Q1 2024 Allegiant Travel Co Earnings Call

Dee: Thank you for standing by. My name is Dee, and I will be your conference operator today. At this time, I would like to welcome everyone to the Allegiant Travel Company first quarter 2024 earnings call. All lines have been placed on mute to prevent any background noise.

You for standing by my name is D and I will be your conference operator today at this time I would like to welcome everyone to the Allegiant travel company first quarter 2024 earnings call. All lines have been placed on mute to prevent any background nice after just because your March there won't be a question and answer session.

Dee: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Sherry Wilson, Managing Director of Investor Relations. Please go ahead.

Dee: I would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star. One again. Thank you I would now like to turn the call over at the Sherry Wilson managing director of Investor Relations. Please go ahead.

Sherry Wilson: Thank you, Dee. Welcome to the Allegiant Travel Company's first quarter 2024 earnings call. On the call with me today are Maury Gallagher, the company's Executive Chairman and CEO, Greg Anderson, President, Micah Richins, President of Sunseeker Resorts, and John Stathoulopoulos. 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 questions. We will start the call with commentary and then open it up to questions. We ask that you please limit yourself to one question and one follow-up.

Sherry Wilson: Thank you D. Welcome to the Allegiant travel company's first quarter 2024 earnings call on the call with me today are Maury Gallagher, the company's executive Chairman and CEO, Greg Anderson, President Micah Richards President of Sunseeker resorts, Scott D Angelo, our EVP and chief marketing off.

Sherry Wilson: Sir drew wells, our SVP and Chief revenue Officer, Robert meal, SVP, and Chief Financial Officer, and a handful of others to help answer your question.

Sherry Wilson: We will start the call with commentary and then open it up to questions. We ask that you. Please limit yourself to one question and one follow up the company's comments today will contain forward looking statements concerning our future performance and strategic plan various risk factors could cause the underlying assumptions these statements and our actual results to differ materially from.

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

Sherry Wilson: Those expressed or implied by our forward looking statements. These risk factors and others are more fully disclosed in our filings with the SEC any forward looking statements are based on information available to US today, we undertake no obligation to update publicly any forward looking statement, whether as a result of future events.

Sherry Wilson: 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.

Sherry Wilson: 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. With that, I'll turn it over to Maury.

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

Maurice J. Gallagher: Thank you, Sherry, and good morning, everyone. Thank you for joining us today. As you can see from our release, our results are not where we want them to be. Historically, our Q1 is one of our strongest quarters, and last year's 15% operating income showed this strength.

Maury: Thank you Sharon and good morning, everyone. Thank you for joining us today.

Maury: As you can see from our release our results were not where we want them to be historically, our Q1 is one of our strongest quarters last year was 15% of operating income showed the strength.

Maurice J. Gallagher: If you look at all operations, operationally, we ran the same airline this Q1 that we ran in 23. Departures, ASMs, and passengers all were within 2% of each other. In fact, we've had minimal growth since 2021, averaging approximately 3% per year during these past three years.

Maury: If you look at our operations operationally, we ran the same airline this Q1 than we ran 23 departures Asl Ms passengers all were are within 2% of each other we've.

Maurice J. Gallagher: We've had minimal growth since 2021, averaging approximately 3% per year. During these past three years, even with this minimal growth. However, we have been one of the most profitable airlines during these turbulent times.

Maurice J. Gallagher: Even with this minimal growth, however, we have been one of the most profitable airlines during these turbulent times. But in the last year, we in the industry have experienced major expense increases, particularly salaries, and specifically with our pilots. Additionally, we had problems predicting how many pilots would be available for us last year. This time last year, we were losing more than a pilot a day, annualizing out to a 40% annual attrition rate. Stop this hemorrhaging.

Maurice J. Gallagher: Last year, we and the industry have experienced major expense increase was particularly salaries and specifically with our pilot. Additionally, we had problems predicting how many pilots would be available for us last year. This time last year, we were losing more than a pilot a day annualizing out to a 40% annual attrition rate stopped.

Maurice J. Gallagher: In June, we began to accrue future bonuses payable to our crew members after we signed an agreement. Through this April, we have recruited and expensed $80 million without any corresponding offset of a new pilot agreement. We hope to have this new agreement in the not too distant future. You'll hear today from Greg, Drew, Robert, Scott, and Micah Richins about our current status, including comments on our revenue problems tied to our Navitaire upgrade, Boeing deliveries, and the lack of productivity of our fleet and pilots, particularly due to the lack of productivity of our fleet and pilots, particularly during our off-peak period.

Maurice J. Gallagher: Stop this emerging in June we began to accrue fees.

Maurice J. Gallagher: Your bonus payable to our crew members. After we signed an agreement soon.

Maurice J. Gallagher: This April we have recruited an expense to $80 million without any corresponding offset.

Maurice J. Gallagher: The new pilot agreement, we hope to have this new agreement in the not too distant future.

Maurice J. Gallagher: You will hear today from Greg Drew Robert Scott and Michael Riches about our current status, including comments on our revenue problems tied toward an avatar upgrade Boeing deliveries and the lack of productivity of our fleet and pilots, particularly do during our off peak periods.

Maurice J. Gallagher: There are a number of reasons for this drop in productivity. Clearly, the pandemic changed our rhythms, our routines, our annual cycle of hiring and training new pilots for the coming year in the fall, adding them in January, February for the March uptick, and late spring for the summer sprint. We've been out of this rhythm for the past three years, but we're about to resume this proven approach in the back half of this year and into 2025.

Maurice J. Gallagher: There are a number of reasons for this drop off in productivity clearly the pandemic changed our rhythms of routines, our annual cycle of hiring and training new pilots for the coming year in the fall, adding them in January February for March.

Maurice J. Gallagher: Uptick in the late spring for the summer spread.

Maurice J. Gallagher: We have been out of this rhythm for the past three years, we are about to resume this proven approach in the back half of this year and into 2025, a critical component of this rhythm is obviously, having airplanes are boring order of 50, Max plus 80 options provides us with the necessary aircraft for the anticipated growth in the coming years.

Maurice J. Gallagher: A critical component of this rhythm is obviously having airplanes. Our Boeing order of 50 Max plus 80 options provides us with the necessary aircraft for the anticipated growth in the coming years. Let me emphasize that the model remains the same.

Maurice J. Gallagher: Going forward, we need to reinstate the execution of the model that has worked so well. Additionally, we are optimizing our revenue software, finalizing max deliveries, as I mentioned, and working with our pilots to finish an agreement. Let me turn to Sunseeker now.

Maurice J. Gallagher: Let me emphasize that the model remains the same going forward, we needed to reinstate the execution of the model that has worked so well. Additionally, we are optimizing our revenue software finalizing Max deliveries as I mentioned in working with our pilots to finish an agreement let me turn to Sunseeker at this point. We are excited to finally have this world class destination resort opened in <unk>.

Maurice J. Gallagher: We are excited to finally have this world-class destination resort open and operating. Initial reviews are all exceptional on the quality of the personnel, the product, and, in particular, the quality of the cuisine. Like all new projects, however, there is a learning curve. Opening at the end of December was not ideal, but the date was driven by the construction delays we experienced for most of last year.

Maurice J. Gallagher: Operator initial reviews are all exceptional on the quality of the personnel the product in and particularly with the quality of the cuisine.

Maurice J. Gallagher: Like all new projects. However, there is a run in time opening at the end of December was not ideal. The date was driven by the construction delays we experienced for most of last year given when we made the decision to open in late October we did not have as much time as we would've liked to market and sell this new destination resort.

Maurice J. Gallagher: Given we made the decision to open in late October, we did not have as much time as we would have liked to market and sell this new destination resort. We're using many tools to drive traffic, not the least of which is our 18 million person customer database. We've had success with this program, sending out as many as 25 to 30 million emails per week on Sunseeker specifically.

Maurice J. Gallagher: Using many tools to drive traffic not the least of which is our 18 million person customer database. We've had success with this program sending out as many as 25 to 30 million E mails per week on Sunseeker and specifically we are already in the booking patterns for southwest, Florida. What the differences are we saw some expected strength in Q1 Q2 and Q3.

Maurice J. Gallagher: We're learning the booking patterns for Southwest Florida, and what the differences are. We saw some expected strength in Q1. Q2 and Q3, however, will be slower, and we're trying to understand where they will settle. Given the patterns we are experiencing at this point, we are lowering our estimates to a negative $15 million EBITDA for this year. Micah Richins, President of Sunseeker, will have more comments in just a moment. While Sunseeker will be a project for 24 and 25, the airline problems we are currently experiencing can be addressed for the most part during the remainder of this year and into 2025. By then, we should be hitting our stride.

Maurice J. Gallagher: However will be slower and we're trying to understand where they will settle.

Maurice J. Gallagher: Given the patterns, we are experiencing at this point, we are lowering our estimates to a negative $15 million EBITDA for this year.

Maurice J. Gallagher: Michael Richards President of Sun season, we will have more comments in just a moment.

Micah Richins: Well sunseeker will be a project for 24% and 25 year life problems. We are currently experiencing can be addressed for the most part during the remainder of this year and into 2025 by then we should be hitting our stride.

Maurice J. Gallagher: Comments about the industry. For years, we've been grouped together with other low cost, low fare companies, particularly Spirit and Frontier. While all of us offer low fares and have focused on leisure customers, we would be remiss if we did not point out that our model has made money consistently during this pandemic time. In particular, I want to direct your attention to the revenue difference. In the just completed Q1, our unit revenue, or TRASM, was $0.132 compared to $0.092 average, or 42% greater than the aforementioned operator.

Maurice J. Gallagher: Comment about the industry for years, we have been grouped together with other low cost low fare companies, particularly spirit and frontier.

Maurice J. Gallagher: All of us offer low fares and have focused on leisure customers. We would be remiss. If we did not point out that our model is made money consistently during this pandemic time.

Maurice J. Gallagher: In particular I want to direct your attention to the revenue differences in.

Maurice J. Gallagher: In the just completed Q1, our unit revenue or <unk> was $13 <unk> compared to $9, <unk> average or 42% greater than the aforementioned operators.

Maurice J. Gallagher: In today's inflationary world, the ability to generate sufficient revenues and increase revenues is the difference between success and failure. Cost management is also important, no doubt. Given our increased utilization later this year and into 2025, you'll see our unit costs decline accordingly. An important component of our revenues has been our third-party revenue. While they are not that big on an absolute basis, they are very powerful for the bottom line. This quarter, our $8.21 per passenger was worth $33 million in operating income. That's a 30% increase over last year's $6.32.

Maurice J. Gallagher: Today's inflationary world the ability to generate sufficient revenues and increased revenues as the difference between success and failure cost management is also important no doubt.

Maurice J. Gallagher: Given our increased utilization later this year and into 2025, you'll see our unit cost decline accordingly.

Maurice J. Gallagher: <unk> component of our revenues has been our third party revenues.

Maurice J. Gallagher: While there are not that big on an absolute basis. They are very powerful for the bottom line this quarter or $8 21 per passenger was worth $33 million of operating income that's a 30% increase over last year's $6 32.

Maurice J. Gallagher: In spite of our problems with our revenue tools in Navitar, we still had one of our best unit revenues in the company's history. Many things go into this ability to generate stronger revenues, including brand and reputation, and we are pleased with how we have positioned ourselves. If you look at the success of the majors, one only has to point to their loyalty programs to see the power of third-party revenues.

Maurice J. Gallagher: In spite of our problems with our revenue tools and Avatar, we still had one of our best unit revenues in the company history.

Maurice J. Gallagher: Many things go into this ability to generate stronger revenues, including brand and reputation and we are pleased with how we have positioned ourselves. If you look at the success of the majors one only has to point to their loyalty programs to see the power of third party revenues, we understand this benefit and are focused on this.

Maurice J. Gallagher: We understand this benefit and are focused on this, producing more of these very accretive dollars. Life is about rhythm. We all work better and have better results when what we do is known, is repeatable, and predictable. Looking back on our successes of the past 20 years, while the model is a critical component, namely 77% of our routes do not have direct competition, the execution component, the rhythm, each year is also critical.

Maurice J. Gallagher: Or do you see more of these very accretive dollars.

Maurice J. Gallagher: For the past many years since COVID, the rhythm, the routine has not been present. To the contrary, there's been minimal predictability, uncertain rhythm, starts, and stops. The fog is lifting from the traditional focus, and we are in better control of our own actions going forward. The model is just fine, as I mentioned, as strong as ever. The rhythm is coming back. Stay tuned for the good news. Greg?

Maurice J. Gallagher: Licensed about rhythm, we all work better have better results when we with what we do is known as repeatable and predictable looking back on our successes of the past 20 years, while the model is a critical.

Maurice J. Gallagher: Ponant, namely 77% of our routes does not have direct competition the execution component. The rhythm. Each year is also critical for the past many years post COVID-19. The rhythm of the routine has not been present to the contrary theres been minimal predictability uncertain rhythm starts and stops.

Maurice J. Gallagher: The fog is lifting in the traditional focus and we have better control of our own actions going forward. The model is just fine as I mentioned is strong as ever the rhythm is coming back stay tuned for the good news Greg.

