Allegiant Travel Company

Form 10-Q

Table of Contents



PART I.	FINANCIAL INFORMATION

ITEM 1.	Consolidated Financial Statements	3

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1820

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	2529

ITEM 4.	Controls and Procedures	2630

PART II.	OTHER INFORMATION

ITEM 1.	Legal Proceedings	2630

ITEM 1A.	Risk Factors	2630

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2730

ITEM 3.	Defaults Upon Senior Securities	2730

ITEM 4.	Mine Safety Disclosures	2730

ITEM 5.	Other Information	2730

ITEM 6.	Exhibits	2831

	Signatures	2932

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

ALLEGIANT TRAVEL COMPANY

CONSOLIDATED BALANCE SHEETS

(in thousands)


	March 31, 2019			December 31, 2018			June 30, 2019			December 31, 2018
	(unaudited)						(unaudited)
CURRENT ASSETS
Cash and cash equivalents	$	243,282		$	81,520		$	453,852		$	81,520
Restricted cash	14,496			14,391			14,318			14,391
Short-term investments	286,955			314,464			216,746			314,464
Accounts receivable	34,209			36,014			36,100			36,014
Expendable parts, supplies and fuel, net	19,527			19,516			25,131			19,516
Prepaid expenses and other current assets	35,477			29,343			34,100			29,343
TOTAL CURRENT ASSETS	633,946			495,248			780,247			495,248
Property and equipment, net	1,940,480			1,847,268			2,019,774			1,847,268
Long-term investments	24,605			51,526			24,704			51,526
Deferred major maintenance, net	83,869			67,873			89,868			67,873
Operating lease right-of-use assets, net	22,788			—			22,233			—
Deposits and other assets	44,789			36,753			45,374			36,753
TOTAL ASSETS:	$	2,750,477		$	2,498,668		$	2,982,200		$	2,498,668
CURRENT LIABILITIES
Accounts payable	$	28,690		$	27,452		$	32,097		$	27,452
Accrued liabilities	136,075			122,027			147,483			122,027
Air traffic liability	276,241			212,230			267,050			212,230
Current maturities of long-term debt and finance lease obligations, net of related costs	154,027			152,287			160,523			152,287
TOTAL CURRENT LIABILITIES	595,033			513,996			607,153			513,996
Long-term debt and finance lease obligations, net of current maturities and related costs	1,203,709			1,119,446			1,338,734			1,119,446
Deferred income taxes	180,136			164,027			199,689			164,027
Other noncurrent liabilities	33,145			10,878			32,115			10,878
TOTAL LIABILITIES:	2,012,023			1,808,347			2,177,691			1,808,347
SHAREHOLDERS' EQUITY
Common stock, par value $.001	23			23			23			23
Treasury stock	(607,316		)	(605,037		)
Treasury shares							(605,115		)	(605,037		)
Additional paid in capital	276,247			270,935			280,783			270,935
Accumulated other comprehensive loss, net	(190		)	(661		)	(4		)	(661		)
Retained earnings	1,069,690			1,025,061			1,128,822			1,025,061
TOTAL EQUITY:	738,454			690,321			804,509			690,321
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY:	$	2,750,477		$	2,498,668		$	2,982,200		$	2,498,668

The accompanying notes are an integral part of these consolidated financial statements.

ALLEGIANT TRAVEL COMPANY

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

(unaudited)


	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018			2019			2018
OPERATING REVENUES:
Passenger	$	419,977		$	396,771		$	454,779		$	405,572		$	874,755		$	802,343
Third party products	17,141			10,325			18,208			17,799			35,350			28,124
Fixed fee contracts	10,575			10,556			12,487			7,653			23,061			18,209
Other	3,929			7,792			6,285			5,756			10,215			13,548
Total operating revenues	451,622			425,444			491,759			436,780			943,381			862,224
OPERATING EXPENSES:
Salary and benefits	119,411			112,963			113,592			101,645			233,003			214,608
Aircraft fuel	99,682			106,027			119,987			122,454			219,670			228,481
Station operations	38,965			37,584			45,870			41,553			84,835			79,137
Maintenance and repairs	22,824			19,270			20,877			24,611			43,701			43,881
Depreciation and amortization	36,182			28,149			38,494			29,833			74,676			57,983
Sales and marketing	20,926			19,078			20,540			18,348			41,466			37,426
Aircraft lease rental							—			75			—			96
Other	22,554			22,405			24,294			24,039			46,849			46,422
Total operating expenses	360,544			345,476			383,654			362,558			744,200			708,034
OPERATING INCOME	91,078			79,968			108,105			74,222			199,181			154,190
OTHER (INCOME) EXPENSES:
Interest expense	18,083			12,908			20,942			13,251			39,025			26,158
Capitalized interest	(1,503		)	(184		)	(1,038		)	(95		)	(2,541		)	(278		)
Interest income	(3,201		)	(1,907		)	(3,502		)	(1,927		)	(6,703		)	(3,834		)
Loss on debt extinguishment	3,677			—			—			—			3,677			—
Other, net	103			(240		)	(86		)	(50		)	15			(290		)
Total other expenses	17,159			10,577			16,316			11,179			33,473			21,756
INCOME BEFORE INCOME TAXES	73,919			69,391			91,789			63,043			165,708			132,434
PROVISION FOR INCOME TAXES	16,795			14,198			21,246			13,027			38,041			27,225
NET INCOME	$	57,124		$	55,193		$	70,543		$	50,016		$	127,667		$	105,209
Earnings per share to common shareholders:
Basic	$	3.52		$	3.43		$	4.33		$	3.10		$	7.85		$	6.53
Diluted	$	3.52		$	3.42		$	4.33		$	3.10		$	7.84		$	6.52
Shares used for computation:
Basic	16,011			15,889			16,063			15,939			16,037			15,898
Diluted	16,013			15,898			16,069			15,945			16,050			15,914

Cash dividends declared per share:	$	0.70		$	0.70		$	0.70		$	0.70		$	1.40		$	1.40

The accompanying notes are an integral part of these consolidated financial statements.

ALLEGIANT TRAVEL COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)


	Three Months Ended March 31,						Three Months Ended June 30,				Six Months Ended June 30,
	2019			2018			2019		2018		2019			2018
NET INCOME	$	57,124		$	55,193		$	70,543	$	50,016	$	127,667		$	105,209
Other comprehensive income (loss):
Other comprehensive income:
Change in available for sale securities, net of tax	477			(956		)	177		113		654			(843		)
Foreign currency translation adjustments	(6		)	101			9		113		3			214
Change in derivatives, net of tax	—			(264		)	—		1,260		—		��	996
Total other comprehensive income (loss)	471			(1,119		)
Total other comprehensive income							186		1,486		657			367
TOTAL COMPREHENSIVE INCOME	$	57,595		$	54,074		$	70,729	$	51,502	$	128,324		$	105,576

The accompanying notes are an integral part of these consolidated financial statements.

