Allegiant loses $93M in ‘most turbulent’ period in industry history

Image Credit: (Erik Verduzco / Las Vegas Review-Journal) @Erik_Verduzco

Allegiant Air plans to furlough up to 275 pilots as its parent company lost more than $90 million in the second quarter, underscoring the coronavirus pandemic’s devastating effect on the travel industry.

Las Vegas-based Allegiant Travel Co., which booked 17 straight profitable years before the pandemic upended daily life with sweeping business closures and stay-at-home orders around the nation, on Wednesday said it lost $93.1 million in the three months ended June 30, compared with a $70.5 million profit in the same period last year. Overall, the quarter was “the most turbulent” in industry history, Allegiant Chairman and CEO Maurice “Maury” Gallagher said in a news release.

“I’m sure you’ve all heard of the movie ‘Groundhog Day’ with Bill Murray and his adventures of repeating the same day over and over,” Gallagher told analysts on a conference call Wednesday. “That’s where we find ourselves today: Each day seems to be repeating itself as we wind our way through this slow-motion video called COVID.”

Allegiant, a deep-discount carrier, is known for flying from small, underserved cities to warm-weather vacation spots, usually without competition on its routes. Revenue plunged nearly 73 percent year over year to $133.3 million in the second quarter, and its passenger count fell 69.5 percent to about 1.3 million. Allegiant drastically cut back on flying amid the public health crisis and overnight economic collapse, logging 15,089 departures in the second quarter, down 50.6 percent from the same period last year.

Gallagher told analysts that 87 workers will be laid off Oct. 1, “a difficult task but a necessary one,” and while Allegiant wants to keep as many people working as possible, it needs to “spread the pain” to save labor costs. “Unfortunately, our pilots’ leadership is unwilling to work with us on this approach,” Gallagher said, adding Allegiant had notified the aviators’ union, the Teamsters, that it intends to furlough as many as 275 pilots.

The airline later told the Review-Journal those cuts “are a worst-case scenario” and would depend on a number of factors, including whether demand rebounds and if additional federal coronavirus relief funding becomes available.

Union officials did not immediately respond to a request for comment. Gallagher told analysts that Allegiant is in good shape from a liquidity standpoint, and compared with other carriers, it boasts the largest percentage of schedule flown and the biggest share of passengers compared to its historic market share.

“I’ve joked around the office that we are the best of the worst, given the state of the airline industry and the tourism industry overall,” he said. Still, things won’t return to normal until people aren’t scared of getting sick from others around them, he indicated.

The coronavirus causes a respiratory disease known as COVID-19, which is known to have killed more than 664,000 people globally as of Wednesday, including more than 150,000 in the U.S., by far the biggest source of fatalities in the world, according to Johns Hopkins University.

The outbreak has devastated Las Vegas’ tourism-dependent economy, which is built on bringing masses of people here from around the country and world, often by airplane, to eat, drink, gamble and party in close quarters.

Casinos, Las Vegas’ financial lifeblood, were allowed to reopen June 4, more than two months after Gov. Steve Sisolak ordered them and other Nevada businesses closed to help contain the virus’ spread.

To return to “any semblance of normalcy people have to believe they won’t become infected,” Gallagher said.