Gregory Clark Anderson: Maury, thank you. Team Allegiant delivered another strong operational performance this quarter with a 99.7% controllable completion rate. That puts us near the top of the industry, and that's thanks to the tremendous efforts of our frontline team members. We have a long history of providing great service at an attractive price for our customers. And our differentiated model is focused on being the only nonstop carrier in the vast majority of our 525 routes.

Greg: Laurie Thank you.

Gregory Clark Anderson: Our team Allegiant delivered another strong operational performance this quarter with a 99, 7% controllable completion right now.

Gregory Clark Anderson: US near the top of the industry and that's thanks to the tremendous efforts of our frontline team members, we have a long history of providing a great service at an attractive price for our customers.

Gregory Clark Anderson: And our differentiated model is focused on being the only nonstop carrier on the vast majority of our 525 droughts that is a structural advantage that affords us great relationships within our origination and destination market, which in addition contribute to our strong ancillary and third party revenue. Our differentiation is why we are.

Gregory Clark Anderson: That is a structural advantage that affords us great relationships within our origination and destination market, which in addition, contribute to our strong ancillary and third party revenue. Our differentiation is why we are, we have been able to generate industry leading margins and profitability for our investors over the long term. While I am pleased with our operational and customer service metrics this quarter, our first quarter adjusted operating margin of 6.2% is disappointing and is not reflective of Allegiant's earnings potential. These results were impacted by three distinct issues, lower aircraft utilization during peak periods, Navitaire implementation timing, and Boeing's delivery delays. Starting with lower utilization.

Gregory Clark Anderson: We have been able to generate industry, leading margins and profitability for our investors over the long term.

Gregory Clark Anderson: I am pleased with our operational and customer service metrics. This quarter, our first quarter adjusted operating margin of six 2% is disappointing and is not reflective of allegiance earnings potential.

Gregory Clark Anderson: These results were impacted by three distinct issues lower aircraft utilization during peak periods, <unk> implementation timing and boeing's delivery delays.

Gregory Clark Anderson: March 2024 flying was about 20% less than we would have liked it to be. The primary constraint of our peak utilization has been the uncertainty of our pilot staffing levels. We were impacted by the same industry-wide shortage faced by our peers, and our attrition levels were meaningfully elevated coming out of COVID but beginning to normalize around the middle of 2023. It was because, at this time, we implemented a retention bonus for our pilots that materially helped STEM attrition.

Gregory Clark Anderson: Starting with lower utilization March 2020 for applying with about 20% less than where we would have liked it to be.

Gregory Clark Anderson: The primary constraint of our peak utilization has been the uncertainty of our pilot staffing levels.

Gregory Clark Anderson: We were impacted by the same industry wide shortage faced by our peers and our attrition levels were meaningfully elevated coming out of COVID-19, but beginning to normalize around the middle of 2023 and it was because at this time, we implemented a retention bonus for our pilots that materially helps stem attrition.

Gregory Clark Anderson: It is important to us that our pilots receive fair and competitive compensation. In advance of an agreed-upon pilot contract, we are accruing upwards of $6 million per month for this bonus. Given our pilot staffing levels have turned to being stable, we are just starting to realize some of these benefits through our scheduling as we work towards restoring our peak utilization. On a related note, achieving a pilot labor contract continues to be a priority of ours, and I am optimistic that we can come to an agreement in the not-too-distant future.

Gregory Clark Anderson: It's important to us that our pilots receive fair and competitive compensation.

Gregory Clark Anderson: In advance of an agreed upon pilot contract, we are accruing upwards of $6 million per month for this bonus.

Gregory Clark Anderson: Given our pilot staffing levels have turned to being stable. We are just starting to realize some of these benefits through our scheduling as we work towards restoring our peak utilization.

Gregory Clark Anderson: On a related note achieving a pilot labor contract continues to be a priority of ours and I am optimistic that we can come to an agreement in the not too distant future we value our relationships with our pilots and are encouraged by the forward movement made since the recent changes in Union leadership.

Gregory Clark Anderson: We value our relationships with our pilots and are encouraged by the forward movement made since the recent changes in union leadership. Since cutting over to Navitaire in the second half of 23, we have made a lot of progress in the system that runs all of our reservations and revenue management. It offers critical new features over our legacy homegrown system, including the ability for international expansion and further efficiencies that are expected to improve our dynamic pricing and increase ancillary revenue.

Gregory Clark Anderson: Since coming over to NAV is here in the second half of 'twenty. Three we have made a lot of progress in the system that runs all of our reservations and revenue management.

Gregory Clark Anderson: It offers critical new features over our legacy homegrown system. This includes the ability for international expense expansion and further efficiencies that are expected to improve our dynamic pricing and increased ancillary revenues.

Gregory Clark Anderson: That migration last year went well for the most critical aspects, as customers had a seamless ability to book and fly. However, migrating our ancillary data has taken longer than we expected, which caused a reduction of about $2 per passenger and ancillary fees in the quarter.

Gregory Clark Anderson: That migration last year went well for the most critical aspects as customers have a seamless ability to book and to fly however, migrating our ancillary data has taken longer than we expected, which caused a reduction of about $2 per passenger and ancillary fees in the quarter. As you. All know that is high margin revenue for us.

Gregory Clark Anderson: As you all know, that is high-margin revenue for us. Turning to Boeing, due to their well-publicized issues, we have experienced even further delivery delays since our last earnings call.

Gregory Clark Anderson: Turning to Boeing due to their well publicized issues, we're experiencing even further delivery delays since our last earnings call. As a reminder, we had originally anticipated and planned for six Max deliveries in the first half of this year.

Gregory Clark Anderson: As a reminder, we had originally anticipated and planned for six Max deliveries in the first half of this year. Prior to this brand new type of aircraft entering the Allegiant fleet, we hire and train pilots, we plan our network, and we take on other preparation and infrastructure costs. These material headwinds are at a current runway rate of roughly 30 million annually for operating engines. At this time, we do not anticipate any MAX aircraft being placed in service during the first half of 2024, yet we continue to incur these significant expenses. Excluding these three distinct items I just outlined, our adjusted airline operating margin for the quarter would have been approximately 13%.

Gregory Clark Anderson: Prior to this brand new type of aircraft entering the Allegiant fleet, we hire and train pilots, we plan our network and we take on other preparation and infrastructure costs.

Gregory Clark Anderson: These material headwinds or at a current run rate right of roughly $30 million annually to operating income.

Gregory Clark Anderson: At this time, we do not anticipate any Max aircraft to be placed in service during the first half of 'twenty four yes, we continue to incur these significant expenses.

Gregory Clark Anderson: This does not, however, change the fact that our current financial port performance is not acceptable to us. The good thing is that we have solutions. So I'd like to talk about the key drivers of how we will return to our normal industry-leading margins. The first driver is increasing peak flying. While the airline has recovered well from COVID, our peak flying is still 20% below 2019 levels. Fortunately, our pilot hiring and attrition issues have improved considerably, and we are seeing normalized staffing levels.

Gregory Clark Anderson: Excluding these three distinct items I just outlined our adjusted airline operating margin for the quarter would have been approximately 13%.

Gregory Clark Anderson: This does not however change the fact that our current financial performance is not acceptable to us.

Gregory Clark Anderson: The good thing is we have solutions, so I'd like to talk about the key drivers of how we will we will return to our normal industry leading margins.

Gregory Clark Anderson: The first driver is increasing peak flying while the airline has recovered well from Covid. Our peak flying is still 20% below 2019 levels.

Gregory Clark Anderson: <unk>, our pilot hiring and attrition issues have improved considerably and we are seeing normalized staffing levels.

Gregory Clark Anderson: Given these improvements, we are pushing up peak utilization and looking to fully restore it by 2025, in 2025, which we expect to add roughly four points of incremental margin. The second driver is harnessing the full power of our Navitares reservation system. While the implementation of the system was more complex and took longer than we expected, we are now at the right point, with Drew Wells, our Chief Revenue Officer, spearheading this initiative at this pivotal time.

Gregory Clark Anderson: These improvements were pushing a peak utilization and look to fully restore it by 2025 in.

Gregory Clark Anderson: In 2025, which we expect to add roughly four points of incremental margin.

Gregory Clark Anderson: The second driver is harnessing the full power of our <unk> reservation system.

Gregory Clark Anderson: While the implementation of the system was more complex and took longer than we expected. We are now at the right point with drew wells, our Chief revenue Officer Spearheading. This initiative at this pivotal time.

Gregory Clark Anderson: We see a big opportunity using Navitaire's tools to drive greater ancillary revenue. Drew will talk in more detail about this platform, but we estimate enhancements to Navitaire will drive as much as three points of incremental margin at a mature state in 2025. We are also growing and improving our product offerings through other commercial opportunities in areas such as loyalty, co-branding, Allegiant Extra, and our planned international expansion with VIVA. Finally, the third driver is ramping up our Boeing MAX fleet.

Gregory Clark Anderson: We see a big opportunity using <unk> tools to create to drive greater ancillary revenue drew will talk in more detail about this platform, but we estimate enhancements to <unk> will drive as much as three points of incremental margin at a mature state in 2025.

Gregory Clark Anderson: We are also growing and improving our product offerings through other commercial opportunities in areas such as loyalty co brand Allegiant Xtra and our planned international expansion with Veeva.

Gregory Clark Anderson: Finally, the third driver is ramping up our Boeing Max fleet once in service and operating at scale at scale, we expect our Max aircraft will provide a meaningful tailwind to our earnings the annual operating income carrying costs of $30 million. We are currently incurring will naturally subside. Furthermore, there was a 20% fuel burn savings and other advantages of this new fleet.

Gregory Clark Anderson: Once in service and operating at scale, we expect the MAX aircraft will provide a meaningful tailwind to our earnings. The annual operating income carrying cost of $30 million we are currently incurring will naturally subside. Furthermore, there is a 20% fuel burn savings and other advantages of this new fleet for Allegiant. We are working with Boeing to ensure an orderly delivery schedule. And given their extended delivery delays, our 2024 capex is expected to be significantly below our initial forecast.

Gregory Clark Anderson: Religion, we are working with Boeing to ensure an orderly delivery schedule given their extended delivery delays are 2020 for capex that capex is expected to be significantly below our initial forecast.

Gregory Clark Anderson: Last but certainly not least, we are very happy to report we have reached a deal with the TWU and our flight attendants on a new contract, a deal our in-flight team members were proud to support. And, in closing, our airline is one of the best proven models in the business. This management team is laser focused on restoring our industry-leading margins. We are executing on a clear path, just as outlined, and further building on our strength. I'm excited about the opportunities ahead for us. With that, I'll turn it to Micah.

Gregory Clark Anderson: Last but certainly not least we are very happy to report we have reached a deal with the TWU and our flight attendants on a new contract a deal are in flight team members, we're proud to support and in closing our airline as one of the best proven models in the business. This management team is laser focused on restoring our industry leading margins we are executing on a clear path.

Micah: Just as outlined and further building on our strength I am excited about the opportunities ahead for us and with that I'll turn it to Mike.

Micah Richins: Thanks, Greg, and good morning, everyone. As Maury mentioned in his opening remarks, we're extremely pleased with the progress that's been made at Sunseeker this past quarter. When we last updated you, we were in the early days of transitioning from a construction site to an operating resort. We still have thousands of punch list items to complete and several venues to bring online. Today, all of our outlets are online, and all but a handful of the punch list items have been completed.

Micah: Thanks, Greg and good morning, everyone.

Micah Richins: As Mory mentioned in his opening remarks, we're extremely pleased with the progress that's been made at Sunseeker This past quarter.

Micah Richins: When we last updated you we were in the early days of transition from a construction site to an operating resort.

Micah Richins: We still have thousands of punch list items to complete in several venues to bring online today.

Micah Richins: Today, all of our outlets are online and all but a handful of the punch list items have been completed.

Micah Richins: Feedback from guests has been overwhelmingly positive, with consistent month-over-month improvements in our Medallia NPS score. Of note, our customers are not only impressed by the resort but have been delighted by our wonderful team members. In terms of the quality of experienced drivers, the leading category is helpfulness of staff. We couldn't be more proud of them.

Micah Richins: Feedback from guests has been overwhelmingly positive with consistent month over month improvements in our medallion NPS scores.

Micah Richins: Of note our customers are not only impressed by the resort, but it will.

Micah Richins: Elided by our wonderful team members.

Micah Richins: In terms of quality of experienced drivers the leading categories helpfulness of staff, we couldnt be more proud of them.

Micah Richins: Guests and locals alike have been highly complementary of our food and beverage offerings. Opening this many restaurants concurrently is no easy task. Despite that, all six of our specialty restaurants have satisfaction ratings over four on a scale of five, with the average being four and a half.

Micah Richins: Guests and locals alike have been highly complementary of our food and beverage offerings.

Micah Richins: Turning this many restaurants concurrently is no easy task despite that all six of our specialty restaurants have satisfaction ratings over four on a scale of five with the average being four and a half.

Micah Richins: These venues, in addition to our spectacular pool experiences, allow us the ability to activate the property in meaningful ways, including sporting events like the Super Bowl and the Kentucky Derby, which we had just this past weekend. In terms of group business, year to date, we've successfully hosted more than 50 groups. Our operating and services team has worked tirelessly to ensure the satisfaction of meeting planners and the attendees alike, building reputational credibility that will pay dividends throughout the remainder of the year and certainly into 2025 and beyond. In the hospitality business, the convention segment is the most effective leading indicator of future financial performance.

