operationally, but rather by that offset of demand and fuel and the off peaks and we think there is probably 30 to 60 minutes of 2023 overall utilization that was impacted by the high fuel price to bring that back down brings us more operations in off peak period, which have been stripped to the bottom line of course.

We also if you average the first and second quarters last year, we were at 17%, 18% operating margins.

Speaker Change: Even with over $3 per gallon fuel in the first quarter. So we know how to play at that level, but theres just things that are going on that are one offs, particularly labor cost in the back half of the year that we are having to readjust and get to we need productivity as well to get back to it.

Speaker Change: We very much intend to get back to those numbers.

Speaker Change: We had a very very good first half of the year.

Speaker Change: Yes.

Right exactly okay.

Speaker Change: Thanks, very much I I.

Speaker Change: Most of my other questions were really asked and answered songs.

Speaker Change: Thanks Helane.

Helane Becker: Of course.

Helane Becker: Your next question comes from the line of Dan Mckenzie with Seaport Global Your line is open.

Dan J. McKenzie: Good afternoon, and thanks guys.

Dan J. McKenzie: Clarify question clarification.

Dan J. McKenzie: One of the prior questions here, the 20% upside in utilization and if I heard that correctly I think the timing was 2025 or 2026.

Based on the response to an earlier question I guess, just clarifying that messaging.

Dan J. McKenzie: Is it that we could potentially be looking at normalized earnings say in 2025 or 2026 is it that simple or are there other things that youre looking at here as well.

Dan J. McKenzie: You guys are things, but yes.

That's the key we think a key driver to normalizing our restoring those earnings Dan.

Dan J. McKenzie: To fight a little bit more detail like for example in 2023 July.

Dan J. McKenzie: Very peak months, where our average aircraft utilization was seven five hours compared to $9 eight hours in.

Dan J. McKenzie: In 2019, and so that's a little over 20% and we think we have a plan to restore that by the time, we get into 2025 and in 2024, we're going to layer in and to narrow that gap.

Dan J. McKenzie: By the time, we get to 25 is when we could pull.

Dan J. McKenzie: Fully restored.

Dan J. McKenzie: Okay.

And then in the past you guys have called out a booking experience for sunseeker that was not in line with the resort hotel peer set and can you remind us of when that is remedied in and how big the revenue penalty in 2024 is I guess I'm just trying to reconcile the occupancy.

Dan J. McKenzie: Right here in the average daily rate of $350. It just seems a little bit low I mean, it's I know, it's a lot higher than that I think the $255 or so that you base the resort on but if you could maybe just add some some additional color there.

Dan J. McKenzie: Micah.

Dan J. McKenzie: Okay.

Micah Richards: I would say that.

But based on what we're seeing right now.

Micah Richards: Sequential growth that we're going and seeing so we feel comfortable with that guide there are certain theres certainly the opportunity for it to be better depending upon if we gain traction more quickly.

Micah Richards: But we wanted to present something that we felt was a good level set on expectations.

Speaker Change: Understood. Okay, if I could just squeeze.

Go ahead, yes.

Speaker Change: The other problem that theres been so many ups and downs over when we started this thing we throw the pandemic and the pricing that went on in 'twenty, one I remember looking $2000 a night.

Speaker Change: Our hotels were off the charts.

Speaker Change: The cost of construction and all of the things.

Speaker Change: Just a different animal in many ways and what we talked about in the early days with John and the like so my expectations are we're going to have to reset and level set but the demand should be there and we're getting a pretty good.

Speaker Change: Our revenue on a daily basis also.

Speaker Change: We'll have to we'll be talking to you over in the coming months as we get a baseline underneath it.

Speaker Change: Okay. Thanks for that and then just debt.

Speaker Change: Last question is the as the booking experience this add up to.

Speaker Change: Is it competitive with the peer set at this point.

Speaker Change: Not on a Legion dot com.

Our apologies, we just figure out what you are asking if youre talking about that functionality, where at Allegiant Dotcom right you have to pay for everything at once versus being able to just leap one night deposit.

Speaker Change: That should be delivered end of March and at that point Allegiant Dot com will be at the same functionality in the meantime, now it's worth mentioning on the website. If you go play around there and typing anything into <unk> dot Sarasota et cetera, you'll you'll see a pop up that will direct <unk>.

Speaker Change: To their site. So that's how we're getting so many of our eyeballs given that we see 150 million unique web users a year.

Speaker Change: Get over to the Sunseeker site and get that streamlined functionality. So we're trying a bunch of ways, while we wait for the late March specs to be understood.

Speaker Change: Understood Congrats on such secrets, a beautiful resort you guys. Thanks for the time.

But I think again, just so the audience knows that.

Speaker Change: We are behind probably candidly, where we might have been if we really are integrated and had very focused start date and we're putting all that together now with the teams.

Speaker Change: Start testing and finding out what works what is effective and things like that in the two websites.

Speaker Change: Candidly as Scott said, we have $150 million.

Speaker Change: People coming through there was a $3 million a day type of thing and.

Speaker Change: And sunseeker doesn't get near that type of traffic. So we definitely want to be mindful of how to balance that and push the traffic over to those guys efficiently and easily.

Speaker Change:

Speaker Change: Your next question comes from the line of Christopher.

Christopher: With Susquehanna Your line is open.

Christopher: Hey, good afternoon. Thanks for taking my question I just wanted to clarify.

Your comment with respect to.

Christopher: Non revpar or I guess non room.

Christopher: Revenue, so getting to an implied revpar around to 10 four.

Susquehanna: For the non room piece today did I hear you say, 50% of the total.

That's correct.

Speaker Change: Okay, Great and then on the airline side.

Speaker Change: Yes.

Speaker Change: Some color in terms of the.

Speaker Change: Perhaps composition and distribution of your capacity this year, including.

Speaker Change: The new Boeing aircrafts so.

Speaker Change: Thinking about departures stage engage in the markets, where you anticipate growing the most thank you.

Speaker Change: Sure I'll, probably stop short of telling everyone, where we are going to be growing the most.

Speaker Change: But I think in general looking around mid singles for growth, we're 2% to six for the year with some some upside coming in the summer that I talked about in the prepared remarks.

Speaker Change: I think we have a little benefit from stage and gauge.

Speaker Change: Year that'll outpace simply the seat growth.

Speaker Change: Kind of similar to Robert's comment that's a little hard to give great detail on the back half of the year there is still.

Speaker Change: A detailed navy worked out in terms of the kind of the cadence and timing of.

Speaker Change: Boeing deliveries to fully round out that answer, but as we think about summer.

Speaker Change: We're not as dependent on the Max certainly through <unk> and only slightly so into <unk>. So I feel pretty good about where we stand there just stay tuned for updates in the next couple of weeks that will that will have a lot more for you.

Speaker Change: Okay. Thank you.

Speaker Change: Okay.

Maurice J. Gallagher: That is all the time, we have for Q&A I will turn the call Tomorrow Gallagher for closing remarks.

Maurice J. Gallagher: Thank you all very much for your time as usual.

Maurice J. Gallagher: We appreciate your interest and your questions.

Maurice J. Gallagher: Follow up questions.

Direct through sharing her team and we'll be talking to you in 90 days.

Maurice J. Gallagher: Thank you very much have a good week.

Maurice J. Gallagher: This concludes <unk> Chicago.

Maurice J. Gallagher: <unk>.

Maurice J. Gallagher: Correct.

Maurice J. Gallagher: Okay.

Maurice J. Gallagher: Okay.

Maurice J. Gallagher: I'll now disconnect your lines.

Maurice J. Gallagher: Thank you.

Maurice J. Gallagher: Yeah.