Q3 2025 Allegiant Travel Co Earnings Call

Speaker #1: Good afternoon , ladies and gentlemen , and thank you for standing by . My name is Kelvin , and I will be your conference operator today .

Speaker #1: At this time , I would like to welcome everyone to the Allegiant Travel Co company's third quarter 2020 earnings call . All lines have been placed on mute to prevent any background noise .

Speaker #1: After the speakers remarks , it 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 .

Speaker #1: You would like to withdraw your question . Please press star one again . Thank you . I would now like to turn the call over to Sherry Wilson , Managing Director of Investor Relations .

Speaker #1: Please go ahead .

Speaker #2: Thank you . Calvin . Welcome to the Allegiant Company's third quarter 2020 earnings call . We will begin today's call with Greg Anderson , CEO , providing a high level overview of the quarter , along with an update on our business .

Speaker #2: Drew Wells Chief Officer will walk through demand commentary and revenue performance . And finally , Robert Neal President and Chief Financial Officer will speak to our financial results and outlook .

Speaker #2: Following the commentary, we will open it up to questions. We ask that you please limit yourself to one question and one follow-up.

Speaker #2: The company's comments today will forward looking statements concerning our future performance and strategic plans . 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 .

Speaker #2: 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.

Speaker #2: We undertake no obligation to update publicly any forward looking statements , whether as a result of future events . New information or otherwise .

Speaker #2: 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 .

Speaker #2: To view this earnings release , as well as the rebroadcast of the call , feel free to visit the company's Investor relations site at IRA .

Speaker #2: Com . And with that , I'll turn it to Greg . Sherry .

Speaker #3: Thank you . And thank you , everyone , for joining us today . As I reflect back on the past year , plus as CEO , I am proud of the great strides we have made to strengthen our core airline and our focus on making sure we return to our roots as a solid double digit operating margin business , a hallmark of our success is that we are the leisure carrier of choice in the communities we serve .

Speaker #3: By offering convenient , nonstop flights at the lowest fares . That success is also because of team allegiance , dedication and execution that underscores our ability to provide consistent and reliable operations for our customers .

Speaker #3: Our performance is demonstrated by our industry leading completion factor for July , a peak period that set a new monthly record for the number of customers flown .

Speaker #3: It is also reinforced by our Net Promoter Scores , which remain near all time highs , reaffirming the loyalty of our customer base and the strength of our brand .

Speaker #3: I am particularly proud that we were recognized by USA Today's Readers' Choice Award for the Best Airline Credit Card for the seventh year in a row, and Best Frequent Flyer Program for the second consecutive year.

Speaker #3: We designed our programs to serve the needs of our leisure customers , which include high value and frequent travelers . The success of our loyalty program , and the fact that we are on pace to generate $135 million in remuneration from it this year .

Speaker #3: Underscores our relevancy in the markets we serve , and we see a lot of opportunities to enhance these programs to drive outsized growth in the years ahead .

Speaker #3: Turning to the third quarter , we saw steady improvement in the demand allowing us to outperform our initial forecasts . In both revenue and cost .

Speaker #3: As expected, we reported a modest operating loss in what is typically our weakest period of the year. But it was at the better end of our guidance range.

Speaker #3: So far this year , average daily peak utilization per aircraft is over nine hours . Near record 2019 levels , and we are delivering one of our best operational performances .

Speaker #3: Despite the higher levels of flying on these peak days . The fruit of our cost structure initiatives can be seen in our industry leading cosmetics , which is down 7% year to date .

Speaker #3: That reflects our efforts to remove structural costs and grow ASMs without adding aircraft or personnel. As discussed on prior calls, there are several continuing key initiatives driving environmental and financial performance improvement by year-end.

Speaker #3: We anticipate having 16 MAX aircraft in service. Bringing on this new fleet type has been a long time coming, and its integration this year has gone very well.

Speaker #3: We are now on pace for the Max fleet to comprise over 20% of our ASMs in 2026 and earned strong returns on the investments we have made in them over the past few years.

Speaker #3: The Max fleet continues to perform nicely , both operationally and financially , and is much improved from our older gen A320s . In addition , owning our aircraft rather than leasing gives us important flexibility to respond to dynamic market conditions .

Speaker #3: Our Allegiant Extra product is now available on 70% of our planes and is exceeding expectations in demand and customer satisfaction with positive benefits to tourism and margin .

Speaker #3: We continue to modernize our technology now that our Navitaire system is post . We are turning our sights to other technology initiatives for improvement , such as website conversion , customer personalization , customer journey , and enhancing communication throughout all phases of travel .

Speaker #3: Additionally , we are investing in our technology stack to take advantage of the power of AI and optimize our infrastructure for faster interactions and data driven decision making .

Speaker #3: As we turn towards the remainder of 2025 , we are seeing improvement in leisure demand , particularly around the holidays . We expect a fourth quarter operating margin in double digits and a full year airline operating margin of approximately 7% .

Speaker #3: As a result , we raised our airline EPs , our airline only EPs guide to more than $4.35 per share for the full year 2025 , and we are optimistic as we look forward to 2026 .

Speaker #3: From an industry perspective , carriers are moderating their domestic capacity plans and we are planning on flattish capacity next year as we drive a higher percentage of peak day flying and harness a full year of benefits from the initiatives .

Speaker #3: I just mentioned . When you put it all together , we are poised to deliver margin expansion that continues to set us apart from our peers .

Speaker #3: Further highlighting our low utilization , flexible capacity model is truly differentiating our capital allocation . Priorities remain the same . Our top priority is reinvesting in our business .

Speaker #3: We will remain disciplined in our goal to balance growth with margins and maintain flexibility , which has served us well throughout our history .

Speaker #3: And before I conclude , I'd like to congratulate BJ on his promotion to president , he will also continue to serve in the Chief Financial Officer role .

Speaker #3: BJ has been an exceptional partner and leader , instrumental in driving both regions financial and operational strengths . Alongside our strategic execution . He knows our business in this industry well and I look forward to continuing to work closely with him and the rest of our excellent management team in shaping Allegiant's bright future .

Speaker #3: I also want to extend my sincere gratitude to the entire team of their hard work and discipline . Have meaningfully strengthened our foundation and positions us well for 2026 and beyond .

Speaker #3: Lastly, I also want to thank the aviation professionals across the system, both within Allegiant and throughout the industry, who have continued to work tirelessly throughout the government shutdown and ongoing ATC constraints.

Speaker #3: Thanks to their dedication, we have successfully minimized disruption and protected the journeys of our customers. And with that, let me turn it over to Drew to provide details on our commercial performance.

Speaker #3: Thank you , Greg , and thanks to everyone for joining us this afternoon . We finished the third quarter with $553 million in airline revenue , approximately half .

Speaker #2: A percent .

