Allegiant Travel Q4 2025 Allegiant Travel Co Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Allegiant Travel Co Earnings Call
Speaker #1: Hello, and welcome to the Allegiant Travel Company fourth quarter and full year 2025 earnings call. All lines have been placed on mute to prevent any background noise.
Sherry Wilson: Hello, and welcome to the Allegiant Travel Company Tyler Hollingsworth Q4 and Q2 2025 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, please press star 1 on your telephone keypad. I would now like to turn the conference over to Sherry Wilson, Managing Director of Investor Relations. You may begin.
Operator: Hello, and welcome to the Allegiant Travel Company Tyler Hollingsworth Q4 and Q2 2025 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, please press star 1 on your telephone keypad. I would now like to turn the conference over to Sherry Wilson, Managing Director of Investor Relations. You may begin.
Speaker #1: After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, please press star one on your telephone keypad.
Speaker #1: I would now like to turn the conference over to Sherry Wilson, Managing Director of Investor Relations. You may begin.
Speaker #1: begin. Thank you.
[Company Representative] (Allegiant Travel Company): Thank you, and welcome to Allegiant Travel Company, Tyler Hollingsworth, Q4 and Q2 2025 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. Drew Wells, Chief Commercial 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. Following commentary, we will open it up to questions. We ask that you please limit yourself to one question and one follow-up if needed. The company's comments today will contain forward-looking statements concerning our future performance and strategic plan. Various risk factors could cause the underlying assumptions of these statements and our actual results to differ materially from those expressed or implied by our forward-looking statements. These risk factors and others are more fully disclosed in our filings with the SEC.
Sherry Wilson: Thank you, and welcome to Allegiant Travel Company, Tyler Hollingsworth, Q4 and Q2 2025 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. Drew Wells, Chief Commercial 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. Following commentary, we will open it up to questions. We ask that you please limit yourself to one question and one follow-up if needed. The company's comments today will contain forward-looking statements concerning our future performance and strategic plan. Various risk factors could cause the underlying assumptions of these statements and our actual results to differ materially from those expressed or implied by our forward-looking statements. These risk factors and others are more fully disclosed in our filings with the SEC.
Speaker #2: And welcome to Allegiant Travel Company's fourth quarter and full year 2025 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 Commercial 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 commentary, we will open it up to questions. We ask that you please limit yourself to one question and one follow-up if needed. The company's comments today will contain forward-looking statements concerning our future performance and strategic plan.
Speaker #2: 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.
[Company Representative] (Allegiant Travel Company): Any forward-looking statements are based on information available to us today. We undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information, or otherwise. The company cautions investors not to place undue reliance on forward-looking statements, which may be based on assumptions and events that do not materialize. To view this earnings release as well as the rebroadcast of the call, feel free to visit the company's investor relations site at ir.allegiantair.com. With that, I'll turn it to Greg.
Sherry Wilson: Any forward-looking statements are based on information available to us today. We undertake no obligation to update publicly any forward-looking statements, whether as a result of future events, new information, or otherwise. The company cautions investors not to place undue reliance on forward-looking statements, which may be based on assumptions and events that do not materialize. To view this earnings release as well as the rebroadcast of the call, feel free to visit the company's investor relations site at ir.allegiantair.com. With that, I'll turn it to Greg.
Speaker #2: We undertake no obligation to update publicly any forward-looking statements whether as a result of future events, new information, or otherwise. The company cautions investors not to place undue reliance on forward-looking statements which may be based on assumptions and events that do not materialize.
Speaker #2: To view this earnings release as well as the re-broadcast of the call, feel free to visit the company's investor relations site at ir.allegiantair.com. And with that, I'll turn it to
Speaker #2: Greg. Sherry, thank you.
Gregory Anderson: Sherry, thank you and thanks to everyone for joining us today. We closed 2025 with strong momentum, capping a year of meaningful progress that strengthened our foundation and showcased the durability of our model. Let me briefly review our performance in Q4, reflect on key achievements from last year, and then frame our strategic focus for 2026. Our financial results for Q4 exceeded our original expectations. We saw strong leisure demand throughout the quarter as TRASM declined just 2.6% on 10.5% capacity growth. Fuel ran slightly higher than expected, but disciplined cost execution helped us deliver a 12.9% adjusted operating margin among the best in the industry. These results demonstrate the effectiveness of our low-utilization, flexible capacity model. Operationally, 2025 was an outstanding year. Controllable completion was an impressive 99.9% even as we increased peak flying. That consistency was recognized externally as well.
Greg Anderson: Sherry, thank you and thanks to everyone for joining us today. We closed 2025 with strong momentum, capping a year of meaningful progress that strengthened our foundation and showcased the durability of our model. Let me briefly review our performance in Q4, reflect on key achievements from last year, and then frame our strategic focus for 2026. Our financial results for Q4 exceeded our original expectations. We saw strong leisure demand throughout the quarter as TRASM declined just 2.6% on 10.5% capacity growth. Fuel ran slightly higher than expected, but disciplined cost execution helped us deliver a 12.9% adjusted operating margin among the best in the industry. These results demonstrate the effectiveness of our low-utilization, flexible capacity model. Operationally, 2025 was an outstanding year. Controllable completion was an impressive 99.9% even as we increased peak flying. That consistency was recognized externally as well.
Speaker #3: And thanks to everyone for joining us today. We closed 2025 with strong momentum, capping a year of meaningful progress that strengthened our foundation and showcased the durability of our model.
Speaker #3: Let me briefly review our performance in the fourth quarter, reflect on key achievements from last year, and then frame our strategic focus for 2026.
Speaker #3: Our financial results for the fourth quarter exceeded our original expectations. We saw strong leisure demand throughout the quarter, as TRASM declined just 2.6% on 10.5% capacity growth.
Speaker #3: Fuel ran slightly higher than expected, but disciplined cost execution helped us deliver a 12.9% adjusted operating margin among the best in the industry. These results demonstrate the effectiveness of our low utilization, flexible capacity model.
Speaker #3: Operationally, 2025 was an outstanding year. Controllable completion was an impressive 99.9%, even as we increased peak volume. That consistency was recognized externally as well.
Speaker #3: The Wall Street Journal ranked Allegiant the second best US airline overall and number one in lowest cancellation rate, the least number of mishandled bags, and the fewest instances of involuntarily bumping passengers.
Gregory Anderson: The Wall Street Journal ranked Allegiant the second-best US airline overall and number one in lowest cancellation rate, the least number of mishandled bags, and the fewest instances of involuntarily bumping passengers. This reflects the daily professionalism and execution of Team Allegiant. We also successfully integrated the MAX aircraft into our fleet. After receiving our first MAX in late 2024, we prioritized investing in pilot training and revamping our maintenance operations. This was to ensure a seamless transition. These aircraft are performing very well, delivering roughly a 20% fuel burn advantage compared to the A320. Now we are continuing to optimize schedules to allow us to realize the efficiency and reliability benefits from our MAX fleet. If they continue to increase their share of flying for us, they should become a meaningful tailwind for margins. Technology modernization was another important milestone.
Greg Anderson: The Wall Street Journal ranked Allegiant the second-best US airline overall and number one in lowest cancellation rate, the least number of mishandled bags, and the fewest instances of involuntarily bumping passengers. This reflects the daily professionalism and execution of Team Allegiant. We also successfully integrated the MAX aircraft into our fleet. After receiving our first MAX in late 2024, we prioritized investing in pilot training and revamping our maintenance operations. This was to ensure a seamless transition. These aircraft are performing very well, delivering roughly a 20% fuel burn advantage compared to the A320. Now we are continuing to optimize schedules to allow us to realize the efficiency and reliability benefits from our MAX fleet. If they continue to increase their share of flying for us, they should become a meaningful tailwind for margins. Technology modernization was another important milestone.
Speaker #3: This reflects the daily professionalism and execution of Team Allegiant. We also successfully integrated the MAX aircraft into our fleet. After receiving our first MAX in late 2024, we prioritized investing in pilot training and revamping our maintenance operations; this was to ensure a seamless transition.
Speaker #3: And these aircraft are performing very well. Delivering roughly a 20% fuel burn advantage compared to the A320. And now, we are continuing to optimize schedules to allow us to realize the efficiency and reliability benefits from our MAX fleet.
Speaker #3: Continue to increase their share of ASMs. As they're flying for us, they should become a meaningful tailwind for margins. Technology modernization was another important milestone.
Speaker #3: Transitioning away from our proprietary systems in favor of modern, flexible platforms was a major undertaking. But it was essential for achieving our future goals.
Gregory Anderson: Transitioning away from our proprietary systems in favor of modern, flexible platforms was a major undertaking, but it was essential for achieving our future goals. We are now turning our focus to leveraging the state-of-the-art technology stack that allows us to introduce new tools and capabilities across the business. Our commercial initiatives are also gaining traction. Allegiant Xtra continues to perform well, loyalty engagement is rising, and our improving digital capabilities are helping to make travel easier and even more enjoyable. With flash capacity growth in 2026, these commercial levers should boost earnings as their early results remain encouraging. Importantly, we strengthened our financial position while advancing all these initiatives. Unit costs fell more than 6% for the year, an industry-leading performance. With the sale of Sunseeker, debt repayments, and improved EBITDA, net leverage was reduced to 2.3 turns, nearing our lowest levels since pre-COVID.
Greg Anderson: Transitioning away from our proprietary systems in favor of modern, flexible platforms was a major undertaking, but it was essential for achieving our future goals. We are now turning our focus to leveraging the state-of-the-art technology stack that allows us to introduce new tools and capabilities across the business. Our commercial initiatives are also gaining traction. Allegiant Xtra continues to perform well, loyalty engagement is rising, and our improving digital capabilities are helping to make travel easier and even more enjoyable. With flash capacity growth in 2026, these commercial levers should boost earnings as their early results remain encouraging. Importantly, we strengthened our financial position while advancing all these initiatives. Unit costs fell more than 6% for the year, an industry-leading performance. With the sale of Sunseeker, debt repayments, and improved EBITDA, net leverage was reduced to 2.3 turns, nearing our lowest levels since pre-COVID.
Speaker #3: We are now turning our focus to leveraging the state-of-the-art technology stack that allows us to introduce new tools and capabilities across the business. And our commercial initiatives are also gaining traction.
Speaker #3: Allegiant Xtra continues to perform well, loyalty engagement is rising, and our improving digital capabilities are helping to make travel easier and even more enjoyable.
Speaker #3: With flash capacity growth in 2026, these commercial levers should boost earnings as they're early results remain encouraging. Importantly, we strengthened our financial position while advancing all of these initiatives.
Speaker #3: Unit costs fell more than 6% per the year, and industry-leading performance. And with the sale of Sunseeker, debt repayments, and improved EBITDA, net leverage was reduced to 2.3 turns, nearing our lowest levels since pre-COVID.
Speaker #3: Turning briefly to demand, we saw meaningful improvement over the holiday period, and that momentum continued into January. Current leisure demand is strong, and our customers continue to value convenience and affordability.
Gregory Anderson: Turning briefly to demand, we saw meaningful improvement over the holiday period, and that momentum continued into January. Current leisure demand is strong, and our customers continue to value convenience and affordability, areas where Allegiant is uniquely positioned. Looking ahead to 2026, we do not plan to grow the fleet this year as a standalone, and we expect to lean into our existing infrastructure and commercial initiatives to drive TRASM improvement and margin expansion. Importantly, we remain committed to balancing growth with profitability, which we refer to as earning the right to grow. We expect a 13.5% adjusted operating margin in Q1, which should be our second straight quarter at or near the industry lead in setting the stage for a strong 2026.
Greg Anderson: Turning briefly to demand, we saw meaningful improvement over the holiday period, and that momentum continued into January. Current leisure demand is strong, and our customers continue to value convenience and affordability, areas where Allegiant is uniquely positioned. Looking ahead to 2026, we do not plan to grow the fleet this year as a standalone, and we expect to lean into our existing infrastructure and commercial initiatives to drive TRASM improvement and margin expansion. Importantly, we remain committed to balancing growth with profitability, which we refer to as earning the right to grow. We expect a 13.5% adjusted operating margin in Q1, which should be our second straight quarter at or near the industry lead in setting the stage for a strong 2026.
Speaker #3: Areas where Allegiant is uniquely positioned. Looking ahead to 2026, we do not plan to grow the fleet this year as a standalone, and we expect to lean into our existing infrastructure and commercial initiatives to drive TRASM improvement and margin expansion.
Speaker #3: Importantly, we remain committed to balancing growth with profitability, which we refer to as earning the right to grow. We expect a 13.5% adjusted operating margin in the first quarter, which should be our second straight quarter at or near the industry lead in setting the stage for a strong 2026.
Speaker #3: And for the full year, we're guiding to adjusted EPS of more than $8 per share—an increase of approximately 60% year over year, reflecting the structural improvements we've made across the business.
Gregory Anderson: For the full year, we're guiding to adjusted EPS of more than $8 per share, an increase of approximately 60% year-over-year, reflecting the structural improvements we've made across the business. Strategically, our agreement to acquire Sun Country is an important step forward as the combination is expected to accelerate our ability to build the leading leisure airline in the US. Given the execution over the past year and the strengthening of our foundation, the organization is well positioned to take on this significant undertaking. The two airlines share strong cultural alignment, similar fleet types, minimal network overlap, and complementary technology platforms, including Navitaire, all of which help reduce integration risk. A thoughtful integration plan is underway, focusing on capturing synergies efficiently while protecting operational excellence and the respective strengths of both airlines.
Greg Anderson: For the full year, we're guiding to adjusted EPS of more than $8 per share, an increase of approximately 60% year-over-year, reflecting the structural improvements we've made across the business. Strategically, our agreement to acquire Sun Country is an important step forward as the combination is expected to accelerate our ability to build the leading leisure airline in the US. Given the execution over the past year and the strengthening of our foundation, the organization is well positioned to take on this significant undertaking. The two airlines share strong cultural alignment, similar fleet types, minimal network overlap, and complementary technology platforms, including Navitaire, all of which help reduce integration risk. A thoughtful integration plan is underway, focusing on capturing synergies efficiently while protecting operational excellence and the respective strengths of both airlines.
Speaker #3: Strategically, our agreement to acquire Sun Country is an important step forward, as the combination is expected to accelerate our ability to build the leading leisure airline in the U.S.
Speaker #3: Given the execution over the past year and the strengthening of our foundation, the organization is well-positioned to take on this significant undertaking. The two airlines share strong cultural alignment, similar fleet types, minimal network overlap, and complementary technology platforms, including Navitare, all of which help reduce integration risk.
Speaker #3: A thoughtful integration plan is underway, focusing on capturing synergy efficiently while protecting operational excellence and the respective strengths of both airlines. And when you step back and look at the broader landscape, it's clear that Allegiant continues to separate itself within our segment of the industry.
Gregory Anderson: When you step back and look at the broader landscape, it's clear that Allegiant continues to separate itself within our segment of the industry. Our low-utilization, flexible capacity model has worked for more than 20 years because it is purpose-built for leisure flying. We take great pride in being the leisure carrier of choice in nearly all of the 126 communities we serve, delivering convenience and reliability that travelers can count on. And none of this is possible without the consistency and dedication of Team Allegiant. Their passion shows up every single day, and I'm honored to work alongside them. And with that, let me turn it over to Drew to walk through our commercial performance.
Greg Anderson: When you step back and look at the broader landscape, it's clear that Allegiant continues to separate itself within our segment of the industry. Our low-utilization, flexible capacity model has worked for more than 20 years because it is purpose-built for leisure flying. We take great pride in being the leisure carrier of choice in nearly all of the 126 communities we serve, delivering convenience and reliability that travelers can count on. And none of this is possible without the consistency and dedication of Team Allegiant. Their passion shows up every single day, and I'm honored to work alongside them. And with that, let me turn it over to Drew to walk through our commercial performance.
Speaker #3: Our low-utilization, flexible-capacity model has worked for more than 20 years because it is purpose-built for leisure flying. We take great pride in being the leisure carrier of choice in nearly all of the 126 communities we serve.
Speaker #3: And with that, let me turn it over to Drew to walk through our commercial performance.
Speaker #2: Thank you, Greg, and thanks to everyone for joining us this afternoon. We finished 2025 with more than 2.5 billion dollars in total airline revenue, up approximately 4.3% versus full year 2024, and a record high for Allegiant.
Drew Wells: Thank you, Greg, and thanks everyone for joining us this afternoon. We finished 2025 with more than $2.5 billion in total airline revenue, up approximately 4.3% for its full year of 2024, and a record high for Allegiant. I'd be remiss not to celebrate the success of the growth strategy even in the face of macroeconomic pressures through the year. On the back of that growth, we believe our year-over-year TRASM change relative to our CASM-ex performance will be the best in the industry for the full year. The fourth quarter ended with approximately $656 million in total airline revenue, up approximately 7.6% versus Q4 2024, and a fourth-quarter record. Finally, the fixed fee revenue contribution of $25.5 million in the fourth quarter, despite the increase of scheduled service utilization, was another quarterly record. Our unit revenue metrics performed quite well in the fourth quarter, particularly when considering the growth profile.
Drew Wells: Thank you, Greg, and thanks everyone for joining us this afternoon. We finished 2025 with more than $2.5 billion in total airline revenue, up approximately 4.3% for its full year of 2024, and a record high for Allegiant. I'd be remiss not to celebrate the success of the growth strategy even in the face of macroeconomic pressures through the year. On the back of that growth, we believe our year-over-year TRASM change relative to our CASM-ex performance will be the best in the industry for the full year.
Speaker #2: As you were missed, not to celebrate the success of the growth strategy, even in the face of macroeconomic pressures through the year. On the back of that growth, we believe our year-over-year TRASM change relative to our CASM-X performance will be the best in the industry for the full year.