ALLEGIANT TRAVEL COMPANY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

(unaudited)


							Accumulated												Three Months Ended June 30, 2019
	Common				Additional		other									Total									Accumulated
	stock		Par		paid-in		comprehensive			Retained			Treasury			shareholders'			Common				Additional		other									Total
	outstanding		value		capital		income (loss)			earnings			shares			equity			stock		Par		paid-in		comprehensive			Retained			Treasury			shareholders'
Balance at December 31, 2018	16,183		$	23	$	270,935	$	(661	)	$	1,025,061		$	(605,037	)	$	690,321
																			outstanding		value		capital		income (loss)			earnings			shares			equity
Balance at March 31, 2019																			16,284		$	23	$	276,247	$	(190	)	$	1,069,690		$	(607,316	)	$	738,454
Share-based compensation	118		—		5,312		—			—			—			5,312			6		—		4,536		—			—			—			4,536
Shares repurchased by the Company and held as treasury shares	(17	)	—		—		—			—			(2,279		)	(2,279		)	(5	)	—		—		—			—			(730		)	(730		)
Cash dividends declared, $0.70 per share	—		—		—		—			(11,394		)	—			(11,394		)
Other comprehensive income (loss)	—		—		—		471			(551		)	—			(80		)
Stock issued under employee stock purchase plan																			20		—		—		—			—			2,931			2,931
Cash dividends, $0.70 per share																			—		—		—		—			(11,411		)	—			(11,411		)
Other comprehensive income																			—		—		—		186			—			—			186
Net income	—		—		—		—			57,124			—			57,124			—		—		—		—			70,543			—			70,543
Cumulative effect of the New Lease Standard (see Note 5)	—		—		—		—			(550		)	—			(550		)
Balance at March 31, 2019	16,284		$	23	$	276,247	$	(190	)	$	1,069,690		$	(607,316	)	$	738,454
Balance at June 30, 2019																			16,305		$	23	$	280,783	$	(4	)	$	1,128,822		$	(605,115	)	$	804,509

Accumulated
Common Additional other Total
stock Par paid-in comprehensive Retained Treasury shareholders'
outstanding value capital income (loss) earnings shares equity
Balance at December 31, 2017 16,066
$ 23
$ 253,840
$ (2,840 ) $ 907,943
$ (605,655 ) $ 553,311
Share-based compensation 98
—
5,385
—
—
—
5,385
Shares repurchased by the Company and held as treasury shares (13 ) —
—
—
—
(2,233 ) (2,233 )
Cash dividends declared, $0.70 per share —
—
—
—
(11,295 ) —
(11,295 )
Other comprehensive income (loss) —
—
—
(1,119 ) 562
—
(557 )
Net income —
—
—
—
55,193
—
55,193
Balance at March 31, 2018 16,151
$ 23
$ 259,225
$ (3,959 ) $ 952,403
$ (607,888 ) $ 599,804



	Six Months Ended June 30, 2019
							Accumulated
	Common				Additional		other									Total
	stock		Par		paid-in		comprehensive			Retained			Treasury			shareholders'
	outstanding		value		capital		income (loss)			earnings			shares			equity
Balance at December 31, 2018	16,183		$	23	$	270,935	$	(661	)	$	1,025,061		$	(605,037	)	$	690,321
Share-based compensation	124		—		9,848		—			—			—			9,848
Shares repurchased by the Company and held as treasury shares	(22	)	—		—		—			—			(3,009		)	(3,009		)
Stock issued under employee stock purchase plan	20		—		—		—			—			2,931			2,931
Cash dividends, $1.40 per share	—		—		—		—			(22,805		)	—			(22,805		)
Other comprehensive income	—		—		—		657			(551		)	—			106
Net income	—		—		—		—			127,667			—			127,667
Cumulative effect of the New Lease Standard (see Note 5)	—		—		—		—			(550		)	—			(550		)
Balance at June 30, 2019	16,305		$	23	$	280,783	$	(4	)	$	1,128,822		$	(605,115	)	$	804,509



	Three Months Ended June 30, 2018
							Accumulated
	Common				Additional		other									Total
	stock		Par		paid-in		comprehensive			Retained			Treasury			shareholders'
	outstanding		value		capital		income (loss)			earnings			shares			equity
Balance at March 31, 2018	16,151		$	23	$	259,225	$	(3,959	)	$	952,403		$	(607,888	)	$	599,804
Share-based compensation	—		—		3,809		—			—			—			3,809
Issuance of common stock, net of forfeitures	5		—		—		—			—			—			—
Shares repurchased by the Company and held as treasury shares	(5	)	—		—		—			—			(761		)	(761		)
Stock issued under employee stock purchase plan	10		—		—		—			—			1,624			1,624
Cash dividends, $0.70 per share	—		—		—		—			(11,310		)	—			(11,310		)
Other comprehensive income	—		—		—		1,486			—			—			1,486
Net income	—		—		—		—			50,016			—			50,016
Balance at June 30, 2018	16,161		$	23	$	263,034	$	(2,473	)	$	991,109		$	(607,025	)	$	644,668



	Six Months Ended June 30, 2018
							Accumulated
	Common				Additional		other									Total
	stock		Par		paid-in		comprehensive			Retained			Treasury			shareholders'
	outstanding		value		capital		income (loss)			earnings			shares			equity
Balance at December 31, 2017	16,066		$	23	$	253,840	$	(2,840	)	$	907,943		$	(605,655	)	$	553,311
Share-based compensation	98		—		9,194		—			—			—			9,194
Issuance of common stock, net of forfeitures	5		—		—		—			—			—			—
Shares repurchased by the Company and held as treasury shares	(18	)	—		—		—			—			(2,994		)	(2,994		)
Stock issued under employee stock purchase plan	10		—		—		—			—			1,624			1,624
Cash dividends, $1.40 per share	—		—		—		—			(22,605		)	—			(22,605		)
Other comprehensive income	—		—		—		367			562			—			929
Net income	—		—		—		—			105,209			—			105,209
Balance at June 30, 2018	16,161		$	23	$	263,034	$	(2,473	)	$	991,109		$	(607,025	)	$	644,668

The accompanying notes are an integral part of these consolidated financial statements.

ALLEGIANT TRAVEL COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Three Months Ended March 31,						Six Months Ended June 30,
	2019			2018			2019			2018
OPERATING ACTIVITIES:
Net income	$	57,124		$	55,193		$	127,667		$	105,209
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	36,182			28,149			74,676			57,983
Gain on aircraft and other equipment disposals	(6,696		)	(132		)	(8,294		)	(1,491		)
Share-based compensation expense	4,538			3,796			9,128			6,106
Deferred income taxes	16,103			12,735			35,634			25,241
Other adjustments	4,971			1,080			5,199			1,237
Changes in certain assets and liabilities:
Accounts receivable	1,805			6,713			(86		)	46,873
Prepaid expenses	(5,988		)	(4,439		)	(4,257		)	(10,516		)
Accounts payable	(368		)	9,959			4,449			7,631
Accrued liabilities	7,877			14,267			14,681			20,859
Air traffic liability	64,011			52,474			54,820			32,633
Deferred major maintenance	(18,376		)	(4,476		)	(31,591		)	(7,841		)
Other assets/liabilities	(1,086		)	(2,392		)	(4,514		)	(689		)
Net cash provided by operating activities	160,097			172,927			277,512			283,235
INVESTING ACTIVITIES:
Purchase of investment securities	(68,447		)	(93,933		)	(130,627		)	(168,923		)
Proceeds from maturities of investment securities	124,472			97,224			258,076			199,294
Purchase of property and equipment, including capitalized interest	(122,551		)	(69,167		)	(234,469		)	(187,456		)
Other investing activities	6,973			521			10,201			(1,468		)
Net cash used in investing activities	(59,553		)	(65,355		)	(96,819		)	(158,553		)
FINANCING ACTIVITIES:
Cash dividends paid to shareholders	(11,394		)	(11,295		)	(22,805		)	(22,605		)
Proceeds from the issuance of debt	494,000			—			770,435			10,797
Principal payments on debt and finance lease obligations	(386,329		)	(102,914		)	(522,616		)	(142,399		)
Debt issuance costs	(30,060		)	(176		)	(30,759		)	(409		)
Other financing activities	(4,894		)	(679		)	(2,689		)	1,529
Net cash provided by (used in) financing activities	61,323			(115,064		)	191,566			(153,087		)
Net change in cash, cash equivalents, and restricted cash	161,867			(7,492		)	372,259			(28,405		)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD	95,911			70,639			95,911			70,639
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	$	257,778		$	63,147		$	468,170		$	42,234

CASH PAYMENTS (RECEIPTS) FOR:
Interest paid, net of amount capitalized	$	20,924		$	17,902		$	36,886		$	24,370
Income tax (refunds)/payments	$	(4,490	)	$	37
Income tax refunds							(3,340		)	(41,284		)
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:
Property capitalized under operating leases	$	23,320		$	—		23,320			—
Flight equipment acquired under finance leases	$	—		$	77,162		—			102,609

The accompanying notes are an integral part of these consolidated financial statements.