Micah Richins: These venues in addition to our spectacular pool experiences allow us the ability to activate the property in meaningful ways, including sporting events like Super Bowl and the Kentucky Derby, We had just this past weekend.

Micah Richins: In terms of group business year to date, we successfully hosted more than 50 groups are operating and servicing team have worked tirelessly to ensure the satisfaction of meeting planners and the attendees alike.

Micah Richins: <unk> reputation credibility that will pay dividends throughout the remainder of the year and certainly into 2025 and beyond.

Micah Richins: The hospitality business. The convention segment is the most effective leading indicator of future financial performance.

Micah Richins: While our sales teams are still fielding leads for short-term in-the-year, for-the-year bookings, much of their activity is now focused on planners booking 2025 and beyond. Our 2025 goal for convention room nights is 60,000. We expect to open the year with 43 room nights, 43,000 room nights on the books, and 17,000 to be booked in the year. We already have 20,000 room nights on the books, and 62,000 room nights are in the pipeline. In future calls, I'll provide updates on our progress.

Micah Richins: While our sales teams are still fielding leads for short term in the year for the bookings.

Micah Richins: Each of their activity is now focused on planner's booking 2025 and beyond our.

Micah Richins: Our 2025 goal for convention room nights as 60000, we expect to open the year with 43 room nights 43000 room nights on the books and 17000 to be booked in the year.

Micah Richins: We already have 20000 on the books was 62000 room nights in the funnel.

Micah Richins: In future calls I will provide updates on our progress.

Micah Richins: Clearly, our occupancy and our resulting financial performance is not yet where we expect it to be. The repeated shifting of our opening date made it extremely challenging for our sales teams to book convention business in Q1 and Q2 of this year. Understandably, group planners are historically risk-averse when it comes to new hotel products. That's why the reputational credibility I mentioned earlier is so critical. Right now, at 785 keys, we have a short-term excess room capacity challenge with the associated cost structure.

Micah Richins: Clearly, our occupancy and our resulting financial performance is not yet where we expect it to be.

Micah Richins: Repeated shifting of our opening date made it extremely challenging for our sales teams to book Convention business into Q1, and Q2 of this year understandably.

Micah Richins: Understandably group planners are historically risk averse when it comes to new hotel product.

Micah Richins: That's why the reputation credibility I mentioned earlier so critical.

Micah Richins: Right now at 785 keys, we have a short term excess room capacity challenge with the associated cost structures.

Micah Richins: As with any new venture, particularly one of this scale, it will take time and significant effort to rectify. We've assembled an executive committee of highly skilled, experienced leaders, some from Vegas, some from Florida, and others from around the country. Most have been through the rigors of opening multiple properties. They know what to expect. They know what to do and how to achieve the results we anticipate going forward. With that, I'll turn it over to Scott DeAngelo.

Micah Richins: As with any new venture, particularly one of this scale it will take time and significant effort to rectify.

Scott Wayne DeAngelo: We've assembled an executive committee of highly skilled experienced leaders come from Vegas come from Florida, and others from around the country most of been through the rigors of opening multiple properties.

Scott Wayne DeAngelo: They know what to expect they know what to do and how to accomplish the results we anticipate going forward.

Scott Wayne DeAngelo: With that I'll turn it over to Scott the Angelo.

Scott Wayne DeAngelo: Thanks Micah. Our Allegiant brand and product continue to improve and are increasingly highly regarded among our customer base. Our net promoter score rose to 55 in the first quarter. That's four points higher than we reported last quarter, and our customers rated us materially higher than all other airlines in the nation. Our high-margin third-party product revenue increased nearly 30% during the first quarter compared to Q1 2023, with our Always Rewards Visa card leading the way as the program surpassed 500,000 cardholders in the quarter and earned nearly $35 million in total co-brand credit card compensation, up 24% versus Q1 2023.

Scott Wayne DeAngelo: Thanks, Mike.

Scott Wayne DeAngelo: Our Allegiant brand and product continued to improve and are increasingly highly regarded among our customer base. Our net promoter score rose to 55 in the first quarter, that's four points higher than we reported last quarter and our customers rated us materially higher than all other airlines in the nation are.

Scott Wayne DeAngelo: Our high margin third party product revenue increased nearly 30% during the first quarter compared to Q1 2023.

Scott Wayne DeAngelo: With our always rewards visa card, leading the way as the program surpassed 500000 cardholders in the quarter and earned nearly $35 million in total co brand credit card compensation up 24% versus Q1 2023. It's also noteworthy that this program was included among Newsweek's 2020 forward listing.

Scott Wayne DeAngelo: It's also noteworthy that this program was included in Newsweek's 2024 list of America's Best Loyalty Programs for the value it delivers to consumers, as voted on by consumers. We also continue to see progress during the first quarter from our marketing support for Sunseeker Resort, primarily email marketing to our 18 million customer database but also including prominent merchandising on our website and mobile app and onboard through our in-flight magazine, Non-Stop Life, dedicated seatback inserts. We also enabled functionality on Elysian.com for customers to be able to book their stay without requiring a deposit.

Scott Wayne DeAngelo: <unk> of America's best loyalty programs for the value it delivers to consumers as voted on by consumers. We also continued to see progress during the first quarter from our marketing support for Sunseeker resort, primarily email marketing to our 18 million customer database, but also including prominent merchandising on our website <unk>.

Scott Wayne DeAngelo: <unk> and onboard through our in flight magazine Nonstop life.

Scott Wayne DeAngelo: Vacated seat back in service, we also enabled functionality Alicia dot com for customers to be able to book their stay without requiring a deposit.

Scott Wayne DeAngelo: Bookings improve sequentially each month from an average of 140 room nights booked per day in December when the resort opens to an average of 265 room nights booked per day in March. While we're heading into a typical off-peak season for Southwest Florida, we expect to continue making progress on the sales and distribution front in order to be at full strength when customers begin booking in earnest for fall and winter. Lastly, our transition from legacy homegrown booking and operating systems to modern open integration technology platforms will enable us greater speed and flexibility as we enhance our customer-facing website and mobile app to improve the booking experience and maximize customer-driven revenue.

Scott Wayne DeAngelo: Bookings improved sequentially each month from an average of 140 room nights booked per day in December when the resort open to an average of 265 room nights booked per day and March.

Scott Wayne DeAngelo: While we are heading into a typical off peak season for southwest, Florida, We expect to continue making progress on the sales and distribution Brian in order to be at full strength when customers begin booking in earnest for fall and winter.

Scott Wayne DeAngelo: Lastly, our transition from legacy homegrown booking and operating systems to modern open integration technology platforms will enable us greater speed and flexibility as we enhance our customer facing website and mobile app to improve the booking experience and maximize customer driven revenue.

Scott Wayne DeAngelo: Specifically, as our Navitaire implementation unlocks its full set of features and functionalities, as both Maury and Greg referenced and Drew will elaborate on, we will, in parallel, be enhancing our web and app booking experience and merchandising capabilities to drive increased take rates for high-margin air ancillary products and models, along with continued increased attachment for high-margin third-party hotel, rental car, and credit card. Also, the expansion of newer air ancillary products, such as Allegiant Extra, Legroom Plus, and Trip Insurance, along with future new product additions, such as gift cards, flight subscriptions, and more, should collectively play key roles in driving profitable revenue growth on a per-passenger basis. And with that, I'll turn it over to our Chief Revenue Officer, Drew Wells.

Scott Wayne DeAngelo: Specifically as our Napa care implementation on lawsuits full set of features and functionalities and both morry and Greg referenced Andrew will elaborate on we will in parallel be enhancing our web and app booking experience and merchandising capability to drive increased take rate for high margin air ancillary products and models along with continued to incur.

Scott Wayne DeAngelo: <unk> attachment for high margin third party hotel rental car and credit card.

Drew Wells: Also the expansion of newer air ancillary products, such as Allegiant extra legroom, Boston Triptans insurance, along with future new product conditions, such as gift card play subscriptions and more should collectively played key roles in driving profitable revenue growth on a per passenger basis and with that I'll turn it over to our chief revenue Officer drew.

Scott Wayne DeAngelo: Yes.

Drew Wells: Thank you, Scott, and thanks to everyone for joining us today. Both are the second highest first quarter figures in Allegiant history. System ASM also increased 2% for 1Q23. I believe this continues to represent one of the best performances of pre-pandemic history, at roughly 15% travel gains on over 20% ASM gains versus the first quarter of 2019, along with a record first quarter fixed fee. Leading the way once more was a total ancillary per passenger increase of roughly $0.50. Our core products were strong, and the addition of Allianz Travel Insurance drove new opportunities in booking. Furthermore, as Scott described, the Always Rewards Visa card continued to drive excellent value.

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

Drew Wells: I am pleased to report our first quarter airline revenue of $632 5 million and <unk> of $13 three.

Drew Wells: Both the second highest first quarter figures and Allegiant history.

Drew Wells: System ASM also increased 2% versus <unk> 23.

Drew Wells: I believe this continues to represent one of the best performances versus pre pandemic.

Drew Wells: That roughly 15% RASM gains on over 20% ASM gains versus the first quarter of 2019, along with a record first quarter fixed fee performance.

Drew Wells: Leading the way once more with a total ancillary per passenger increase of roughly 50.

Drew Wells: Our core products were strong and the addition of <unk> travel insurance drove new opportunities in the booking path.

Drew Wells: Further as Scott described you're always rewards visa card continued to drive excellent value.

Drew Wells: The air ancillary portion was down slightly, and we know that we're leaving value on the table here, as Greg mentioned, but more on that later. The 1Q trasm represents a 0.54% sequential increase versus 4Q23 and is in line with our revised guide. Well, on a year-over-year basis, TRASM was down 4.8%. However, as communicated in the last quarter's call, our peak spring break flying at the end of March was unit revenue positive for the same weeks in 2023. Obviously, 2024 has the benefit of Easter in that comparison. However, it is still a great signal that the best leisure travel periods remain resilient. Of course, there's the other side to Easter changing.

Drew Wells: The air ancillary portion was down slightly and we know that we're leading value on the table here as Greg mentioned, but more on that later.

Drew Wells: The <unk> represented 0.54% sequential increase versus <unk> 23, and in line with our revised guidance.

Drew Wells: Well on a year over year basis, <unk> was down four 8% as communicated during last quarter's call. Our peak spring break flying at the end of March with unit revenue positive versus the same weeks in 2023.

Drew Wells: Obviously 2024 gets the benefit of Easter and that comparison. However, it is still a great signal, but the best leisure travel periods remain resilient.

Drew Wells: The first two weeks of March were weaker than anticipated, and early April felt the pain of the spring travel season ending early. While Easter shifts every year, it landed in March just twice between 2009 and 2019. Both of those times saw 1Q to 2Q sequential TRASM decline at least 5%. The expectations for 2Q 2024 exceed those comparisons, and we expect sequential travel to decline just 2.5% for 1Q24. This represents a year-over-year decline of roughly 5.5%.

Drew Wells: There is the other side the Easter shifting the first two weeks of March were weaker than anticipated in early April felt the pain of the spring travel season ending earlier.

Drew Wells: While Easter shifts every year and landed in March just twice between 2009 and 2019.

Drew Wells: Both of those times saw <unk> to <unk> sequential <unk> decline at least 5%.

Drew Wells: The expectations for <unk> 2024 exceed those comparisons and we expect sequential traveling to declined just two 5% versus <unk> 24. This.

Drew Wells: This represents a year over year decline of roughly five 5%.

Drew Wells: While I still expect the total ancillary per passenger to grow slightly year over year in the second quarter, we're accomplishing this with reduced functionality versus the same time last year. Our Navitaire cutover in late August 2023 was implemented with some known gaps and a path to not just bridging but improving our position.

Drew Wells: While I still expect the total ancillary per passenger to grow slightly year over year in the second quarter were accomplishing this with reduced functionality versus the same time last year.

Drew Wells: Our <unk> cutover in late August 2023 was implemented with some known gas and a path to not just bridging but improving our position.

Drew Wells: Included in those gaps were roughly $2 per passenger and booking path ancillary functionality, impact on our ability to collect all revenues at the airport, and a handful of factors driving additional call volume to our customer care team for issues previously self-served. Additionally, the bridges have proven significantly more challenging than initially thought. The additional upside of at least another $2 per passenger we had communicated from the increased dynamic abilities had to take a backseat.

Drew Wells: Included in those gaps were roughly $2 per passenger in booking path ancillary functionality.

Drew Wells: Impacts to our ability to collect all revenues at the airport and a handful of factors driving additional call volume to our customer care team for issues previously self service model.

Drew Wells: And the bridges that proven significantly more challenging than initially thought.

Drew Wells: The additional upside of at least another $2 per passenger we had communicated from the increased dynamic abilities have to take a back seat.

Drew Wells: I'd like to commend the entire organization for the efforts in developing, testing, finding ways to go above and beyond and continuing to make this company great through growth. However, as we become more familiar with the platform and its capabilities, we feel it is time to take a step back and acknowledge there may be a better way to move forward. We have incredibly high conviction in the Navitaire platform when done right, and doing it right is what we need to do.

Drew Wells: I'd like to commend the entire organization for their efforts in developing testing finding ways to go above and beyond continuing to make this company great through the growing pains.