Speaker #2: The fourth quarter ended with approximately 656 million dollars in total airline revenue, up approximately 7.6% versus 4Q '24, and a fourth quarter record. Finally, the fixed fee revenue contribution of 25.5 million dollars in the fourth quarter, despite the increase of scheduled service utilization, was another quarterly record.
Drew Wells: The fourth quarter ended with approximately $656 million in total airline revenue, up approximately 7.6% versus Q4 2024, and a fourth-quarter record. Finally, the fixed fee revenue contribution of $25.5 million in the fourth quarter, despite the increase of scheduled service utilization, was another quarterly record. Our unit revenue metrics performed quite well in the fourth quarter, particularly when considering the growth profile.
Speaker #2: Our unit revenue metrics performed quite well in the fourth quarter, particularly when considering the growth profile. Our scheduled service ASNs grew 10.5% year over year in the fourth quarter, while TRASM decreased 2.6% to 12.67 cents.
Drew Wells: Our scheduled service ASMs grew 10.5% year-over-year in the fourth quarter, while TRASM decreased 2.6% to $0.1267. As we've discussed over the last couple of quarters, the change in load factor trajectory is helping support the improvement of the growth-adjusted trends in unit revenue metrics as we gained a full point of load factor in Q4 2025 compared to the prior year. The winter holiday performance was certainly the most striking. Unit revenues over the Thanksgiving travel window were slightly higher on a year-over-year basis, and unit revenues across the Christmas and New Year's travel period were modestly higher on a year-over-year basis, but also notably shifted into January, providing some tailwind into Q1 2026. Remember, the holiday period in 2024 also marks the start of our utilization normalization and continues into 2026.
Drew Wells: Our scheduled service ASMs grew 10.5% year-over-year in the fourth quarter, while TRASM decreased 2.6% to $0.1267. As we've discussed over the last couple of quarters, the change in load factor trajectory is helping support the improvement of the growth-adjusted trends in unit revenue metrics as we gained a full point of load factor in Q4 2025 compared to the prior year. The winter holiday performance was certainly the most striking. Unit revenues over the Thanksgiving travel window were slightly higher on a year-over-year basis, and unit revenues across the Christmas and New Year's travel period were modestly higher on a year-over-year basis, but also notably shifted into January, providing some tailwind into Q1 2026. Remember, the holiday period in 2024 also marks the start of our utilization normalization and continues into 2026.
Speaker #2: As we've discussed over the last couple of quarters, the change in low-factor trajectory is helping support the improvement of the growth-adjusted trends in unit revenue metrics, as we gained a full point of low factor in Q4 '25 compared to the prior year.
Speaker #2: The winter holiday performance was certainly the most striking. Unit revenues over the Thanksgiving travel window were slightly higher on a year-over-year basis, and unit revenues across the Christmas and New Year's travel period were modestly higher on a year-over-year basis, but also notably shifted into January providing some tailwind into the first quarter of 2026.
Speaker #2: Remember, the holiday period in 2024 also marked the start of our utilization normalization, and continues into 2026. We expect the next year to represent additional sculpting of the significant utilization lift of the last year.
Drew Wells: We expect the next year to represent additional sculpting of the significant utilization lift of the last year. For many markets, that represents capacity somewhere between 2024 and 2025 levels. Peak days will increase utilization just slightly through the first half of the year, while off-peak days will regress slightly more. We'll maintain some slack in the approach, but as usual, we'll feature more ability to add off-peak day capacity as the environment dictates. Additionally, as Greg alluded to, is the proliferation of MAX flying in our network. We're thrilled with the performance of the new aircraft in our system thus far. In fact, when cherry-picking the top A320 lines throughout the entire system against all MAX flyers, we are producing approximately 20% better economics, simply measured as revenue per hour less fuel expense per hour on peak days with similar utilization.
Drew Wells: We expect the next year to represent additional sculpting of the significant utilization lift of the last year. For many markets, that represents capacity somewhere between 2024 and 2025 levels. Peak days will increase utilization just slightly through the first half of the year, while off-peak days will regress slightly more. We'll maintain some slack in the approach, but as usual, we'll feature more ability to add off-peak day capacity as the environment dictates. Additionally, as Greg alluded to, is the proliferation of MAX flying in our network. We're thrilled with the performance of the new aircraft in our system thus far. In fact, when cherry-picking the top A320 lines throughout the entire system against all MAX flyers, we are producing approximately 20% better economics, simply measured as revenue per hour less fuel expense per hour on peak days with similar utilization.
Speaker #2: For many markets, that represents capacity somewhere between 2024 and 2025 levels. Peak days will increase utilization just slightly through the first half of the year, while off-peak days will regress slightly more.
Speaker #2: We'll maintain some slack in the approach, but as usual, we'll feature more ability to add off-peak day capacity as the environment dictates. Additionally, as Greg alluded to, as the proliferation of MAX flying in our network continues, we're thrilled with the performance of the new aircraft in our system thus far.
Speaker #2: In fact, when cherry-picking the top A320 lines throughout the entire system, against all max flyers, we are producing approximately 20% better economics simply measured as revenue per hour less fuel expense per hour on peak days with similar utilization.
Speaker #2: Further, through the same comparison on off-peak days, we produce nearly 10% better per-hour economics, while also flying the MAX aircraft 30% more than the same top Airbus tails in the fourth quarter.
Drew Wells: Further, through the same comparison on off-peak days, we produce nearly 10% better per hour economics while also flying the MAX aircraft 30% more than the same top Airbus tails in Q4. We continue to be incredibly excited for the increased potential that lies ahead with this aircraft. The fleet cadence through 2026, of course, correlates neatly with our overall ASM growth expectations. Q1 ASMs are expected to be down approximately 5.7%, and Q2 slightly more due both to the fleet schedule and the Easter holiday pulling forward. Growth is expected to ramp up in Q3 and then further in Q4 to achieve a full-year expectation of down 0.5% versus full year 2025. 2026 will also mark a return of robust levels of new market ASMs.
Drew Wells: Further, through the same comparison on off-peak days, we produce nearly 10% better per hour economics while also flying the MAX aircraft 30% more than the same top Airbus tails in Q4. We continue to be incredibly excited for the increased potential that lies ahead with this aircraft. The fleet cadence through 2026, of course, correlates neatly with our overall ASM growth expectations. Q1 ASMs are expected to be down approximately 5.7%, and Q2 slightly more due both to the fleet schedule and the Easter holiday pulling forward. Growth is expected to ramp up in Q3 and then further in Q4 to achieve a full-year expectation of down 0.5% versus full year 2025. 2026 will also mark a return of robust levels of new market ASMs.
Speaker #2: We continue to be incredibly excited for the increased potential that lies ahead with this aircraft. The fleet cadence through 2026, of course, correlates neatly with our overall ASM growth expectation.
Speaker #2: First quarter ASMs are expected to be down approximately 5.7%, and the second quarter slightly more due both to fleet schedule and the Easter holiday pulling forward.
Speaker #2: to ramp up in the third and then further in Growth is expected the fourth quarter to achieve a full year expectation of down half of 1% versus full year 2025.
Speaker #2: 2026 will also mark a return of robust levels of new market ASMs. While Q1 remains in the mid-single percent of ASMs flown, approximately 10% of both the second and third quarters will be in their first 12 months of operation.
Drew Wells: While one Q remains in the mid-single percent of ASMs flown, approximately 10% of both Q2 and Q3 will be in their first 12 months of operation. 19 markets begin service in Q1, 17 of those this month, and 20 more in Q2. New markets lend themselves to strong lift in new card acquisition trends. Four of the last five months have been double-digit percent higher on a year-over-year basis, and spend remains strong on the card. We received approximately $140 million in remuneration, which represented a modest year-over-year increase. As we continue to build on this momentum, we are committed to working closely with Bank of America on the evolution of the co-brand, and we are engaged in constructive discussions to ensure long-term alignment and a continued strong partnership that supports the next phase of our current program.
Drew Wells: While one Q remains in the mid-single percent of ASMs flown, approximately 10% of both Q2 and Q3 will be in their first 12 months of operation. 19 markets begin service in Q1, 17 of those this month, and 20 more in Q2. New markets lend themselves to strong lift in new card acquisition trends. Four of the last five months have been double-digit percent higher on a year-over-year basis, and spend remains strong on the card. We received approximately $140 million in remuneration, which represented a modest year-over-year increase. As we continue to build on this momentum, we are committed to working closely with Bank of America on the evolution of the co-brand, and we are engaged in constructive discussions to ensure long-term alignment and a continued strong partnership that supports the next phase of our current program.
Speaker #2: Nineteen markets begin service in the first quarter, seventeen of those this month, and twenty more in the second quarter. New markets lend themselves to strong lift in new card acquisition trends.
Speaker #2: Four of the last five months have been double-digit percent higher on a year-over-year basis, and spend remains strong on the card. We received approximately 140 million dollars in remuneration which represented a modest year-over-year increase.
Speaker #2: As we continue to build on this momentum, we are committed to working closely with Bank of America on the evolution of the co-brand. And we are engaged in constructive discussions to ensure long-term alignment and a continued strong partnership that supports the next phase of our current program.
Speaker #2: The modest decline in ASMs, holiday shifts pulling noticeable traffic into the quarter, and, most importantly, the exceptional demand throughout the month of January, set us up for an incredible Q1 revenue performance.
Drew Wells: The modest decline in ASMs, holiday shifts pulling noticeable traffic into the quarter, and most importantly, the exceptional demand throughout the month of January sets us up for an incredible Q1 revenue performance. I noted the New Year's shift of travel into Q1, but the early Easter will have some positive impact to the end of March as well. Even while winter storm impacts were worth approximately $2 million in absolute revenue headwinds, the TRASM effect is a slight positive due to the timing within the quarter. We were much better positioned within our Navitaire ecosystem to provide options and reaccommodate our passengers. And most of all, a huge thank you to all of our team members that showed up in adverse conditions and safely made a huge difference in the lives of our travelers. With that, I'd like to hand it over to Robert.
Drew Wells: The modest decline in ASMs, holiday shifts pulling noticeable traffic into the quarter, and most importantly, the exceptional demand throughout the month of January sets us up for an incredible Q1 revenue performance. I noted the New Year's shift of travel into Q1, but the early Easter will have some positive impact to the end of March as well. Even while winter storm impacts were worth approximately $2 million in absolute revenue headwinds, the TRASM effect is a slight positive due to the timing within the quarter. We were much better positioned within our Navitaire ecosystem to provide options and reaccommodate our passengers. And most of all, a huge thank you to all of our team members that showed up in adverse conditions and safely made a huge difference in the lives of our travelers. With that, I'd like to hand it over to Robert.
Speaker #2: I noted the New Year's shift of travel into Q1, but the early Easter will have some positive impact at the end of March as well.
Speaker #2: Even while winter storm impacts were worth approximately $2 million in absolute revenue headwinds, the TRASM effect is a slight positive due to the timing within the quarter.
Speaker #2: We were much better positioned within our Navatar ecosystem to provide options to reaccommodate our passengers. And most of all, a huge thank you to all of our team members that showed up in adverse conditions and safely made a huge difference in the lives of our travelers.
Speaker #2: With that, I'd like to hand it over to Robert.
Speaker #1: Thank you, Drew, and good afternoon, everyone. I'd like to start by just recognizing the team for their incredible work throughout 2025. We grew capacity by 12.6% in the year on flat fleet count and flat staffing levels, despite a 14% increase in fleet utilization and nearly 17% reduction in employees per departure.
Robert Neal: Thank you, Drew, and good afternoon, everyone. I'd like to start by just recognizing the team for their incredible work throughout 2025. We grew capacity by 12.6% in the year on flat fleet count and flat staffing levels. Despite a 14% increase in fleet utilization and nearly 17% reduction in employees per departure, our team members delivered an industry-leading controllable completion of 99.9%. Now I'll walk through the Q4 and full-year results and then provide an update on our outlook and financial position. As with prior calls, my comments today will reference results on an adjusted basis, excluding special items unless otherwise noted. Our outlook today will exclude any impact from our proposed acquisition of Sun Country Airlines, which we expect to close in the back half of 2026.
Robert Neal: Thank you, Drew, and good afternoon, everyone. I'd like to start by just recognizing the team for their incredible work throughout 2025. We grew capacity by 12.6% in the year on flat fleet count and flat staffing levels. Despite a 14% increase in fleet utilization and nearly 17% reduction in employees per departure, our team members delivered an industry-leading controllable completion of 99.9%. Now I'll walk through the Q4 and full-year results and then provide an update on our outlook and financial position. As with prior calls, my comments today will reference results on an adjusted basis, excluding special items unless otherwise noted. Our outlook today will exclude any impact from our proposed acquisition of Sun Country Airlines, which we expect to close in the back half of 2026.
Speaker #1: Our team members delivered an industry-leading controllable completion of 99.9%. Now, I'll walk through the fourth quarter and full year results, and then provide position.
Speaker #1: As with prior an update on our outlook and financial calls, my comments today will reference results on an adjusted basis, excluding special items unless otherwise noted.
Speaker #1: Our outlook today will exclude any impact from our proposed acquisition of Sun Country Airlines, which we expect to close in the back half of 2026.
Speaker #1: For the fourth quarter, the airline segment produced net income of $50.1 million resulting in airline-only earnings of $2.72 per share, coming in ahead of our guided range which was $2 per share at the midpoint.
Robert Neal: For the fourth quarter, the airline segment produced net income of $50.1 million, resulting in airline-only earnings of $2.72 per share, coming in ahead of our guided range, which was $2 per share at the midpoint. Our performance was driven by lower-than-expected salaries and benefits, timing of certain maintenance expenses, and a stronger-than-expected revenue environment following a government shutdown. Full year 2025 consolidated net income was $70.3 million or $3.80 per share. The airline earned $93.8 million, yielding a full-year airline-only earnings of $5.07 per share. The airline generated just over $143 million of EBITDA during the fourth quarter, producing an EBITDA margin of nearly 22%, underscoring the earnings power of the model in a favorable leisure demand environment. Turning to costs, fuel averaged $2.61 per gallon during the fourth quarter, slightly above our expectations.
Robert Neal: For the fourth quarter, the airline segment produced net income of $50.1 million, resulting in airline-only earnings of $2.72 per share, coming in ahead of our guided range, which was $2 per share at the midpoint. Our performance was driven by lower-than-expected salaries and benefits, timing of certain maintenance expenses, and a stronger-than-expected revenue environment following a government shutdown. Full year 2025 consolidated net income was $70.3 million or $3.80 per share. The airline earned $93.8 million, yielding a full-year airline-only earnings of $5.07 per share. The airline generated just over $143 million of EBITDA during the fourth quarter, producing an EBITDA margin of nearly 22%, underscoring the earnings power of the model in a favorable leisure demand environment. Turning to costs, fuel averaged $2.61 per gallon during the fourth quarter, slightly above our expectations.
Speaker #1: Outperformance was driven by lower-than-expected salaries and benefits, timing of certain maintenance expenses, and a stronger-than-expected revenue environment following the government shutdown. Full year 2025 consolidated net income with $70.3 million or $3.80 per share.
Speaker #1: The airline earned $93.8 million, yielding full-year airline-only earnings of $5.07 per share. The airline generated just over $143 million of EBITDA during the fourth quarter, producing an EBITDA margin of nearly 22%, underscoring the earnings power of the model in a favorable leisure demand environment.
Speaker #1: Turning to costs, fuel averaged $2.61 per gallon during the fourth quarter, slightly above our expectations. Notably, ASMs per gallon were up 2.6% over the prior year quarter, highlighting initial efficiencies from investments in the max aircraft and lease engines.
Robert Neal: Notably, ASMs per gallon were up 2.6% over the prior year quarter, highlighting initial efficiencies from investments in the MAX aircraft and LEAP engines. As the MAX aircraft comprises a larger percentage of the fleet, we expect to see continued improvements here, yielding significant savings in annual fuel consumption. Fourth quarter adjusted non-fuel unit costs were $8.01, representing a 3.4% year-over-year improvement on 10.2% higher capacity. For the full year, cost performance came in consistent with our down mid-single digit expectation, with non-fuel unit costs down 6.1% despite removal of 4.5 points of planned capacity growth, demonstrating the strength and agility of our flexible utilization model and the cost discipline of our team. We've continued to grow into our infrastructure throughout 2025, and I'm really pleased with how the team has delivered on the cost front.
Robert Neal: Notably, ASMs per gallon were up 2.6% over the prior year quarter, highlighting initial efficiencies from investments in the MAX aircraft and LEAP engines. As the MAX aircraft comprises a larger percentage of the fleet, we expect to see continued improvements here, yielding significant savings in annual fuel consumption. Fourth quarter adjusted non-fuel unit costs were $8.01, representing a 3.4% year-over-year improvement on 10.2% higher capacity. For the full year, cost performance came in consistent with our down mid-single digit expectation, with non-fuel unit costs down 6.1% despite removal of 4.5 points of planned capacity growth, demonstrating the strength and agility of our flexible utilization model and the cost discipline of our team. We've continued to grow into our infrastructure throughout 2025, and I'm really pleased with how the team has delivered on the cost front.
Speaker #1: As the MAX aircraft comprises a larger percentage of the fleet, we expect to see continued improvements here, yielding significant savings in annual fuel consumption.
Speaker #1: Fourth quarter adjusted non-fuel unit costs were $8.01, representing a 3.4% year-over-year improvement on $10.2% higher capacity. For the full year, cost performance came in consistent with our down mid-single digit expectation, with non-fuel unit costs down 6.1% despite removal of 4.5 points of planned capacity growth.
Speaker #1: Demonstrating the strength and agility of our flexible utilization model and the cost discipline of our team. We've continued to grow into our infrastructure throughout 2025, and I'm really pleased with how the team has delivered on the cost front.