Speaker #3: Above the prior year , producing a third quarter travel of 11.1 $0.09 . This is down 8.4% year over year , in line with our internal expectations from our update .

Speaker #3: Above the prior year , producing a third quarter travel of 11.1 $0.09 . This is down 8.4% year over year , in line with our internal expectations from our Mid-quarter unit revenue improvement in the same capacity markets versus the second quarter , which recovered approximately one point to down about 5% year over year .

Speaker #3: Inconsistent with the original expectation of sequential year over year improvement . Allegiant grew total ASM 9.7% versus three Q 24 , with overall utilization of 10% .

Speaker #3: Again , perhaps oversimplified , with a growth expected headwind of approximately four points , we slightly outperformed the combination of core capacity , performance and the expectation from our elevated growth rate .

Speaker #3: Further , within the quarter , we saw all three months produce better year over year unit revenue figures than any month in the second quarter .

Speaker #3: And the best low factor results for his prior year of any month , year to date . Meanwhile , the profile of new market ASM as a percent of the total steadily ticked higher .

Speaker #3: The third quarter ended around 5% , while the fourth quarter will ramp up to over 5.5% of scheduled service . Asms and is expected to rise again in the first quarter .

Speaker #3: 51 routes operated in the summer of 2025 that did not operate in the previous summer . Of those , approximately 85% of them contributed positively to earnings in their first summer of operations .

Speaker #3: The results from these markets rolled into announcing more new and exciting route opportunities through the third quarter . 19 new routes are set to begin Thanksgiving to early spring , including four new cities Fort Myers , Florida .

Speaker #3: Huntsville , Alabama . Atlantic City , new Jersey . And Burbank , California . We're encouraged by the early performance of our new cities and markets and continue to see customers embrace our reliable and convenient travel at unbeatable value .

Speaker #3: The third quarter of 2025 marked three consecutive years of industry commentary around abnormal peak-to-peak relationships. In the quarter, we are at the tail end of the post-pandemic demand surge into a more typical fall in 2023, or the relatively sluggish July marked by late summer demand uptick into the fall.

Speaker #3: Over the last two years , all three of those quarters saw sequential traffic declines from the second quarter below pre-pandemic levels . Meanwhile , the fourth quarter has remained more resilient , with each of the last three years hitting above $0.13 , a feat we'd accomplished in just one quarter pre-pandemic .

Speaker #3: As a result of the diverging quarterly trends, our performance had looked relatively better each year, and that pattern is expected to continue in 2025.

Speaker #3: As mentioned on the last call , we expect sequential improvement in year over year travel levels for the fourth quarter . And that should hold into the first quarter of 2026 as well .

Speaker #3: The conversion benefits from development . We discussed in the last call yielded load factor benefit in the third quarter . As I described earlier and should persist into the fourth quarter despite a roughly 10% scheduled service , ASM growth profile in fortune 25 , we expect load factors to be flat to slightly up in the fourth quarter versus for Q 24 .

Speaker #3: And while capacity for the quarter as a whole is expected to grow roughly 10%, much of that is due to the weather-impacted comparison with October 2024.

Speaker #3: November and December 2025 expects combined to be approximately 6% higher year over year for scheduled service . Asms . Our peak Thanksgiving and Christmas week utilization profiles , slightly higher than prior year and around all time highs during the peak period .

Speaker #3: We are incredibly encouraged by peak holiday demand profiling , similar to last year as well . Our customer base remains well positioned for leisure travel .

Speaker #3: Our network lends itself to a lower cost of living profile , with median household income over 100,000 . We continue to see demand trending closely to legacy common commentary on Main cabin performance , as well as continued opportunity with our Allegiant Extra cabin .

Speaker #3: Our award winning Allegiant always co-branded credit card and loyalty programs , and beyond . We've completed the multiyear journey of retrofitting our Airbus aircraft with the extra layout .

Speaker #3: We continue to see results hold through the expanded offering and repurchase rates , growing further . The results on the Max aircraft are in line with the expectations set by current Airbus performance , and we should see start to see efficiency benefits from the transition of our Fort Lauderdale base to solely max aircraft in the fourth quarter .

Speaker #3: Our full review of the co-brand program is nearing an end. We expect to receive approximately $135 million in remuneration in full year '25. However, as we had expected, given the time since program launch, we believe there will be meaningful opportunities for evolution and improvement.

Speaker #3: However , the review of Easy Part , of course , we will soon shift into execution mode , working through the negotiations , logistics and bringing the plan to life .

Speaker #3: In the short term , we continue to test new acquisition tactics and offers . We realize mid 20% lift on new card acquisition in the months of September and October as a multi-year core system transition moves into the rear view mirror .

Speaker #3: Our foundation and technology can enable further commercial independence , and we're excited to bring the customer experience at a value into focus . Allegiant Brand program updates and other commercial developments allow us to better segment for a broad spectrum customer preferences .

Speaker #3: And now I'd like to hand it over to Robert Neal . Mr. president . Thanks , drew , and good afternoon , everyone .

Speaker #3: I'll go ahead and walk through our results and provide an update on our outlook and financial position . As with prior calls , my comments today will reference results that have been adjusted to exclude special items unless otherwise noted .

Speaker #3: This afternoon, we reported a consolidated net loss of $37.7 million, or a loss of $2.09 per share. We had a net loss in the airline segment of $29.5 million, or a loss of $1.64 per share.

Speaker #3: Our airline segment generated a -3.1% operating margin , which was at the better end of our original guided range . As suggested in our August traffic .

Speaker #3: Traffic release . The quarter came in ahead of our forecast on both cost and revenue . While it reduced tax benefit , brought EPs slightly below our September expectations .

Speaker #3: This was driven predominantly by a change in our estimated tax rate , which reflected an improved revenue outlook for the remainder of 2025 .

Speaker #3: Notably, the sale of Sunseeker Resort closed on September 4, marking a significant milestone for the company, supporting balance sheet improvement and driving better consolidated earnings.

Speaker #3: Airline EBITDA for the quarter was 41.5 million , giving us an EBITDA margin of 7.5% through the peak summer season . Our team delivered operational excellence for our customers , which underpinned cost performance that continued to exceed our forecast third quarter , Non-fuel unit costs were down 4.7% year over year .

Speaker #3: Our ability to leverage existing infrastructure grow into our workforce and execute on cost initiatives outlined on prior calls has resulted in industry leading cost performance year to date , with a nearly 7% reduction in Casm fuel through the first nine months of the year .

Speaker #3: Our unit cost performance kept the shape we expected at the start of the year , despite removal of four and a half points of capacity growth during the year , primarily coming from the third quarter with full year capacity growth of 12.5% on flat aircraft and reduced headcount .