ALLEGIANT TRAVEL COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1 — Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements include the accounts of Allegiant Travel Company (the “Company”) and its majority-owned operating subsidiaries. The Company has no independent assets or operations, and all guarantees of the Company's publicly held debt are full and unconditional and joint and several. Any subsidiaries of the parent company other than the subsidiary guarantors are minor. The Company's investments in unconsolidated affiliates, which are 50 percent or less owned, are accounted for under the equity or cost method. All intercompany balances and transactions have been eliminated.

These unaudited consolidated financial statements reflect all normal recurring adjustments which management believes are necessary to present fairly the financial position, results of operations, and cash flows of the Company for the respective periods presented. Certain reclassifications have been made to prior year financial statements to conform to classifications used in the current year. Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission for Form 10-Q. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company and notes thereto included in the annual report of the Company on Form 10-K for the year ended December 31, 2018 and filed with the Securities and Exchange Commission.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates.

Recent Accounting Pronouncements

Recently Adopted Standards

In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02, Leases (Topic 842), (the "New Lease Standard"). This standard requires leases, other than short-term, to be recognized on the balance sheet as a lease liability and a corresponding right-of-use asset.

Lease payments include fixed payments, variable payments based on an index or rate, reasonably certain purchase options, termination penalties, and others as required by the standard. Lease payments do not include variable lease payments other than those that depend on an index or rate, any guarantee by the lessee of the lessor’s debt, or any amount allocated to non-lease components. This standard is effective for interim and annual reporting periods beginning after December 15, 2018 and the Company adopted the New Lease Standard as of January 1, 2019. The Company also elected the package of practical expedients, which among other things, does not require reassessment of lease classification.

The Company adopted the New Lease Standard using the modified retrospective transition approach as of the effective date as permitted by the amendments in ASU 2018-11, "Targeted Improvements - Leases (Topic 842)." Under this method, the cumulative effect adjustment to the opening balance of retained earnings is recognized at the adoption date. As a result, the Company was not required to adjust its comparative period financial information for effects of the standard or make the new required lease disclosures for periods before the date of adoption on January 1, 2019.

The Company's consolidated balance sheet was affected by this standard, but the consolidated statement of income and liquidity were not significantly impacted. The most significant change to the consolidated balance sheet upon adoption on January 1, 2019 relates to the recognition of new right-of-use (ROU) assets of $18.0 million and operating liabilities of $19.1 million. The Company's accounting for finance leases remains substantially unchanged.

See Note 5, "Leases," for more information.

Note 2 — Revenue Recognition

Passenger Revenue

Passenger revenue is the most significant category in our reported operating revenues. Passenger revenue is primarily composed of scheduled service revenue ~~(includes~~(including passenger ticket sales and credit voucher breakage), revenue from ancillary air-related charges ~~(includes~~(including seat fees, baggage fees, and other travel-related services performed in conjunction with a passenger’s flight), as well as co-brand credit card point redemptions, as outlined below:



	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2019		2018		2019		2018
Scheduled service	$	237,685	$	235,746	$	472,456	$	474,267
Ancillary air-related charges	213,527		167,630		395,227		322,347
Co-brand redemptions	3,567		2,196		7,072		5,729
Total passenger revenue	$	454,779	$	405,572	$	874,755	$	802,343

Three Months Ended March,
(in thousands) 2019 2018
Scheduled service $ 234,772
$ 238,520
Ancillary air-related charges 181,700
154,717
Co-brand redemptions 3,505
3,534
Total passenger revenue $ 419,977
$ 396,771

Sales of passenger tickets not yet flown are recorded in air traffic liability. Passenger revenue is recognized when transportation is provided or when ticket voucher breakage occurs, to the extent different from estimated breakage.

The contract term of passenger tickets is 12twelve months and revenue associated with future travel will principally be recognized within this time frame. ~~$175.7~~During the six months ended June 30, 2019, $204.8 million was recognized into passenger revenue ~~during the three months ended March 31, 2019~~ that was recorded in the air traffic liability balance of $212.2 million at December 31, 2018.

Co-brand redemptions

In relation to the travel component of the contract with Bank of America, the Company has a performance obligation to provide cardholders with points to be used for future travel award redemptions. Therefore, consideration received from Bank of America related to the travel component is deferred based on its relative selling price and is recognized into passenger revenue when the points are redeemed and the transportation is provided.

The following table presents the activity of the co-brand point liability as of the dates indicated:



	Six Months Ended June 30,
(in thousands)	2019			2018
Balance at January 1	$	10,708		$	8,903
Points awarded (deferral of revenue)	8,827			6,898
Points redeemed (recognition of revenue)	(7,072		)	(5,730		)
Balance at June 30	$	12,463		$	10,071

Three Months Ended March,
(in thousands) 2019 2018
Balance at January 1 $ 10,708
$ 8,903
Points awarded (deferral of revenue) 4,164
3,233
Points redeemed (recognition of revenue) (3,505 ) (3,534 )
Balance at March 31 $ 11,367
$ 8,602

As of ~~March 31,~~June 30, 2019 and ~~March 31,~~ 2018, ~~$8.9~~$9.8 million and ~~$5.7~~$6.9 million, respectively, of the current points liability is reflected in Accrued liabilities and represents our current estimate of revenue to be recognized in the next twelve months based on historical trends, with the remaining balance reflected in Other noncurrent liabilities expected to be recognized into revenue in periods thereafter.

Note 3 — Property and Equipment

Property and ~~equipment (in thousands):~~equipment:



(in thousands)	As of June 30, 2019			As of December 31, 2018
Flight equipment, including pre-delivery deposits	$	2,089,440		$	1,905,157
Computer hardware and software	149,354			140,385
Land and buildings/leasehold improvements	85,939			85,925
Other property and equipment	121,285			89,778
Total property and equipment	2,446,018			2,221,245
Less accumulated depreciation and amortization	(426,244		)	(373,977		)
Property and equipment, net	$	2,019,774		$	1,847,268

As of March 31, 2019 As of December 31, 2018
Flight equipment, including pre-delivery deposits $ 2,002,777
$ 1,905,157
Computer hardware and software 143,369
140,385
Land and buildings/leasehold improvements 85,925
85,925
Other property and equipment 106,159
89,778
Total property and equipment 2,338,230
2,221,245
Less accumulated depreciation and amortization (397,750 ) (373,977 )
Property and equipment, net $ 1,940,480
$ 1,847,268

Note 4 — Long-Term Debt

Long-term debt and finance lease ~~obligations (in thousands):~~obligations:



(in thousands)	As of June 30, 2019			As of December 31, 2018
Fixed-rate debt and finance lease obligations due through 2029^{(1) (2)}	$	321,646		$	640,806
Variable-rate debt due through 2029	1,177,611			630,927
Total long-term debt and finance lease obligations, net of related costs	1,499,257			1,271,733
Less current maturities, net of related costs⁽¹⁾	160,523			152,287
Long-term debt and finance lease obligations, net of current maturities and related costs	$	1,338,734		$	1,119,446

Weighted average fixed-interest rate on debt	4.7		%	5.3		%
Weighted average variable-interest rate on debt	5.1		%	4.2		%

As of March 31, 2019 As of December 31, 2018
Fixed-rate debt and finance lease obligations due through 2030 (1) (2)
$ 325,353
$ 640,806
Variable-rate debt due through 2028 1,032,383
630,927
Total long-term debt and finance lease obligations, net of related costs 1,357,736
1,271,733
Less current maturities, net of related costs (1)
154,027
152,287
Long-term debt and finance lease obligations, net of current maturities and related costs $ 1,203,709
$ 1,119,446

Weighted average fixed-interest rate on debt 3.9 % 5.3 %
Weighted average variable-interest rate on debt 5.5 % 4.2 %

(1) As of ~~March 31,~~June 30, 2019, and December 31, 2018, respectively, $80.1 million and $428.0 million of the Company's Unsecured Senior Notes were classified as long-term as management refinanced the borrowings on a long-term basis in February 2019, as discussed below.

(2) Includes finance lease obligations secured by five ~~A320 series~~ aircraft.