Speaker #1: As we look ahead to 2026, while we expect capacity to be down slightly year over year, which will place modest pressure on CASM-X, I remain confident that the cost initiatives implemented in 2025 will help mitigate these pressures.
Robert Neal: As we look ahead to 2026, while we expect capacity to be down slightly year-over-year, which will place modest pressure on CASM-ex, I remain confident that the cost initiatives implemented in 2025 will help mitigate these pressures. Importantly, we continue to expect full-year unit revenue increases to exceed CASM-ex fuel increases, as evidenced by our full-year outlook, which I'll discuss in a moment. Moving to the balance sheet, we ended the quarter with total available liquidity of $1.1 billion, inclusive of $250 million of underwritten revolving credit facilities. Cash and investments declined by approximately $150 million from the end of the prior quarter, reflecting proactive debt prepayments following the sale of Sunseeker, which had closed late in the third quarter. During the quarter, we repaid $259 million of debt, including $224 million in voluntary prepayments. At year-end, cash and investments sat at approximately 32% of full-year revenues.
Robert Neal: As we look ahead to 2026, while we expect capacity to be down slightly year-over-year, which will place modest pressure on CASM-ex, I remain confident that the cost initiatives implemented in 2025 will help mitigate these pressures. Importantly, we continue to expect full-year unit revenue increases to exceed CASM-ex fuel increases, as evidenced by our full-year outlook, which I'll discuss in a moment. Moving to the balance sheet, we ended the quarter with total available liquidity of $1.1 billion, inclusive of $250 million of underwritten revolving credit facilities. Cash and investments declined by approximately $150 million from the end of the prior quarter, reflecting proactive debt prepayments following the sale of Sunseeker, which had closed late in the third quarter. During the quarter, we repaid $259 million of debt, including $224 million in voluntary prepayments. At year-end, cash and investments sat at approximately 32% of full-year revenues.
Speaker #1: Importantly, we continue to expect full-year unit revenue increases to exceed CASM ex-fuel increases, as evidenced by our full-year outlook, which I'll discuss in a moment.
Speaker #1: Moving to the balance sheet, we ended the quarter with total available liquidity of $1.1 billion, inclusive of $250 million of undrawn revolving credit facilities.
Speaker #1: Cash and investments declined by approximately 150 million from the end of the prior quarter, reflecting proactive debt prepayments following the sale of Sunseeker, which had closed late in the third quarter.
Speaker #1: During the quarter, we repaid $259 million of debt, including $224 million in voluntary prepayments. At year-end, cash and investments sat at approximately 32% of full year revenues.
Speaker #1: We also increased our revolver capacity to 250 million dollars, up from 175 million providing efficient available liquidity while allowing for reduction in debt balances.
Robert Neal: We also increased our revolver capacity to $250 million, up from $175 million, providing efficient available liquidity while allowing for reduction in debt balances. Notably, we continue to maintain an unencumbered pool of aircraft and engines valued at well over $1 billion, providing substantial financial flexibility. Total debt at year-end was just under $1.8 billion, down from $2.1 billion at the end of Q3, and net leverage improved to 2.3 times, down nearly a full turn from Q4 of 2024. Capital expenditures during Q4 were $56.7 million, including $35.9 million of aircraft-related spend and $20.8 million in other expenditures, while deferred heavy maintenance spend during the quarter was $11.5 million. For the full year, we invested $453 million into the airline, inclusive of heavy maintenance expenditures and within our previously guided range.
Robert Neal: We also increased our revolver capacity to $250 million, up from $175 million, providing efficient available liquidity while allowing for reduction in debt balances. Notably, we continue to maintain an unencumbered pool of aircraft and engines valued at well over $1 billion, providing substantial financial flexibility. Total debt at year-end was just under $1.8 billion, down from $2.1 billion at the end of Q3, and net leverage improved to 2.3 times, down nearly a full turn from Q4 of 2024. Capital expenditures during Q4 were $56.7 million, including $35.9 million of aircraft-related spend and $20.8 million in other expenditures, while deferred heavy maintenance spend during the quarter was $11.5 million. For the full year, we invested $453 million into the airline, inclusive of heavy maintenance expenditures and within our previously guided range.
Speaker #1: Notably, we continue to maintain an unencumbered pool of over $1 billion in aircraft and engines, providing substantial financial flexibility. Total debt at year-end was just under $1.8 billion, down from $2.1 billion at the end of the third quarter, and net leverage improved to 2.3 times, down nearly a full turn from the fourth quarter of 2024.
Speaker #1: Capital expenditures during the fourth quarter were $56.7 million, including $35.9 million of aircraft-related spend and $20.8 million in other expenditures, while deferred heavy maintenance spend during the quarter was $11.5 million.
Speaker #1: For the full year, we invested $453 million into the airline, inclusive of heavy maintenance expenditures and within our previously guided range. We ended the year with $123 aircraft in the fleet, including 16 737 MAX and 107 A320 family aircraft.
Robert Neal: We ended the year with 123 aircraft in the fleet, including 16 737 MAX and 107 A320 family aircraft. Looking ahead to 2026, we expect to take delivery of 11 737 MAX aircraft, with 9 placed into service by year-end while retiring 9 A320 family aircraft throughout the year, resulting in a flat year-over-year fleet count. Based on these delivery expectations, we estimate full year 2026 capital expenditures of approximately $750 million, including $85 million in deferred heavy maintenance and $580 million of aircraft-related CapEx. Turning to our outlook, as Drew noted, we now expect full-year capacity to be down slightly year-over-year, largely due to timing of aircraft deliveries, which are back half-weighted. This includes a modest delay of 3 aircraft, pushing their entry into service just after the start of our summer peak.
Robert Neal: We ended the year with 123 aircraft in the fleet, including 16 737 MAX and 107 A320 family aircraft. Looking ahead to 2026, we expect to take delivery of 11 737 MAX aircraft, with 9 placed into service by year-end while retiring 9 A320 family aircraft throughout the year, resulting in a flat year-over-year fleet count. Based on these delivery expectations, we estimate full year 2026 capital expenditures of approximately $750 million, including $85 million in deferred heavy maintenance and $580 million of aircraft-related CapEx. Turning to our outlook, as Drew noted, we now expect full-year capacity to be down slightly year-over-year, largely due to timing of aircraft deliveries, which are back half-weighted. This includes a modest delay of 3 aircraft, pushing their entry into service just after the start of our summer peak.
Speaker #1: Looking ahead to 2026, we expect to take delivery of 11 737 MAX aircraft, with nine placed into service by year-end, while retiring nine A320 family aircraft throughout the year. This will result in a flat year-over-year fleet count.
Speaker #1: Based on these delivery expectations, we estimate full year 2026 capital expenditures of approximately $750 million including $85 million in deferred heavy maintenance and $580 million of aircraft-related CapEx.
Speaker #1: Turning to our outlook, as Drew noted, we now expect full year capacity to be down slightly year-over-year, largely due to timing of aircraft deliveries, which are back half-weighted.
Speaker #1: This includes a modest delay of three aircraft, pushing their entry into service just after the start of our summer peak. The healthy demand environment we observed during the fourth quarter of 2025 extended into early January.
Robert Neal: The healthy demand environment we observed during Q4 2025 extended into early January. While winter storms Fern and Giana did impact bookings, we are beginning to see a recovery, and today's guidance reflects the impact from the storms. As a reminder, our outlook is based on Allegiant's standalone forecast. For Q1, we expect earnings per share of approximately $3 at the midpoint of our guided range, implying an operating margin of 13.5% based on an assumed fuel cost of $2.60 per gallon. For the full year, given continued macro uncertainty across the industry, we believe it is appropriate to guide more conservatively. At this point, we expect to deliver earnings per share of at least $8, with the potential for upside as demand trends, cost initiatives, and operating performance evolve over the course of the year.
Robert Neal: The healthy demand environment we observed during Q4 2025 extended into early January. While winter storms Fern and Giana did impact bookings, we are beginning to see a recovery, and today's guidance reflects the impact from the storms. As a reminder, our outlook is based on Allegiant's standalone forecast. For Q1, we expect earnings per share of approximately $3 at the midpoint of our guided range, implying an operating margin of 13.5% based on an assumed fuel cost of $2.60 per gallon. For the full year, given continued macro uncertainty across the industry, we believe it is appropriate to guide more conservatively. At this point, we expect to deliver earnings per share of at least $8, with the potential for upside as demand trends, cost initiatives, and operating performance evolve over the course of the year.
Speaker #1: While winter storms furn and Giana did impact bookings, we're beginning to see a recovery, and today's guidance reflects the impact from the storms. As a reminder, our outlook is based on allegiance to standalone forecasts.
Speaker #1: For the first quarter, we expect earnings per share of approximately $3 at the midpoint of our guided range, implying an operating margin of 13.5% based on an assumed fuel cost per gallon.
Speaker #1: For the full year, given continued macro uncertainty across the industry, we believe it is appropriate to guide more conservatively. At this point, we expect to deliver earnings per share of at least $8.00, with the potential for upside as demand trends, cost initiatives, and operating performance evolve over the course of the year.
Speaker #1: As I wrap up, 2025 was a foundational year for Allegiant. We brought the level of operations back in line with our fleet infrastructure, providing operating cost economics constructed to our leisure-focused, flexible capacity model.
Robert Neal: As I wrap up, 2025 was a foundational year for Allegiant. We brought level of operations back in line with our fleet infrastructure, providing operating cost economics constructed to our leisure-focused, flexible capacity model. We largely restored peak day aircraft utilization, making more of our product available on the days our customers want to travel. We aligned management headcount to level of operations and introduced performance-based pay programs for leaders across the business. We integrated 1/3 of our firm order book from Boeing, improving team member productivity and delivering initial fuel efficiency targets. We divested of the Sunseeker business and refocused management efforts on the airline. We paid down debt and positioned our balance sheet for healthy investment in our future.
Robert Neal: As I wrap up, 2025 was a foundational year for Allegiant. We brought level of operations back in line with our fleet infrastructure, providing operating cost economics constructed to our leisure-focused, flexible capacity model. We largely restored peak day aircraft utilization, making more of our product available on the days our customers want to travel. We aligned management headcount to level of operations and introduced performance-based pay programs for leaders across the business. We integrated 1/3 of our firm order book from Boeing, improving team member productivity and delivering initial fuel efficiency targets. We divested of the Sunseeker business and refocused management efforts on the airline. We paid down debt and positioned our balance sheet for healthy investment in our future.
Speaker #1: We largely restored peak-day aircraft utilization, making more of our product available on the days our customers want to travel. We aligned management headcount to the level of operations and introduced performance-based pay programs for leaders across the business.
Speaker #1: We integrated one-third of our firm order book from Boeing, improving team member productivity and delivering initial fuel efficiency targets. We divested of the Sunseeker business and refocused management efforts on the airline.
Speaker #1: We paid down debt and positioned our balance sheet for healthy investment in our future. With more than 100 new technology aircraft available in our order book, a healthy financial position to access the used aircraft market opportunistically, and a technology suite suitable for serving a larger customer base, I remain highly confident in the foundation we have here.
Robert Neal: With more than 100 new technology aircraft available in our order book, a healthy financial position to access the used aircraft market opportunistically, and a technology suite suitable for serving a larger customer base, I remain highly confident in the foundation we have here, whether that be for navigating through various demand environments, expanding our leisure offering to more communities, or enhancing our customer and team member experience. And with that, operator, this concludes our prepared remarks. We can now move to analyst questions.
Robert Neal: With more than 100 new technology aircraft available in our order book, a healthy financial position to access the used aircraft market opportunistically, and a technology suite suitable for serving a larger customer base, I remain highly confident in the foundation we have here, whether that be for navigating through various demand environments, expanding our leisure offering to more communities, or enhancing our customer and team member experience. And with that, operator, this concludes our prepared remarks. We can now move to analyst questions.
Speaker #1: Whether that be for navigating through various demand environments, expanding our leisure offering to more communities, or enhancing our customer and team member experience. And with that, operator, this concludes our prepared remarks.
Speaker #1: We can now move to analyst questions.
Speaker #2: Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again.
Operator: Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. We ask that you please limit yourself to one question and one follow-up if needed. Thank you. Your first question comes from Scott Group with Wolfe Research. Your line is open.
Operator: Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. We ask that you please limit yourself to one question and one follow-up if needed. Thank you. Your first question comes from Scott Group with Wolfe Research. Your line is open.
Speaker #2: We ask that you please limit yourself to one question and one follow-up if needed. Thank you. Your first question comes from Scott Group with Wolf Research.
Speaker #2: Your line is
Speaker #3: Hey, thanks. Afternoon. So I think the term you used was January was exceptional. From a demand standpoint, maybe just some color on what you think is driving that.
[Analyst] (Wolfe Research): Hey, thanks. Afternoon. So I think the term you used was January was exceptional from a demand standpoint. Maybe just some color on what you think is driving that. And I know it's early, but when you look at the how does the rest of the quarter looking? Are you seeing that same trend continue? Any degree of moderation? Just any thoughts there?
Scott Group: Hey, thanks. Afternoon. So I think the term you used was January was exceptional from a demand standpoint. Maybe just some color on what you think is driving that. And I know it's early, but when you look at the how does the rest of the quarter looking? Are you seeing that same trend continue? Any degree of moderation? Just any thoughts there?
Speaker #3: And I know it's early, but when you look at the how does the rest of the quarter looking? Are you seeing that same trend continue?
Speaker #3: Any degree of moderation? Just any thoughts there?
Speaker #4: Yeah, thanks, Scott. It helps that we have seats pulling back a little bit when it comes to demand, but I don't think what we're talking about is much different than what we've heard from a number of carriers through this cycle.
Drew Wells: Yeah, thanks, Scott. It helps that we have seats pulling back a little bit when it comes to demand, but I don't think what we're talking about is much different than what we've heard from a number of carriers through this cycle. The visitation coming through the front door is better than we've seen in several of the prior years, able to manifest both in terms of bookings and through some pricing capabilities, some yield, which is a nice change of pace for us over the last couple of years. So I think that's going to be really pronounced going through the spring break and Easter period. And then we'll kind of see what happens as bookings and demand start to turn a corner toward post-Easter into the summer time frame, which is still a bit too far out for the current booking curve.
Drew Wells: Yeah, thanks, Scott. It helps that we have seats pulling back a little bit when it comes to demand, but I don't think what we're talking about is much different than what we've heard from a number of carriers through this cycle. The visitation coming through the front door is better than we've seen in several of the prior years, able to manifest both in terms of bookings and through some pricing capabilities, some yield, which is a nice change of pace for us over the last couple of years. So I think that's going to be really pronounced going through the spring break and Easter period. And then we'll kind of see what happens as bookings and demand start to turn a corner toward post-Easter into the summer time frame, which is still a bit too far out for the current booking curve.
Speaker #4: The user of the visitation coming through the front door is better than we've seen in several of the prior years, able to manifest both in terms of bookings and through some pricing capabilities, some yield, which is a nice change of pace for us over the last couple of years.
Speaker #4: So I think that's going to be really pronounced. Going through the spring break and Easter period, and then we'll kind of see what happens as bookings and demand start to turn a corner toward post-Easter into the summer timeframe, which is still a bit too far out for the current booking curve.
Speaker #4: So I think we're hopeful as we get into the second and third quarters that there remains upside similar to what we've seen in January.
Drew Wells: So I think we're hopeful as we get into Q2 and Q3 that there remains upside similar to what we've seen in January, but not something that I'm willing to bank on quite yet. Our bars on what we've seen for the summer period over the last several years are just so much wider that it's hard to have a great deal of conviction that this will definitively continue through that time frame.
Drew Wells: So I think we're hopeful as we get into Q2 and Q3 that there remains upside similar to what we've seen in January, but not something that I'm willing to bank on quite yet. Our bars on what we've seen for the summer period over the last several years are just so much wider that it's hard to have a great deal of conviction that this will definitively continue through that time frame.
Speaker #4: But not something that I'm willing to bank on quite yet. Error bars on what we've seen for summer period over the last several years are just so much wider that it's hard to have a great deal of conviction that this will definitively continue through that timeframe.
Speaker #4: But not something that I'm willing to bank on quite yet. Error bars on what we've seen for summer period over the last several years are just so much wider that it's hard to have a great deal of conviction that this will definitively continue through that
Speaker #3: And then if I heard correctly, I think you have a view that you guys are going to have the best rasm-casm spread in the some a little bit industry this year.
[Analyst] (Wolfe Research): And then if I heard correctly, I think you have a view that you guys are going to have the best RASM/CASM spread in the industry this year. Maybe just a little bit more color on how you are thinking about both RASM and CASM this year would be helpful.
Scott Group: And then if I heard correctly, I think you have a view that you guys are going to have the best RASM/CASM spread in the industry this year. Maybe just a little bit more color on how you are thinking about both RASM and CASM this year would be helpful.
Speaker #3: More color on how you are thinking about both RASM—maybe just RASM and CASM this year, would be...
Speaker #5: Hey, Scott.
Gregory Anderson: Hey, Scott. I think in Drew's comments, he was referring to, in 2025, the best spread between TRASM and CASM-ex. But I will say, as we look to 2026, we expect TRASM to improve more than CASM-ex this year as well, which reinforces the margin expansion that we're looking at.
Greg Anderson: Hey, Scott. I think in Drew's comments, he was referring to, in 2025, the best spread between TRASM and CASM-ex. But I will say, as we look to 2026, we expect TRASM to improve more than CASM-ex this year as well, which reinforces the margin expansion that we're looking at.
Speaker #5: I helpful. think in Drew's comments, he was referring to in 2025, the best spread between trasm and casmx. But I will say, as we look to 2026, we expect trasm to improve more than casmx this year as well.