Speaker #3: We are on track to see full year calumets down mid-single digits , and I want to thank the entire team for their remarkable execution .

Speaker #3: Our cost structure remains a top priority as we look ahead to 2026 . We are realizing the full benefit of approximately 20 million in run rate savings initiatives implemented this year , which delivered ahead of schedule and will carry over into next year .

Speaker #3: I'm very pleased with the continued focus and discipline the team has demonstrated on this front . Before I move on from costs , I will mention the increase in the maintenance line this quarter .

Speaker #3: A portion of this was timing related and a shift from the second quarter largely related to an elevated number of road repairs . There was also some maintenance spend associated with aircraft lease returns and to a lesser degree , some tariff costs on parts , although this will continue for much of the fourth quarter .

Speaker #3: I view nearly all of this as transitory . Our unique , flexible capacity model is rooted in strong balance sheet . We ended the quarter with total available liquidity of 1.2 billion , consisting of 991.2 million in cash and investments and 175 million in undrawn revolving credit facilities .

Speaker #3: Cash and investments at 40% of trailing 12 month revenue at quarter end . With this robust liquidity position , we continue to make meaningful progress on debt reduction , including more than 180 million in voluntary prepayments during the quarter .

Speaker #3: Additionally , in October , we repaid 120 million of 2027 bonds under a call notice issued on September 15th . We expect total debt to decline a bit further by year end .

Speaker #3: Net leverage remained unchanged at the end from the end of the second quarter , and we anticipate ending the year at a similar level .

Speaker #3: We're continuing to make long term lasting investments in the business capital spending was approximately 140 million for the quarter , including 107 million for aircraft related CapEx and 22 million in other airline spend , while deferred heavy maintenance CapEx was 11 million .

Speaker #3: We ended the quarter with 121 aircraft in our operating fleet , down from 126 at the end of the second quarter . During the quarter , we took delivery of three aircraft , one of which entered revenue service , while four leased aircraft exited service and two airframes were sold to a third party .

Speaker #3: Looking ahead , we expect to induct six , seven , three seven aircraft into revenue service and retire four leased A320 series aircraft during the fourth quarter , bringing our year end fleet count to 123 .

Speaker #3: Boeing have produced ahead of plan with all of our 2025 aircraft having been received by the end of the third quarter , and we continue to expect full year CapEx of approximately 435 million .

Speaker #3: Now , on to our fourth quarter operating outlook . The improvement in bookings observed in late July has continued at the midpoint of our guidance , we expect to produce an 11% operating margin and deliver consolidated earnings of approximately $2 per share , which , following the Sunseeker sale , reflects solely the airline segment .

Speaker #3: The fourth quarter performance should result in full year airline only earnings of more than $4.35 per share . Although we're not going to provide guidance on 2026 , I will share some high level commentary .

Speaker #3: We expect to take delivery of 11 737 Max aircraft next year , all of which will replace A319s or A320s , resulting in flat year over year fleet .

Speaker #3: Fleet count with respect to CapEx , we're working with Boeing to update 2027 and 2028 delivery schedules following their recent approval for increased production rate , which will inform the requirement of pre-delivery deposits and overall CapEx profile for 2026 .

Speaker #3: We expect CapEx to be above 2025 levels , though we do not expect this to place meaningful pressure on net leverage . We're not anticipating notable capacity growth in 2026 .

Speaker #3: While not guidance , we expect the year over year increase in traffic driven by limited growth , industry supply moderation and revenue initiatives .

Speaker #3: Drew . As mentioned , to exceed any increase in cosmetics Nashville unit costs will experienced some pressure given limited growth , but the team has done an excellent job driving structural cost out of the business .

Speaker #3: Additionally , with approximately 20% of our Asms flown on fuel efficient Max aircraft , we expect the differential between travel and Casm to result in margin expansion next year .

Speaker #3: In closing , I'm very pleased with the team's operational execution and financial discipline throughout this year . Throughout 2025 , team Allegiant's ability to manage through what has been an earnings setback for the industry has been impressive .

Speaker #3: It's an exciting time in Allegiant as we turn the corner to 2026, with the sale of Sunseeker completed, a strong balance sheet, and continued progress on cost and fleet initiatives.

Speaker #3: Were structurally well positioned to deliver higher and more consistent earnings in 26 and beyond . And now , Calvin , we can go to analyst questions .

Speaker #1: Thank you , ladies and gentlemen , we will now begin the question and answer session . During the Q&A , we ask that you please limit your inputs to one question and one follow up .

Speaker #1: I would like to remind everyone to ask a question . Please press the start button followed by the number one on your telephone keypad .

Speaker #1: You would like to withdraw your question . Please press star one again . One moment please . For your first question . Your first question comes from the line of savvy Smith of Raymond James .

Speaker #1: Please go ahead .

Speaker #4: Hey . Good afternoon and congrats , DJ . And maybe I'll give you the first question to you as a result , you mentioned a little bit about CapEx stepping up , but not , you know , meaningfully impacting leverage .

Speaker #4: But could you talk a little bit more about how you're thinking about the balance sheet now that there's a little bit more kind of stability across kind ?

Speaker #4: The operation and with Sunseeker out of the way , just how you're thinking about cash levels and leverage and just cash flow generation .

Speaker #3: Thanks , Audie . Appreciate the comments . Yeah . So when we think about next year , I guess I would remind you we had a limited a limited amount of PDP CapEx in 2025 because we were catching up from pre-delivery deposits that had been made in prior years face of some of the aircraft delays .

Speaker #3: So, I expect those to come back into the CapEx profile next year. I think you're getting at we were carrying quite a bit of cash at the end of the quarter.

Speaker #3: That was partially the result of the Sunseeker sale , and then also and I think maybe I mentioned on a previous call , we kind of over financed our Max deliveries at the beginning of the year , and that was just out of caution with what we were seeing in some of the economic headlines back around April .

Speaker #3: Time frame . So I do think we can get to a point where we're carrying a little bit less liquidity on the balance sheet .

Speaker #3: We've historically talked about two times air traffic liability . And in the have started to stabilize and some speakers behind us , and especially as we have aircraft further out , we can we can bring those cash levels down a little bit and we'll continue to to use cash to invest in the business for , for the rest of 25 .

Speaker #3: And of course , 26 .

Speaker #4: But that's helpful . And if I might just on the I'm not sure if this is true or Greg on the AI and data infrastructure side investments that you're talking about .

Speaker #4: You know , generally you think of kind of larger organizations as having an advantage there . Could you talk about just maybe how it's being implemented at Allegiant and maybe what advantages , you have versus some of your bigger peers ?

Speaker #3: Sure . Let me take it off . And sure , we'll add some color , I'm sure . But starting on the AI front , it's just as an organization we're really proud of the way we're embracing AI to make our business better .