Maturities of long-term debt and finance lease obligations for the remainder of 2019 and for the next four years and thereafter, in the aggregate, are: remaining in 2019 - ~~$196.2~~$168.1 million; 2020 - ~~$124.0~~$138.9 million; 2021 - ~~$144.4~~$133.4 million; 2022 - ~~$70.1~~$113.9 million; 2023 - ~~$57.2~~$100.9 million; and ~~$765.8~~$844.1 million thereafter.

Consolidated Variable Interest Entity

The Company evaluates ownership, contractual lease arrangements and other interests in entities to determine if they are variable interest entities ("VIEs") based on the nature and extent of those interests. These evaluations can be complex and involve judgment and the use of estimates and assumptions based on available historical information and management’s judgment, among other factors. The Company consolidates a VIE when, among other criteria, it has the power to direct the activities that most significantly impact the VIE’s economic performance as well as the obligation to absorb losses or the right to receive benefits of the VIE, thus making the Company the primary beneficiary of the VIE.

In March 2019, the Company, through a wholly owned subsidiary, entered into agreements with a trust to borrow $44.0 million secured by one ~~Airbus A320 series~~ aircraft. The trust was funded on inception. These borrowings bear interest at a blended rate of 3.8 percent, payable in quarterly installments through ~~March~~April 2029, at which time the Company will have a purchase option at a fixed amount. As this transaction is a common control transaction, the Company, as the primary beneficiary, has measured and recorded the assets and liabilities at their carrying values, which were $39.1 million and $44.0 million, respectively, at the time of borrowing.

Senior Secured Revolving Credit Facility

The Company has a senior secured revolving credit facility under which it is able to borrow up to $81.0 ~~million, and $46.9 million is outstanding~~million. There was no balance under this facility as of ~~March 31,~~June 30, 2019. The facility has a ~~current~~ term of 24 months and is based on the value of ~~Airbus A320 series~~ aircraft placed in the collateral pool. Aircraft ~~may~~ remain in the collateral pool for up to two years, and, as of ~~March 31,~~June 30, 2019, there were ~~nine~~four aircraft in the collateral pool.

Secured Debt

In June 2019, the Company entered into an agreement to borrow $213.0 million secured by 23 aircraft. The ~~notes~~borrowing bears interest at a floating rate based on LIBOR, and is payable in quarterly installments over five years. A portion of the proceeds was used for the ~~amounts~~prepayment of six existing debt agreements and the repayment of the outstanding balance on the senior secured revolving credit facility.

During the second quarter 2019, the Company borrowed a total of $63.4 million under ~~the facility~~multiple loan agreements secured by spare engines. The borrowings bear interest at a floating rate based on LIBOR, and are ~~due on March 31, 2021.~~payable in quarterly installments, with terms ranging from seven to ten years.

Term Loan

In February 2019, the Company entered into a Credit and Guaranty Agreement (the “Term Loan”) to borrow $450.0 million, guaranteed by all of the Company's subsidiaries, excluding Sunseeker Resorts Inc. and its subsidiaries, and other insignificant subsidiaries (the "Term Loan Guarantors"). The Term Loan is secured by substantially all property and assets of the Company and the Term Loan Guarantors, excluding aircraft and aircraft engines, and excluding certain other assets. The Term Loan has a five-year term, bears interest based on LIBOR and provides for quarterly interest payments along with quarterly principal payments of $1.1 million through February 2024, at which time the Term Loan is due. The Term Loan may be prepaid at any time without penalty.

In connection with the Term Loan, the Company conducted a tender offer for its 5.5 percent senior unsecured obligation, as outlined below.

General Unsecured Senior Notes

~~In June 2014,~~Since December 2016 and until February 2019, the Company ~~completed an offering of $300.0~~had outstanding $450.0 million aggregate principal amount of senior unsecured obligations (the "Notes") which will mature in July 2019. In December 2016, the Company completed an offering of an additional $150.0 million principal amount of these notes, which were issued at a price of 101.5 percent of the principal amount, plus accrued interest from July 15, 2016. The Notes bearbore interest at ~~a rate of~~ 5.5 percent per year ~~payable~~and matured in ~~cash semi-annually, on January 15th and~~ July ~~15th of each year.~~2019.

In connection with the Term Loan discussed above, the Company completed a tender offer in February 2019, whereby it purchased $347.9 million of the Notes, and incurred related debt extinguishment costs of $3.7 million. The indenture governing the Notes was amended to eliminate most of the restrictive covenants and certain events of default ~~reduce the minimum notice period required for redemptions of the Notes from 30 days as previously required by the indenture to three business days,~~ and amend certain other provisions applicable to the Notes. The $428.0 million net proceeds from the Term Loan ~~have been, or will be,~~were used to purchase the ~~Notes. The Company expects to call~~Notes, of which the remaining ~~balance of the Notes~~$102.1 million outstanding at June 30, 2019 was paid at maturity in ~~advance of their~~ July ~~2019 maturity.~~2019.

Construction Loan Agreement

In March 2019, Sunseeker Florida, Inc. (“SFI”), a wholly-owned subsidiary of the Company, entered into a Construction Loan Agreement with certain lenders affiliated with TPG Sixth Street Partners, LLC (the “Lender”). Under the Construction Loan Agreement, SFI may borrow up to $175.0 million (the “Loan”) to fund the construction of Phase 1 of Sunseeker Resort -Charlotte Harbor (the “Project”). No amount has been drawn under this agreement as of ~~March 31,~~June 30, 2019.

Under the Construction Loan Agreement, the Lender is to provide the final $175.0 million of funding for the Project, with initial funding to come from the Company. The loan is secured by the Project and, for a period of time, the surrounding land owned by SFI. The Company has guaranteed one-third of the debt, has agreed to bear responsibility under a Non-Recourse Carve-Out Guaranty, and has agreed to guarantee completion of the Project in accordance with approved plans and specifications. All of the shares in SFI are also pledged to secure the loan. The Loan bears interest based on LIBOR and matures in March 2023.

Note 5 — Leases

The Company determines if an arrangement is a lease at inception and has lease agreements for office facilities, office equipment, certain airport and terminal facilities, and other space and assets. These commitments have remaining non-cancelable lease terms, with lease expirations which range from 2019 to 2036.

As a result of the New Lease Standard, certain real estate and property leases, and various other operating leases have been measured on the balance sheet with a lease liability and right-of-use asset ("ROU"). Airport terminal leases mostly include

variable lease payments outside of those based on a fixed index, and are therefore excluded from consideration.

Application of this standard resulted in the recognition of $23.3 million in ROU assets and a corresponding lease liability of $24.2 million (with $22.0 million classified as long-term within Other non-current liabilities and the remainder classified as short-term within Accrued liabilities) as of March 31, 2019. Accounting for finance leases is substantially unchanged.

Operating leases are included in operating lease ROU assets, accrued liabilities, and other noncurrent liabilities on the consolidated balance sheets. Finance leases are included in property and equipment, current maturities of long-term debt and finance leases, and long-term debt and finance leases, net of current maturities, on the consolidated balance sheets. ROU assets represent the Company's right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make scheduled lease payments. ROU assets and liabilities are recognized on the lease commencement date based on the present value of lease payments over the lease term. The present value of lease payments is calculated using the incremental borrowing rate at lease commencement, which takes into consideration recent debt issuances as well as other applicable market data available.

Lease terms include options to extend when it is reasonably certain that the option will be exercised. Leases with a term of 12twelve months or less are not recorded on the balance sheet. Additionally, lease and non-lease components are accounted for as a single lease component for real estate agreements.

In addition to operating leases, the Company leases certain aircraft and, as of ~~March 31,~~June 30, 2019, had five aircraft under finance leases with remaining terms to 2029.