Speaker #5: Which reinforces the margin expansion that we're looking at.
[Analyst] (Wolfe Research): Oh, that was back we're looking. Okay, I apologize. But how are we thinking about in a flat-ish capacity environment, how are you thinking about CASM this year?
Scott Group: Oh, that was back we're looking. Okay, I apologize. But how are we thinking about in a flat-ish capacity environment, how are you thinking about CASM this year?
Speaker #3: But how are we thinking about, in a flattish capacity environment, how are you thinking about CASM this?
Speaker #3: year? Sure, Scott.
Robert Neal: Sure, Scott. Hey, CJ. On a full-year basis, as you would expect, we would expect CASM to be up for the most part across all lines in the P&L, except maybe aircraft rent, which we talked about the last couple of calls. And then if you just think about the shape of capacity, you would expect CASM-X to be up more in the first half of the year than it would be in the back half of the year. And I would just share that I would expect the second quarter to be the high point on a year-over-year comp basis. And then maybe just worth noting, we do expect CASM-X on a full-year basis to be down versus 2024.
Robert Neal: Sure, Scott. Hey, CJ. On a full-year basis, as you would expect, we would expect CASM to be up for the most part across all lines in the P&L, except maybe aircraft rent, which we talked about the last couple of calls. And then if you just think about the shape of capacity, you would expect CASM-X to be up more in the first half of the year than it would be in the back half of the year. And I would just share that I would expect the second quarter to be the high point on a year-over-year comp basis. And then maybe just worth noting, we do expect CASM-X on a full-year basis to be down versus 2024.
Speaker #5: Hey, it's BJ. On a full-year basis, as you would expect, we would up. For the most part, across all lines, in the P&L, except maybe aircraft rent, which we've talked about the last couple of calls.
Speaker #5: And then if you just think about the shape of capacity, you would expect the year, than it would be in the back half. Of the year.
Speaker #5: And I would just share that I would expect the second quarter to be the high point on a year-over-year comp basis. And then maybe just worth noting, we do expect casmx on a full-year basis to be down versus
Operator: The next question comes from Atul Maheswari with UBS. Your line is open.
Operator: The next question comes from Atul Maheswari with UBS. Your line is open.
Speaker #1: From a tool . Maheshwari with UBS . Your line is .
Speaker #2: evening . Good Thanks and Thanks a good evening . lot for taking my question . Vijay , you mentioned in your prepared remarks that you were being conservative with the full year .
[Analyst] (UBS): Good evening. Thanks a lot for taking my question. CJ, you mentioned in your prepared remarks that you were being conservative with the full-year guidance given how some of the macro issues hit Allegiant and the industry last year. So just to be clear on what's assumed for the full-year guidance, you're not really assuming the current strong January trends to continue. And is that the right way to think about what gets you to the $8 versus if January trends were to continue, you get a number higher than that? Is that the right way to think about it?
Atul Maheswari: Good evening. Thanks a lot for taking my question. CJ, you mentioned in your prepared remarks that you were being conservative with the full-year guidance given how some of the macro issues hit Allegiant and the industry last year. So just to be clear on what's assumed for the full-year guidance, you're not really assuming the current strong January trends to continue. And is that the right way to think about what gets you to the $8 versus if January trends were to continue, you get a number higher than that? Is that the right way to think about it?
Speaker #2: Given guidance how some of the macro issues the Allegiant and hit industry last year . So just to be clear on what's assumed for the full year guidance , you're really assuming not the current strong January trends to continue .
Speaker #2: And is that the right way to about , think know , what you the $8 versus like , if January trends were to continue , you get a number higher than that .
Speaker #2: Is is that the right way to think about it ? Yeah .
Drew Wells: Yeah, Atul, I think that's right. You can just kind of think about Drew's answer there to Scott's question. That would line up.
Drew Wells: Yeah, Atul, I think that's right. You can just kind of think about Drew's answer there to Scott's question. That would line up.
Speaker #3: that's think right . You can just kind Drew's answer there , to Scott's . about I Scott's line up That that would .
[Analyst] (UBS): Okay, thank you. And then on the Q1, I want to better understand what's assumed at the low end and at the high end. So if current booking trends were to continue, does that take you to the midpoint of the Q1 range, which is the $3, or does that take you to the high end of the range? And then what's assumed at the low end?
Atul Maheswari: Okay, thank you. And then on the Q1, I want to better understand what's assumed at the low end and at the high end. So if current booking trends were to continue, does that take you to the midpoint of the Q1 range, which is the $3, or does that take you to the high end of the range? And then what's assumed at the low end?
Speaker #2: you . Okay . Thank And then first quarter , I want to better understand what's assumed at the low end and at the high end .
Speaker #2: you . Okay . Thank And then first quarter , I want to better understand what's assumed at the low end and at the high on the So if if you know , current booking trends were to continue , does to the midpoint that take you of the first quarter range or the $3 , or does that take you to which is of the range high end ?
Speaker #2: And then what's assumed at the low end ?
Drew Wells: A lot there. What we're putting out for the midpoint is kind of where we see demand. We know it will taper a little bit through the quarter for in-quarter bookings. That's just the nature of things. The peak is certainly the weeks immediately after the New Year. So we won't persist at exactly the same level, but we wouldn't expect that either. And then variance from that on the rep side will take us one way or the other.
Drew Wells: A lot there. What we're putting out for the midpoint is kind of where we see demand. We know it will taper a little bit through the quarter for in-quarter bookings. That's just the nature of things. The peak is certainly the weeks immediately after the New Year. So we won't persist at exactly the same level, but we wouldn't expect that either. And then variance from that on the rep side will take us one way or the other.
Speaker #4: A lot , a lot . There . You know , like what what we're we're putting out midpoint is kind of where , where we see demand , we know it will taper a little bit through the quarter for in bookings .
Speaker #4: quarter you know , just the nature That's , of things . The peak is certainly the weeks immediately after the new year . So we persist exactly the at same level .
Speaker #4: we wouldn't won't But expect that then either . And the left from that on will take us other one way or the .
Operator: The next question comes from Mike Linenberg with Deutsche Bank. Your line is open.
Operator: The next question comes from Mike Linenberg with Deutsche Bank. Your line is open.
Speaker #1: next The question comes from Mike Lindberg with Deutsche Bank . Your line is open .
[Analyst] (Deutsche Bank): Oh, yeah. Hey, good afternoon. Two questions here. When you talk about demand and the strength that you're seeing, how much of that is just a function of the fact that you're coming into the year with a very favorable supply backdrop? I mean, you indicated, Drew, that you're going to be down March and June and then it picks up. And maybe more specifically, where is the demand across the network? Is it stronger in some regions versus others? We know that Vegas has been struggling, but we've also seen a lot of capacity come out of Vegas. So I realize the headline number may be somewhat deceiving, and so I'm just curious if you could drill down and give us a little more color.
Mike Linenberg: Oh, yeah. Hey, good afternoon. Two questions here. When you talk about demand and the strength that you're seeing, how much of that is just a function of the fact that you're coming into the year with a very favorable supply backdrop? I mean, you indicated, Drew, that you're going to be down March and June and then it picks up. And maybe more specifically, where is the demand across the network? Is it stronger in some regions versus others? We know that Vegas has been struggling, but we've also seen a lot of capacity come out of Vegas. So I realize the headline number may be somewhat deceiving, and so I'm just curious if you could drill down and give us a little more color.
Speaker #5: Oh , Hey , hey , good yeah . . Two questions here . When about demand and you talk the strength that you're seeing much of that , how a is just function of the you're coming into the year with a very supply backdrop .
Speaker #5: I favorable you mean , indicated , drew , that you're going to be down March and June , and then it picks up and , you more know , maybe specifically know , where where is the , you where is the demand network .
Speaker #5: You know , in is it some regions versus others ? stronger Like we know that Vegas has been struggling , also seen a but we've lot of capacity come out of Vegas .
Speaker #5: I So you know , I realize the headline number may be somewhat just curious if you could drill down and deceiving . give us a And so I'm little more color .
Drew Wells: Perhaps a little more color, but I'll probably stop short of great detail. Geographically, it all looks pretty strong. I mean, to your point, it's not a new story that Vegas has struggled. I think LVCBA's numbers had it down about 7.5% or so in visitation year-over-year, but convention attendees were flat, right? It's becoming a very event-driven and holiday-driven destination, which is very similar to the rest of our network, but a bit unfortunate to lose kind of that year-round rockstar, reliable that it once was. So yeah, certainly having seats down helps. But I alluded to the visitation to the website. I mean, what's coming through the front door, we would have loved to have in 2025 too when we were talking about how strong it was to start the year, and we're beating that. So I feel really good about where we sit.
Drew Wells: Perhaps a little more color, but I'll probably stop short of great detail. Geographically, it all looks pretty strong. I mean, to your point, it's not a new story that Vegas has struggled. I think LVCBA's numbers had it down about 7.5% or so in visitation year-over-year, but convention attendees were flat, right? It's becoming a very event-driven and holiday-driven destination, which is very similar to the rest of our network, but a bit unfortunate to lose kind of that year-round rockstar, reliable that it once was. So yeah, certainly having seats down helps. But I alluded to the visitation to the website. I mean, what's coming through the front door, we would have loved to have in 2025 too when we were talking about how strong it was to start the year, and we're beating that. So I feel really good about where we sit.
Speaker #4: a little perhaps You know , you know , I'll probably great stop short of detail color . But , . You know it all it all looks more pretty , geographically , strong .
Speaker #4: I mean , to your point , it's a new story not Vegas struggled . I has Lvcva it numbers had down about 7.5% or so in visitation year But over year .
Speaker #4: convention attendees were flat , right ? It's becoming a very event driven holiday and driven destination , which is very similar to the rest of our network , but a bit unfortunate to lose kind of that round rock star reliable that that it once was .
Speaker #4: So yeah , having seats down helps to but as I alluded to , the visitation to the I mean what's what's coming through the front door , you know , have loved to we would have in 25 to when we were talking about how strong it start the year .
Speaker #4: we're And , we're beating that . So really good about about where we I'd feel good about it . In , sit . capacity .
Drew Wells: I feel good about it in elevated capacity. I feel really good about it with seats coming down a little bit.
Drew Wells: I feel good about it in elevated capacity. I feel really good about it with seats coming down a little bit.
Speaker #4: I feel really elevated. I feel good about it. The seats, a little bit.
[Analyst] (UBS): Okay, great.
Mike Linenberg: Okay, great.
Gregory Anderson: In my case, it's Greg. What Drew and team did in the plan this year as well is they concentrated more flying in the peaks and removed some in the off-peak as well. So I know Drew mentioned that in his opening remarks, but that too, that's a helpful backdrop for the strength we're seeing in demand.
Greg Anderson: In my case, it's Greg. What Drew and team did in the plan this year as well is they concentrated more flying in the peaks and removed some in the off-peak as well. So I know Drew mentioned that in his opening remarks, but that too, that's a helpful backdrop for the strength we're seeing in demand.
Speaker #5: Okay , great .
Speaker #6: In my case , it's Greg ? What . What coming down Team Drew and did in plan this year as the well ? Is they concentrated flying in the more and removed some in peaks the off well .
Speaker #6: So I know drew mentioned in his that peak as know that opening that's helpful a for the strength we're seeing demand .
Speaker #6: So I know drew mentioned in his that peak as know that opening that's helpful a for the strength we're seeing demand .
[Analyst] (Deutsche Bank): Great. And then just my second question, really turning to the merger and maybe just some of the mechanics, not that you put out a filing, but just curious at what day or what time frame you did actually file Hart-Scott-Rodino. I know it's a 30-day waiting period. The deal was announced early January, so if it was right around that time, we'd be coming up to at least the first 30-day period. And sort of tied to the merger, as we think about the cash component, the $4+ per Sun Country share, I think that's about $200 million. Is the plan to finance that out of cash, or would you finance that? Is it out of cash, or would you actually finance it? Thanks for taking my questions on that.
Mike Linenberg: Great. And then just my second question, really turning to the merger and maybe just some of the mechanics, not that you put out a filing, but just curious at what day or what time frame you did actually file Hart-Scott-Rodino. I know it's a 30-day waiting period. The deal was announced early January, so if it was right around that time, we'd be coming up to at least the first 30-day period. And sort of tied to the merger, as we think about the cash component, the $4+ per Sun Country share, I think that's about $200 million. Is the plan to finance that out of cash, or would you finance that? Is it out of cash, or would you actually finance it? Thanks for taking my questions on that.
Speaker #5: Great . And
Speaker #5: my second question , really just to turning the merger and maybe just mechanics some of the , not that you put out filing , but just curious what at what know , a you what time frame you did file Hart-scott-rodino .
Speaker #5: I know in it's a 30 day waiting period . The deal was announced early so January , if it was that time , we'd be right around coming up to at least period and tied to 30 day the first merger , as we think about the cash sort of the component , $4 plus per country share that's , I think about $200 million .
Speaker #5: Is that plan to is the out of finance that or , you know , would you would you finance that ? it out of cash or would You know , is you actually finance it ?
Speaker #5: Thanks for taking my questions on that .
Gregory Anderson: No, thanks for the question, Mike. I'll kick it off. BJ, we'll follow up on that second part around cash. As we put out, we expect the merger to close in the second half of 2026. To your point, there's conditions necessary to achieve that: shareholder vote, regulatory approval, and then some other customary closing conditions. For the shareholder vote and the regulatory approval or the HSR filing, we expect, Mike, to file both of those within the coming weeks. Then that'll post those filings and review. That'll trigger the timeline as well. And then oh, yeah. And then BJ, do you want to jump in on the next question?
Greg Anderson: No, thanks for the question, Mike. I'll kick it off. BJ, we'll follow up on that second part around cash. As we put out, we expect the merger to close in the second half of 2026. To your point, there's conditions necessary to achieve that: shareholder vote, regulatory approval, and then some other customary closing conditions. For the shareholder vote and the regulatory approval or the HSR filing, we expect, Mike, to file both of those within the coming weeks. Then that'll post those filings and review. That'll trigger the timeline as well. And then oh, yeah. And then BJ, do you want to jump in on the next question?
Speaker #6: No, thanks for the question, Mike. I'll kick it off. BJ, we'll let you follow up on the second part around cash.
Speaker #6: As we put out, we expect the merger to close in the second half of '26. And to your point, there are conditions necessary to achieve that shareholder vote.
Speaker #6: Regulatory approval and then some other customary closing for the shareholder and the regulatory approval or the filing . We expect , Mike to file both of those within the coming weeks .
Speaker #6: And then post those filings and that'll as And then , oh yeah , and then BJ , do to you want the . Sure .
Speaker #6: jump in on
Speaker #6: jump in on
Robert Neal: Sure. Yeah. Hey, Mike. On the cash consideration for the merger closing, it's certainly going to depend on when in the year the closing would take place. I would just note we have a bond out there that matures in Q3 2027. And so we've had an eye on the market to refinance that at some point. And so ideally, we would refinance that and take a little bit more out and have some extra cash to pay the cash consideration of the merger closing. But if the timing doesn't work out, there's more than $1 billion in unencumbered aircraft and engines. Handily, cash balances for Q1 are ahead of schedule. We could start by just using cash balances if we need to.
Robert Neal: Sure. Yeah. Hey, Mike. On the cash consideration for the merger closing, it's certainly going to depend on when in the year the closing would take place. I would just note we have a bond out there that matures in Q3 2027. And so we've had an eye on the market to refinance that at some point. And so ideally, we would refinance that and take a little bit more out and have some extra cash to pay the cash consideration of the merger closing. But if the timing doesn't work out, there's more than $1 billion in unencumbered aircraft and engines. Handily, cash balances for Q1 are ahead of schedule. We could start by just using cash balances if we need to.
Speaker #3: Hey , Mike , on Yeah . the on consideration for the cash the closing . know , it's merger certainly going depend to on when the year closing the would when in
Speaker #3: take place . I would just note we have a bond out there that matures in the third of 2027 . And so we've had an eye on the market to refinance quarter that so ideally we would point .
Speaker #3: that and And refinance take a little some more and have some extra out pay cash to bit cash . Consideration of merger closing .
Speaker #3: But if the timing doesn't work, there's, you know, more than a billion in unencumbered aircraft and engines. Candidly, cash in the first quarter are ahead of schedule.
Speaker #3: We of could we could start using cash by just as we need .
Drew Wells: Great. Great. Thanks, everyone.
Drew Wells: Great. Great. Thanks, everyone.
Speaker #7: Great
Speaker #5: everyone Thanks , .
Robert Neal: Thanks, Mike.
Robert Neal: Thanks, Mike.
Speaker #3: Thanks , Mike balances .
Operator: The next question comes from Duane Pfennigwerth with Evercore ISI. Your line is open.
Operator: The next question comes from Duane Pfennigwerth with Evercore ISI. Your line is open.
Speaker #1: The next comes from Dwayne with Evercore ISI . Your line is open .
[Analyst] (Evercore ISI): Hey, thank you. I just wondered if you could speak to how you were deploying the MAX aircraft, any more flexibility that you have currently versus maybe how you were using them with just a few on the property. And as you begin to consider the combination with Sun Country's fleet and your own fleet, where do you see the biggest opportunities?
Duane Pfennigwerth: Hey, thank you. I just wondered if you could speak to how you were deploying the MAX aircraft, any more flexibility that you have currently versus maybe how you were using them with just a few on the property. And as you begin to consider the combination with Sun Country's fleet and your own fleet, where do you see the biggest opportunities?
Speaker #8: Hey thank you . Just wonder if you could speak how you were deploying to Max the you have aircraft any more flexibility that were versus maybe how you using currently a few them on the property ?
Speaker #8: begin to And as you consider the combination with some countries fleet own and your fleet , where do you see the biggest opportunities ?