Drew Wells: As we become more familiar with the platform and its capabilities we have.

Drew Wells: Still it is time to take a step back and acknowledged there may be a better way to move forward.

Drew Wells: We have incredibly high conviction in the navigator platform when done right and done right is what we need to do.

Drew Wells: It won't be an overnight fix, but we believe it's the right long term solution. We'll have more details around timing and value beyond what I've described here in the coming weeks. One of the ways we continue to offset the current integration headwind is with our extra product. As the fleet grows and we gather more data, we continue to work to align our product mix and experience with what customers value most. The first quarter ended with 15 tails and the 180-seat extra layout, and thanks to our maintenance strategy team and our Mesa hangar, we expect as many as 11 additional aircraft to be modified by the end of the year.

Drew Wells: It won't be an overnight fix but we believe it's the right long term decision.

Drew Wells: We will have more details around timing and value beyond what I've described here in the coming quarters.

Drew Wells: One of the ways, we continue to offset the current integration headwind is with our extra product.

Drew Wells: As the fleet grows and we gather more data we continue to work to align our product mix and experience with what customers value most.

Drew Wells: The first quarter ended with 15 tails and the 100 ADC extra layout and thanks to our maintenance strategy team and our Mesa Hanger, we expect as many as 11 additional aircrafts, we modified by the end of May.

Drew Wells: As we shift to the capacity front, our summer capacity did increase, as indicated on the last call. The month of June is expected to grow approximately 7%, and while it offsets the 11% April decline primarily associated with the Easter shift, we expect the quarter to have ASMs approximately 1% below 2Q22. Despite the delays in Boeing aircraft, our planning and operations teams have found a way to preserve the selling schedule through July and August, allowing us to maintain a mid-single-digit percent ASM growth in each month and about a half-hour utilization per day per aircraft increase over last summer.

Drew Wells: As we shifted the capacity front our summer capacity did increase as indicated on the last call. The month of June is expected to grow approximately 7%.

Drew Wells: While it offsets the 11% April decline, primarily associated with the Easter shift we expect the quarter to have ASM is approximately 1% below <unk> 23.

Drew Wells: Despite the delays in Boeing aircrafts are planning and ops teams have found a way to preserve the selling schedule through July and August, allowing us to maintain a mid single digit percent ASM growth in each month and about a half hour utilization per day per aircraft increase over last summer.

Drew Wells: This is generally in line with 2018 summer utilization and a solid first step toward restoring our peak period utilization. It has taken about a year from the announcement of the pilot retention bonus to have comfort levels at the appropriate lead time to push on flying a bit harder. Candidly, we ended up with enough pilots to fly a little more in March. Unfortunately, that certainty occurred too close to March to react accordingly. But it does provide support for our summer.

Drew Wells: This was generally in line with 2018 summer utilization and a solid first step towards restoring our peak periods utilization.

Drew Wells: It has taken about a year from the announcement of the pilot retention bonus to have comfort levels at the appropriate lead time to push on flying a bit harder.

Drew Wells: Candidly, we ended with enough pilots to fly a little more in March.

Drew Wells: Unfortunately that certainty to close to March to react accordingly.

Drew Wells: It does provide support for our summer plan.

Drew Wells: However, our reduced Boeing delivery expectations will impact our anticipated fourth quarter capacity and, in turn, our full year guidance. And we now expect 2 to 4% year-over-year A&M. The demand environment continues to be elevated well above pre-pandemic levels, Peaks have shown resiliency, and the gaps between peak and off-peak leisure demand appear normal. We see a path forward with our system implementation and other plans laid out today and are confident that we are building out the tools and processes to optimize flying, revenue, and, most importantly, profitability. With that said, I'd like to turn it over. Good afternoon.

Drew Wells: However, our reduced Boeing delivery expectations will impact our anticipated fourth quarter capacity and in turn our full year guidance and we now expect 2% to 4% year over year ASM growth.

Drew Wells: The demand environment continues to be elevated well above pre pandemic levels.

Drew Wells: Peaks have shown resiliency and the gaps between peak and off peak leisure demand appear normal.

Drew Wells: We see a path forward with our system implementation and other plans laid out today and are confident that we are building out the tools and processes to optimize flying revenue and most importantly profitability.

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

Unknown Executive: As you've heard from others today, our first quarter results are below our expectations. As Greg outlined, there are several contributing factors for this underperformance. We are encouraged, however, that for each of the factors Greg identified, we have a clear and actionable plan to restore our earnings potential in the coming quarters. I'll speak today about our financial results and guidance on an adjusted basis. Looking at the first quarter, we delivered a consolidated net income of $10.4 million, yielding earnings per share of $57.6.

Speaker Change: Good afternoon, as you've heard from others today, our first quarter results are below our expectations.

Unknown Executive: As Greg outlined there are several contributing factors for this underperformance. We are encouraged however that for each of the factors Greg identified we have a clear and actionable plan to restore our earnings potential in the coming quarters.

Unknown Executive: I will speak today to our financial results and guidance on an adjusted basis.

Unknown Executive: Looking at the first quarter, we delivered a consolidated net income of $10 $4 million, yielding an earnings per share of <unk> 57.

Unknown Executive: Consolidated EBITDA came in at $92.3 million, generating an EBITDA margin of just over 14%. The airline business recorded a net income of $19.8 million, yielding an airline-only EPS of $1.08. The airline produced $97 million in EBITDA during the quarter for an EBITDA margin of 15.3%. However, fuel continued to pressure results, coming in at $3.03 per gallon for the quarter, which was 18 cents above our initial expectation. We have seen some slight relief as of late, and we're estimating second quarter fuel costs to be approximately $2.90 per gallon. Non-fuel unit costs were up 14% year over year.

Unknown Executive: Consolidated EBITDA came in at $92 3 million generating an EBITDA margin of just over 14%.

Unknown Executive: The airline business recorded a net income of $19 $8 million, yielding an airline only EPS of $1 eight.

Unknown Executive: The airline produced $97 million in EBITDA during the quarter for an EBITDA margin of 15, 3%.

Unknown Executive: Fuel continued to pressure results coming in at $3 <unk> per gallon for the quarter, which was <unk> 18 above our initial expectations.

Unknown Executive: But we have seen some slight relief as of late and we're estimating second quarter fuel cost to be approximately $2 90 per gallon.

Unknown Executive: Six points of this increase were related to the accrual for our pilot retention bonus, as we were not accruing during the first quarter of 2023. Three points were driven by pilot training and loss of pilot productivity awaiting delivery of the 737 MAX aircraft. Roughly a point and a half was attributable to the maintenance CBA that was passed last May. One point came from the timing of light engine maintenance, and the remainder was from a handful of other items. Turning to the balance sheet, our total liquidity at the end of the quarter was $1.1 billion, comprised of $854 million in cash and investments and $275 million in undrawn revolvers.

Unknown Executive: Non fuel unit costs were up 14% year over year six points of this increase was related to the accrual for our pilot retention bonus as we were not accruing during the first quarter of 2023.

Unknown Executive: Three points were driven by pilot training and loss of pilot productivity awaiting delivery of the 737 Max aircraft roughly a point and a half was attributable to the maintenance CVA that was passed last may.

Unknown Executive: <unk> came from the timing of light engine maintenance and the remainder is from a handful of various other items.

Unknown Executive: Turning to the balance sheet, our total liquidity at the end of the quarter was $1 1 billion comprised of $854 million in cash and investments and $275 million and Undrawn revolvers, we made principal payments of $31 5 million during the first quarter and expect about the same during the second quarter.

Unknown Executive: We made principal payments of $31.5 million during the first quarter and expect about the same during the second quarter. Net leverage was higher at the end of the quarter, with net debt to trailing 12-month EBITDA at 3.4 times, which included $75 million in pilot retention bonuses. At the end of the quarter, we had prearranged financing commitments for $435 million to cover our first nine 737 MAX deliveries, which, in aggregate, provide the business with approximately $100 million in liquidity from efficient financing vehicles that those aircraft deliver.

Unknown Executive: Net leverage was higher at the end of the quarter with net debt to trailing 12 month EBITDA at three four times, which included $75 million in pilot retention bonus costs.

Unknown Executive: At the end of the quarter, we had prearranged financing commitments for $435 million to cover our first 90 737 Max deliveries.

Unknown Executive: In aggregate provide the business with approximately $100 million in liquidity from efficient financing vehicles as those aircraft deliver this will give us valuable flexibility with respect to aircraft financing heading into 2025, while retaining ownership of those assets I want to thank our committed financing partners and our PDP lenders who have been particularly.

Unknown Executive: This will give us valuable flexibility with respect to aircraft financing heading into 2025 while retaining ownership of those assets. I want to thank our committed financing partners and our PDP lenders, who have been particularly supportive and flexible for us in the face of the aircraft delivery delay. We retired two A320 aircraft during the quarter and placed one A320 in service.

Unknown Executive: Supportive and flexible for us in the face of the aircraft delivery delays.

Unknown Executive: Okay.

Unknown Executive: We retired 200 <unk> hundred 20 aircraft during the quarter and placed 100 <unk> hundred 20 into service, we took delivery of one <unk> hundred 20 aircraft during the quarter. This delivery represents our last <unk> hundred 20 under contract and we expect the airplane to Interserve revenue service for our summer peak.

Unknown Executive: We took delivery of one A320 aircraft during the quarter. This delivery represents our last A320 under contract, and we expect the airplane to enter revenue service for our summer peak. As Greg mentioned, we're working with Boeing to devise an orderly delivery schedule, which may moderate our capacity growth in the short to midterm but should mitigate risks to the operation, risks to our selling schedule, and cost drag resulting from the disconnected timing of crew and aircraft availability.

Unknown Executive: As Greg mentioned, we are working with Boeing to devise an orderly delivery schedule, which may moderate our capacity growth in the short to midterm, but should mitigate risks to the operation risk to our selling schedule and cost drag, resulting from the disconnected timing of crew and aircraft availability.

Unknown Executive: At the time of our last earnings call, we anticipated our first 737 MAX aircraft delivery to be in March. That aircraft, the first in Allegiant spec, is awaiting FAA inspection, which will need to be completed before deliveries to Allegiant can begin.

Unknown Executive: At the time of our last earnings call, we anticipated in our first 737 Max aircraft delivery to be in March that aircraft. The first and Allegiant spec is awaiting FAA inspection, which will need to be completed before deliveries to Legion can begin.

Unknown Executive: We now expect this aircraft to enter revenue service during the third quarter. We are updating our delivery expectations and planning the business for delivery of six aircraft this year rather than the 12 previously communicated. This estimate is not based on guidance from Boeing but rather represents our best estimate based on information available to us today.

Unknown Executive: We now expect this aircraft to enter revenue service during the third quarter.

Unknown Executive: We are updating our delivery expectations and planning the business for delivery of six aircraft this year rather than 12 previously communicated.

Unknown Executive: This estimate is not based on guidance from Boeing but rather represents our best estimate based on information available to us today.

Unknown Executive: While we remain excited about and committed to the max centering of our fleet this year, we're very happy to own 86% of our operating fleet, providing meaningful flexibility to help manage these delays. Given the reduction in expected deliveries, we have updated our full-year airline capex to $475 million, down roughly $315 million from the prior gap. However, as indicated last quarter, these expectations differ from our contractual obligations.

Unknown Executive: While we remain excited about and committed to the Max entering our fleet. This year, we're very happy to 186% of our operating fleet, providing meaningful flexibility to help manage these delays.

Unknown Executive: Given the reduction in expected deliveries, we have updated our full year airline capex to $475 million down roughly $315 million from the prior guidance as.

Unknown Executive: As indicated last quarter these expectations differ from our contractual obligations.

Unknown Executive: Updated CAPEX guidance consists of $240 million in aircraft and engine related payments, $85 million related to heavy maintenance, and $165 million related to other airline CAPEX. Because we're planning for six fewer aircraft to deliver in 2024, we've trimmed our full year capacity guide by one point and now expect the capacity to be up 3% over the prior year. On a quarterly basis, we are estimating second quarter capacity to remain unchanged at down 1% year over year, third quarter capacity to be up about 4% year over year, and fourth quarter capacity to be up about 7% over the fourth quarter of 2023.

Unknown Executive: Updated capex guidance consists of $240 million in aircraft and engine related payments $85 million related to the heavy maintenance and $165 million related to other airline capex.

Unknown Executive: Because we are planning for six fewer aircraft to deliver in 2024, we've trimmed our full year capacity guide by one point and now expect capacity to be up 3% over the prior year on.

Unknown Executive: On a quarterly cadence, we are estimating second quarter capacity to remain unchanged at down 1% year over year third quarter capacity to be up about 4% year over year and fourth quarter capacity to be up about 7% over the fourth quarter of 2023.

Unknown Executive: Due to further reductions in capacity this year and uncertainty around our 2025 aircraft delivery schedule, we are now reviewing our airline infrastructure and expect to make adjustments over the coming months to align with a more moderate growth trajectory. Turning to second quarter guidance, we expect the airline to produce an adjusted earnings per share of $1.50 at the midpoint of our guidance, yielding an airline operating margin of around 8%. We expect second-quarter CASMX to increase by approximately 7% over the second quarter of 2023.