Speaker #3: We've been working over the past year or so on our structured and unstructured data to ensure that it's in the right place for advanced technology and deploying solutions here at HQ across the board , such as Copilot for our developers , GitHub , which is improving productivity in that regard , we're reshaping functions and across the board .

Speaker #3: But an area specifically like the call center or operations where we're using AI and use cases to drive more efficiency , productivity , and we're just scratching the surface .

Speaker #3: Surface . Excuse me . One of the things though , I think it's important , is a lot of the changes that come from AI are through change management .

Speaker #3: And as an organization , we're building that muscle . And the reason we're feeling confident about kind of building that muscle . And it's it's probably before we walk , walk before we run type attitude is because of the transformational technology stack that's in place now , which is best in class .

Speaker #3: And I we've talked a lot about it with the IT team has done over the past couple of years . They definitely take in what the whole airline is built on , proprietary software and moved it to state of the art systems .

Speaker #3: We talked about Navitaire , SAP tracks and other systems , and so now that we have all those in place , we're really able to start harnessing and leveraging where that's at to be a little bit more nimble .

Speaker #3: And Drew's got a whole list of priorities and initiatives, along with the rest of the team. But Drew, I kind of went off on it a little bit.

Speaker #3: Anything to add , though , from your perspective ? No , I'll be fairly quick on the front . There's there's wins to be had as it pertains to revenue modeling and how we think about offer management as we think about .

Speaker #3: Right sizing , the combination of of pricing and ancillary pricing , which has historically been a major challenge to solve . There will be some wins .

Speaker #3: That's not to say there's not wins here . I'm really bullish on what this could mean for for 26 and beyond , where we're kind of in the development phase now .

Speaker #1: question comes from the line of Dwayne Pennyworth . Evercore ISI . Please go ahead .

Speaker #5: Hey , thank you . On the flattish 26 capacity outlook , how are you thinking about the shape of that by quarter and specifically , how are you thinking about one queue growth ?

Speaker #5: And I don't know if it's too early , but could you characterize maybe the difference between the shape of off peak versus the shape of peak within that flattish outlook ?

Speaker #3: Sure , Dwayne , I'll give it a try here . So the shape will be kind of , you know , down low to mid single digits in each of the first couple of quarters just following the shape of fleet .

Speaker #3: We'll be slightly down , I guess more down on off peak at that in the first quarter . While keeping relatively flat . You know , utilization through the march peaks in particular , with Easter pulling forward a little bit , you'll see April come down a bit more , but similar story in the second quarter as off peaks will underweight relative to peak periods to to form that back half of the year .

Speaker #3: Kind of , you know , inverse and you'll be uploaded mid-single digits to get back to that flattish outlook . And I'll just add to point there , there's going to be a higher percentage .

Speaker #3: We're planning on a higher percentage of peak capacity next year than , say , this year .

Speaker #5: That's helpful . And then I don't know if you're able to do it , but on the max , can you speak to how you were able to deploy those aircraft ?

Speaker #5: You know , what base limitations you may have had this year ? And how those constraints ease up ? I guess I'll stay with you , drew .

Speaker #5: Maybe you could just speak to the types of routes the Max had to fly this year versus the optimal routes you'd like them to fly on .

Speaker #5: Thank you .

Speaker #3: Yeah . So through I mean , really , from the time of the first delivery until kind of this week , next week , we've flown them very heavily on short haul markets , trying to maximize the number of takeoffs and landings to help facilitate some of the transition training needs .

Speaker #3: We had to get pilots certified and ready to fly as we beefed up that number of pilots efficiently , we'll see that shift more towards longer hauls .

Speaker #3: Taking a little more advantage of the stage length and fuel burn benefits , there . As we flip the Fort Lauderdale base to solely max what we'll get , we'll get stage length benefit there as well as a little bit longer haul than Orlando .

Speaker #3: And Saint Pete . We didn't necessarily have base constraints . We opted to split Sanford and Saint Pete to start , just to help provide a little bit of resiliency in the event of changes to the delivery schedule .

Speaker #3: From Boeing , have a little bit of a shock absorber there where Airbus could replace that . We could do more Boeing flying as the deliveries shaped up .

Speaker #3: And then with Fort Lauderdale , we're keeping things fairly geographically centralized to even just some of the logistics that may come about as we get to the back half of next year , we'll kind of hit our next wave of base considerations as more deliveries come in and stay tuned .

Speaker #3: But as of this point , there's no real constraints , at least that I'm aware of on what think the rest of the teams that have any .

Speaker #3: But this has all been kind of our choice on trying to maximize both the efficiencies of the introduction of the fleet , but as well as just the continued operation .

Speaker #5: Thank you .

Speaker #1: Your next question comes from the line of Scott Group , Wolfe Research . Please go ahead .

Speaker #6: Hey , thanks . Afternoon , guys . Can you maybe just talk a little bit about some of the underlying rasam casm assumptions for Q4 ?

Speaker #6: And then I don't know any color on what you're seeing with the government shutdown . Do you think maybe your your smaller airports being less impacted ?

Speaker #6: Does starting to have any impact on demand just any thoughts there ? Thank you .

Speaker #3: Yeah . Hey Scott , it's Vijay here . I'll start on on the Kazim side . Probably a bit easier . You know , I talked about the shape of our cabin performance this year .

Speaker #3: Generally holding with comments that we made at the beginning of the year , which should get us to mid digits by the end of the year .

Speaker #3: And I guess you can back into what that does for the fourth quarter . But I would tell you that , you know , it expects continued goodness year over year in the salaries and benefits and DNA line that you've seen in the prior quarters .

Speaker #3: And then pressure in the fourth quarter in the maintenance line and the red line , both of which I think are transitory on all we've really said publicly is that we expect see continued sequential improvement on a year over year basis .

Speaker #3: We know that kind of the implication here is we're pushing towards the extreme of the fourth quarter versus third quarter performance . But I try to address that a little bit in the prepared remarks that it's as much a a story as it is for Q as those are kind of diverging from just a customer base and demand base that seems on on government shutdown , we haven't seen anything meaningful flow through of bookings or continued demand at this point .

Speaker #3: I do feel pretty confident that the longer this drags on , the more likely we are to see impact . And certainly if it does stretch all the way to Thanksgiving , that that would be a huge , huge problem for the industry as a whole .

Speaker #3: I have some confidence that we will get through this as a country and a government ahead of that , and strongly urge Congress to to unlock this .

Speaker #6: And then your comments about exceeding casm next year , I guess if you have any more color there , that'd be great . And then as I think about what you were saying on one of the earlier questions , first half capacity is down a bit .

Speaker #6: So pressuring Casm a little bit , do you think you see Trazium exceeding casm all year , or is that should we think about that more as a back half casm exceeding casm sort of comment .

