Allegiant Travel (ALGT) Continues to Execute; Buyback Announced

I don't currently have a position in Allegiant Travel (ALGT) in the new portfolio but had one in the old one. I am hoping to get a limit order fill below $32... Delta Air (DAL) had a gosh awful report (-20%!) so it seems to be hurting the group, as does any uptick in oil which we've seen the past few days (ex today)

• Demand for air travel continues to weaken as deep fare sales in recent weeks have not spurred customers to open up their wallets in droves, Delta Air Lines Inc. executives said Tuesday after the world's biggest carrier posted a $1.4 billion loss for the final three months of 2008 and signaled the revenue environment for 2009 will be challenging.

ALGT continues to trade in no man's land - good for daytrading I suppose but not for my time frame.

I saw nothing unworthy in this earnings report and please tell me what other airline is doing a buyback! (it's a small one, but at least they have the cash flow to do it - market cap is $700M so $25M is 4%) Their 88 cents beat analyst estimates by 21 cents, and unless oil gets back to $100+ next year's $3.70 seems achievable. Even at $3.00 this is just over 10x forward estimates.

• Allegiant Travel (ALGT) the Las Vegas parent of Allegiant Air, reported that fourth-quarter earnings nearly quadrupled on 21% higher revenue. Earnings reached $18.2 million, or 88 cents a share, from $4.8 million, or 23 cents, in the year-earlier quarter. Revenue rose to $122.4 million from $101 million.
• The company also said it would buy back as much as $25 million of its common stock.
• Allegiant had "tuned the airline to handle high fuel prices in the fourth quarter, as evidenced by the year-over-year reduction in capacity, and substantial increases in passengers per departure, load factor and total average air fare," President and Chief Executive Maurice J. Gallagher Jr. said in a statement late on Monday. Load factor is the percentage of seats filled with passengers. Our December fuel cost per passenger was less than $30 compared to an average of $60 during the second and third quarters of 2008 and $55 per passenger in first quarter of 2008.
• The airline was "well positioned to benefit from the dramatic collapse in oil prices during the second half of the year," Gallagher said. First-quarter average air fare should decline 4% to 6% from a year earlier but should be more than offset by lower fuel costs and higher aircraft utilization, the executive said. Our fourth quarter fuel price per gallon was down 21% year-over-year and a stunning 40% sequentially. The resulting reduction in fourth quarter operating cost helped pave the way to a record operating margin, with operating profit surging close to 400% year-over-year.

Balance Sheet

• We ended the quarter with unrestricted cash and short-term investments of $174.8 million, up from $138.6 million at the end of the prior quarter. Excluding air traffic liability, cash increased from $60.8 million to $105.8 million sequentially. Year-end 2008 total debt was $64.7 million, down from $70.1 million at the end of the prior quarter. We expect 2009 year-end total debt to decline by $25.3 million.
• "The rapid deterioration in the global aircraft market has put even more pressure on MD-80 prices and we are able to acquire high quality aircraft at even lower prices than before. Our strong liquidity position enables us to purchase MD-80 aircraft for cash without external financing, so the current credit crisis does not constrain our ability to grow."

This is exactly what we are looking for in all our companies - absolutely no need to deal with the dysfunctional credit markets. In this industry - the ability to say that is quite impressive.

No position but watching closely