Unknown Executive: Due to further reductions in capacity this year and uncertainty around our 2025 aircraft delivery schedule. We are now reviewing our airline infrastructure and expect to make adjustments over the coming months to align with a more moderate growth trajectory.

Unknown Executive: Turning to second quarter guidance, we expect the airlines to produce an adjusted earnings per share of $1 50 at the midpoint of our guide yielding.

Unknown Executive: Yielding an airline operating margin of around 8%.

Unknown Executive: We expect second quarter CASM ex to increase by approximately 7% over the second quarter of 2023.

Unknown Executive: While this assumes a slight year-over-year reduction in capacity in the quarter, the increases are due primarily to increases in the salary and benefits line, including one additional month of the pilot retention bonus accrual, as well as increased wage rates for our flight attendants, technicians, and dispatchers as a result of new agreements or amendments. It's worth noting that these labor agreements are part of our path back to incremental utilization and better productivity in the business.

Unknown Executive: While this assumes a slight year over year reduction in capacity in the quarter. The increase is due primarily to increases in salary and benefits line, including one additional month of the pilot retention bonus accrual as well as incorporating increased wage rates for our flight attendants technicians and dispatchers as a result of new agreements or amendments.

Unknown Executive: It's worth noting that these labor agreements are part of our path back to incremental utilization and better productivity in the business I want to congratulate our flight attendants on their recently ratified agreement.

Unknown Executive: I want to congratulate our flight attendants on their recently ratified agreement. As we progress throughout the back half of the year, we expect CASMX to moderate into the third quarter with a slight year over year reduction expected in the fourth quarter. Based on Maurice's commentary regarding Sunseeker and much of the second quarter being off peak for the property, we are guiding consolidated earnings per share of $0.75 for the second quarter. Before I close, I want to thank our team members for all of their efforts this quarter.

Unknown Executive: As we progress throughout the back half of the year, we expect CASM ex to moderate into the third quarter with a slight year over year reduction expected in the fourth quarter.

Unknown Executive: Based on where he's commentary regarding sunseeker and much of the second quarter being off peak for the property.

Unknown Executive: We're guiding consolidated earnings per share to <unk> 75 for the second quarter.

Unknown Executive: Before I close I want to thank our team members for all their efforts this quarter. Despite this financial outcome. The operation again ran safely and smoothly. Thanks to your hard work and that is foundational for us as we now focus on increasing utilization in peak leisure demand periods as we head into our peak summer schedule. Thank you for all you do.

Unknown Executive: Despite this financial outcome, the operation again ran safely and smoothly thanks to your hard work. And that's foundational for us as we now focus on increasing utilization in peak leisure demand periods. As we head into our peak summer schedule, thank you for all you do. And with that said, D, we can now turn it back to you for analysis.

D: And with that said, we can now turn it back to you for analyst questions.

Dee: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask questions, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon by your questioner listening via the loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.

D: Thank you we will now begin the question and answer session. If you have dialed in and we'd like to ask a question. Please press star one on your tablet on the keypad to raise your hand in China Q. If you would like to make a question simply press star One again, if you call. The part of your question and listening via loudspeakers device. Please speak apprehension.

Dee: And ensure that your phone is set to mute when asking a question reading a question for todays session that you. Please limit to one question and one follow up again.

Dee: We do request for today's session that you please limit to one question and one follow-up. Again, press star 1 to join the queue, and our first question comes from the line of Helane Becker from TD Cohen. Please go ahead.

Dee: I wanted to join the queue and our first question comes from the line of Helane Becker from Cowen. Please go ahead.

Helane Renee Becker: Thanks very much, Operator. Hi, everybody. Thanks for the time here. Just a couple of questions on guidance as we're looking for the maintenance costs. Is that just a one-quarter item, or is that a full year item that we should expect at that level?

Helane Renee Becker: Thanks, very much operator, hi, everybody. Thanks for the time here.

Helane Renee Becker: Just a couple of questions on guidance.

Helane Renee Becker: And we're looking forward to maintenance costs.

Helane Renee Becker: Is that just a one quarter item or is that a full year item that we should expect that that level.

Unknown Executive: Hey Helane, it's BJ. Thanks. Yeah, it's a little bit of both. There's some noise in the comp in the first quarter of 2023. So we are running some light check and repair level maintenance visits on our engines. That'll persist throughout the year, but it's offset by a nice reduction in contract labor expense. So on an ASM basis, we expect maintenance costs to be down unitized throughout

BJ: Hey, Helane, it's BJ.

Speaker Change: Thanks, Yes.

Unknown Executive: It's a little bit of both there is some noise in the comp in the first quarter of 2023.

Unknown Executive: So we are running some light.

Unknown Executive: Repair level maintenance visits on our engines now persist throughout the year, but it is offset by a nice reduction in contract labor expense. So on an ASM basis, we expect maintenance costs to be down on unitize throughout the year.

Unknown Executive: Okay, that's very helpful. And then, actually, I have a follow-up question for you. Is there... a level of cash, or I don't know if you want to measure it in terms of liquidity that you are not willing to go below, as you think about it?

Helane: Okay. That's very helpful and then.

Speaker Change: Actually a follow up question for you is there.

Unknown Executive: Okay.

Unknown Executive: Right.

Speaker Change: Our level.

Speaker Change: Uh huh.

Speaker Change: Uh huh.

Speaker Change: Sure I don't know if you want to measure it and liquidity that you are not willing to go below.

Speaker Change: As you think about it.

Unknown Executive: Sure. You know, we normally talk on these calls about liquidity levels being maintained at two times ATL. Now, for our purposes, we would credit that with some of the available balance under our undrawn revolver facilities. So, all in, we're a little bit above that today. I still like to maintain cash balances around two times ATL until we have some clarity on the Boeing delivery schedules. But as we have financing lined up further and further out, be comfortable at two times ATL, including revolvers. Okay.

Helane: Sure. We normally talk on these calls about liquidity levels being maintained at two times the ATL.

Unknown Executive: Now for our purposes, we we would credit that with some of the available balance under our Undrawn revolver facilities. So all in we're a little bit above that today.

Unknown Executive: Still like to maintain cash balances around two times ATL.

Unknown Executive: Until we have some clarity on the following delivery schedules, but as we have financing lined up further and further out be comfortable at two times ACL, including revolver balances.

Unknown Executive: Okay. Thanks, BJ. That's very helpful.

Speaker Change: Okay. Thanks, Vijay that's very helpful.

Unknown Executive: Yeah.

Ravi Shanker: Our next question comes from the line of Ravi Shanker from Morgan Stanley. Please go ahead.

Unknown Executive: Our next question comes from the line of Ravi Shanker from Morgan Stanley. Please go ahead.

Ravi Shanker: Great, thanks to everyone. Thanks for all the detail on the call.

Ravi Shanker: Great. Thanks, Good afternoon, one thanks.

Ravi Shanker: Thanks for all the detail on the call.

Ravi Shanker: Maybe the first question is yes.

Drew Wells: Maybe the first question is, you said that you are taking steps to improve the financials, and the first step was to improve your peak flying. One of your peers also increased their flying once they resolved their staffing issues, but they ended up with too much capacity, and they're now pulling back. Do you have the confidence that your increasing peak flying is not going to end up with that outcome and will actually be a creative learning experience?

Ravi Shanker: You said that you are taking steps to kind of improve the financials in the first half.

Drew Wells: To improve your peak flying one of your peers are also kind of increase their flying once they resolve their staffing issues, but they ended up with too much capacity. They are now pulling back do you have the visibility that youre, increasing peak flying is kind of not going to end up that I would comment will actually be accretive to earnings.

Drew Wells: This is Drew. If I'm reading between the lines properly and thinking of the right other airline, I believe they commented that there was outside growth in April and May and that they wish they had pulled back a little bit, given current fare levels. What we're talking about is, you know, summer flying, it's March, it's the holidays, where I still believe that there is immense incremental value for us to drive by flying more there, and not quite as much in the April-May timeframe. So, forgive me if I'm thinking of the wrong quote, but that's my position. And, Ravi, this is Craig.

Drew Wells: This is Julia if I'm reading between the lines properly and thinking it the right. Other airline I believe they commented that there was outsized growth in April and May that they wish they had pulled back a little bit given current fair level.

Drew Wells: What we're talking about is some are flying its march it's the holidays.

Drew Wells: I still believe that there is immense incremental value for us to to drive by flying more there, but not quite as much in the April may timeframe. So forgive me if I'm thinking of the wrong quote, but that's that's my position and Ravi. This is Greg I just wanted to add a comment to that and 80% of our earnings come in those peak periods in March.

Gregory Clark Anderson: I just want to add a comment to that, and, you know, 80% of our earnings come in those peak periods, March, the summers, and the holidays, and, you know, Drew is still, and his team are still seeing terrific demand, leisure demand, in those periods as well. I don't know if you caught his comments, but we're already taking a nice step up this summer with a half hour more utilization per aircraft. We're going to continue to take those steps up until we get into 2025, where we want to restore that 20% delta that we're under today in terms of aircraft utilization in the peak periods.

Gregory Clark Anderson: The summers in the holidays and drew is still and his team are still seeing terrific demand leisure demand in those periods as well I don't know if you caught in his comments, but we're already taken a nice step up this summer with a half hour more of utilization per aircraft and we're going to continue to take those steps up until we get into 2025, where we want to restore.

Gregory Clark Anderson: At 20% Delta.

Gregory Clark Anderson: We're under today and in terms of aircraft utilization in the peak periods.

Gregory Clark Anderson: I got it. It's really helpful. And maybe as a follow-up, I know that a lot of the industry is kind of pushing towards premiumizing their product. And some of your ULCC peers are also introducing new front of cabin products and kind of pushing the potential kind of premium offering. What are your thoughts on that? Obviously, you have a good bundled product now at Sunseeker, and anything you can do kind of on the aircraft itself to kind of push towards a premium flyer that you're thinking of.

Speaker Change: Got it that's really helpful and maybe as a follow up.

Gregory Clark Anderson: I know that.

Gregory Clark Anderson: A lot of the industry is kind of pushing towards premium rising that product.

Gregory Clark Anderson: And some of your peers are also introducing new front of cabin product and kind of pushing that.

Gregory Clark Anderson: Potentially we'll get a.

Gregory Clark Anderson: Premium offering.

Gregory Clark Anderson: I wanted to talk on that can have obviously you have a good bundled product now it's on CCAR up enough and anything you can do kind of on the aircraft itself to kind of push towards a premium player than anything else.

Drew Wells: Yeah, so, you know, we're not.

Speaker Change: Yes so.

Drew Wells: We're not that far removed from talking about bringing extra products across all of our fleet. We still haven't received our first max aircraft, which would have materially increased the number of either extra or legroom plus seats on an aircraft. We're constantly looking and evaluating other options. But I don't think we're at a position today, again, seeing we haven't received a Max aircraft, to say we need to be pushing harder. There's a lot of, I think, confirmation bias in what we've seen, right, in putting aircraft on the most valuable routes. So give it time, we'll continue to review everything, and maybe it makes sense, maybe it doesn't, but that's probably a little bit further down the road for us.

Gregory Clark Anderson: We're not that far removed from from talking about bringing the extra products.

Drew Wells: Across all of our fleet.

Drew Wells: We still haven't received our first Max aircraft, which would have materially increased the number of either extra or leg room plus.

Drew Wells: Seats.

Drew Wells: On an aircraft, but we're constantly looking and evaluating other options, but I don't think were at a position today again think we havent received the Max aircraft to say, we need to be pushing harder. There's a lot of I think confirmation bias in what we use what we have seen right in putting aircraft on the most valuable routes.

Drew Wells: So give it time will continue to review everything and maybe it makes sense, maybe it doesn't but thats, probably a little bit further down the road for us, but I think just one other thing when you have 77% of your routes or without competition a lot of what Youre seeing is the morning, <unk> ship in competitiveness and ability to price with some major has really rolled in so they can real people.

Gregory Clark Anderson: Well, I think it's more one other thing. When 77% of your routes are without competition, a lot of what you're seeing is more upsmanship and competitiveness and ability to price with some majors really rolled in. So they can roll people up in their purchasing, having that ability to fly. Our customers, while we've got a great brand and we do a good job, I don't know that they're that price sensitive on a two hour flight.

Gregory Clark Anderson: Up in there.

Gregory Clark Anderson: And they're purchasing.

Gregory Clark Anderson: Having that ability to fly.

Gregory Clark Anderson: Our customer well.

Gregory Clark Anderson: We've got a great brand and we do a good job I don't know that they are that price sensitive in a two hour flight.

Gregory Clark Anderson: It's hard to, you know, see that you're really adding a lot of value in first class, but, you know, that's very much being driven by the majors, and the others are following to try and keep up.

Gregory Clark Anderson: It's hard to.

Gregory Clark Anderson: See that you really adding a lot of value first class but.

Gregory Clark Anderson: That's very much being driven by the majors and the others were following to try and keep up.

Ravi Shanker: Very helpful. Thanks, everyone.

Speaker Change: Very helpful. Thanks, everyone.

Andrew George Didora: Our next question comes from Andrew Didora from Bank of America. Please go ahead.

Ravi Shanker: Our next question comes from the line of Angie <unk> from Bank of America. Please go ahead.