Drew Wells: Yeah. So I think we talked about this in previous quarters. Starting around mid-November, we pivoted a little bit on MAX from flying a lot of cycles and getting up and down for pilot transition training into something that supported a bit of longer-haul flying, something that was a bit more commercially driven. So yeah, that started, what, 2.5 months ago or so. And it's contributing to the numbers I quoted in the remarks, feeling great about that. We'll get into additional basing on that in the back half this year as deliveries resume. Sorry, I've got a second there.
Drew Wells: Yeah. So I think we talked about this in previous quarters. Starting around mid-November, we pivoted a little bit on MAX from flying a lot of cycles and getting up and down for pilot transition training into something that supported a bit of longer-haul flying, something that was a bit more commercially driven. So yeah, that started, what, 2.5 months ago or so. And it's contributing to the numbers I quoted in the remarks, feeling great about that. We'll get into additional basing on that in the back half this year as deliveries resume. Sorry, I've got a second there.
Speaker #4: Yeah . So I think we talked about this in previous quarters starting around mid . We little bit pivoted a on on max flying .
Speaker #4: You know, cycles a lot of getting up and for, for pilot down transition training and something to that's supported a bit from longer haul, something that's a bit more commercially driven of.
Speaker #4: that So yeah , started what , two and a half months so . And , you know , flying contributing to the numbers I quoted in the remarks , feeling great about that feeling , .
Speaker #4: You know , into we'll get basing on that in the back additional half of this year as deliveries resume
Gregory Anderson: Yeah. Then just on the potential transaction, Duane, with fleet and how we would be flexible in that regard, I think we're really excited. We think some upside in the deal to ensure that we can have the right aircraft at the right gauge in the right markets, both Sun Country and Allegiant. We own our aircraft. We have a great deal of flexibility there. It'd be too early to say what we're planning at this point, but we do think that provides some potential additional upside as part of the transaction as well.
Greg Anderson: Yeah. Then just on the potential transaction, Duane, with fleet and how we would be flexible in that regard, I think we're really excited. We think some upside in the deal to ensure that we can have the right aircraft at the right gauge in the right markets, both Sun Country and Allegiant. We own our aircraft. We have a great deal of flexibility there. It'd be too early to say what we're planning at this point, but we do think that provides some potential additional upside as part of the transaction as well.
Speaker #4: The
Speaker #4: second
Speaker #4: part . .
Speaker #6: then just And
Speaker #6: on the , you know , Yeah . potential the Dwayne , transaction , fleet and how with we would be flexible in I that think regard .
Speaker #6: we're really some the deal to upside in ensure excited . we can have the aircraft , that gauge and the the right right markets Allegiant .
Speaker #6: We Country and aircraft . We great deal have a of our . It'd be too early Both Sun say what we're planning at this point , there .
Speaker #6: provides some potential additional that upside as part of the transaction as well think .
Speaker #6: provides some potential additional that upside as part of the transaction as well think . We think
[Analyst] (Evercore ISI): Thanks for that. And then maybe just from an earnings seasonality perspective, as you think about the quarterly baseline, maybe for 2025, which quarter do you think has the most upside from your perspective? And not necessarily a 2026 comment, but just to get to that normalized earnings power on an Allegiant standalone basis, as you look back on the four quarters of 2025, which quarter do you think has the most upside?
Duane Pfennigwerth: Thanks for that. And then maybe just from an earnings seasonality perspective, as you think about the quarterly baseline, maybe for 2025, which quarter do you think has the most upside from your perspective? And not necessarily a 2026 comment, but just to get to that normalized earnings power on an Allegiant standalone basis, as you look back on the four quarters of 2025, which quarter do you think has the most upside?
Speaker #8: From just an earnings power perspective, as you think about the quarterly seasonality baseline—maybe for 2025—which quarter do you think has the most upside from your perspective? Not necessarily asking you to comment.
Speaker #8: . You
Speaker #8: But just to a 2026 that that's not earnings normalized power on an standalone as you look basis , four back on the you think quarters of 25 , has the most upside which ?
Gregory Anderson: Duane, let me kick it off. I don't want to say that the Q3, I believe, has the most upside, but what we're focused on is, as you recall, in 2025, we had a negative margin in the Q3, and we're focused on turning that to a positive margin as well. But in terms of the most upside, Drew, I mean, do you think it's kind of bookended on the Q1 and the Q4 right now?
Greg Anderson: Duane, let me kick it off. I don't want to say that the Q3, I believe, has the most upside, but what we're focused on is, as you recall, in 2025, we had a negative margin in the Q3, and we're focused on turning that to a positive margin as well. But in terms of the most upside, Drew, I mean, do you think it's kind of bookended on the Q1 and the Q4 right now?
Speaker #6: me kick it Dwayne , let off and I'll I don't want to say I believe , has the that the third quarter ,
Speaker #6: me kick it Dwayne , let off and I'll I don't want to say I believe , has the that the third quarter , most upside , but what we're focused on is , as you recall , Allegiant in 2025 , we we had a negative margin in quarter .
Speaker #6: the third focused on turning that to a positive margin as . But well And terms of the in most , drew , I mean , do you upside it's kind of bookended on the first and the fourth quarter right now ?
Drew Wells: Yeah, they've remained incredibly resilient, first and fourth quarter. Just thinking about the same store, flat capacity backdrop, we were down about 6% in Q2 and 5% in Q3. I don't know, and I'm not willing to guide for you today what recovers from that, but those certainly took the largest kind of core demand impact through 2025, and from that perspective would pose the biggest upside capability this year.
Drew Wells: Yeah, they've remained incredibly resilient, first and fourth quarter. Just thinking about the same store, flat capacity backdrop, we were down about 6% in Q2 and 5% in Q3. I don't know, and I'm not willing to guide for you today what recovers from that, but those certainly took the largest kind of core demand impact through 2025, and from that perspective would pose the biggest upside capability this year.
Speaker #4: Yeah , remained they've incredibly resilient . First and fourth quarter . just , you know , thinking about the same store flat capacity backdrop .
Speaker #4: about 6% in the second 5% quarter and in the third . You know , I don't know . And I'm not willing to today you But but those certainly recovers from that .
Speaker #4: about 6% in the second 5% quarter and in the third . You know , I don't know . And I'm not willing to today you But but those certainly recovers from that . guide for took kind of largest demand the impact 25 .
Speaker #4: through And from that core the upside biggest year .
Speaker #4: capability this
[Analyst] (Evercore ISI): Okay, very helpful. Thank you.
Duane Pfennigwerth: Okay, very helpful. Thank you.
Speaker #8: Very Okay . helpful .
Speaker #8: Thank you
Speaker #8: .
Operator: The next question comes from Andrew Didora with Bank of America. Your line is open.
Operator: The next question comes from Andrew Didora with Bank of America. Your line is open.
Speaker #1: The next question comes from Andrew Dora with Bank of America. Your line is open.
Drew Wells: Hi, good afternoon, everyone. I guess first question for Greg. I guess now that you're kind of back on track with your MAX order book here, I think you used to generate roughly $6 million in EBITDA per aircraft back in 2019. With this new fleet, anyway, any chance you can maybe give us an update on where you think that can go in today's environment with the new MAX fleet that you're going to have?
Andrew Didora: Hi, good afternoon, everyone. I guess first question for Greg. I guess now that you're kind of back on track with your MAX order book here, I think you used to generate roughly $6 million in EBITDA per aircraft back in 2019. With this new fleet, anyway, any chance you can maybe give us an update on where you think that can go in today's environment with the new MAX fleet that you're going to have?
Speaker #6: Hi . Good .
Speaker #9: everyone . Afternoon I guess first question for for Now that Greg . you're of back on track with your your Max , Max here , I think you order book used to roughly $6 million in EBITDA generate aircraft back 2019 with this new fleet .
Speaker #9: Any chance, anyway, you can maybe give us an idea where you think that can go? And today, with the new MAX fleet, what are you going to have?
Gregory Anderson: Yeah. On the max aircraft, Andrew, they're definitely the larger share of ASMs that they're producing in the company. We think that becomes a meaningful structural tailwind. Overall, though, and I appreciate the comment about the improvements you've seen, we've really been focused on these initiatives that we've talked about to strengthen our business, kind of get back to the Allegiant of old. And for many years, we have led the industry, and we're pleased with the progress we're making. Our first step is getting back to double-digit margins. And I think this year, you're seeing in our guide that we're taking a meaningful move in that direction. We expect still later this year (we talked about it on a previous earnings call) to have an investor day. I think the transaction announcement may push that back a little bit later than what we initially anticipated.
Greg Anderson: Yeah. On the max aircraft, Andrew, they're definitely the larger share of ASMs that they're producing in the company. We think that becomes a meaningful structural tailwind. Overall, though, and I appreciate the comment about the improvements you've seen, we've really been focused on these initiatives that we've talked about to strengthen our business, kind of get back to the Allegiant of old. And for many years, we have led the industry, and we're pleased with the progress we're making. Our first step is getting back to double-digit margins. And I think this year, you're seeing in our guide that we're taking a meaningful move in that direction. We expect still later this year (we talked about it on a previous earnings call) to have an investor day. I think the transaction announcement may push that back a little bit later than what we initially anticipated.
Speaker #6: Yeah . On the on the max
Speaker #6: aircraft . Andrew , there that you're definitely the share of larger asms producing in the company . You know , we think meaningful a becomes that structural tailwind .
Speaker #6: We And appreciate the comment about the overall though . seen . We've really been focused I on improvements you've these initiatives talked about to strengthen our business , kind of get back to the and , old allegiant of you know , for many have led years we the and we're pleased with the progress we're making .
Speaker #6: Our first step is getting back to industry double digit . And I this year think you're guide that our we're seeing in taking , you know , a move in meaningful that direction .
Speaker #6: We expect still later this year , we it on a previous earnings call to have an Investor Day . transaction that we've little bit I think the than what we later initially anticipated .
Gregory Anderson: But that would be, I think, a helpful setting for us to talk about the long-term earnings potential, and we could drive it in margins or in terms of EBITDA per aircraft as well.
Greg Anderson: But that would be, I think, a helpful setting for us to talk about the long-term earnings potential, and we could drive it in margins or in terms of EBITDA per aircraft as well.
Speaker #6: that would be , you know , I think a helpful setting But talk about the long term earnings potential . And we could , you for us to know , drive it in margins or of EBITDA per aircraft as well in terms .
Drew Wells: Got it. Fair enough. Then just my second question. I know there's obviously a lot of utilization to flex capacity over the year. I guess if you see demand get materially better, do you have much capacity that you could potentially flex and add in given your flat fleet growth? Thanks. Yeah. I mentioned a little bit in the remarks that we have some slack on peak days kind of as we go through the summer. But certainly, off-peak has a ton of runway if the demand and fuel environments dictate that we add that in there. I think we'd be making those calls Easter-ish timeframe more or less, but certainly some slack would still exist there. Great. Thank you very much.
Andrew Didora: Got it. Fair enough. Then just my second question. I know there's obviously a lot of utilization to flex capacity over the year. I guess if you see demand get materially better, do you have much capacity that you could potentially flex and add in given your flat fleet growth? Thanks. Yeah. I mentioned a little bit in the remarks that we have some slack on peak days kind of as we go through the summer. But certainly, off-peak has a ton of runway if the demand and fuel environments dictate that we add that in there. I think we'd be making those calls Easter-ish timeframe more or less, but certainly some slack would still exist there. Great. Thank you very much.
Speaker #9: Got it . Fair enough And I know second question , there's obviously a utilization to flex the over capacity year over the guess see demand , get if you materially better , you could have much potentially flex do you and add in given your flat feet , flat fleet growth ?
Speaker #9: Thanks .
Speaker #4: Yeah , I mentioned a little bit in the remarks that we have some slack days as we go through through the summer certainly , you know , peak has of runway a ton .
Speaker #4: demand and off , but If the environments dictate that in there . You know , I think we'd be those calls . You know ish making frame more or less .
Speaker #4: , Easter But certainly certainly some slack that still exists . There .
Speaker #9: Great . Thank much you very
Speaker #9: Great . Thank much you very
Operator: The next question comes from John Godyn with Citigroup. Your line is open.
Operator: The next question comes from John Godyn with Citigroup. Your line is open.
Speaker #1: See you . Next
Speaker #1: with Gordon John Citigroup . . open is
[Analyst] (Deutsche Bank): Hey, guys. Thanks for taking my question. Obviously, great quarter, great guidance. I wanted to just think about Q1 guidance versus the full year in a little bit more detail. Last year, if we think about the seasonality of margins, we saw Q2 margins just a little bit lower than Q1 margins. Obviously, Q3 is very different. And then Q4 margins above significantly the Q1 level. Is that the right general seasonality that we should be thinking for 2026 off of this 13.5% margin at the midpoint? It seems like the full-year guidance, at least at the $8 level, really doesn't contemplate that kind of seasonality. Maybe I'm wrong. Maybe you could just kind of offer some thoughts there.
John Godyn: Hey, guys. Thanks for taking my question. Obviously, great quarter, great guidance. I wanted to just think about Q1 guidance versus the full year in a little bit more detail. Last year, if we think about the seasonality of margins, we saw Q2 margins just a little bit lower than Q1 margins. Obviously, Q3 is very different. And then Q4 margins above significantly the Q1 level. Is that the right general seasonality that we should be thinking for 2026 off of this 13.5% margin at the midpoint? It seems like the full-year guidance, at least at the $8 level, really doesn't contemplate that kind of seasonality. Maybe I'm wrong. Maybe you could just kind of offer some thoughts there.
Speaker #1: .
Speaker #6: guys .
Speaker #10: Taking my Thanks for . . Obviously . question Great quarter . Great guidance . I to just think about wanted . guidance versus the full year .
Speaker #10: A that , we add in bit more a little bit Last year about the seasonality of margins , we if we think saw two Q .
Speaker #10: little bit just a lower than one Q Obviously , three Q detail . is And then four Q margins different . very above margins .
Speaker #10: level You know , right general seasonality that we should be for 2026 off of thinking this margin at the 13.5% midpoint , it seems like the full year guidance , at least at $8 level , the really doesn't contemplate that kind of maybe I'm wrong .
Speaker #10: seasonality . Maybe you could But of offer some There .
Drew Wells: Sure. I mean, maybe just thinking of the rep side in particular and going back to some of the early comments, a lot of this will depend on your view on what happens with core demand as we go through the summer. I think the industry as a whole, and we're no different, is taking a slightly more conservative view on how that will roll out. Again, we've just seen so much variability in those actual results as we go back through the last several years. So depending on your level of bullishness on summer demand, that will probably dictate how you think that margin cadence looks through 2026.
Drew Wells: Sure. I mean, maybe just thinking of the rep side in particular and going back to some of the early comments, a lot of this will depend on your view on what happens with core demand as we go through the summer. I think the industry as a whole, and we're no different, is taking a slightly more conservative view on how that will roll out. Again, we've just seen so much variability in those actual results as we go back through the last several years. So depending on your level of bullishness on summer demand, that will probably dictate how you think that margin cadence looks through 2026.
Speaker #4: Sure . I mean , maybe , you know , thinking just the rev side going back to in some of the comments , you know , a lot of will depend this on your view on on what happens with , with demand as we core go through the summer .
Speaker #4: I think the a whole , and we're no different . Taking a slightly more conservative view on on how that industry as will out roll much We've just variability in those again .
Speaker #4: I think the a whole , and we're no different . Taking a slightly more conservative view on on how that industry as will out roll much We've just seen so actual as we go back through the last years several .
Speaker #4: So , you know , particular and depending on your level of on summer bullishness dictate how you think probably that margin cadence looks through through 26 .
Gregory Anderson: Hey, John. It's BJ. The only thing I'd add to that is just keep in mind, Drew hinted at the top of the call that he's constrained on fleet heading into the summer. We had some very modest delays on some MAX deliveries that are impacting the early part of summer capacity. And so that'll put a limit on what we can do in Q2.
Robert Neal: Hey, John. It's BJ. The only thing I'd add to that is just keep in mind, Drew hinted at the top of the call that he's constrained on fleet heading into the summer. We had some very modest delays on some MAX deliveries that are impacting the early part of summer capacity. And so that'll put a limit on what we can do in Q2.
Speaker #3: Hey John , it's BJ only thing I'd that is add to . keep in mind The hinted at the top of the call drew , you know , he's constrained on heading into the summer .
Speaker #3: We had some fleet very modest delays Max deliveries that are on some impacting the summer of capacity , that'll early part put a limit on what we can in Q two .
Speaker #3: .
[Analyst] (Deutsche Bank): Okay. I guess what I was getting at is some of this is in your control with the maxes kind of rolling on throughout the year. It does seem very reasonable, even in a wide range of demand scenarios, that Q4 2026 margins are going to be considerably higher than your Q1 range. I mean, unless something really changed in the demand environment, is that logic wrong?
John Godyn: Okay. I guess what I was getting at is some of this is in your control with the maxes kind of rolling on throughout the year. It does seem very reasonable, even in a wide range of demand scenarios, that Q4 2026 margins are going to be considerably higher than your Q1 range. I mean, unless something really changed in the demand environment, is that logic wrong?
Speaker #10: is in your some control with the max is kind of rolling
Speaker #10: seem very getting even in a wide range of demand scenarios , that for Q 26 , margins are going to be considerably do higher than your one Q range .
Speaker #10: I mean really changed in the environment , is that logic demand wrong , unless something ?
Gregory Anderson: Hey, John. It's Greg. I could step in maybe. For Q1, I think we have about 28% remaining to book. We're still early in the full year. So we put a guide out there for the full year that we're confident that we can deliver on. Currently, demand is strong. And the economy, the backdrop, it seems good. But to Drew's point, we just don't want to get ahead of ourselves. So we want to take a more measured approach and then update throughout the year each quarter.