~~See Note 8, Commitments and Contingencies, for further detail.~~

Lease Costs

The components of lease expense were as follows:



		Three Months Ended		Six Months Ended
(in thousands)	Classification on the Statements of Income	June 30, 2019		June 30, 2019
Finance lease costs:
Amortization of assets	Depreciation and amortization	$	1,629	$	3,259
Interest on lease liabilities	Interest expense	1,326		2,672
Operating lease cost	Station operations; Maintenance and repairs; Other operating expense	805		1,581
Variable lease cost	Station operations; Maintenance and repairs; Other operating expense	2,703		5,797
Total lease cost		$	6,463	$	13,309

Three Months Ended
(in thousands) Classification on the Statements of Income March 31, 2019
Finance lease costs:
Amortization of assets Depreciation and amortization $ 1,629
Interest on lease liabilities Interest expense 1,346
Operating lease cost Station operations; Maintenance and repairs; Other operating expense 775
Variable lease cost Station operations; Maintenance and repairs; Other operating expense 3,092
Total lease cost $ 6,842

Lease position as of ~~March 31,~~June 30, 2019

The table below presents the lease-related assets and liabilities recorded on the balance sheet.



		As of
(in thousands)	Classification on the Balance Sheet	June 30, 2019
Assets
Operating lease assets	Operating lease right-of-use assets, net	$	22,233
Finance lease assets	Property and equipment, net	114,924
Total lease assets		$	137,157

Liabilities
Current
Operating	Accrued liabilities	$	2,240
Finance	Current maturities of long-term debt and finance lease obligations	7,499
Noncurrent
Operating	Other noncurrent liabilities	21,476
Finance	Long-term debt and finance lease obligations	111,805
Total lease liabilities		$	143,020

Weighted-average remaining lease term
Operating leases		9.3 years
Finance leases		10.4 years
Weighted-average discount rate
Operating leases		4.2		%
Finance leases		4.4		%

(in thousands) Classification on the Balance Sheet As of March 31, 2019
Assets
Operating lease assets Operating lease right-of-use assets, net $ 22,788
Finance lease assets Property and equipment, net 116,553
Total lease assets $ 139,341

Liabilities
Current
Operating Accrued liabilities $ 2,101
Finance Current maturities of long-term debt and finance lease obligations 7,417
Noncurrent
Operating Other noncurrent liabilities 22,049
Finance Long-term debt and finance lease obligations 113,710
Total lease liabilities $ 145,277

Weighted-average remaining lease term
Operating leases 9.5 years
Finance leases 10.6 years
Weighted-average discount rate
Operating leases 4.2 %
Finance leases 4.4 %

Other Information

The table below presents supplemental cash flow information related to leases during the three and six months ended ~~March 31,~~June 30, 2019.



	Three Months Ended		Six Months Ended
(in thousands)	June 30, 2019		June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases	$	643	1,272
Operating cash flows for finance leases	1,326		2,672
Financing cash flows for finance leases	1,824		3,628

Three Months Ended
(in thousands) March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases $ 629
Operating cash flows for finance leases 1,346
Financing cash flows for finance leases 1,804

Maturities of Lease Liabilities

The table below indicates the future minimum payments of lease liabilities as of ~~March 31,~~June 30, 2019.



(in thousands)	Operating Leases			Finance Leases
Remaining in 2019	$	1,586		$	6,300
2020	3,206			12,600
2021	3,249			12,600
2022	3,294			11,095
2023	3,147			10,500
Thereafter	14,325			103,459
Total lease payments	28,807			156,554
Less imputed interest	(5,091		)	(37,250		)
Total lease obligations	23,716			119,304
Less current obligations	(2,240		)	(7,499		)
Long-term lease obligations	$	21,476		$	111,805

(in thousands) Operating Leases Finance Leases
Remaining in 2019 $ 2,269
$ 9,450
2020 3,206
12,600
2021 3,249
12,600
2022 3,295
11,095
2023 3,147
10,500
Thereafter 14,325
103,458
Total lease payments 29,491
159,703
Less imputed interest (5,341 ) (38,576 )
Total lease obligations 24,150
121,127
Less current obligations (2,101 ) (7,417 )
Long-term lease obligations $ 22,049
$ 113,710

The Company adopted the New Lease Standard on January 1, 2019 as noted above, and as required, the following disclosure is provided for periods prior to adoption. Future annual minimum lease payments as of December 31, 2018 were as follows:



(in thousands)	Operating Leases		Capital Leases
2019	$	8,102	$	12,600
2020	6,031		12,600
2021	3,643		12,600
2022	1,630		11,095
2023	1,626		10,500
Thereafter	8,297		103,458
Total lease payments	$	29,329	162,853
Less imputed interest			(39,922		)
Total lease obligations			122,931
Less current obligations			(7,336		)
Long-term lease obligations			$	115,595

(in thousands) Operating Leases Capital Leases
2019 $ 8,102
$ 12,600
2020 6,031
12,600
2021 3,643
12,600
2022 1,630
11,095
2023 1,626
10,500
Thereafter 8,297
103,458
Total lease payments $ 29,329
162,853
Less imputed interest (39,922 )
Total lease obligations 122,931
Less current obligations (7,336 )
Long-term lease obligations $ 115,595

Note 6 — Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received by selling an asset or paid to transfer a liability in an orderly transaction between market participants.

Accounting standards pertaining to fair value measurements establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than Level 1 inputs that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The Company uses the market approach valuation technique to determine fair value for investment securities. The assets classified as Level 1 consist of money market funds for which original cost approximates fair value. The assets classified as Level 2 consist of commercial paper, municipal debt securities, federal agency debt securities, US Treasury Bonds, and corporate debt securities, which are valued using quoted market prices or alternative pricing sources including transactions involving identical or comparable assets and models utilizing market observable inputs. The Company has no investment securities classified as Level 3.

For those assets classified as Level 2 that are not in active markets, the Company obtains fair value from pricing sources using quoted market prices for identical or comparable instruments, and uses pricing models which include all significant observable

inputs: maturity dates, issue dates, settlement dates, benchmark yields, reported trades, broker-dealer quotes, issue spreads, benchmark securities, bids, offers and other market related data. These inputs are observable or can be derived from, or corroborated by, observable market data for substantially the full term of the asset.

Financial instruments measured at fair value on a recurring ~~basis (in thousands):~~basis:


	As of March 31, 2019						As of December 31, 2018						As of June 30, 2019						As of December 31, 2018
	Total		Level 1		Level 2		Total		Level 1		Level 2
(in thousands)													Total		Level 1		Level 2		Total		Level 1		Level 2
Cash equivalents
Money market funds	$	125,394	$	125,394	$	—	$	43,281	$	43,281	$	—	$	310,550	$	310,550	$	—	$	43,281	$	43,281	$	—
Commercial paper	80,760		—		80,760		29,138		—		29,138		110,429		—		110,429		29,138		—		29,138
Municipal debt securities	3,792		—		3,792		—		—				2,408		—		2,408		—		—		—
US Treasury Bonds	880		—		880		1,415		—		1,415
Federal agency debt securities													950		—		950		—		—		—
US Treasury bonds													—		—		—		1,415		—		1,415
Total cash equivalents	210,826		125,394		85,432		73,834		43,281		30,553		424,337		310,550		113,787		73,834		43,281		30,553
Short-term
Commercial paper	182,608		—		182,608		180,846		—		180,846		138,332		—		138,332		180,846		—		180,846
Corporate debt securities	74,331		—		74,331		101,489		—		101,489		55,729		—		55,729		101,489		—		101,489
Federal agency debt securities													10,504		—		10,504		11,887		—		11,887
Municipal debt securities	13,927		—		13,927		14,252		—		14,252		7,450		—		7,450		14,252		—		14,252
Federal agency debt securities	11,367		—		11,367		11,887		—		11,887
US Treasury Bonds	4,722		—		4,722		5,990		—		5,990
US Treasury bonds													4,731		—		4,731		5,990		—		5,990
Total short-term	286,955		—		286,955		314,464		—		314,464		216,746		—		216,746		314,464		—		314,464
Long-term
Corporate debt securities	20,300		—		20,300		37,334		—		37,334		20,367		—		20,367		37,334		—		37,334
US Treasury Bonds	3,050		—		3,050		2,901		—		2,901
US Treasury bonds													3,068		—		3,068		2,901		—		2,901
Federal agency debt securities	1,255		—		1,255		11,291		—		11,291		1,269		—		1,269		11,291		—		11,291
Total long-term	24,605		—		24,605		51,526		—		51,526		24,704		—		24,704		51,526		—		51,526
Total financial instruments	$	522,386	$	125,394	$	396,992	$	439,824	$	43,281	$	396,543	$	665,787	$	310,550	$	355,237	$	439,824	$	43,281	$	396,543

The fair value of the Company’s publicly held long-term debt is determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets; therefore, the Company has categorized its publicly held debt as Level 2. The Company's remaining debt is not publicly held, and the Company has determined the estimated fair value of these notes to be Level 3, as certain inputs used to determine the fair value are unobservable and, therefore, could be sensitive to changes in inputs. The Company utilizes the discounted cash flow method to estimate the fair value of Level 3 debt.