Andrew George Didora: Hey, thanks for the questions, everyone. Maybe the first question for Greg or BJ, you know, just given the CapEx changes in 2024 and down $315 million, what would be kind of your first look in terms of how 2025 and maybe 2026 look? You know, I would assume that $300 million just moves into those years. Any initial thoughts?

Andrew George Didora: Hey, Thanks for the questions everyone. Maybe first question for Frank.

Andrew George Didora: Craig or Jay just given the Capex changes in 2024 down from $315 million.

Andrew George Didora: Well it would be kind of first look in terms of how 2025, and maybe 2026 look like I would assume that $300 million exposure into those years.

Speaker Change: Michelle thoughts.

Unknown Executive: Hey, Andrew, it's BJ. You know, I apologize. I'm just trying to get back to that page.

BJ: Hey, Andrew it's BJ.

Speaker Change: I apologize I'm, just trying to get back to that page. What I will say is there is just still a lot of uncertainty around 2025, and I mentioned at the moment, we're taking a close look at different areas of the business and where we need to adjust to be prepared for a little bit slower.

Speaker Change: <unk> growth profile.

BJ: So I think we will have a lot more for you next quarter, maybe we can share on 2025.

Unknown Executive: But what I will say is there's just still a lot of uncertainty around 2025. And as I mentioned at the moment, we're taking a close look at different areas of the business and where we need to adjust to be prepared for a little bit slower growth profile. So I think we'll have a lot more for you next quarter that maybe we can share in 2025. But we were originally contracted to take 24 airplanes next year, but just given what we've learned from the risk of, you know, relying on two aircraft a month, I would expect we to adjust that down somewhat. So as that does shift into 2025, some of the 2025 CapEx, I would expect to shift a little bit.

Speaker Change: We were originally contracted to take 24 airplanes next year, just given what we've learned from the risk of relying on two aircraft a month.

Unknown Executive: I would expect we adjust that down somewhat so as that does shift into 2025. Some of the 2025 Capex I would expect to shift to 2026.

Andrew George Didora: Got it. Okay. Thank you. And then, maybe for Maury, I mean, I guess just in terms of Sunseeker, what changed so rapidly over the years that brought kind of REBPAR assumptions down about 30%? And does the year one EBITDA losses make you think any differently about, you know, owning or running the asset and potentially thinking about a potential divestiture here? Thank you.

Speaker Change: Got it okay.

Unknown Executive: And then second question just.

Andrew George Didora: Maybe for Maury I mean, I guess just in terms of sunseeker change so rapidly.

Maury: The years that probably kind of revpar assumption is down about 30%.

Maury: Doug year, one EBITDA losses make you think any differently about owning a running the asset potentially thinking.

Maury: Thinking about a potential divestiture here. Thank you.

Maurice J. Gallagher: Unfortunately, we didn't have a lot of front-end time to market and sell, and I think we're also a bit of victims of the curve that's coming down and normalizing that we've been started in 21, 22. I know I personally looked at rates of $2,000 a night.

Maury: Unfortunately, we didn't have a lot of front end time to market and sell and.

Maurice J. Gallagher: Think we're also a bit of victims of the curve thats coming down or normalizing.

Maurice J. Gallagher: <unk>.

Maurice J. Gallagher: <unk> started in 'twenty, one 'twenty two.

Maurice J. Gallagher: We were looking I know I personally looked at rates of $2000. A night there were a lot of equivalent properties down there.

Maurice J. Gallagher: There are a lot of equivalent properties down there, but it's just an effort that we've got to go after. Micah can probably add more color than I can at this point. As far as looking at other alternatives, yes, we're going to look at those types of alternatives. I think that this year, I look at this as I call it a project. We're going to learn a lot this year, and we'll be able to react and do things accordingly to fill it in next year.

Maurice J. Gallagher: But.

Maury: Putting our effort that we've got to go after.

Maurice J. Gallagher: Michael can probably add more color than I can at this point as far as looking at other alternatives, yes, we're going to look at those types of alternatives I think.

Maurice J. Gallagher: This year, if I look at this as I call. It a project, we're going to learn a lot this year and we'll be able to react and do things occur.

Maurice J. Gallagher: Accordingly for filling it into next year is definitely going to improve as we go.

Maurice J. Gallagher: It's definitely going to improve as we go forward. But, bottom line, as I said, we have a really quality product, so we'll fill it up. It's just a question of how fast. Micah, any thoughts? Yeah, in terms of why, why

Maurice J. Gallagher: Forward, but the bottom line as I said, we have a really quality product. So we'll fill it up it's just a question of how fast Micah any thoughts.

Micah Richins: Yeah, in terms of why the adjustment, I think there are a couple of things. One, we now have four months of data, and that helps us at least think better about what's going to happen in the next few months. When we were talking about this in Q1, we had zero data, but it helps us a little bit.

Micah Richins: Yes in terms of why why the adjustment I think theres a couple of things one we now have four months of data.

Micah Richins: And that helps us at least.

Micah Richins: Better about what's going to happen in the next coming months. When we were talking about this in Q1, we had we had zero so that helps us a little bit.

Micah Richins: Scott talked about the booking trends and the way they were ramping up like we wanted them to into March, and they slowed down a little bit. So part of the booking trend analysis that we were watching, and its decline has led to us thinking about Q2 and Q3 a little differently than we did in February and March. There's anecdotal softness in Florida. Some of you are starting to see people talking about that, so that's a part of it.

Micah Richins: Scott talked about the booking trends in.

Micah Richins: The way they were ramping up like we wanted them to into March and they slowed down a little bit. So part of the booking trend analysis that we were watching and its decline has led to lead to us thinking about Q2, and Q3, a little differently than we were thinking about it in February and March there is anecdotal softness in Florida some of your.

Micah Richins: Youre starting to see people talking about that so that's part of it.

Micah Richins: We're still learning every day about how the locals behave and how they'll handle food and beverage demand between seasons, in and out of season. And I think the last thing that I would tell you is that we didn't really know for sure when we first talked about which of our group's prospects would materialize and which wouldn't. We kind of hoped we'd be a little more lucky than we have, and I think those are probably some of the things that led to the changes in the short term.

Micah Richins: We're still learning everyday about how the local behave and how how they'll handle food and beverage demand.

Micah Richins: Between seasons in and out of season, and I think the last thing that I would tell you is that we didn't really know for sure.

Micah Richins: When we first talked about what one of our group prospects would materialize and which ones wouldn't we kind of hoped we play a little more lucky than we have and I think those are probably some of the things that led to the changes in the short term.

Speaker Change: Great. Thank you.

Duane Thomas Pfennigwerth: Our next question comes from the line of Duane Pfennigwerth from Evercore ISI. Please go ahead.

Micah Richins: Our next question comes from the line of Blayne banning breath from Evercore ISI. Please go ahead.

Duane Thomas Pfennigwerth: Hey, thank you guys. Good morning.

Duane Thomas Pfennigwerth: Hey, Thank you guys good morning.

Duane Thomas Pfennigwerth: I wanted to maybe ask the Capex question a different way obviously.

Duane Thomas Pfennigwerth: Youre disappointed in the delays the delays.

Duane Thomas Pfennigwerth: Drive your hiring plan in your ops plan or at least the fleet plan does but from the outside looking in the iron He feels like it's actually a good thing.

Duane Thomas Pfennigwerth: I wanted to maybe ask the CapEx question a different way. Obviously, you're disappointed in the delays. The delays drive your hiring plan and your operations plan, or at least the fleet plan does. But from the outside, looking in, the irony feels like it's actually a good thing for 2024. And so the question is, do you see an opportunity to smooth out The Capital Commitments Beyond Just This Year, and how do you think about the guardrails from a balance sheet perspective that shape your longer-term capital plan?

Duane Thomas Pfennigwerth: For 2024, and so the question is do you see an opportunity to smooth out.

Duane Thomas Pfennigwerth: The capital commitments beyond just this year.

Duane Thomas Pfennigwerth: And how do you think about the guardrails from a balance sheet perspective.

Duane Thomas Pfennigwerth: That shape your longer term capital plans.

Duane Thomas Pfennigwerth: Yeah.

Unknown Executive: Sure, Duane. Yeah, I mean, I guess there is an ability to smooth it out. I think we'll have to wait to see just how many airplanes Boeing is going to produce in a month and how many of those are delivered to Allegiant. You know, we do need to be careful of what I think is an outside risk for Allegiant compared to some of the other carriers with respect to these deliveries. And as Greg mentioned, we're getting ready for the airplanes and taking pilots off of the A320 and having them standing by ready for 737. And so.

Speaker Change: Sure Duane.

Speaker Change: Yes, I mean, I guess there is there is an ability to smooth it out I think we'll have to wait to see.

Unknown Executive: Just how many airplanes Boeing is going to produce in a month and how many of those are delivered to the Legion, we do need to be careful of what I think is an outsized risk for allegiant compared to some of the other carriers with respect to these deliveries in that what Greg mentioned as we're getting ready for these airplanes and taking pilots off of the <unk> hundred 20.

Unknown Executive: And having been standing by ready for 737 and so.

Gregory Clark Anderson: Sitting here relying on two aircraft a month just doesn't feel like a good recipe at the moment. And then that said, that's also creating some pressure on earnings, as we've talked about today, which would limit what we can do from a leverage perspective. So all things that we're mindful of, but I don't know that I have a clear answer for you as we think about 25, Duane. It's Greg. I might just add, and BJ mentioned this in his opening comments that he and the team are actively working with Boeing on setting up an orderly delivery schedule that we can all execute on. And so that flexibility is important. And that plan is going to be important. And together, we believe, you know, we'll get to the right outcome. Yeah, what do you think?

Unknown Executive: Sitting here relying on two aircraft a month.

Gregory Clark Anderson: Just.

Greg: It doesn't feel like a good recipe.

Greg: At the moment.

Greg: And then that said that's also creating some pressure on earnings as we've talked about today.

Greg: Which would limit.

Greg: What we can do from a leverage perspective.

Greg: All things that we're mindful of but I don't know that Ive a clean answer for you as we think about 'twenty five 'twenty six yet.

Gregory Clark Anderson: Duane it's Greg I might just add and BJ mentioned this in his opening comments that he and the team. They are actively working with Boeing on setting up an orderly delivery schedule that we could all exit execute two and so that flexibility is important in that plan is going to be important and together. We believe we will get to the right outcome.

Gregory Clark Anderson: Yeah, one other final comment, Duane. If we slow down a little bit, it won't be the end of the world, either. You know, certainly, part of that process, we're going to retire some airplanes as we take those out, that new equipment. But, you know, just given the way the world's developing, you know, just taking our time a little bit longer is not a bad thing for where we see ourselves. And I think you also get some benefits, maybe, in interest rates if you take them all very quickly.

Speaker Change: So what other final comments Dwayne if we slow down a little bit it wont be the end of the world too.

Gregory Clark Anderson: <unk>.

Gregory Clark Anderson: Clearly part of that process, we are going to retire some airplanes when because we took those.

Gregory Clark Anderson: Those that new equipment, but.

Gregory Clark Anderson: Just given the way the world's developing.

Gregory Clark Anderson: Just taking our time a little bit longer.

Gregory Clark Anderson: It's not a bad thing for where we see ourselves in.

Gregory Clark Anderson: I think you'll also get some benefits maybe in interest rates that we pay.

Gregory Clark Anderson: Thank them all very quickly we'll have the interest rate benefits that might come a year or two later.

Gregory Clark Anderson: We won't have the interest rate benefits that might come, you know, a year or two later. But, you know, Boeing and we have to come to an agreement, and they're certainly, you know. I can't believe how they can't get off the front page. It's just astonishing. So, yeah.

Gregory Clark Anderson: But.

Gregory Clark Anderson: No.

Gregory Clark Anderson: Boeing and we have to come to an agreement there.

Gregory Clark Anderson: Certainly.

Gregory Clark Anderson: Continuing on I can't believe how they can't get off the front page, it's just astonishing so.

Gregory Clark Anderson: Yes.

Duane Thomas Pfennigwerth: Okay, appreciate those thoughts. And then maybe you gave part of the answer with the Navitaire commentary, but can you speak to the level of integration of air and hotel packages within your booking engine? When do you think you'll have the ability to fully market Sunseeker to your airline customers?

Speaker Change: Okay I appreciate those thoughts and then and then maybe you gave part of the answer with the naphtha to your commentary but.

Duane Thomas Pfennigwerth: Can you speak to the level of integration of air and hotel packages within your booking engine.

Duane Thomas Pfennigwerth: When do you think you'll have the ability to fully markets on CCAR to your airline customers.

Scott Wayne DeAngelo: Hi, Duane. This is Scott. Thanks for the question. The answer is we've gotten there technically now.

Duane Thomas Pfennigwerth: Hi, Duane this is Scott thanks for the question.

Scott: The answer is we've gotten there.

Scott: Technically now as of a couple of weeks ago, we removed one of the biggest barriers, which you may recall was.

Scott Wayne DeAngelo: Requiring customers to pay for the entire era, plus hotel purchase it widens.

Scott Wayne DeAngelo: As of a couple of weeks ago, we removed one of the biggest barriers, which you may recall was requiring customers to pay for the entire Air Plus Hotel purchase at once. Now, when you book Sunseeker, you are actually not required to leave a deposit as you book your Air and Hotel together. We will begin to market that now that we've got a couple of weeks, knowing that everything works from a customer experience standpoint, and a customer service standpoint. We will begin to market that in earnest very soon.