Speaker #3: Hey Scott , it's Greg , maybe I'll start at a high level and then we'll add in some color . I'm sure . Just kind of taking a step back .

Speaker #3: We've accomplished quite a bit here in 2025 . Strengthen the airline and we're going to build on those accomplishments in 2026 . So I think about the margin improvement for 2026 .

Speaker #3: And if you break it into 3 or 4 areas , one , the traffic tailwinds , which at a high level with flattish capacity , that should also obviously help unit rest side , but also flying a higher percentage of peak days .

Speaker #3: Right , versus off peak helpful . The commercial initiatives that we've been talking about all year , region extra Navitaire or larger contributions next year than in 26 .

Speaker #3: And this year , loyalty contributions are exceeding revenue growth . Drew may want to hit some more on the on the front there , but on the cost side just it's BJ and team .

Speaker #3: They've gone through a couple passes of the So while we're not final we're in the I guess mid innings of it . And I think the cost have come in to a point where it gives us confidence today in the area that we can control on the cost side , that we can keep those at a point of which , if all else being equal , on the demand side or the revenue side , that we'd be able to see margin expansion , the match performance .

Speaker #3: We talked a lot about that . 20% of our asms next year will budget . be flown on the max to kind of frame that , and the benefits we get from a fuel perspective , the asm's per gallon on a max are just over 106 , 105 .

Speaker #3: I want to say , versus the 320 series is closer to 80 . So call about a 30% benefit in that regard . At the same ownership cost .

Speaker #3: So that and then coupled with all the technology initiatives and just continuing to get better , drive more productivity and efficiency , our plan now has for margin expansion next year .

Speaker #3: And we we can build off that through PJ . Yeah , I'll just add a couple things here . So Scott , we're in kind of the second phase of our budget planning for next year .

Speaker #3: So it's not final . I don't want to go so far as to give guidance , but you can kind of read into what drew talked about in terms of the shape of capacity next year relative to fleet counts , with being down a little bit in the first two quarters , that's going to put the most pressure on Casmcs in the first two quarters of of next year .

Speaker #3: And then , like Greg said , I'm relatively optimistic that even given limited growth , that we can hold the line on cost next year .

Speaker #3: Just given some of the structural cost improvements that that we've made this year .

Speaker #6: Thank you guys . Appreciate it .

Speaker #3: Thanks , Scott .

Speaker #1: Your next question comes from the line of Ravi Shanker of Morgan Stanley . Please go ahead .

Speaker #7: Great . Thanks . Good . So it seems like it's clearer coast ahead . Obviously some secrets behind you now . Margins are starting to improve .

Speaker #7: Feels like you're on a better path with , you know , stable capacity . And the chasm present of everything else . So can we start to dream the dream about what normalized EPs looks like ?

Speaker #7: Again , obviously , coming out of the pandemic , it was a very different level than you guys are right now . How do you think about what that long term trajectory looks like in that destination as well ?

Speaker #3: Thanks , Ravi . Let me kick it off . Again , we're not going to guide 2026 or long term EPs at this point , but our goal is to get back to solid double digit operating margins .

Speaker #3: And that's what we're executing towards. We talked about the work, the great work that's been performed by the team this year.

Speaker #3: And harvesting all that work in 2026 . And we expect margin expansion there . And all else being equal , I think in 2027 , there's still .

Speaker #3: More initiatives as we prioritize and continue to improve in different areas of the business . We think continue to expand in the 2027 , drew and his team , I think , really good job of kind of walking through a framework of our commercial strategy , and this is more tied to the longer term .

Speaker #3: have done a we went in and took out some of the structural costs . And so I mentioned that because looking ahead towards 2026 , 2027 and beyond , we're always going to take a hard look at our cost structure .

Speaker #3: I think margin improving , margin margins are driving higher margins . And I mean , it's from continued loyalty enhancement to different products , non ASM revenue and different areas on that front , I think BJ and team on the cost side have done a terrific job .

Speaker #3: We're unique in the industry in the sense that we have high variable costs , low fixed costs . But it doesn't mean that fixed costs aren't material for us .

Speaker #3: And so when demand is often this year , by way of example , I think the team reacted quickly . We scaled back growth .

Speaker #3: We're going to continue to find ways to better optimize the business . I think the match fleet is well , if you think about 27 , 28 , the efficiencies we're seeing there , by the time we get to 2028 , I would expect 50% of our Asms are flown by the Max aircraft and driving a nice tailwind on the fuel side .

Speaker #3: So we talked about it . We teased it on the last earnings call . We probably think it's helpful at some point next year to have an investor day to really walk through some of these initiatives for guardrails and what we think our objectives are and our opportunities are .

Speaker #3: But I think it's just a high level . On the earnings call today where we sit , we feel confident that 2026 , we can drive higher margins and the demand and fuel backdrop , and we can continue to build on that momentum into 2027 .

Speaker #7: Got it . That's those are helpful . Building blocks . And maybe as a follow up can you just give us an update on the Vegas market and kind of what you're seeing there .

Speaker #7: And remind us of seasonality there . Again , also kind of easier comps next year . Kind of do you think that can bounce back from some of the headwinds earlier this year ?

Speaker #3: Yeah , obviously Vegas still underperforms where we'd like it to be . It has definitely shown improvement over through the summer and through the fall .

Speaker #3: Maybe on the seasonality front , it's historically been a very unseasonal market . You know , pre-pandemic it was it was very reliable year round .

Speaker #3: It definitely feels more seasonal today than it has , which is unfortunate given how much of a rock star it has been for so long .

Speaker #3: Definitely coming out of the market . I think there's there's room for more improvement . I've seen more from from the Vegas resorts in terms of innovative ways to to recapture customers and recapture trips .

Speaker #3: So I think there's better times ahead for Vegas . But we're still kind of climbing out of the hole a bit .

Speaker #7: Great . Thank you .

Speaker #1: Your next question comes from the line of Michael Lindenberg of Deutsche Bank . Please go ahead .

Speaker #8: Hi there . This is Shannen Doherty on for my congratulations on your promotion , DJ . This first question is probably not for you , but maybe to drew , can you guys speak to how competitive landscape is evolving , moving into new cities like Atlanta City and Burbank ?

Speaker #8: And I'd also be very interested to hear more about the 15% of new routes that you launch this summer that did not perform to expectations .

Speaker #8: Like what ? What did you see there ?

Speaker #3: Yeah . So maybe maybe first on what I think was about kind of the new city selection , you know , continues to be the same .

Speaker #3: The same pillars that that guide all of our network selection looking for unserved and underserved markets , that , that fit our customer profile .

Speaker #3: Well , Atlantic City , we've seen some reduction in seats with the market . We've we've been talking to since 2017 , 2018 .