Carrying value and estimated fair value of long-term debt, including current maturities and without reduction for related costs are as ~~follows (in thousands):~~follows:



	As of June 30, 2019				As of December 31, 2018
(in thousands)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value		Hierarchy Level
Publicly held debt	$	102,090	$	102,154	$	450,463	$	451,026	2
Non-publicly held debt	1,303,593		1,098,068		703,372		619,379		3
Total long-term debt	$	1,405,683	$	1,200,222	$	1,153,835	$	1,070,405

As of March 31, 2019 As of December 31, 2018
Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Hierarchy Level
Publicly held debt $ 102,133
$ 102,389
$ 450,463
$ 451,026
2
Non-publicly held debt 1,160,772
937,134
703,372
619,379
3
Total long-term debt $ 1,262,905
$ 1,039,523
$ 1,153,835
$ 1,070,405

Due to the short-term nature, carrying amounts of cash, cash equivalents, restricted cash, accounts receivable and accounts payable approximate fair value.

Note 7 — Earnings per Share

Basic and diluted earnings per share are computed pursuant to the two-class method. Under this method, the Company attributes net income to two classes: common stock and unvested restricted stock. Unvested restricted stock awards granted to employees under the Company’s Long-Term Incentive Plan are considered participating securities as they receive non-forfeitable rights to cash dividends at the same rate as common stock.

Diluted net income per share is calculated using the more dilutive of the two methods. Under both methods, the exercise of employee stock options is assumed using the treasury stock method. The assumption of vesting of restricted stock, however, differs:


1.	Assume vesting of restricted stock using the treasury stock method.


2.	Assume unvested restricted stock awards are not vested, and allocate earnings to common shares and unvested restricted stock awards using the two-class method.

For the three and six months ended ~~March 31,~~June 30, 2019 and 2018, respectively, the second method, which assumes unvested awards are not vested, was used in the computation because it was more dilutive than the first method.

The following table sets forth the computation of net income per share, on a basic and diluted basis, for the periods indicated (share count and dollar amounts other than per-share amounts in table are in thousands):



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Basic:
Net income	$	70,543		$	50,016		$	127,667		$	105,209
Less net income allocated to participating securities	(997		)	(659		)	(1,791		)	(1,427		)
Net income attributable to common stock	$	69,546		$	49,357		$	125,876		$	103,782
Earnings per share, basic	$	4.33		$	3.10		$	7.85		$	6.53
Weighted-average shares outstanding	16,063			15,939			16,037			15,898
Diluted:
Net income	$	70,543		$	50,016		$	127,667		$	105,209
Less net income allocated to participating securities	(996		)	(658		)	(1,790		)	(1,425		)
Net income attributable to common stock	$	69,547		$	49,358		$	125,877		$	103,784
Earnings per share, diluted	$	4.33		$	3.10		$	7.84		$	6.52
Weighted-average shares outstanding	16,063			15,939			16,037			15,898
Dilutive effect of stock options and restricted stock	39			44			39			63
Adjusted weighted-average shares outstanding under treasury stock method	16,102			15,983			16,076			15,961
Participating securities excluded under two-class method	(33		)	(38		)	(26		)	(47		)
Adjusted weighted-average shares outstanding under two-class method	16,069			15,945			16,050			15,914

Three Months Ended March 31,
2019 2018
Basic:
Net income $ 57,124
$ 55,193
Less net income allocated to participating securities (799 ) (768 )
Net income attributable to common stock $ 56,325
$ 54,425
Earnings per share, basic $ 3.52
$ 3.43
Weighted-average shares outstanding 16,011
15,889
Diluted:

Net income $ 57,124
$ 55,193
Less net income allocated to participating securities (798 ) (768 )
Net income attributable to common stock $ 56,326
$ 54,425
Earnings per share, diluted $ 3.52
$ 3.42
Weighted-average shares outstanding 16,011
15,889
Dilutive effect of stock options and restricted stock 31
46
Adjusted weighted-average shares outstanding under treasury stock method 16,042
15,935
Participating securities excluded under two-class method (29 ) (37 )
Adjusted weighted-average shares outstanding under two-class method 16,013
15,898

~~For the three months ended March 31, 2019 and 2018, respectively, anti-dilutive shares excluded from the calculation of earnings per share were 4,046 shares and 1,463 shares (not in thousands).~~

Note 8 — Commitments and Contingencies

As of ~~March 31,~~June 30, 2019, the Company had firm commitments to purchase ~~twelve~~nine Airbus A320 series aircraft and ~~four~~one CFM ~~engines.~~engine.

The Company's contractual purchase commitments consist primarily of aircraft and engine acquisitions. The total future commitments are as ~~follows (in thousands):~~follows:



(in thousands)	As of June 30, 2019
Remaining in 2019	$	120,927
2020	33,800
2021	500
2022	18,000
Total commitments	$	173,227

As of March 31, 2019
Remaining in 2019 $ 198,110
2020 33,800
2021 500
2022 18,000
Total commitments $ 250,410

Contingencies

The Company is subject to certain legal and administrative actions it considers routine to its business activities. The Company believes the ultimate outcome of any pending legal or administrative matters will not have a material adverse impact on its financial position, liquidity or results of operations.

Note 9 — Segments

Operating segments are components of a company for which separate financial and operating information is regularly evaluated and reported to the Chief Operating Decision Maker ("CODM"), and is used to allocate resources and analyze performance. The Company's CODM is the executive leadership team, which reviews information about the Company's three operating segments: the Airline, Sunseeker Resort, and Other non-airline.

Airline Segment

The Airline segment operates as a single business unit and includes all scheduled service air transportation, ancillary air-related products and services, third party products and services, fixed fee contract air transportation and other airline-related revenue. The CODM evaluation includes, but is not limited to, route and flight profitability data, ancillary and third party product and service offering statistics, and fixed fee contract information when making resource allocation decisions with the goal of optimizing consolidated financial results.

Sunseeker Resort Segment

The Sunseeker Resort segment represents activity related to the development and construction of Sunseeker Resort in Southwest Florida, as well as the operation of Kingsway golf course. Plans for the resort include a 500-room hotel and two towers offering an estimated 180 one, two and three bedroom suites, bar and restaurant options, and other amenities. The golf course is a short drive from the resort site and is considered, from a planning and strategic perspective, to be an additional resort amenity. The construction of Sunseeker Resort is an extension of the Company's leisure travel focus and it is expected that many customers flying to Southwest Florida on Allegiant will elect to stay at this resort and enjoy its amenities.

Other non-Airline Segment

The other non-airline segment includes the Teesnap golf course management solution and Allegiant Nonstop family entertainment ~~centers, both of which fit with the Company's leisure focus.~~centers. Allegiant Nonstop family entertainment centers are comprised of games, attractions, and food facilities.