Greg Anderson: Hey, John. It's Greg. I could step in maybe. For Q1, I think we have about 28% remaining to book. We're still early in the full year. So we put a guide out there for the full year that we're confident that we can deliver on. Currently, demand is strong. And the economy, the backdrop, it seems good. But to Drew's point, we just don't want to get ahead of ourselves. So we want to take a more measured approach and then update throughout the year each quarter.
Speaker #6: Hey . Hey , John , it's Greg . I step Maybe can in . the for the first quarter . think we I have about 28% remaining to book .
Speaker #6: still early in the full year so we we put a feel . there for the guide out full year And we can confident that .
Speaker #6: demand is deliver Currently strong and on the you know , it backdrop , good , seems but to Drew's point , we just don't want to get ahead of ourselves .
Speaker #6: so we want And to measured take approach . more update throughout the year . Each And then quarter .
[Analyst] (Deutsche Bank): Okay. Okay. Fair enough. I mean, I think we can tell what you're getting at. Can I just ask a completely different question? There's a view out there that there could be a carrier liquidating relatively soon. I'm not sure if that's true or not. I'm just curious if you guys have a playbook for an event like that. Does that influence anything that you would do? Is there kind of a second step to that if we see an event like that occur in the industry?
John Godyn: Okay. Okay. Fair enough. I mean, I think we can tell what you're getting at. Can I just ask a completely different question? There's a view out there that there could be a carrier liquidating relatively soon. I'm not sure if that's true or not. I'm just curious if you guys have a playbook for an event like that. Does that influence anything that you would do? Is there kind of a second step to that if we see an event like that occur in the industry?
Speaker #10: okay . Okay , enough . Fair I mean , I think we I think we can tell what you're getting at . Can I completely different just ask a question ?
Speaker #10: There's a view out there that there could be a carrier liquidating relatively soon . sure if I'm not that's true or not . I'm just curious if you guys have a playbook for an event like that .
Speaker #10: that Does influence anything that that you would do ? Is there is kind of a second step to that ? If we see an event like that occur in the industry ?
Speaker #10: there
Gregory Anderson: I'll start, and Drew may want to add, but we don't view our success here at Allegiant as being kind of dependent on what other carriers in our sector may or may not do. We believe we're just uniquely positioned here at Allegiant just because our differentiated model and, candidly, we have limited overlap. But what Drew and his team always do is they keep a close eye on capacity, industry capacity, and they'll continue to evaluate that as they would normally, right?
Greg Anderson: I'll start, and Drew may want to add, but we don't view our success here at Allegiant as being kind of dependent on what other carriers in our sector may or may not do. We believe we're just uniquely positioned here at Allegiant just because our differentiated model and, candidly, we have limited overlap. But what Drew and his team always do is they keep a close eye on capacity, industry capacity, and they'll continue to evaluate that as they would normally, right?
Speaker #6: start drew may add , but you know , we don't view our want to success here at Allegiant as being kind of dependent on what other carriers in our may or may not sector do .
Speaker #6: I believe we’re uniquely positioned here at Allegiant, just because of our differentiated model, and candidly, we have limited overlap. But what Drew and his team always do is they keep a close eye on capacity.
Speaker #6: Industry they'll continue to evaluate, and that—as they would. Right?
Drew Wells: Yeah, that's right. We recently secured a little bit more space in Fort Lauderdale as it is. I've been looking to grow in there for a while, and it's candidly a bit of an owner's airport to be able to grow into. We've been great partners with them. They've been great partners to us, helping to work to secure that. We're going to keep trying to grow where we see demand and success. That's one of the places where we've been successful in doing so.
Drew Wells: Yeah, that's right. We recently secured a little bit more space in Fort Lauderdale as it is. I've been looking to grow in there for a while, and it's candidly a bit of an owner's airport to be able to grow into. We've been great partners with them. They've been great partners to us, helping to work to secure that. We're going to keep trying to grow where we see demand and success. That's one of the places where we've been successful in doing so.
Speaker #4: Yeah .
Speaker #4: right . And you know , we recently secured a normally more space in Fort Lauderdale as is it . I've been grow in there for a while .
Speaker #4: looking to And you know , it's a bit of an onerous airport to be able to little grow into . we've been And great partners with them .
Speaker #4: They've been great partners to us helping to to work to secure that . And we're going to keep trying to grow where we see demand and success and , you know , that's one of the places where where we've been successful in in doing so .
[Analyst] (Deutsche Bank): If that happened in the near term, would you have the ability to lean into that, to flex capacity into that? It sounds like there are some aircraft constraints as well. Or do you think you'd just be a beneficiary more on the yield side or something like that?
John Godyn: If that happened in the near term, would you have the ability to lean into that, to flex capacity into that? It sounds like there are some aircraft constraints as well. Or do you think you'd just be a beneficiary more on the yield side or something like that?
Speaker #10: And if that happened in the near term , would ability to lean into that , to flex capacity into that ? It sounds like there are some aircraft constraints as well .
Speaker #10: do you Or just be a you beneficiary ? have the the think you'd yield side or something like that ?
Drew Wells: I mean, to be determined. I mean, it's a lot of speculation in there. Like we mentioned earlier, we do have some slack left in our schedule that we'll deploy as we see fit, kind of as we see what shakes out. So whether that comes through capacity, whether that comes through just a few less seats in the market benefiting pricing for the short term, I guess we'll see. It's hard to speculate at this point, I think.
Drew Wells: I mean, to be determined. I mean, it's a lot of speculation in there. Like we mentioned earlier, we do have some slack left in our schedule that we'll deploy as we see fit, kind of as we see what shakes out. So whether that comes through capacity, whether that comes through just a few less seats in the market benefiting pricing for the short term, I guess we'll see. It's hard to speculate at this point, I think.
Speaker #4: I mean , two , be mean , it's a lot of speculation in determined . Like we I mentioned earlier , we do slack left in our will deploy as we see have some schedule that that fit .
Speaker #4: Kind of as as we see what shakes out . So comes through through capacity , whether that comes whether that , you know , just a few few less seats in the market benefiting pricing for the short .
Speaker #4: I term guess we'll see to . speculate at It's hard think .
[Analyst] (Deutsche Bank): All right. Fair enough. Thank you for all the answers.
John Godyn: All right. Fair enough. Thank you for all the answers.
Speaker #10: right . Fair enough . All Thank you for all the answers
Speaker #10: .
Operator: The next question comes from Savi Syth with Raymond James. Your line is open.
Operator: The next question comes from Savi Syth with Raymond James. Your line is open.
Speaker #1: next The question from Savi this point . Smith with
Speaker #1: James . Your I line is open comes .
[Analyst] (Evercore ISI): Hey, good afternoon. Just maybe expanding a little bit on Mike's earlier question, I was kind of curious how you're thinking about balance sheet this year and targets. You do have a big CapEx plan this year and this merger. Curious how you're kind of thinking about where you'd like to kind of keep the balance sheet.
Savi Syth: Hey, good afternoon. Just maybe expanding a little bit on Mike's earlier question, I was kind of curious how you're thinking about balance sheet this year and targets. You do have a big CapEx plan this year and this merger. Curious how you're kind of thinking about where you'd like to kind of keep the balance sheet.
Speaker #11: Hey . Good afternoon . Just maybe a little expanding a little bit on Mike's earlier question . I was kind of curious how you're thinking about balance sheet this year and targets .
Speaker #11: You know, you do have a big CapEx plan this year, and this merger is—curious how you're kind of thinking you'd like to kind of, about where, of keep the balance sheet.
Gregory Anderson: Sure. Thanks, Savi. I've spoken on these calls for a while about trying to keep net leverage in the 2 to 2.5 turns. We don't have a specific mandate from Greg or our board on that, but we update on it every quarter. And I think that's a healthy place to be. I'd like to see that number closer to 2 versus 2.5. But as we've kind of alluded to on the call, there's been a lot of opportunity out in the industry, and there are certain times where we should move within that range. As I think about 2026, the things that we need to consider are refinancing our bonds. So that's maturing in 2027. We don't need to do that in 2026, but the markets are quite constructive at the moment.
Drew Wells: Sure. Thanks, Savi. I've spoken on these calls for a while about trying to keep net leverage in the 2 to 2.5 turns. We don't have a specific mandate from Greg or our board on that, but we update on it every quarter. And I think that's a healthy place to be. I'd like to see that number closer to 2 versus 2.5. But as we've kind of alluded to on the call, there's been a lot of opportunity out in the industry, and there are certain times where we should move within that range. As I think about 2026, the things that we need to consider are refinancing our bonds. So that's maturing in 2027. We don't need to do that in 2026, but the markets are quite constructive at the moment.
Speaker #3: Sure . You I've spoken know , Thanks . on these for a while calls about trying to keep leverage in 2 to 2 and a half turns .
Speaker #3: We don't the have a specific mandate from Greg or our board net that , we update on it every quarter . And I think that's place to be .
Speaker #3: I'd like to see that but number two versus versus two and a half , but as alluded we've kind of to on the call , there's there's been a lot of opportunity out in the industry .
Speaker #3: And there are certain times there's where we should move within that range . As I think about 2026 , the the things that we need to consider are refinancing our bond .
Speaker #3: So that's maturing in 2027 . We to do that in the markets don't need quite 2026 . moment . a good But opportunity It could be to build up some balances at attractive economics and then there's the consideration , the cash consideration due to Sun country in of the year .
Gregory Anderson: It could be a good opportunity to build up some cash balances at attractive economics. And then there's the cash consideration due to Sun Country in the back of the year. And then we've been trying to keep cash balances elevated a little bit toward the higher end of our targets. And that's because we'd like to envision a world where we're paying out our pilot retention bonus at some point soon as well. And so we want to be ready to do that when we have an opportunity. So those are the big things. And then we have a big CapEx here, as you mentioned. Now, most of all of that could be financed at delivery. We'll probably pay cash for airplanes in the first half of the year and then think about aircraft financing in the back half of the year. Savi, it's Greg.
Drew Wells: It could be a good opportunity to build up some cash balances at attractive economics. And then there's the cash consideration due to Sun Country in the back of the year. And then we've been trying to keep cash balances elevated a little bit toward the higher end of our targets. And that's because we'd like to envision a world where we're paying out our pilot retention bonus at some point soon as well. And so we want to be ready to do that when we have an opportunity. So those are the big things. And then we have a big CapEx here, as you mentioned. Now, most of all of that could be financed at delivery. We'll probably pay cash for airplanes in the first half of the year and then think about aircraft financing in the back half of the year.
Speaker #3: And then we've been trying to keep cash balances elevated a little bit toward the higher end of our targets. We'd like to, too, because where we're paying out our— and that's envision a bonus at some pilot, we want to— well.
Speaker #3: to do And so that when soon as we have an opportunity . So those are the big things . And then we have a big CapEx year , as you mentioned .
Speaker #3: Now , most of most of the all of that could be financed at delivery . We'll probably pay cash for airplanes in the first half of the year and then think about aircraft financing in the of the year .
Speaker #3: back half
Greg Anderson: Savi, it's Greg.
Gregory Anderson: I just wanted to add a couple of comments on BJ's points there and maybe a little bit more high-level. That's that owning our fleet and opportunistically buying aircraft is a differentiator for us at Allegiant. We think it sets us apart, particularly in our segment of the industry. It's a major driver behind our durability, our low ownership costs, and our flexibility in that regard. With the Sun Country acquisition, just the work that BJ and the team have done to strengthen the balance sheet over the years and the way we structured the deal, this isn't going to, the acquisition isn't going to stretch us by any means. In fact, post-close and integration, it's going to strengthen the balance sheet. We have a favorable, well-timed max order.
Greg Anderson: I just wanted to add a couple of comments on BJ's points there and maybe a little bit more high-level. That's that owning our fleet and opportunistically buying aircraft is a differentiator for us at Allegiant. We think it sets us apart, particularly in our segment of the industry. It's a major driver behind our durability, our low ownership costs, and our flexibility in that regard. With the Sun Country acquisition, just the work that BJ and the team have done to strengthen the balance sheet over the years and the way we structured the deal, this isn't going to, the acquisition isn't going to stretch us by any means. In fact, post-close and integration, it's going to strengthen the balance sheet. We have a favorable, well-timed max order.
Speaker #6: So
Speaker #6: I just wanted to add a couple comments on on BJ's points there . And maybe a high little bit more level . And that's that .
Speaker #6: You know , owning our fleet and opportunistically buying aircraft is a differentiator for us at Allegiant . And we think it sets us apart , particularly in our segment the of industry .
Speaker #6: it's a And major driver behind our durability , our low ownership costs and our that flexibility in . regard with the sun Country acquisition , just the work that BJ and the team have done to strengthen the balance sheet over the years and the way we structured the deal , this isn't going to the acquisition , isn't going to stretch us by any In means .
Speaker #6: fact , Post-close and integration , it's going to strengthen the balance sheet . We have a favorable max , well-timed order , and you combine that with the free flow cash that some countries currently producing .
Gregory Anderson: And you combine that with the free cash flow that Sun Country is currently producing, that's going to help us not only maintain low leverage but continue to delever post-combination. That's well said, Greg. Thank you for adding that. And I think inside of Greg's comments there, Savi, the question is, if we wanted to raise the financing, do we do it ahead of having clarity on all of the approval dates and knowing the close date definitively? Because we may raise a little bit of additional capital today to be ready to close, but immediately on closing, we'll benefit, like Greg mentioned, from the cash flow that that business produces.
Greg Anderson: And you combine that with the free cash flow that Sun Country is currently producing, that's going to help us not only maintain low leverage but continue to delever post-combination.
Speaker #6: That's going to help us not only maintain a low leverage, but continue to deliver post-combination.
Drew Wells: That's well said, Greg. Thank you for adding that. And I think inside of Greg's comments there, Savi, the question is, if we wanted to raise the financing, do we do it ahead of having clarity on all of the approval dates and knowing the close date definitively? Because we may raise a little bit of additional capital today to be ready to close, but immediately on closing, we'll benefit, like Greg mentioned, from the cash flow that that business produces.
Speaker #3: That's well said . Greg , thank you for adding that . And I think , you know , inside of comments , they're the Greg's question is if we wanted to raise the financing , do we do it ahead of having clarity on all the approval dates and the date , knowing the closed date definitively , definitively , because we of additional a little bit today to be ready to close .
Speaker #3: But may raise immediately on closing capital will benefit . Like Greg mentioned cash flow that that the business produces .
[Analyst] (Evercore ISI): Great. Good points. This is our round, so I'll leave it at that. Thank you.
Savi Syth: Great. Good points. This is our round, so I'll leave it at that. Thank you.
Speaker #11: . Good point . And it I'll leave it at that . Thank you .
Gregory Anderson: Thank you.
Greg Anderson: Thank you.
Speaker #6: Thank you .
Operator: The next question comes from Conor Cunningham with Melius Research. Your line is open.
Operator: The next question comes from Conor Cunningham with Melius Research. Your line is open.
Speaker #1: The next question comes from Connor Cunningham with Melius Research . Your line is open everyone .
Sherry Wilson: Hey, everyone. Thank you. Maybe we could just start on the new market development. It's been a bit since we've started to add back new cities and whatnot. You highlighted the 10% of your capacity in Q2 and Q3. Just curious if you could provide maybe some historical context to what a unit revenue drag would normally be on new markets just as we start to think about past Q1 in general. Thank you.
Conor Cunningham: Hey, everyone. Thank you. Maybe we could just start on the new market development. It's been a bit since we've started to add back new cities and whatnot. You highlighted the 10% of your capacity in Q2 and Q3. Just curious if you could provide maybe some historical context to what a unit revenue drag would normally be on new markets just as we start to think about past Q1 in general. Thank you.
Speaker #6: Thank you .
Speaker #9: Maybe we could just start on the new development or new market development . It's been a bit since we've started to add back new cities and whatnot .
Speaker #9: You highlighted the 10% of your capacity in two Q and three Q . Just curious if you could provide some historical maybe some context a unit revenue drag would normally be on , on , on , on new markets , just as we start to think about past one Q to what in thank you general , .
Drew Wells: Yeah. I think in the past, what we've talked about is something in the 10% to 15% range relative to the rest of the system. No reason to expect it to be different through the cycle.
Greg Anderson: Yeah. I think in the past, what we've talked about is something in the 10% to 15% range relative to the rest of the system. No reason to expect it to be different through the cycle.
Speaker #4: Yeah, I think, in the past, what we've talked about is something in the 10 to 15% range relative to the rest of the— and no reason for it to be through the— different to expect.
Sherry Wilson: Okay. Helpful. And then just in terms of so yeah, your well-timed MAX order, you've sounded very, very bullish on the MAXes in general. I believe you have 80 options that are still waiting to be converted or potentially converted. Do you need to wait? Can you just talk about how you would approach the options side of the business or the options for the MAXes in general? Are you going to wait for Sun Country to close? Just trying to understand the dynamic of where we could be in a couple of years from now in terms of just the overall, maybe a decade from now, and where we could be in terms of just MAX contribution in general for the company. Thank you.
Conor Cunningham: Okay. Helpful. And then just in terms of so yeah, your well-timed MAX order, you've sounded very, very bullish on the MAXes in general. I believe you have 80 options that are still waiting to be converted or potentially converted. Do you need to wait? Can you just talk about how you would approach the options side of the business or the options for the MAXes in general? Are you going to wait for Sun Country to close? Just trying to understand the dynamic of where we could be in a couple of years from now in terms of just the overall, maybe a decade from now, and where we could be in terms of just MAX contribution in general for the company. Thank you.
Speaker #9: Okay . And then terms system of so , yeah , timed , max you're well order , you've sounded very , very bullish on the max delivery on general , Max's in I believe you have 80 on options that are still still waiting to be converted or potentially converted .