Speaker #3: And we felt like the time was right for us to move in there on on Burbank . And we've we've talked at length about LAX and the cost structure there was becoming a bit untenable for us .

Speaker #3: And so we've kind of diversified our base in capacity between Burbank and where we've been in for a few years now . You know , think Burbank is going to be going to be a great addition .

Speaker #3: So that's going to be that's going to be helpful for us on the competitive capacity front within those cities . Obviously , you know , there is some capacity on Atlantic City and on half of our Burbank collection .

Speaker #3: It's not something that we're running away from capacity or competitive capacity . From where we're trying to do what's right for Allegiant , run our rates .

Speaker #3: And we found success on some of these markets . And , you know , on the 15% where we weren't successful . We'll take a look at each of those .

Speaker #3: Some you know , it's the first year . You know , it may or may not be meeting expectations , but there should be some level of maturity and run rate associated with those .

Speaker #3: And for those , we don't see a future . They'll come out . We won't operate them next year . It's that simple .

Speaker #3: We've got a long runway of new opportunities , so I have no issue cutting bait on some of those and finding something new .

Speaker #3: Shannon , it's Greg . I just want to add to your commentary there that for serving the domestic leisure space , our low utilization taxable capacity model works works well .

Speaker #3: I was interested , I thought drew provided an interesting comment in his opening remarks that I paraphrased just along the line of the resilience of our leisure customers , who they represent all facets , facets of the economy .

Speaker #3: They like to travel and they have the means to do so . And what he and his team are doing and continuing to find those markets that are low fares and convenient nonstop service .

Speaker #3: It's a strong value proposition .

Speaker #8: That's great . And maybe just bigger picture , right ? Is the demand that you're seeing today supportive of higher growth in the peak periods than flattish , like you're expecting next year ?

Speaker #8: I guess I'm just trying to figure out how constrained you are from a utilization perspective .

Speaker #3: For the , you know , most peak periods , you know , in really that's that's the holidays and the spring break sprint .

Speaker #3: Well, maybe not 100% at our max utilization, but we're pretty close. We're pushing as hard as we've ever pushed through the holiday period.

Speaker #3: I think we have just a little bit of slack . In March , you know , kind of more growth would come in the off peaks such that the the environment called for with demand for peak up or fuel were to meaningfully come down , can find a little bit more in there .

Speaker #3: I think as we get toward the summertime and that schedule comes out now, we'll be in the public eye. Things are coming in the weeks ahead.

Speaker #3: You'll see a little bit more slack that we can add into on that front .

Speaker #1: Your next question comes from the line of Connor Cunningham of Melius Research . Please go ahead .

Speaker #3: Hi , everybody .

Speaker #9: Thank you . Congratulations , BJ , on the promotion . I was hoping we could talk . So yeah , the max situation .

Speaker #9: You're obviously talking that up a fair bit with, I think, Greg. You mentioned that it's going to be 50% of your capacity in 2027, 2028 or something.

Speaker #9: Something in that time frame . Can you just talk about in the past , you've talked about like a rule of thumb around EBITDA per or Ebit , EBITDA per per aircraft .

Speaker #9: And I would just think that there's the max EBITDA contribution is way higher than the current A320 fleet . So just any high level thoughts around that ?

Speaker #9: I think you mentioned 30% fuel efficiency , but is there anything else that's within that that could be helpful in building that that type of a type of thought process ?

Speaker #9: Thanks .

Speaker #3: Yeah , maybe let me kick that one off . And we talked in the past . Connor . Quite a bit pre-pandemic . I think the 6 million of EBITDA for aircraft was was our true north .

Speaker #3: I want to say right now , what are we roughly 3.5 million of EBITDA per aircraft thereabouts . I won't go into all the detail on the initiative that we've either completed or completing or planned to complete that I've about around margin expansion , but I think you want to zoom a little bit more in on the Max aircraft .

Speaker #3: A couple comments that I think are interesting . One , that the earnings on it today , now it's still early , are 2,030% higher than the A320 series fleet .

Speaker #3: I want to dig on that and dig in on that a little bit here . But the other thing is the operational reliability is outstanding .

Speaker #3: It's not quite a point , but nearly a point higher than the the 320 series fleet . But some of the questions , as you think about the way we deploy capacity , drew and his team and you think about utilization , think about it in thirds .

Speaker #3: So in terms of lines of flying . So yeah , but the first third , what drew utilization roughly 8 to 10 hours per aircraft per day in the middle third of the middle tranche , roughly six hours .

Speaker #3: And then you go from 3 to 4 hours on the lower tranche. But obviously, with these aircraft, we're going to put them in on our highest lines of flying just because of their performance and their reliability.

Speaker #3: But drew did an interesting study where because of our base structure was comparing the highest lines of flying in base versus the max performance in respective bases .

Speaker #3: And it's still like for like significantly outperforming the 320 just given , you know , a few just given the economics that we talked about in the past .

Speaker #3: But drew , I'm excited about the max and what what we're seeing continuing to make more deliveries of those aircraft . We have the same ownership cost in general as a 320 .

Speaker #3: So it's commercially a good deal for us . And drew , BJ , anything else you want to add ? I'll take one step .

Speaker #3: And that was comparing the highest lines of flying , regardless of base on the Airbus to the max performance and outperform it at 20 to 30% , putting it on a highly utilized base like Fort Lauderdale .

Speaker #3: It's going to have immense benefits , and we'll continue to be selective on where those aircraft go to make sure that we're getting the most value for those going forward .

Speaker #3: It's incredible . Yeah , and I'll just add one thing . Thanks , Connor . You know , we we've talked about the overall earnings of the max at this point being , you know , about 30% better than the system average , as you would expect .

Speaker #3: Most of that comes from fuel efficiency . But there's still there's still a bit of improvement in other opex as well . Primarily coming in on the on the maintenance line .

Speaker #3: Just don't want to underappreciate the value of the maintenance honeymoon . We had gone a few years where we weren't adding any new airplanes , and that meant two things .

Speaker #3: One , we weren't getting any relief on maintenance costs of aging aircraft , but two , we had a larger percentage of our overall fleet unavailable during peak periods for for revenue service .

Speaker #3: And so by introducing some component of new aircraft , again , we've got more of that fleet available for service .

Speaker #9: Okay . That's super helpful . And detailed . Just around around the co-branded credit card program review and completion . I was hoping you could drill down on that a little bit more .

Speaker #9: Just talk about what you've learned , what needs to be tweaked . Just if there's anything else there behind it . I know that you've talked about it for a couple quarters , but just as we're closing on the end , just any thoughts in general ?

Speaker #9: Thank you .

Speaker #3: Yeah . And probably still a bit early for for me to get too detailed . But there's obviously a lot of work left to go .