Selected information for the Company's segments and the reconciliation to the consolidated financial statement amounts are as ~~follows (in thousands):~~follows:


	Airline		Sunseeker Resort			Other non- airline			Consolidated
Three Months Ended March 31, 2019
Operating revenue:
Passenger	$	419,977	$	—		$	—		$	419,977
Third party products	17,141		—			—			17,141
Fixed fee contract	10,575		—			—			10,575
Other	631		902			2,396			3,929
Operating income (loss)	98,490		(1,222		)	(6,190		)	91,078
Interest expense, net of capitalized interest and interest income	13,221		158			—			13,379
Depreciation and amortization	35,229		156			797			36,182
Total assets, end of period	2,640,003		68,742			41,732			2,750,477
Capital expenditures	108,920		5,275			8,356			122,551
Three Months Ended March 31, 2018
(in thousands)											Airline		Sunseeker Resort			Other non- airline			Consolidated
Three Months Ended June 30, 2019
Operating revenue:
Passenger	$	396,771	$	—		$	—		$	396,771	$	454,779	$	—		$	—		$	454,779
Third party products	10,325		—			—			10,325		18,208		—			—			18,208
Fixed fee contract	10,556		—			—			10,556		12,487		—			—			12,487
Other	6,666		—			1,126			7,792		1,299		373			4,613			6,285
Operating income (loss)	81,950		(145		)	(1,837		)	79,968		115,546		(1,695		)	(5,746		)	108,105
Interest expense, net	10,817		—			—			10,817		15,924		478			—			16,402
Depreciation and amortization	27,766		7			376			28,149		36,890		326			1,278			38,494
Total assets, end of period	2,248,340		33,910			6,715			2,288,965
Capital expenditures	59,574		8,140			1,453			69,167		98,128		11,296			2,494			111,918
Three Months Ended June 30, 2018
Operating revenue:
Passenger											$	405,572	$	—		$	—		$	405,572
Third party products											17,799		—			—			17,799
Fixed fee contract											7,653		—			—			7,653
Other											3,531		—			2,225			5,756
Operating income (loss)											76,054		(301		)	(1,531		)	74,222
Interest expense, net											11,229		—			—			11,229
Depreciation and amortization											29,405		10			418			29,833
Capital expenditures											106,360		9,204			2,725			118,289

(in thousands)											Airline		Sunseeker Resort			Other non- airline			Consolidated
Six Months Ended June 30, 2019
Operating revenue:
Passenger											$	874,755	$	—		$	—		$	874,755
Third party products											35,350		—			—			35,350
Fixed fee contract											23,061		—			—			23,061
Other											1,930		1,275			7,010			10,215
Operating income (loss)											214,035		(2,917		)	(11,937		)	199,181
Interest expense, net											29,145		636			—			29,781
Depreciation and amortization											72,119		482			2,075			74,676
Capital expenditures											207,048		16,571			10,850			234,469
Six Months Ended June 30, 2018
Operating revenue:
Passenger											$	802,343	$	—		$	—		$	802,343
Third party products											28,124		—			—			28,124
Fixed fee contract											18,209		—			—			18,209
Other											10,197		—			3,351			13,548
Operating income (loss)											158,004		(446		)	(3,368		)	154,190
Interest expense, net											22,046		—			—			22,046
Depreciation and amortization											57,172		17			794			57,983
Capital expenditures											165,934		17,344			4,178			187,456

Total assets were as follows as of the date indicated:



(in thousands)	June 30, 2019		December 31, 2018
Airline	$	2,859,309	$	2,422,523
Sunseeker Resort	80,895		56,047
Other non-airline	41,996		20,098
Consolidated	$	2,982,200	$	2,498,668

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis presents factors that had a material effect on our results of operations during the three and six months ended ~~March 31,~~June 30, 2019 and 2018. Also discussed is our financial position as of ~~March 31,~~June 30, 2019 and December 31, 2018. You should read this discussion in conjunction with our unaudited consolidated financial statements, including the notes thereto, appearing elsewhere in this Form 10-Q and our consolidated financial statements appearing in our annual report on Form 10-K for the year ended December 31, 2018. This discussion and analysis contains forward-looking statements. Please refer to the section below entitled “Cautionary Note Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements.

~~First~~Second Quarter 2019 Review

Highlights:


–	Achieved 2223.7 percent airline operating ~~margin;~~margin, which represents a 6.2 percentage point increase year over year;


–	produced a 6.1 percent decrease in airline operating CASM excluding fuel;


–	recognized ~~record~~our second consecutive quarter of ancillary air-related revenue per passenger exceeding $50, with a total of ~~$53.10, which represents an increase~~$51.68 this quarter;


–	achieved industry leading controllable completion of ~~12.5 percent~~more than 99.9% during the quarter;


–	improved A14 performance (flight arrival within 14 minutes of scheduled arrival) by 2.8 percentage points compared to 2018;


–	added ~~eight~~two aircraft into service and expect an additional ~~nine~~six to be added ~~throughout~~in the back half of 2019; and


–	announced 3510 new routes, ~~including inaugural~~and began service ~~into Anchorage, AK; and~~


–	~~broke ground~~ on ~~Sunseeker Resort - Charlotte Harbor.~~35 routes previously announced.

AIRCRAFT

The following table sets forth the aircraft in service and operated by us as of the dates indicated:


	March 31, 2019	December 31, 2018	March 31, 2018	June 30, 2019	December 31, 2018	June 30, 2018
MD-80	—	—	32
A319	37	32	26	37	32	31
A320 (1)	47	44	30	49	44	35
MD-80				—	—	27
Total	84	76	88	86	76	93

(1) Does not include ~~three~~four aircraft ~~for~~of which we have taken delivery, but were not yet in service as of ~~March 31,~~June 30, 2019.

As of ~~March 31,~~June 30, 2019, we had firm commitments to purchase ~~twelve~~nine aircraft. We expect delivery of ~~nine~~six of these aircraft in 2019 and the remaining aircraft in 2020 and 2022. We continually consider aircraft acquisitions on an opportunistic basis.

Fleet Plan

The below table indicates the number of aircraft expected to be in service as of the dates indicated, based on currently scheduled additions to our operating fleet.


	As of June 30, 2019	As of September 30, 2019	As of December 31, 2019	As of September 30, 2019	As of December 31, 2019
A319	37	38	38	37	38
A320	51	53	55	53	55
Total	88	91	93	90	93

NETWORK

As of ~~March 31,~~June 30, 2019, we ~~are currently~~were selling ~~450~~459 routes versus ~~419~~414 as of the same date last year, which represents a ~~7.4~~10.9 percent increase. Our total number of origination cities and leisure destinations (for operating routes) were 9895 and ~~23,~~26, respectively, as of ~~March 31,~~June 30, 2019. Based on our currently published schedule through ~~early-February~~May 2020, and service announcements and cancellations by other airlines ~~to date,~~as of June 30, 2019, we will have direct competition (which we consider to be similar non-stop service between markets) on ~~114 of our~~approximately 100 routes as of that date.

During the ~~first~~second quarter of 2019, we announced 3510 new routes including service into three new cities - Redmond, OR; State College, PA; and Traverse City, MI. These new routes are planned to begin service in October 2019.

During the second quarter 2019, we also began service on 35 routes announced previously, including our inaugural scheduled flights to Anchorage, ~~AK and additional service to Destin, FL, Nashville, TN, and Savannah, GA, among other route announcements. The new routes are all planned to begin service in the second quarter 2019.~~AK.

In April 2019, we filed an application with the U.S. Department of Transportation to offer scheduled service to Mexico. This is the first step in beginning to offer international service to our leisure travelers, with non-stop flights between the United States and Mexico.

TRENDS

~~As we have completed our~~The transition to an all-Airbus fleet ~~transition, Airbus aircraft flew 100 percent of our scheduled service ASMs for the quarter, compared~~continues to ~~72.4 percent for the same time period in 2018, which drove a 9.6 percent increase in fuel efficiency (measured as ASMs per gallon).~~produce positive operating results. Despite having an average of 11seven fewer ~~operating~~ aircraft in service during the ~~fleet~~second quarter 2019 compared to 2018, scheduled service ASMs increased ~~5.6~~13.6 percent on a 13.8 percent increase in departures, and scheduled service passengers increased ~~4.3~~12.2 percent. ~~Higher~~We accomplished the increased capacity by increasing aircraft utilization (block hours per aircraft) by 20.5 percent compared to the second quarter 2018. We were able to grow airline operating margin by 6.2 percentage points due, in large part, to reduced costs per ASM which were impacted significantly by an 8.1 percent increase in fuel efficiency.

During the second quarter, we flew more on off-peak days (32.8 percent of our scheduled ASMs for the quarter were on Tuesdays, Wednesdays or Saturdays compared to 30.6 percent in the same quarter last year). This contributed to our profitability, but led to a small decline in unit revenue.