Scott: Now when you book Sunseeker, you actually are required to leave no deposit as you book your air and hotels and together, we will begin to market that now that we've got a couple of weeks knowing that everything works.

Scott Wayne DeAngelo: From a customer experience standpoint, and customer servicing standpoint market that in earnest very soon.

Scott Wayne DeAngelo: I will tell you just one other tidbit. Of the different channels, the Allegiant.com, if you will, customer who books Air and Hotel is by far the highest value. Their length of stay is longer, and they're paying more in average daily rates, so continuing to fuel that fire of Air Plus Hotel for Sunseeker is going to be critical.

Speaker Change: I will tell you just one other tidbit.

Scott Wayne DeAngelo: The different channels.

Scott Wayne DeAngelo: <unk> Dot com, if you will customer who books air and hotel is by far the highest value their length of stay is longer and they are paying more and average daily rate so continuing to fuel that fire.

Scott Wayne DeAngelo: <unk> Air plus hotel for Sunseeker.

Scott Wayne DeAngelo: Is going to be critical.

Scott Wayne DeAngelo: We're already at now.

Scott Wayne DeAngelo: The technical ability to do that in earnest.

Duane Thomas Pfennigwerth: Thanks, and if I could speak,

Duane Thomas Pfennigwerth: Thanks, and if I could sneak one last one in, just on the Sunseeker OPEX run rate, is this first quarter level a good level? Do we go up from there sequentially, or is there a way to kind of flex it down in these off-peak periods? Thanks for taking the questions.

Speaker Change: Thanks, and if I could sneak one last one in just just on the Sunseeker Opex run rate is this first quarter level a good level do we go up from there sequentially or is there a way to kind of flex it down in these off peak periods. Thanks, Thanks for taking the questions.

Duane Thomas Pfennigwerth: Micah.

Duane Thomas Pfennigwerth: Say that again, Duane. I had a hard time hearing you.

Speaker Change: Say that again, Duane I had a hard time hearing you.

Duane Thomas Pfennigwerth: Yeah, just we now have a quarter, a full quarter of Sunseeker OPEX, and so is this the right level to model off of going forward, or can you flex that up or down depending upon seasonality? No, absolutely. You can select it up and down

Duane Thomas Pfennigwerth: Yes.

Duane: We now have a quarter a full quarter of sunseeker opex.

Duane Thomas Pfennigwerth: So is this is this the right level to model off of going forward or can you flex that up or down depending upon seasonality.

Micah Richins: No, absolutely not. You can flex it up and down based on seasonality. So you should see us become more efficient in Q2 and Q3 and then flex back up a little bit into Q4 as demand returns.

Speaker Change: No absolutely you can flex it up and down based on seasonality. So you should see.

Micah Richins: Become more efficient in Q2, and Q3, and then flex back up a little bit into Q4 as demand returns.

Speaker Change: Okay. Thank you.

Scott Pruitt: Our next question comes from the line of Scott Pruitt from Walpole Research. Please go ahead.

Micah Richins: Okay.

Micah Richins: Our next question comes from the line of Scott Group.

Scott Pruitt: While research. Please go ahead.

Scott Pruitt: Hey, thanks. Afternoon. So I think you talked about a 7% increase in airline CASMX in Q [inaudible].

Scott Pruitt: Hey, thanks.

Scott Pruitt: So I think you talked about 7% increase in airline CASM ex in Q.

Scott Pruitt: Two is that I just want to make sure is that apples to apples with the up 14, 5% in Q1, and then any thoughts on back half of the year.

Scott Pruitt: I just want to make sure that apples to apples with the up 14 and

Scott Pruitt: Apples to Apples with the up 14.5% in Q1 and then any thoughts on the back half of the year chasm?

Scott Pruitt: CASM.

Unknown Executive: Sure. Hey, Scott. Yeah, dapple dapples with the first quarter. I will mention in the second quarter that you still have one month of the pilot payroll accrual, I think I mentioned in the script, and then incorporating some of the new labor agreements. But yeah, otherwise dapple dapples. Scott, hey, it's Greg.

Speaker Change: Sure, Hey, Scott, Yes, apples to apples with the first quarter I will mention in the second quarter, you have still one month of the.

Unknown Executive: Pilot payroll accrual I think I mentioned in the script and then incorporating some of the new labor agreements, but yes, otherwise apples to apples.

Greg: Scott Hey, it's Greg.

Gregory Clark Anderson: Just as you think about maybe the longer term and the power of increasing utilization, I think something like an hour increase in aircraft utilization per year results in a reduction in CASM-X by about a half a cent. So that could be a nice tailwind. And then as we work through some of the kind of inefficiencies with the overhead getting ready to take on the new MAX aircraft, I believe as that starts to work itself through, it's another like eighth of a cent of CASM-X that we could see there.

Greg: Just as you think about maybe even longer term and the.

Gregory Clark Anderson: The power of increasing utilization.

Gregory Clark Anderson: Something like an hour increase of aircraft utilization per year results in a reduction of CASM ex about a half a cent so that could be a nice tailwind and then as we work through some of the kind of inefficiencies with the overhead getting ready to take on the new Max aircraft I believe as that starts to work itself through its another.

Gregory Clark Anderson: Like eight of a cent of CASM ex.

Gregory Clark Anderson: Could see there too.

Gregory Clark Anderson: And then just Scott, as I mentioned in the prepared remarks, we expect Chasm X on a year over year comp basis to moderate into the third quarter and end up slightly below the fourth quarter.

Gregory Clark Anderson: And then just Scott as I mentioned in the prepared remarks, we expect CASM ex on a year over year comp basis to two.

Gregory Clark Anderson: Moderate into the third quarter.

Gregory Clark Anderson: <unk>.

Gregory Clark Anderson: So slightly below the fourth quarter comp.

Unknown Executive: You're saying that for the fourth quarter, CASMEC should be down something year over year.

Gregory Clark Anderson: Youre, saying fourth quarter, CASM, Max should be down something year over year.

Unknown Executive: Right, slightly. Okay.

Scott Pruitt: Right slightly okay.

Unknown Executive: Okay.

Unknown Executive: Any.

Scott Pruitt: I know you said RASM down about two and a half percent sequentially from q1 to q2, just absolute terms. I know it's early.

Speaker Change: I know you said RASM down about two 5% sequentially Q1 to Q2, just absolute terms I know, it's early but any.

Scott Pruitt: I know it's early, but any early thoughts about how you're thinking about the back half year razzle? Not particularly. You know, there's still obviously a long ways to go in for July, but we have at least 75% left to book. So everything's still early, and I think the general theme still holds that we believe there's resiliency in the peak period. I'd expect continued normalization between the peak and the off peak. But But other than that, I don't have any other information.

Scott Pruitt: Early thoughts about how you're thinking about back half year RASM.

Scott Pruitt: Not particularly.

Scott Pruitt: Still obviously, a long ways to go in for July has at least 75% left to book So everything is still early.

Scott Pruitt: And I think the general theme still hold that we believe is resiliency in the peak period I would expect continued normalization between the peak and the off peak.

Scott Pruitt: But other than that I don't have I don't have a lot more to add to the back half of the year.

Drew Wells: I don't have a lot more to add for the second half of the year.

Speaker Change: Okay, and then just last one I know you got asked the question already about.

Unknown Executive: I know you got asked the question already about sort of liquidity targets and all that sort of stuff to the extent that you wanted. How do you balance liquidity needs versus where you're willing to take the leverage is, you know, give or take four times. Is that high as you're willing to take the balance sheet leverage? Would you take it higher? Or, you know, if any incremental capital raise, is that more likely to be with equity than? Sure, yeah, no plans for any equity-related capital raise.

Unknown Executive: Sort of liquidity targets and all that sort of stopped to the extent that you wanted.

Unknown Executive: How do you balance liquidity needs versus where you are willing to take the leverage is now give or take four times is that as high as you're willing to take the balance sheet leverage would you take it higher or.

Unknown Executive: As if any incremental capital raise is that more likely to be with with equity and debt.

Scott Pruitt: At this time, you know, I realize what that could mean for leverage if we're trying to maintain liquidity at two times ATL. But you know, as we've locked in financing for some of this future CapEx, we're okay with liquidity coming down a little bit, as I mentioned, in response to Helane's question or the other part of your question. Did I miss something?

Speaker Change: Sure, Yes, no no plans for any equity related capital raise.

Scott Pruitt: At this time.

Scott Pruitt: Realized what that.

Scott Pruitt: It could mean for leverage if we're trying to maintain liquidity at two times ATL, but as we've locked in financing for some of this future capex were okay with liquidity.

Scott Pruitt: Liquidity coming down a little bit as I mentioned in response to <unk> question.

Scott Pruitt: Our daily part of your question.

Scott Pruitt: Miss something.

Unknown Executive: No, I mean, I guess you're saying you're okay, either with the liquidity coming down a little bit or the leverage metrics going up a little bit. Yeah, and we had expected leverage to be elevated throughout this year. I think we may have mentioned that on the last call, but certainly, in one-on-ones and whatnot throughout the year, this is an investment period, a lot of capex for airplanes. So we would have expected leverage to be pressured a little bit as we move through.

Scott Pruitt: And then I guess, youre, saying youre, okay, either with the liquidity coming down a little bit or the leverage metrics going up a little bit.

Unknown Executive: And we had expected leverage to be elevated throughout this year I think we may have mentioned that on the last call, but certainly in one on ones and whatnot throughout the year.

Unknown Executive: This is an investment period of a lot of capex for airplanes that we would've expected leverage to be pressured a little bit as we move through 2024.

Scott Pruitt: Okay. Thank you guys for your time. I appreciate it.

Speaker Change: Okay. Thank you guys for the time appreciate it.

Speaker Change: Thank you.

Michael John Linenberg: Our next question comes from the line of Mike Linenberg from Deutsche Bank. Please go ahead. Oh, yeah. Hey.

Scott Pruitt: Our next question comes from the line of Mike <unk> from Deutsche Bank. Please go ahead.

Scott Wayne DeAngelo: Good morning everyone. With respect to the distribution of Sunseeker, I know that you are going through third-party channels, which I know historically was not the model for Allegiant. Can you tell us, as of now, maybe what you're booking through Allegiant.com versus third-party channels? And I'm just curious, out of the 18 million people in your customer database, what's the uptake on them? Would you say that the majority of people at Sunseeker today are out of that 18 million database, or are these just entirely new clients, new customers? Hey, Mike, it's Scott. I'll start and let Mike chime in.

Michael John Linenberg: Yeah, Hey, good morning, everyone.

Scott Pruitt: With respect to the distribution of Sunseeker I know that you are going through third party channels, which historically was not the model for for Allegiant can you tell us.

Scott Pruitt: As of now maybe what Youre booking.

Scott Pruitt: To Allegiant Dot com versus third party channels and I'm, just curious out of the 18 million people in your customer database.

Scott Pruitt: What's the uptake of them would you say that the majority of people with some secret today are out of that $18 million database or are these just entirely new.

Scott Pruitt: Clients new customers.

Scott Wayne DeAngelo: So right now, the majority, I put it at like 80 to 85%, and Micah, you'd correct me, are coming directly either to SunseekerResorts.com or via Allegiant.com. So that's great news that we're seeing the majority of bookings without requiring both the added cost and the disintermediation that comes via OTA. In terms of the majority of folks that are staying, back in January, you saw it go from about three quarters to one quarter in favor of Allegiant customers to now close to 50-50 while the overall pie grows.

Scott Wayne DeAngelo: Hey, Mike, It's Scott I'll start and let Mike.

Speaker Change: Chime in so right now the majority I'd put it at like 80% to 85% and Michael you'd correct me are coming directly either to sunseeker resorts stock Com RBI Alicia Dot com. So that's great news that we're seeing the majority of bookings.

Scott Wayne DeAngelo: Without requiring.

Scott Wayne DeAngelo: Both the added cost in the disintermediation that comes via Otas.

Scott Wayne DeAngelo: In terms of the majority of folks.

Scott Wayne DeAngelo: Staying back in January call as you've seen it go from about like three quarters to one quarter in favor of Allegiant customers Zoom now close to 50 50.

Scott Wayne DeAngelo: While the overall pie grows so it's a good story that yes, we are driving a lot directly and.

Scott Wayne DeAngelo: So it's a good story that, yes, we drive a lot directly and through the email, but that proportion, as the pie has grown, has become smaller, meaning that more other people are coming into the Allegiant Travel Company family, if you will, many from places that Allegiant doesn't currently serve or serve in earnest, like Atlanta or New York City, et cetera. Mike, I'd invite you to make any additional commentary.

Scott Wayne DeAngelo: Due to the E mail, but that proportion as the pie has grown has become smaller meaning that more other people are coming in to the Allegiant travel company family. If you will.

Scott Wayne DeAngelo: Many from places that Allegiant doesn't currently serve or serve in earnest like Atlanta, or New York City.

Speaker Change: Et cetera.

Scott Wayne DeAngelo: Mike I'd invite you for any additional commentary.