Speaker #3: What we've learned I think some of what was in my in my remarks , we do have a fairly affluent and well off customer as a subset of our overall base , and we haven't been providing , I think probably the the best value proposition to all of the subsets of customers that we can .

Speaker #3: So I think something that's a bit more segmented , that's something that provides a better value proposition than what we're offering . Ten years ago , is is going to be really helpful .

Speaker #3: If you've watched . You know , most other carriers go through a few evolutions of their program since whereas our annual fee is still the same today , that it was at launch .

Speaker #3: So , you know , there's a lot of opportunity there just in terms of how the overall market has evolved as well as as leaning a little bit more into what we know with our customers specifically , one one area that's pretty obvious and something that's I've heard mentioned elsewhere , we weren't giving our customers a great reason to spend on our card .

Speaker #3: Right ? It's great when you're interacting with Allegiant specifically , but how do we broaden that to be a bit more relevant more often ?

Speaker #3: And I think that's been pretty low hanging fruit to drive , very scalable and efficient volume in terms of contribution to us .

Speaker #9: Great . Thank you .

Speaker #3: Thanks , Connor .

Speaker #1: Your next question comes from the line of Dan McKenzie of Seaport Global. Please go ahead.

Speaker #10: Hi . Hey . Good afternoon . Thanks , BJ . Congrats on the promotion here . So , you know , I know you guys are guiding to flat capacity in 2026 , you know , but probably , you know , the biggest change over the past quarter is just spirit .

Speaker #10: You know , down filing for chapter 11 . And downsizing . And I , I know that your overlap with them is very de minimis .

Speaker #10: I think 2.5% or something like that . But , you know , I guess the question really is , you know , is Spirit's downsizing causing you to , you know , rethink the network composition .

Speaker #10: So , you know , have you picked up more gates either at Fort Lauderdale or elsewhere or just kind of thinking about the percent of flying that you have either in the West Coast versus into the state of Florida .

Speaker #3: Yeah , we haven't I mean , we haven't seen kind of those direct benefits to date , you know , unsure if we will .

Speaker #3: I think there's still a lot of support for spirit maintaining a fairly large Fort Lauderdale presence . We certainly seen some pull down capacity out of there .

Speaker #3: You know , we're very excited about Fort Lauderdale . We obviously have been putting our Max aircraft there , trying to grow capacity where we can .

Speaker #3: So we're we're very interested . But you know , I don't know that according to a lot of direct benefit yet we'll remain opportunistic and mindful of what happens , but maybe not as much to point to directly right now .

Speaker #10: Yep . Understood . Okay . And then , you know , CapEx above 2025 and 2026 , but not meaningful pressure on leverage to go back to the script .

Speaker #10: I'm just trying to provide a little bit more perspective on that . Are you you know , planning to pay cash for some of the aircraft next year or how should we think about , you know , the decision to lease versus to purchase ?

Speaker #10: And , you know , how do we think about , you know , year end leverage at 2026 versus 2025 ?

Speaker #3: Thanks , Dan . Yeah , I'll give it a shot here . So when I think about next year , you know , I kind of mentioned in response to these questions , some of the CapEx I guess lift , if you want to think of it that way , next year is really going to be driven by by Pdps .

Speaker #3: And those will those will come due throughout the year . Our aircraft delivery schedule is back half weighted . And so with the way the business produces cash in the first quarter , certainly we could pay cash for the amount due to Boeing at delivery for our airplanes , probably for the first half of the year .

Speaker #3: That said , you know , we'll be opportunistic and keep our ear to the ground on the markets to look for the most attractive way to finance those airplanes .

Speaker #3: I would tell you , and we've spent a lot of time on this this year . I would tell you that we expect to continue owning airplanes , and that's why we try to grow at the pace that the balance sheet allows for owning airplanes in our mind , is , is , is half the cost of leasing airplanes over the life of the asset .

Speaker #3: And we think that that's one of the key ingredients that supports our low utilization model . So I would suspect that we'll continue to be focused there .

Speaker #3: We'll always keep an open mind and look at offers that come in . But that's my expectation .

Speaker #10: Very good . Thanks for the time . You guys .

Speaker #3: Yeah .

Speaker #1: Your next question comes from the line of Brandon Oglenski , Barclays . Please go ahead .

Speaker #11: Hey good afternoon everyone , and thanks for taking the question and congrats as well . Robert . Greg , I guess I've heard a lot of questions tonight around growth .

Speaker #11: And you know , now that the hotel is behind you , I think like what's the next phase for Allegiant here as you focus on the core of the business ?

Speaker #11: Historically , we've always heard , you know , there's what , 5 or 600 markets out there that could be Allegiant esque . Is that still the case ?

Speaker #11: And especially , you know , in lines with Dan's question , just previously , I mean , airlines are still losing money , even as some of the low cost capacity comes out .

Speaker #11: So do you just need to see the industry still right-size itself in the next year before you can start thinking again about future network expansion?

Speaker #3: Thanks , Brandon . I'll kick it off and ask you to come in on his views around the growth and those in more detail , but the good thing about us is we have optionality .

Speaker #3: As BJ just mentioned , we own our aircraft . We plan to own the new aircraft that are coming to us and we only use 320 fleet in prior calls .

Speaker #3: I think we've talked at least a high level about the importance of earning the right to grow , and so that fleet flexibility of manage , I think that's something we have that gives us the ability to determine what that growth rate looks like .

Speaker #3: And that's just to drive better discipline to ensure we grow , that we grow profitably , and that we run a really good airline .

Speaker #3: I think what we've seen from Tyler Hollingsworth and the operational teams over the past couple of years , our ops game has really stepped up and we're pleased with what we're seeing , but we're not going to push it to a point to where it's going to be , do more harm than good in terms of our model and what we do , we think it's unique .

Speaker #3: We think there's a lot of opportunities for us to continue to to grow . And if the industry , as you kind of mentioned there , Brandon , I think is the industry , particularly our sector segment of the industry , I guess for lack of a better term , finds its equilibrium or kind of works its way through .

Speaker #3: We think a run or a well-run carriers like Allegiant , there's going to be opportunities for a flexible capacity model like ours , but true .

Speaker #3: I mean , you feel like there's a lot of network and runway ahead . So you want to talk about , as you do , the opportunities .

Speaker #3: Yeah , I'll kind of take it in two pillars here , maybe number one . Right . We talked in the remarks about over 50 new routes that operated this last summer that weren't operating the summer before .

Speaker #3: We there's an immense amount of opportunity that remains . We've talked about 1400 plus , you know , well beyond the five , 600 that I think will work well for us .

Speaker #3: Certainly not all of them will . But I think the vast majority are perfect for what we do . So I think there's no shortage there .

Speaker #3: Second , and Greg mentioned kind of post navitaire implementation time frame . It's not , a big secret that we didn't have the cleanest of implementations with our Navitaire system .