Speaker #9: Like do you need to wait ? Are you can talk about how you would approach you just that options side of business or the options for the Max's in general ?
Speaker #9: Are you going to wait for some country to close, like, is there—just trying to understand the dynamic of where we could be in a couple from now in of years, in terms of just the overall—maybe a—and where a decade from now we could be, in terms of just max contribution in general for the company.
Speaker #9: Thank you .
Gregory Anderson: Conor, yeah, thanks for the question. As you can tell, we're really excited about the opportunity and excited about what we're seeing in the firm portion of the MAX order. And there are 80 options. I think we would need to start talking about exercising those options if that's the decision in the back half of this year. And that would be for deliveries beginning in 2028. And I don't think that we have to wait for a Sun Country close to make that decision because we know or I'll say, I believe that exercising some of those options, at least, is accretive to our standalone business. But I think it becomes much, much more powerful when you think about the combined fleet.
Robert Neal: Conor, yeah, thanks for the question. As you can tell, we're really excited about the opportunity and excited about what we're seeing in the firm portion of the MAX order. And there are 80 options. I think we would need to start talking about exercising those options if that's the decision in the back half of this year. And that would be for deliveries beginning in 2028. And I don't think that we have to wait for a Sun Country close to make that decision because we know or I'll say, I believe that exercising some of those options, at least, is accretive to our standalone business. But I think it becomes much, much more powerful when you think about the combined fleet.
Speaker #3: Connor . Yeah , thanks for the question . As you can tell , we're really excited about the opportunity and excited about what we're seeing in the firm portion of the max order .
Speaker #3: And there are 80 options . I think we would need to start talking about exercising those decision in the this year that's the back that would , and deliveries beginning half of in 2028 .
Speaker #3: And and I don't think that we have to wait for a son country close to make that decision we , because know or I'll say , I believe , that exercising some of those options , at is least , accretive to our standalone business .
Speaker #3: But I think it options . much more you think about the combined powerful when fleet . You know , when we had the call on the merger , we talked a synergies , but lot about really difficult to it was quantify If fleet synergies , in particular around the PNL , because there's just a lot of trading opportunity between the two airlines that own their entire fleet .
Gregory Anderson: When we had the call on the merger, we talked a lot about synergies, but it was really difficult to quantify fleet synergies, in particular around the P&L, because there's just a lot of trading opportunity between the two airlines that own their entire fleet. And we just have such a better opportunity to take advantage of the option order book.
Robert Neal: When we had the call on the merger, we talked a lot about synergies, but it was really difficult to quantify fleet synergies, in particular around the P&L, because there's just a lot of trading opportunity between the two airlines that own their entire fleet. And we just have such a better opportunity to take advantage of the option order book.
Speaker #3: And we had such a better opportunity to take advantage of the option order book.
Sherry Wilson: Can I just ask one more on top of that? Is the A320, do you envision the A320 to be part of the fleet further down the line? It just seems like the MAX has done wonders for your business in general. And obviously, Sun Country is a 737 operator. So just any thoughts on single fleet in general? Thank you.
Conor Cunningham: Can I just ask one more on top of that? Is the A320, do you envision the A320 to be part of the fleet further down the line? It just seems like the MAX has done wonders for your business in general. And obviously, Sun Country is a 737 operator. So just any thoughts on single fleet in general? Thank you.
Speaker #9: Can ask I just one more ? On top of that is the A3 . Do you envision the to be A320 part of the like , you know , further line ?
Speaker #9: It down the just seems like the done max is fleet wonders for your obviously , you know , general . business in some countries 737 operators , just like thoughts any on single single fleet in general ?
Speaker #9: Thank you .
Gregory Anderson: Sure, Conor. I think I got a little bit.
Robert Neal: Sure, Conor. I think I got a little bit.
Sherry Wilson: Loaded. I know.
Conor Cunningham: Loaded. I know.
Speaker #3: Sure . think I got a .
Speaker #3: Connor , I Little .
Gregory Anderson: I close part of your question and probably forgot to maybe give you a responsible CFO comment and say the number one thing to guide that decision is probably the shape of our balance sheet. And so the 320 has been a fantastic machine, a fantastic producer for the Allegiant business for a long time. When we announced the max order, I think we talked about the combined fleet being about 50% Airbus, 50% Boeing at the end of the order. Candidly, we haven't sat around internally and discussed that changing significantly. Like I said, there's probably a little bit more opportunity on the max side now that we on the assumption that we would close the Sun Country transaction. But I think owning aircraft is more important than which of the two aircraft right now.
Robert Neal: I close part of your question and probably forgot to maybe give you a responsible CFO comment and say the number one thing to guide that decision is probably the shape of our balance sheet. And so the 320 has been a fantastic machine, a fantastic producer for the Allegiant business for a long time. When we announced the max order, I think we talked about the combined fleet being about 50% Airbus, 50% Boeing at the end of the order. Candidly, we haven't sat around internally and discussed that changing significantly. Like I said, there's probably a little bit more opportunity on the max side now that we on the assumption that we would close the Sun Country transaction. But I think owning aircraft is more important than which of the two aircraft right now.
Speaker #9: I know Loaded . .
Speaker #3: Your your question and and probably maybe give you a to responsible forgot CFO comment and say number one thing to guide that decision is probably the shape of our balance sheet .
Speaker #3: And the three, so the 320 has been a fantastic machine, a fantastic producer for the Allegiant business for a long time.
Speaker #3: When we announced the max order , I think we talked about the Combined the being about 50% Airbus , 50% Boeing . At the end of the order .
Speaker #3: We haven’t, candidly, sat internally and discussed that changing significantly. Like I said, bit more—probably a little opportunity on the MAX side now. We had that on the assumption that we would close the Sun Country transaction, but I think owning aircraft is more a question of having the right aircraft now.
Gregory Anderson: In order to own the aircraft, we need to maintain a healthy balance sheet.
Robert Neal: In order to own the aircraft, we need to maintain a healthy balance sheet.
Speaker #3: And in order to than important the aircraft , we need to maintain a healthy balance sheet .
Sherry Wilson: Okay. Thank you.
Conor Cunningham: Okay. Thank you.
Speaker #9: Okay . Thank you there's .
Speaker #9: Okay . Thank you there's .
Operator: The next question comes from the line of Ravi Shanker with Morgan Stanley. Your line is open.
Operator: The next question comes from the line of Ravi Shanker with Morgan Stanley. Your line is open.
Speaker #1: The next question comes from the line of Ravi Shanker with Morgan Stanley. Your line is open.
Robert Neal: Great. Thanks. Good evening, everyone. I think at the top of the call, you mentioned a tech stack opportunity and kind of how you're excited about what's coming. Can you just elaborate on that a little bit? And kind of is that something that you are putting in place now, or do you think that needs to wait until after the merger?
Ravi Shanker: Great. Thanks. Good evening, everyone. I think at the top of the call, you mentioned a tech stack opportunity and kind of how you're excited about what's coming. Can you just elaborate on that a little bit? And kind of is that something that you are putting in place now, or do you think that needs to wait until after the merger?
Speaker #12: Great . Thanks . Good evening everyone . I think on the top of the call , you mentioned Tech the two stack kind of how you're opportunity and excited about what's coming .
Speaker #12: Can you just elaborate on that a little bit is that and kind of something that you are putting in place or now , or do you think that needs to wait until after the merger ?
Gregory Anderson: Well, thanks, Ravi, for the question. It's a really important one. We've been through a technology transformation here for a number of years. I like to think where we're at today is that our technology investments are much more focused, and they're very practical. As we've modernized our IT stack, it's unlocking a lot of value for us. These platforms, particularly on the commercial side, are allowing us to move much more quickly. What we also were able to accomplish as part of this is bringing our data together, having better data, and the ability to use that data to make better decisions. We're going to continue to be more nimble, continue in terms of technology, and continue to find ways to improve, particularly on the commercial side, but throughout the business.
Greg Anderson: Well, thanks, Ravi, for the question. It's a really important one. We've been through a technology transformation here for a number of years. I like to think where we're at today is that our technology investments are much more focused, and they're very practical. As we've modernized our IT stack, it's unlocking a lot of value for us. These platforms, particularly on the commercial side, are allowing us to move much more quickly. What we also were able to accomplish as part of this is bringing our data together, having better data, and the ability to use that data to make better decisions. We're going to continue to be more nimble, continue in terms of technology, and continue to find ways to improve, particularly on the commercial side, but throughout the business.
Speaker #6: Well , thanks , Ravi , for the question . It's a really important one . And we've been , you know , through a technology transformation here for a number of years .
Speaker #6: And I'd like to think where we're at today is that our technology investments are much more And they're focused . very practical . And as we've our IT stack , we're unlocking a lot of value for us .
Speaker #6: And so these platforms , particularly on the commercial side , they're allowing us to move much more quickly . We were able to also accomplish as part of this is bringing our data together and having better data in the ability to use that data to make better decisions .
Speaker #6: But we're we're going to continue to be more nimble , continue in terms of technology , continue to find ways to improve , particularly on the commercial side .
Speaker #6: But throughout the business , for example , we we're seeing just for the winter storms that we just recently had , the new technology stack allowed us to communicate better with our customers , and that's what we're ultimately trying to drive .
Gregory Anderson: For example, we were seeing just for the winter storms that we just recently had, the new technology stack allowed us to communicate better with our customers. And that's what we're ultimately trying to drive. And it's still early, but we're pretty encouraged by what we're seeing and the changes we've made in this area of the business.
Greg Anderson: For example, we were seeing just for the winter storms that we just recently had, the new technology stack allowed us to communicate better with our customers. And that's what we're ultimately trying to drive. And it's still early, but we're pretty encouraged by what we're seeing and the changes we've made in this area of the business.
Speaker #6: And still, we're pretty encouraged by what we're seeing early, and the changes we've made in this area of the business.
Robert Neal: Understood. That's helpful. And maybe as a follow-up, you mentioned the investor day that you mentioned earlier for this year. Do you think that's still a 2026 event, or do you think it gets pushed out to 2027?
Ravi Shanker: Understood. That's helpful. And maybe as a follow-up, you mentioned the investor day that you mentioned earlier for this year. Do you think that's still a 2026 event, or do you think it gets pushed out to 2027?
Speaker #12: Understood . That's helpful . And follow maybe as a up , you the that you Investor Day mentioned mentioned earlier for for this year .
Speaker #12: Do you think that's still a 2026 event or do you think it gets pushed out to 27 ?
Gregory Anderson: I think it will pace with the close of the transaction that we're talking about. But we would expect, if it closed during the timeline of which we put out there, the second half of this year, we still think there's going to be room to have an investor day this year in 2026.
Greg Anderson: I think it will pace with the close of the transaction that we're talking about. But we would expect, if it closed during the timeline of which we put out there, the second half of this year, we still think there's going to be room to have an investor day this year in 2026.
Speaker #6: I think it will pace with the close of the transaction that we're talking about, but we would expect, if it closed during the timeline out there—which we put as second half of this year.
Speaker #6: I think there's still going to be room to have an Investor Day this year in 2026.
Robert Neal: Great. I think that's going to be a pretty important catalyst for the stock and figuring out normal LDPS. So would strongly encourage that. Thank you.
Robert Neal: Great. I think that's going to be a pretty important catalyst for the stock and figuring out normal LDPS. So would strongly encourage that. Thank you.
Speaker #12: Great . think there's I going to be a pretty important catalyst for the stock and figuring out normalized EPs . So would strongly encourage that .
Speaker #12: Thank you .
Gregory Anderson: Thanks, Ravi.
Greg Anderson: Thanks, Ravi.
Speaker #6: Thanks , Ravi .
Operator: The next question comes from Dan McKenzie with Seaport Global. Your line is open.
Operator: The next question comes from Dan McKenzie with Seaport Global. Your line is open.
Speaker #1: The next question comes from Dan McKenzie with Seaport Global. Your line is open.
Robert Neal: Oh, hey. Good afternoon. Thanks for the time, you guys. A couple of questions here. I guess just I hope you don't cringe too much at this question. Leave it to me to kick a dead horse here. But going back to the guide, does the and does the $8 embed a full or partial recovery of the 5 percentage points of RASM that was lost in 2025? I guess just beyond 2026, more broadly, just given the K-shaped economic recovery that we've experienced, drew some of the lowest leisure demand buckets still missing here as you kind of give us this revenue outlook. I guess related to that, if that demand segment doesn't come back, can you still manage the airline to a mid-teens operating margin throughout the cycle?
Dan McKenzie: Oh, hey. Good afternoon. Thanks for the time, you guys. A couple of questions here. I guess just I hope you don't cringe too much at this question. Leave it to me to kick a dead horse here. But going back to the guide, does the and does the $8 embed a full or partial recovery of the 5 percentage points of RASM that was lost in 2025? I guess just beyond 2026, more broadly, just given the K-shaped economic recovery that we've experienced, drew some of the lowest leisure demand buckets still missing here as you kind of give us this revenue outlook. I guess related to that, if that demand segment doesn't come back, can you still manage the airline to a mid-teens operating margin throughout the cycle?
Speaker #13: Oh hey . Good afternoon . Thanks for guys the time , . A couple questions here . And , you know , I guess just , you know .
Speaker #13: I hope you don't cringe too much at this question. You know, leave it to me to kick a dead horse here.
Speaker #13: But going back to the the guy does the , you know , does the $8 embed a full or partial recovery of the five percentage points of resin that was lost in 2025 ?
Speaker #13: And I guess , you know , just beyond more 2026 , broadly , you know , just given the k-shaped economic recovery that we've experienced , our drew are some of the lowest leisure demand buckets .
Speaker #13: Still missing here as you kind us this revenue of give outlook . And , you know , I guess related to that , if that demand segment doesn't come back , you know , can you still manage the airline to a mid-teens operating margin , you know , throughout the cycle ?
Gregory Anderson: Yeah. Thanks, Dan. I'll try to unpack some of this here. Yeah, I'd be remiss not to give another shout-out for our customer mix. It does tend to be on the top part of that K-shape, right? I mean, we're median income over 100,000, generally originating from lower cost of living DMAs. We do have a really healthy customer that flies on us. So I don't think that the K-shaped economy by any means is any more headwind or worrisome for me, I guess, as we look forward. What we provide is truly valuable in the communities we serve. And we can still stimulate with price. We can still play with our schedule in a way that's going to produce the right outcome for what we're looking for. So that is not something that I will lose sleep over at this point. Or should we be starting with this? Yeah.
Drew Wells: Yeah. Thanks, Dan. I'll try to unpack some of this here. Yeah, I'd be remiss not to give another shout-out for our customer mix. It does tend to be on the top part of that K-shape, right? I mean, we're median income over 100,000, generally originating from lower cost of living DMAs. We do have a really healthy customer that flies on us. So I don't think that the K-shaped economy by any means is any more headwind or worrisome for me, I guess, as we look forward. What we provide is truly valuable in the communities we serve. And we can still stimulate with price. We can still play with our schedule in a way that's going to produce the right outcome for what we're looking for. So that is not something that I will lose sleep over at this point. Or should we be starting with this? Yeah.
Speaker #4: Yeah . Thanks , Dan . I'll try to try to unpack some of this here . Yeah , I'd be remiss not to , you know , give another shout out for for our customer mix .
Speaker #4: You know , does tend to be on on the top part of that that k shape . Right . And there we're median income over 100 K generally originating from lower cost of living .
Speaker #4: You know, Dmas, we do have a really healthy customer that flies on us. So I don't think that the K-shaped economy, by any means, is any more of a headwind or worrisome for me. I guess as we look forward, you know, what we provide is valuable, truly, to the communities we serve.
Speaker #4: And we can stimulate with price. We can still work with our schedule and still play in a way that's going to produce the right outcome for what we're looking for.
Speaker #4: So that is not something that that I will lose sleep over at this point . Or are we starting with this ?
Gregory Anderson: And I would just add to that, Dan, that I mean, just to echo what Drew said, that our business and model is designed to protect margins, the flexibility that we've built into it. And what we've talked a lot to the street about over the past year or so, the initiatives and the execution of the team to really restrengthen that foundation. And so just to Drew's point, we feel really good where we're at and the flexibility we have and our ability just to serve the leisure customer.
Greg Anderson: And I would just add to that, Dan, that I mean, just to echo what Drew said, that our business and model is designed to protect margins, the flexibility that we've built into it. And what we've talked a lot to the street about over the past year or so, the initiatives and the execution of the team to really restrengthen that foundation. And so just to Drew's point, we feel really good where we're at and the flexibility we have and our ability just to serve the leisure customer.
Speaker #6: And Yeah . I would just add to that , Dan , that I mean , just to echo what drew said , but our business and model is designed to protect margins , the flexibility that we built into it and what you've , we've what talked a lot to the street about over the past year or so .
Speaker #6: The initiatives and the execution of the team to really restrengthen that foundation. And so just to really point, we feel good where we're at, with the flexibility we have and our ability just to serve the customer.
Drew Wells: Yeah. And maybe, sorry, I remember the first part of the question. As we think about the middle part of the year and recovering kind of that same store deficiency we saw last year, we're not plugging a full recovery into that number. So I mean, that's kind of where you would see a clear upside story if the economy does get there. We're above zero on it, but not all the way back.
Drew Wells: Yeah. And maybe, sorry, I remember the first part of the question. As we think about the middle part of the year and recovering kind of that same store deficiency we saw last year, we're not plugging a full recovery into that number. So I mean, that's kind of where you would see a clear upside story if the economy does get there. We're above zero on it, but not all the way back.
Speaker #6: .
Speaker #4: And maybe I remember the first part of the question as we think about the middle part of the year recovering and that kind of that same store deficiency we saw last year , you know , we're not plugging a full recovery into that number .