Micah Richins: You know, the only thing that I'd add to that, Scott, is, as you mentioned, in Q1, we were just in the very early stages of ramping up OTA productivity. So, for example, when you looked at January, we booked less than 15 rooms. By February, we were booking 300 to 350, and by March, upwards of 1,800 to 2,000, and we think that will continue to grow. One of the things that we think, you know, I think Scott mentioned it, it's obviously best for us to produce as much as we can through G4 Direct as part of the packages. They have long lengths of stay.

Mike: Well the only thing that I'd add to that Scott is as you mentioned in Q1, we were just in the very early stages of ramping up Ofta productivity. So for example, when you looked at January.

Micah Richins: We booked us in less than 15 rooms by February we're booking 300 to 350 and by March upwards of 800 to 2000, and we think that will continue to grow one of the things that we think.

Micah Richins: Scott mentioned that.

Micah Richins: Obviously best for us to produce as much as we can through G. Four direct as part of packages. They have long length of stay they have really good rates.

Micah Richins: They have really good rates. And then, obviously, anything that we can book directly on our own website and or through group business is our priority. But a third party will always be a good partner for us, and it's important for us to continue to grow that. And so you'll see our sales and marketing teams, particularly over the next several months, working to not only establish but then make our partnerships that we have already established now more effective, work in marketing programs with them, and see better production out of the OTA partners. But I think Scott nailed it the right way. We have a priority of how we'd like that to happen, but they are a key component for us.

Micah Richins: Obviously anything that we can book directly through our own website <unk> group business is our priority, but third party will always be a good partner for us and it's important for us to continue to grow that and so youll see our sales and marketing teams, particularly over the next several months.

Micah Richins: Working not only established with them.

Micah Richins: Make them make our partnership that we have already established now more effective work and marketing programs with them and see better production out of the Opa partners.

Micah Richins: But I think Scott the right way, we are a priority of how we'd like that to happen, but they are a key component for us.

Michael John Linenberg: Micah, is that 1800 to 2000 March? That is, that's a monthly booking rate.

Micah Richins: Like does that 800 to 2000 in March that is that's a monthly booking rate is that.

Micah Richins: No, that's an actualized amount for the month. So, you know, on a go forward basis, yeah, on a go forward basis, you'd expect that to be somewhere in the two to three thousand a month or so. Okay, great.

Michael John Linenberg: No. That's that's an actualized in the month.

Micah Richins: So you know.

Micah Richins: On a go forward basis, yeah, you're in a go forward basis, you'd expect that to be somewhere in the two to 3000.

Michael John Linenberg: Okay, great. And then just my second question, you know, with respect to what's called this D.O.T., I guess, Consumer Protection Plan or benefits as they characterize it. From what we hear, you have this refund element that kicks in, I think, in the next month or so. Maybe it's like at the end of June. And the transparency piece.

Speaker Change: Okay, Great and then just my second question.

Michael John Linenberg: With respect to.

Michael John Linenberg: This call today.

Michael John Linenberg: Yes.

Michael John Linenberg: <unk>.

Michael John Linenberg: I guess consumer.

Michael John Linenberg: Protection plan or benefits.

Michael John Linenberg: Characterized.

Michael John Linenberg: From what we hear you have this refund element that kicks in I think in the next month or so maybe it's like at the end of June.

Michael John Linenberg: The transparency piece.

Michael John Linenberg: And, you know, carriers have come back, and some have said that it disproportionately impacts low-fare carriers, and it's ultimately going to raise the cost to the consumer, which is actually going to add cost. So it's going to make it harder to offer lower fares.

Michael John Linenberg: <unk>.

Michael John Linenberg: Carriers have come back and say that it disproportionately impacts low fare carriers, it's ultimately going to raise the cost to the consumer which.

Michael John Linenberg: Which is actually I do think that it is going to it is going to add cost.

Michael John Linenberg: Harder to offer lower fares.

Speaker Change: All right.

Drew Wells: What are the gating issues? It seems like some of the refund elements are already being done today. But it does seem like, you know, we've gotten feedback on the technology piece that the industry may not be ready in six weeks to meet. You know, the various elements of what the DOT is requiring. What are your thoughts on that? Thanks for taking my question. Sure, Drew, I'll start, and we'll probably keep it pretty high level.

Michael John Linenberg: What.

Michael John Linenberg: What are the gating issues. It seems like some of the refund elements are already being done today, but it does seem like we've gotten feedback on the technology piece that the industry may not be ready in six weeks.

Drew Wells: <unk>.

Speaker Change: The various elements of what the Doj is requiring.

Speaker Change: Thoughts on that thanks for taking my question.

Drew Wells: This is all pretty fresh, right, and we're trying to work through it. Yeah, I think we do comply, particularly with the refund language. I think we comply with quite a bit of it already.

Speaker Change: Sure I'll start and then we'll probably keep it pretty high levels is all pretty fresh side and what we're trying to work through it.

Speaker Change: Yes, I think we do comply particularly to the refund later I think we comply with quite a bit of it already I'm proud of how we've how we've addressed a lot of that around cancels in particular, I think there's a little work we need to do around.

Drew Wells: I'm proud of how we've addressed a lot of that around cancels, in particular. I think there's a little work we need to do around the delay side, but in terms of gating or how ready we'll be in six weeks, I think we still need to kind of do some work on that. But I don't think it's quite as big of a lift given what we've already done to date and with not a lot of commentary on the transparency part of ancillary fees.

Drew Wells: The delay side.

Drew Wells: But in terms of the gating or how ready will be in six weeks I think we still need to.

Drew Wells: Do some work on that but I don't think it's quite a big of a lift.

Drew Wells: What we've already done to date.

Drew Wells: Not a lot of commentary on the on the transparent as part of ancillary fees like you still need to do a lot of work to understand what that is going to look like and the booking funnel. So.

Drew Wells: I think we still need to do a lot of work to understand what that's gonna look like in the booking funnel. So, sorry to keep it maybe a bit vague for today, but we're still working through it just like everyone else. Should I just add 1 thing, Drew Mike?

Drew Wells: Sorry to keep it maybe a bit bank for today, but we're still working through it just like everyone else can I just add one thing drew Mike This is Greg.

Gregory Clark Anderson: This is Greg. Just on the refund point, we talked about this over the years, but when we have cancellations with our customers, we issue them actual refunds. It's called a pain for up to 300 dollars. And so we compensate our customers when we have cancellations. We've been doing that, and I think we're one of the unique character carriers in the US to do that. And so, when we talk about, that's a big chunk of the. So, just wanted to point that out that we've already been trying for years to take care of our customers in those typical types of situations when there's a cancellation. Very good. Thanks, everyone.

Gregory Clark Anderson: On the refunds point Allegiant, we've talked about this over the years, but when we have cancellations with our customers.

Gregory Clark Anderson: We issue them actual what's called a <unk> up to $300 and so we compensate our customers.

Gregory Clark Anderson: We have cancellations, we've been doing that I think we're one of the unique character carriers in the U S to do that.

Gregory Clark Anderson: And so when we talk about <unk>, that's a big chunk of the Iraq. So just wanted to point that out.

Gregory Clark Anderson: We've already.

Gregory Clark Anderson: For years of trying to take care of our customers in those difficult type of situations, where there's a cancellation.

Gregory Clark Anderson: Very good thanks, everyone.

Speaker Change: Thanks, Michael.

Daniel J. McKenzie: Our next question comes from the line of Dan McKenzie from Seaport Global. Please go ahead.

Gregory Clark Anderson: Our next question comes from the line of Dan Mckenzie from Seaport Global. Please go ahead.

Daniel J. McKenzie: Oh, hey, thanks. I know you're not guiding for the full year, obviously, but the street's pretty divided. You know, you could drive a Mack truck through Estimates. I think you got a low of $2.55 to over $7.

Daniel J. McKenzie: Oh, hey, thanks.

Daniel J. McKenzie: I know youre not guiding to the full year, obviously, but the street's pretty divided you could drive a mack truck through estimates I think you got a low of $2 55 to over $7.

Unknown Executive: And I guess, you know, just based on what you're seeing for the summer, can we start to eliminate either the high end or the low end here? And, you know, I guess, as part of that, does the current plan contemplate profitability in each of the quarters? Hey, Dan, it's BJ.

Daniel J. McKenzie: And I guess, just based on what Youre seeing for the summer can we start to eliminate either the high end or the low end here and I guess as part of that does the current plan contemplate profitability in each of the quarters.

Daniel J. McKenzie: You know, I'm going to shy away from giving guidance in the third and fourth quarter. There are a lot of moving parts, as we've talked about today. One of these is the execution of a CBA with our pilots, which will have an impact on full-year results, as will the timing of Boeing deliveries and when those airplanes can be placed into service. And one that would be more immediate is just around some of the improvements in Navitar that Drew's been speaking about. So, as you can see, just a lot of moving, and so apologies for dodging the question.

BJ: Hey, Dan it's BJ.

Daniel J. McKenzie: Just shy away from.

Daniel J. McKenzie: Giving guidance in the third and fourth quarter.

Daniel J. McKenzie: A lot of moving parts.

Daniel J. McKenzie: As we talked about today.

Daniel J. McKenzie: One of which is execution of the CBA with our pilots, which will have an impact on full year results as will the timing of Boeing deliveries in windows airplanes can be placed into service.

Daniel J. McKenzie: And one that would be more immediate is.

Daniel J. McKenzie: Just around some of the.

Daniel J. McKenzie: The improvements in <unk> and speaking to slide you can see just a lot moving and so apologies for going to dodging the question.

Daniel J. McKenzie: Yep, I understand. Okay.

Speaker Change: Understood Okay.

Daniel J. McKenzie: I guess the second question here, you know, leg room plus seems like it's now part of the booking process. I can see it there, but it doesn't look like you're really monetizing it yet.

Daniel J. McKenzie: I guess second question here leg room, plus seems to it.

Daniel J. McKenzie: Now part of the booking process I can see it there, but it doesn't look like you are really monetizing that yet and I just wonder if you can remind us when did that start exactly where are you at with this program and then I guess what is the kind of target benefit.

Daniel J. McKenzie: That this could potentially.

Daniel J. McKenzie: Provide.

Drew Wells: And I'm just wondering if you can remind us when that started exactly? And, you know, where you are with this program? And then I guess, what is the kind of target benefit that this could potentially provide? Yeah, so we started testing the Allegiant Xtra layout as well as the 2019, I believe. And, of course, they ran right into the pandemic and kind of got derailed a little bit through there.

Speaker Change: Yeah. So we started testing the allegiant extra.

Drew Wells: Lay out as well as a 2019 I believe.

Drew Wells: And then of course ran right into the pandemic and kind of got the rail a little bit through there.

Drew Wells: We announced probably 18 to 24 months ago, we were going to bring this to the full fleet. In addition to putting it on all Max aircraft with about double the number of seats, a little bit less than double the amount of premium seats.

Drew Wells: We announced probably, what, 18-24 months ago, we were going to bring this to the full fleet. In addition to putting it on all MAX aircraft with about double the number of seats, a little bit less than double the amount of premium. So there's a little distinction between Allegiant Extra, which is kind of an all-inclusive by Allegiant Standards product that has the extra legroom, comes with the priority boarding, the dedicated overhead bin space, and now a free snack on board, which complements very well for our cardholders who will get a free drink and really, maybe not to the full extent, but rival kind of a Delta Comfort Plus type of experience, which I think is a remarkable perk there.

Drew Wells: Theres a little distinction between.

Drew Wells: Allegiant extra which is kind of an all inclusive.

Drew Wells: Standards product that has the extra legroom comes with the priority boarding the dedicated overhead bin space and now a free snack onboard which complements very well for our cardholders will get a free drink and really maybe not to the full extent of the arrival of kind of a delta comfort plus type of experience, which I think is a remarkable remarkable perk there.

Drew Wells: So in terms of monetizing, it's on only a portion of our fleet, 15 aircraft, with 11 more primed for this summer. So I think there's a lot left to go here in terms of experimentation with pricing and product mix. But so far, we've been responding to what our customers say is valuable to them and led us to where we are today. So, still in the infancy, I think, of where this will go, but absolutely thrilled with what we've been able to do with the product and monetization thus far. I see.

Drew Wells: So in terms of monetizing right it isn't the only a few.

Drew Wells: Portion of our fleet 15, aircrafts with 11 more primed for this summer. So I think there's a lot left to go here in terms of experimentation with with pricing and product mix.

Drew Wells: But so far we've been responding to what our customers say this is valuable to them and led us to where we are today.

Drew Wells: So still in the infancy, I think of where this will go but absolutely thrilled with what we've been able to do with the product and monetization thus far.

Daniel J. McKenzie: I see. Okay. Well, thanks for the time, you guys.

Speaker Change: I see okay, well thanks for the time you guys.

Speaker Change: Thanks, Dan.

Maurice J. Gallagher: That concludes our Q&A session. I will now turn the conference back over to Maurice Gallagher for closing remarks.

Daniel J. McKenzie: This concludes our Q&A session I will now turn the conference back over to Maury Gallagher for closing remarks.

Dee: Thank you all very much. We appreciate your input, and we'll talk to you in 90 days.

Maurice J. Gallagher: Thank you all very much appreciate your input and we will talk to you in 90 days.

Maurice J. Gallagher: Have a good day.

Dee: Ladies and gentlemen, that concludes today's call. Thank you all for joining us. You may now disconnect.

Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.

Dee: Yes.

Dee: Okay.