Speaker #3: And it's taken us a little over two years to start to turn toward , okay , what's what's the next thing that we can start to build on our new foundation to help further develop the commercial stack and how we're interacting with customers , that providing the right experience , you know , throughout the journey .

Speaker #3: And that's where that next phase goes . It's kind of a little bit of catch up candidly to where others have seen success , which tells me there's a lot of low hanging fruit for us to go get .

Speaker #3: So it's not just on the network front , it's about the entire commercial strategy to make sure that that the current network and future network work , as well as it possibly can .

Speaker #11: Appreciate that response . And I guess , Greg , as you think about , you know , potential industry M&A , if that does play out , I don't know where does Allegiant fall within that context ?

Speaker #3: Thanks , Brandon . Just some high level thoughts , right ? 80% of the domestic market is controlled by the big four carriers .

Speaker #3: And what the industry is showing is that size , scale and relevancy . I think , have their advantages in our industry . But you know , and we believe that it's in everybody's best interest .

Speaker #3: We'll certainly consumer's best interest . Maybe I should keep it at that . Have and having stronger airlines competing against the big four , I'll tell you for us , we like our model .

Speaker #3: We like our ability to outperform , especially given everything we're doing and that we've been talking to the street about for some time now .

Speaker #3: So I don't want to say I don't think consolidation is needed for us to get back to our historic earnings profile . But at the end of the day , what we're focused is on is driving value .

Speaker #11: Thank you .

Speaker #1: Your next question comes from the line of Catherine O'Brien of Goldman Sachs . Please go ahead .

Speaker #12: Hey , good afternoon everyone . Thanks for the time . And congrats , BJ . Maybe a follow up to Shannon's question earlier is the flight capacity outlook next year a function as the fleet being maxed out ?

Speaker #12: Or if demand got significantly

Speaker #12: , could you and would you delay retirements or push utilization higher in the off peaks ? And I guess if the answer is yes to that , how much better would demand have to be for you to consider doing that ?

Speaker #12: And what are the guardrails you assess in making those kinds of decisions ?

Speaker #3: Yeah . So we're you know , I think like I like I mentioned , we're operating probably about as heavily as we're able to in the peak weeks through Thanksgiving shareholder , through Christmas and into spring break .

Speaker #3: There's absolutely room for us to grow in the in the off peak periods or even some off peak days within within those peak weeks such that we have a booking curve .

Speaker #3: If the demand environment were to improve or fuel environment were to get meaningfully cheaper , I don't know that I have a specific value would be be looking for , say demand needs to get 5% better to add 1% capacity .

Speaker #3: I'm not sure that I have that for you today , but it's something we'll continue to monitor . We certainly have the bandwidth for anything in the spring , and then summer so far away that that lots of time to react , regardless of what may happen .

Speaker #3: Katie I'll just take the fleet side of that . Just keep in mind the aircraft reduction that we see in the first part of 26 is a result of eight leased airplanes returning , really exiting service from late third quarter through late fourth quarter .

Speaker #3: These were transactions that originated back in the pandemic . And those airplanes need to go back because they're much , much more expensive .

Speaker #3: If we had had chosen to keep them and then as we move through the year , there's probably some more flexibility with a few shells to extend retirements .

Speaker #3: But just don't underestimate how expensive that gets when you start talking about 24 year old A320 family aircraft . The return is just much better when we invest that capital into into our max order and we start to see the Max deliveries pick up in the back half of the year anyway .

Speaker #12: Sounds like a prudent plan . I guess . You know , as you've for my second question , have you've increased the proportion of the fleet with Allegiant Extra over the course of this year ?

Speaker #12: Any any updates on the impact of the financial impact of that configuration versus your aircraft without it ? And and then just Annualizing the higher proportion of Allegiant Extra in 26 that you put in place over 25 on flat capacity .

Speaker #12: You know , roughly speaking , any sense of how much of a tail when could be in next year ? Thanks so much for the .

Speaker #3: Yeah . So the contribution has remained pretty flat around that $500 per departure . You know , obviously , as we put more and more onto that layout , it's a little bit harder because our counterfactual , our control gets a little bit smaller .

Speaker #3: So that remeasuring gets a little more challenging moving forward . I feel good about the 500 from a full year basis . I think we'll be something around ten points of departures incremental on a full year basis .

Speaker #3: So you can think about the 500 per departure across roughly 10% more flights , or 1010 points . The distribution , I should say .

Speaker #12: Great . Thank you .

Speaker #1: question comes from the line of Atul Maheswari of UBS . Please go ahead . Good afternoon . Thanks a for taking my question and congrats on your .

Speaker #3: Promotion . Vijay .

Speaker #13: First half was difficult last year with the elections and some weather and then the back half of fourth quarter , especially December last year , was very strong .

Speaker #13: That would create very lumpy year over year compares for you for this , for this fourth quarter . So the question really is does your guidance assume some slowing in Razim over December as you lap difficult compares , or are you simply expecting current booked yields for the fourth quarter to persist for the rest of the quarter ?

Speaker #13: That's not booked ?

Speaker #3: Yeah , I mean , the the lumpiness is nothing new for for Allegiant , right . Being leisure carrier , we're going to ride the highs and lows of leisure demand , which means , you know , and just about every year Thanksgiving and Christmas are good .

Speaker #3: And the shoulder and off peaks are a little bit weaker . You know , we'll certainly get the benefit of having the weather in our comparison through October .

Speaker #3: I would expect more of that . That flat capacity weakness to persist in the period . Call it early November , early December .

Speaker #3: While the holiday periods , I think will be much closer to on par with last year , probably not flat , but but much closer to on par .

Speaker #3: So very , very resilient holiday periods with kind of typical fluctuation within the quarter between the peak and off peak .

Speaker #13: Got it . That's helpful . And then just quickly , are you able to share what portion of the fourth quarter is booked by month ?

Speaker #13: If you can ?

Speaker #3: The portion books I can talk to the quarter , maybe we have about 75% of the fourth quarter booked at this point . We do have about 100% of October booked .

Speaker #3: So you know , we have we have some pretty good line of sight . You know , the fourth quarter and in particular the holidays tend to be the longest booking curve of the year .

Speaker #3: So we do get a little bit of forward insight . There . Looking forward to the first quarter . Obviously much lower where it will probably be something closer to 15% booked as also we won't get a lot of insight to first quarter until the calendar starts .

Speaker #3: Really .

Speaker #13: Understood. Thanks for that, and good luck with the fourth quarter.

Speaker #14: Thank you .

Speaker #1: There are no further questions at this time . And with that I will turn the call back to Sherry Wilson for closing remarks .

Speaker #1: Please go ahead .

Speaker #2: Thank you all for joining the call . We'll chat again next quarter .