Speaker #4: So , I mean , that's that's kind of , you know , where you would see a clear upside story if the economy does get there .
Speaker #4: We're above zero on it, but not all the way back.
Robert Neal: Very helpful. And then second question here. Going back to the script and the reference to the next phase of the credit card program, I'm just wondering, what are the benchmarks that you'd like that credit card program to hit, I guess, first? And then second of all, are there steps that you can take to get your credit card holders to spend more? Or as you think about that next phase and where the revenue upside is, what are the areas of focus that really make sense?
Dan McKenzie: Very helpful. And then second question here. Going back to the script and the reference to the next phase of the credit card program, I'm just wondering, what are the benchmarks that you'd like that credit card program to hit, I guess, first? And then second of all, are there steps that you can take to get your credit card holders to spend more? Or as you think about that next phase and where the revenue upside is, what are the areas of focus that really make sense?
Speaker #13: Very . And then , you know , second question here , going back to the script and the next phase of reference to the the credit card program , I'm just wondering what are the benchmarks that you'd like that credit card program to hit ?
Speaker #13: I guess first and then second of all , you know , are there steps that you can take to get your credit card holders to spend more , or do you just as you think about that next phase and revenue upside where the is , you know , what are the areas of focus that you know , that really makes sense ?
Drew Wells: Yeah. I mean, there's definitely steps that we can take. And we know that because we've seen it in action over the last five months. I mentioned at the top, for the last five months, being up double-digit percentage in new card acquisition. Spend continues to look really strong. I think we just surpassed 600,000 cardholders. It's a really great story as we've applied kind of some new tactics and new thoughts even within the existing program. And then as you refresh it and bring it to something a little bit more modern, I think there's a meaningful amount of runway that exists there. And because we think about how it's been communicated elsewhere, you see 10% or more remuneration as a percent of revenue.
Drew Wells: Yeah. I mean, there's definitely steps that we can take. And we know that because we've seen it in action over the last five months. I mentioned at the top, for the last five months, being up double-digit percentage in new card acquisition. Spend continues to look really strong. I think we just surpassed 600,000 cardholders. It's a really great story as we've applied kind of some new tactics and new thoughts even within the existing program. And then as you refresh it and bring it to something a little bit more modern, I think there's a meaningful amount of runway that exists there. And because we think about how it's been communicated elsewhere, you see 10% or more remuneration as a percent of revenue.
Speaker #4: Yeah , I mean , there's definitively steps that we can take that because we've seen it in action over the last five months .
Speaker #4: know , I mentioned at the You top , you know , for the last five months , being up double digit percentage of new card acquisition spend continues to look really strong .
Speaker #4: I just think we surpassed 600,000 cardholders . It's a really great story as we've applied some , you know , some new tactics and new thoughts even within the existing program .
Speaker #4: And and then as you refresh it and bring it to something a little bit more modern , I think there's a meaningful amount of runway that , that exists there .
Speaker #4: And so as we think about how it's been communicated elsewhere , you see 10% or more renumeration as a percent of revenue . I don't know that we get all the way to ten , but I think we get above the 5% or so that that we did in 2025 .
Drew Wells: I don't know that we get all the way to 10, but I think we get above the 5% or so that we did in 2025. So as you think about another 2 to 3 points on that, it's a pretty compelling case right there.
Drew Wells: I don't know that we get all the way to 10, but I think we get above the 5% or so that we did in 2025. So as you think about another 2 to 3 points on that, it's a pretty compelling case right there.
Speaker #4: So you think about another 2 to 3 points on that . It's a pretty compelling right there .
Robert Neal: Yeah. Absolutely. Thanks for the time, you guys.
Dan McKenzie: Yeah. Absolutely. Thanks for the time, you guys.
Speaker #13: Yeah , absolutely .
Speaker #13: Thanks for the time, you guys.
Operator: The next question comes from Christopher Stathoulopoulos with SIG. Your line is open.
Operator: The next question comes from Christopher Stathoulopoulos with SIG. Your line is open.
Speaker #1: The next question comes from Christopher case Stassinopoulos with sig . Your line is open .
[Analyst] (UBS): Good afternoon. Want to dig into the capacity outlook for 2026. So the 10% to 15%, the new routes, it's consistent with your historical profile. If you could speak to the composition, so departure, stage, engage, and then on utilization, hours per day, year-on-year, and then the mix peak versus off-peak, year-on-year. And then also on the allocations of just look at first Q1, Q, excuse me, inventory is down solidly across most of your key markets, obviously, with the exception of FLL, and how you're thinking about inventory, I guess, distribution against that full-year guide. Thanks. Bye-bye, Mark.
Christopher Stathoulopoulos: Good afternoon. Want to dig into the capacity outlook for 2026. So the 10% to 15%, the new routes, it's consistent with your historical profile. If you could speak to the composition, so departure, stage, engage, and then on utilization, hours per day, year-on-year, and then the mix peak versus off-peak, year-on-year. And then also on the allocations of just look at first Q1, Q, excuse me, inventory is down solidly across most of your key markets, obviously, with the exception of FLL, and how you're thinking about inventory, I guess, distribution against that full-year guide. Thanks. Bye-bye, Mark.
Speaker #14: Good afternoon . Want to dig into the the capacity outlook for 26 . So the 10 to 15% . The new routes . It's consistent with your historical profile .
Speaker #14: If you could speak the to composition . So departure stage engage and then on utilization hours per day year on year . And then the mix peak versus off peak year on year .
Speaker #14: And then also on on the allocations of still got first Q1Q excuse me . You know , inventory is down solidly across most of your key markets .
Speaker #14: Obviously , with the exception of FL and you're thinking about inventory , I guess distribution against that full year guide . Thanks . By market .
Drew Wells: Yeah. Bye-bye, Mark. Yeah, you got it. How about day two? We'll kind of go through all of it. I'll do my best to unpack everything we talked through here. Stage and engage are a little bit offsetting through the year. So those are somewhat of a neutral for us. We talked about Lauderdale, some of the other growth spots that kind of come from the new market announcements. We filled out S&A a little bit, filled out a little more in Gulf Shores. Lauderdale, we talked about. In the spring, it's come a little bit at the expense of Provo capacity that's gone elsewhere. But by and large, we'll be back by summer. So some of it has really just been kind of a seasonal kind of sculpting, having to make some tough choices through the spring.
Drew Wells: Yeah. Bye-bye, Mark. Yeah, you got it. How about day two? We'll kind of go through all of it. I'll do my best to unpack everything we talked through here. Stage and engage are a little bit offsetting through the year. So those are somewhat of a neutral for us. We talked about Lauderdale, some of the other growth spots that kind of come from the new market announcements. We filled out S&A a little bit, filled out a little more in Gulf Shores. Lauderdale, we talked about. In the spring, it's come a little bit at the expense of Provo capacity that's gone elsewhere. But by and large, we'll be back by summer. So some of it has really just been kind of a seasonal kind of sculpting, having to make some tough choices through the spring.
Speaker #4: I yeah , yeah , you got it . How about day two ? We'll just we'll go through all of it . I'll do my to best unpack everything .
Speaker #4: We talked through here . know You stage and are a little bit offsetting through the through years . So those are those are somewhat of a neutral for us .
Speaker #4: We talked about Lauderdale and some of the other growth spots that kind of come from the new market announcements . We filled out a little bit , filled out a little Gulf more in Shores .
Speaker #4: Lauderdale . We about talked , you know , in the spring , it's come at the a little bit expense of Provo capacity that's gone But by and large , elsewhere .
Speaker #4: by summer . So some of it is really just been kind of a seasonal kind of sculpting , having to make some tough choices through the spring , but really a lot of that capacity that is coming out is off peak day .
Drew Wells: But really, a lot of that capacity that is coming out is off-peak day. We're able to hold our peak days pretty close to flat in terms of actual flying, which, to Greg's earlier point, will be a bit of a tailwind to our unit revenue outlook and better overall patterns for customers on that perspective. So I can promise you I didn't hit all of your topics there. Is there anything else you wanted me to dive there?
Drew Wells: But really, a lot of that capacity that is coming out is off-peak day. We're able to hold our peak days pretty close to flat in terms of actual flying, which, to Greg's earlier point, will be a bit of a tailwind to our unit revenue outlook and better overall patterns for customers on that perspective. So I can promise you I didn't hit all of your topics there. Is there anything else you wanted me to dive there?
Speaker #4: We're able to hold our peak days pretty close to to flat in terms of actual flying , which to Greg's point will be , you earlier know , a bit of a tailwind to our unit revenue outlook .
Speaker #4: and You better overall patterns for for customers on that perspective . So can promise you I didn't hit your topics there . Is there anything else you wanted me to dive there ?
Gregory Anderson: Aircraft utilization, where we stepped it up meaningfully. 2025 versus 2024, I want to say it was low 6s, hours per aircraft per day in 2024, up to 7, over 7 in 2025. I think it's flat, maybe slightly up a little bit in 2026 for overall aircraft utilization.
Greg Anderson: Aircraft utilization, where we stepped it up meaningfully. 2025 versus 2024, I want to say it was low 6s, hours per aircraft per day in 2024, up to 7, over 7 in 2025. I think it's flat, maybe slightly up a little bit in 2026 for overall aircraft utilization.
Speaker #6: Aircraft utilization
Speaker #6: we stepped it up meaningfully 25 versus want to say 24 ? I low it was sixes hours per aircraft per day , I 24 up over seven and 25 .
Speaker #6: I think it's flat—maybe slightly up a little bit in '26 for aircraft overall utilization.
[Analyst] (UBS): Great. Okay. I'll keep it to that. Thank you.
Christopher Stathoulopoulos: Great. Okay. I'll keep it to that. Thank you.
Speaker #14: Great . Okay . I'll that . keep it to Thank you .
Operator: The next question comes from Catherine O'Brien with Goldman Sachs. Your line is open.
Operator: The next question comes from Catherine O'Brien with Goldman Sachs. Your line is open.
Speaker #1: The next question comes from Catherine O'Brien with Goldman Sachs . Your line is open .
[Analyst] (Deutsche Bank): Hey. Good afternoon, everyone. Thanks for the time. So, I just wanted to bring it back to the Q4 beat for a minute. You came in ahead despite the government shutdown. We don't know what your RASM or CASM expectations were going into the quarter. Can you just walk us through what went better? And maybe just put some numbers around maybe how much better, roughly, if not exactly. I'm really just trying to get a sense of where there might be continued momentum into the Q1. Thanks.
Catherine O'Brien: Hey. Good afternoon, everyone. Thanks for the time. So, I just wanted to bring it back to the Q4 beat for a minute. You came in ahead despite the government shutdown. We don't know what your RASM or CASM expectations were going into the quarter. Can you just walk us through what went better? And maybe just put some numbers around maybe how much better, roughly, if not exactly. I'm really just trying to get a sense of where there might be continued momentum into the Q1. Thanks.
Speaker #15: Hey good afternoon everyone . for the Thanks time . So just wanted to bring it back to the a You know , you came ahead fourth quarter beat for minute .
Speaker #15: ahead despite the shutdown . We don't know what your government razzmatazz expectations were going into the quarter . Can you just walk us through what went better and maybe just put some numbers around .
Speaker #15: Maybe how much better, roughly, if not exactly. I'm really just trying to get a sense of where there might be continued momentum into the first quarter.
Speaker #15: Thanks .
Drew Wells: Yeah. I'm happy to start. I mean, the rev outlook outperformed a little bit. And in particular, we certainly, I think, we had communicated that we did see a bit of a slowdown during government shutdown as flights were being pulled back. But that recovered so well in the weeks following. And I talked a little bit about the holiday period, but that three-week stretch, some of which does spill into January, being a positive on a year-over-year, was certainly a bigger catalyst than I had anticipated at the beginning of the quarter. So kind of that late demand spike was a good guy.
Drew Wells: Yeah. I'm happy to start. I mean, the rev outlook outperformed a little bit. And in particular, we certainly, I think, we had communicated that we did see a bit of a slowdown during government shutdown as flights were being pulled back. But that recovered so well in the weeks following. And I talked a little bit about the holiday period, but that three-week stretch, some of which does spill into January, being a positive on a year-over-year, was certainly a bigger catalyst than I had anticipated at the beginning of the quarter. So kind of that late demand spike was a good guy.
Speaker #4: Yeah , I'm happy to start . I mean , the rev outlook , you know little , outperformed a . And in particular , you know , we certainly I think we had communicated that bit of a we did see a slowdown during during government shutdown as flights were being pulled back .
Speaker #4: But that recovered so well in the weeks following . And you know , I talked a little bit about the holiday period . But you know , that three week stretch with some of which does spill into January being a positive on a year over year , certainly a bigger catalyst than than I had anticipated at the beginning of the quarter .
Speaker #4: So kind of that that late demand spike was was a good guy .
Speaker #4: So, kind of, that late demand spike was a good guy.
Gregory Anderson: Sure, Katie. I'll just add in. Yeah, we did have a handful of beats on the cost side as well. There were a few areas. Salaries and wages came in a little bit lower than we had expected. And then I think the point of your question, there are a few items, maybe one that I'll call out, which is in the maintenance line. We had a meaningful beat there, which I would expect to be a bit of a shift into Q1 2026.
Greg Anderson: Sure, Katie. I'll just add in. Yeah, we did have a handful of beats on the cost side as well. There were a few areas. Salaries and wages came in a little bit lower than we had expected. And then I think the point of your question, there are a few items, maybe one that I'll call out, which is in the maintenance line. We had a meaningful beat there, which I would expect to be a bit of a shift into Q1 2026.
Speaker #3: Sure . Katie , I'll just Yeah , we did have a add in . handful of beats on the cost side as well .
Speaker #3: There were a few areas salaries and wages came in a little bit lower than than we had expected . And I then think the point of your question there are there are a few items maybe one that out , which I'll call maintenance line .
Speaker #3: We had a meaningful beat there , which I would expect to be a bit of a shift into the first quarter of 26 .
[Analyst] (Deutsche Bank): Okay. Great. Thanks. And then maybe, BJ, just sticking with you, on the potential for refinancing and perhaps looking to raise that against your unencumbered assets, you mentioned that the markets look constructive right now. Is there any structure or market that looks particularly attractive? Capital markets, bank debt, finance lease, JOLCO, whatever it may be?
Catherine O'Brien: Okay. Great. Thanks. And then maybe, BJ, just sticking with you, on the potential for refinancing and perhaps looking to raise that against your unencumbered assets, you mentioned that the markets look constructive right now. Is there any structure or market that looks particularly attractive? Capital markets, bank debt, finance lease, JOLCO, whatever it may be?
Speaker #15: Okay, great. Thanks. And then maybe just sticking with you on the potential for refinancing, and perhaps looking to raise that against your unencumbered assets.
Speaker #15: You mentioned that the markets look constructive right now . Is there any structure or market that looks particularly attractive ? You know , capital markets , bank debt , finance , lease ?
Speaker #15: Jocko , whatever it may be .
[Analyst] (UBS): We like all of those products. I think for me, and certainly others can weigh in here, for me, I just think it's important that we have a piece of the capital stack on the debt side that is not aircraft-funded because aircraft have proven to be resilient throughout cycles, including through a pandemic. And I just really like the ability to tap into aircraft to raise capital, whether that's opportunistically for a large acquisition or whether that's out of defense because we see fluctuation in the demand environment. And so I just like the idea of keeping something of similar size to our existing bond at the time of its original issuance, which was around $500 million. I like keeping something like that out there, which is secured by corporate collateral or the loyalty program.
Robert Neal: We like all of those products. I think for me, and certainly others can weigh in here, for me, I just think it's important that we have a piece of the capital stack on the debt side that is not aircraft-funded because aircraft have proven to be resilient throughout cycles, including through a pandemic. And I just really like the ability to tap into aircraft to raise capital, whether that's opportunistically for a large acquisition or whether that's out of defense because we see fluctuation in the demand environment. And so I just like the idea of keeping something of similar size to our existing bond at the time of its original issuance, which was around $500 million. I like keeping something like that out there, which is secured by corporate collateral or the loyalty program.
Speaker #3: like all We of those all of those products . I think for me , in certainly others can weigh in here for me .
Speaker #3: I just think it's important that we have a piece of the capital stack on the debt side that is not aircraft funded because the aircraft have have proven to be resilient throughout cycles , including through a pandemic I just really like the ability to tap into .
Speaker #3: aircraft to to raise And capital , whether that's large opportunistically for a acquisition or whether that's out of defense , because we see fluctuation in the demand environment .
Speaker #3: And so I just like the idea of keeping something of similar size to our existing bond at the time of its original issuance , which was around $500 million .
Speaker #3: I like keeping something like that out there, which is secured by corporate collateral or the loyalty program.
[Analyst] (Deutsche Bank): Okay. Great. Thanks for the caller.
Catherine O'Brien: Okay. Great. Thanks for the caller.
Speaker #15: Okay , great . Thanks for the color .
[Analyst] (UBS): Thanks, Katie.
Drew Wells: Thanks, Katie.
Speaker #3: Thanks , Katie .
Operator: This concludes the question and answer session. I'll turn the call to Sherry Wilson for closing remarks.
Operator: This concludes the question and answer session. I'll turn the call to Sherry Wilson for closing remarks.
Speaker #1: This concludes the question and answer session . I'll turn the call to Sherry Wilson for closing remarks .
[Analyst] (Deutsche Bank): Thank you all for joining us today. We'll see you next quarter.
Drew Wells: Thank you all for joining us today. We'll see you next quarter.
Speaker #16: Thank you all for joining us today. We'll see you next quarter.
Operator: This concludes today's conference call. Thank you for joining. You may now disconnect.
Operator: This concludes today's conference call. Thank you for joining. You may now disconnect.