Additionally, we have led or tied for the industry lead in controllable completion factor for 16 of the ~~Airbus fleet (with a 16.9 percent year-over-year increase~~past 18 months, including every month in average block hours per aircraft per day) enabled system growth with fewer aircraft. We expect to return to lower aircraft utilization during the year, as more aircraft are added to our operating fleet. Airline operating income increased more than $16 million quarter-over-quarter, and produced a 22 percent operating margin.

~~We continue to improve our operation, as evidenced by a 100 percent controllable completion rate for~~ the first ~~quarter~~half of 2019, ~~and a total completion factor of 99.2 percent. We also achieved a record 123 consecutive~~during which time we had only ten days ~~without a~~that were affected by maintenance ~~cancellation.~~cancellations.

In April 2019, our dispatchers, represented by the International Brotherhood of Teamsters, (IBT) voted to ratify their first collective bargaining agreement. The agreement has a five year term beginning May 1, 2019 and is not expected to have a significant effect on our operating results.

~~In March~~July 2019, we ~~began~~announced the evaluation of strategic alternatives for our Teesnap golf course management solution entity, which will trigger held-for-sale classification in the third quarter 2019.

The construction ~~for~~of Sunseeker Resort ~~- Charlotte Harbor in Southwest Florida, and entered into a Construction Loan Agreement with affiliates of TPG Sixth Street Partners~~continues to provide $175 million in construction financing for the project. We also opened our first Allegiant Nonstop family entertainment center in Clearfield, UT, in January 2019 and our second location in Warren, MI, in April 2019.progress.

RESULTS OF OPERATIONS

Comparison of three months ended ~~March 31,~~June 30, 2019 to three months ended ~~March 31,~~June 30, 2018

Operating Revenue

Passenger revenue. For the ~~first~~second quarter 2019, passenger revenue increased ~~5.8~~12.1 percent compared to ~~first~~second quarter 2018. The increase was driven primarily by a ~~4.6~~13.8 percent increase in scheduled service departures, which resulted in a ~~4.3~~12.2 percent increase in scheduled service ~~passengers (slightly diluted by a 1.2 percentage point drop~~passengers. The 13.5 percent increase in ~~load factor). The higher number of passengers resulted~~air-related ancillary average fare offset the decrease in ~~year-over-year increases in ancillary revenues, the most significant of which were increases~~scheduled service average fare. Increases in the customer convenience fee and ~~carry on and checked~~ baggage fees ~~throughout the network. These increases~~ contributed to ~~a 12.5 percent~~the increase in air-related ancillary unit ~~ancillary~~ revenue to ~~$53.10~~$51.68 per ~~passenger, the highest quarterly performance in our history.~~passenger.

Third party products revenue. Third party products revenue for the ~~first~~second quarter 2019 increased ~~66.0~~2.3 percent, ~~or $6.8 million,~~ compared to the same period in 2018. This is primarily the result of ~~a 26.5 percent~~increased revenue from our co-branded credit card program, as well as an increase in net revenue from rental ~~cars resulting from the increase in scheduled service passengers coupled with a higher take rate, as well as an increase in revenue generated from our co-branded credit card program.~~cars.

Fixed fee contract revenue. Fixed fee contract revenue for the ~~first~~second quarter 2019 ~~remained relatively flat~~increased 63.2 percent when compared to ~~2018, despite~~2018. This is primarily the result of a ~~6.5~~61.0 percent ~~decrease~~increase in ~~fixed fee~~related departures, ~~quarter-over-quarter. The decrease in departures resulted from the government shutdown early in the quarter, as the FAA was not available~~which is largely attributable to ~~provide certification for~~greater availability of spare aircraft ~~that we had available~~due to improved operations and ~~ready for service; thus, we were operating fewer aircraft than planned.~~an all-Airbus fleet.

Other revenue. Other revenue ~~decreased~~increased by ~~$3.9~~$0.5 million for the ~~first~~second quarter 2019 from 2018, ~~primarily~~ due to increased revenue from our non-airline activities. This increase was partially offset by a decrease in aircraft lease ~~revenue. We took redelivery of the final~~revenue, as we had six aircraft ~~previously~~ on lease to a European carrier ~~in December 2018, whereas 10 aircraft were on lease~~ during the ~~first~~second quarter ~~2018. The decline in lease revenue was partially offset by increased revenue from Teesnap, our golf course management solution.~~of 2018 and none during 2019.

Operating Expenses

We primarily evaluate our expense management by comparing our costs per ASM across different periods, which enables us to assess trends in each expense category. The following table presents unit costs on a per ASM basis, or CASM, for the indicated

periods. Excluding fuel on a per ASM basis provides management and investors the ability to measure and monitor our cost performance absent fuel price volatility. Both the cost and availability of fuel are subject to many economic and political factors beyond our control.


	Three Months Ended March 31,						Percent		Three Months Ended June 30,				Percent
	2019			2018			Change		2019		2018		Change
Airline unitized costs
Salary and benefits		3.05	¢		3.03	¢	0.7	%	$	2.46	$	2.55	(3.5	)%
Aircraft fuel	2.55			2.84			(10.2	)
Station operations	1.00			1.01			(1.0	)	1.03		1.06		(2.8	)
Depreciation and amortization									0.83		0.75		10.7
Maintenance and repairs	0.58			0.52			11.5		0.47		0.63		(25.4	)
Depreciation and amortization	0.93			0.75			24.0
Sales and marketing	0.54			0.51			5.9		0.45		0.47		(4.3	)
Other	0.57			0.61			(6.6	)	0.41		0.56		(26.8	)
CASM		9.22	¢		9.27	¢	(0.5	)%
Operating CASM, excluding fuel	6.67			6.43			3.7
Airline CASM, excluding fuel									5.65		6.02		(6.1	)
Aircraft fuel									2.70		3.12		(13.5	)
Airline CASM									8.35		9.14		(8.6	)

Airline CASM									8.35		9.14		(8.6	)
Non-airline operating CASM*	0.27			0.08			NM		0.28		0.10		180.0
Operating CASM, excluding fuel and non-airline activity		6.40	¢		6.35	¢	0.8	%
Operating CASM (consolidated)									8.63		9.24		(6.6	)



ý☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended ~~March 31,~~		June 30, 2019

OR
o☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



Nevada		20-4745737
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

1201 North Town Center Drive
Las Vegas,	Nevada	89144
(Address of Principal Executive Offices)		(Zip Code)



Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, par value $.001	ALGT	NASDAQ Stock Market



Large accelerated filerx	☒		Accelerated filero	☐

Non-accelerated filero	☐		Smaller reporting companyo	☐

~~(Do not check if a smaller reporting company)~~	Emerging growth companyo	☐


	Three Months Ended March 31,						Percent		Three Months Ended June 30,						Percent
	2019			2018			Change (1)		2019			2018			Change⁽¹⁾
Operating statistics (unaudited):
Total system statistics:
Passengers	3,450,278			3,302,951			4.5		4,169,536			3,704,113			12.6
Revenue passenger miles (RPMs) (thousands)	3,228,594			3,094,805			4.3		3,654,369			3,276,599			11.5
Available seat miles (ASMs) (thousands)	3,910,239			3,728,563			4.9		4,447,066			3,922,294			13.4
Load factor	82.6		%	83.0		%	(0.4	)	82.2		%	83.5		%	(1.3	)
Airline operating expense per ASM (CASM) (cents)	8.95			9.19			(2.6	)
Operating expense per ASM (CASM) (cents)									8.63			9.24			(6.6	)
Fuel expense per ASM (cents)	2.55			2.84			(10.2	)	2.70			3.12			(13.5	)
Airline operating CASM, excluding fuel (cents)	6.40			6.35			0.8
Operating CASM, excluding fuel (cents)									5.93			6.12			(3.1	)
ASMs per gallon of fuel	84.1			76.7			9.6		82.3			76.1			8.1
Departures	25,200			24,248			3.9		30,547			27,063			12.9
Block hours	59,819			57,803			3.5		68,332			60,707			12.6
Average stage length (miles)	904			910			(0.7	)	853			858			(0.6	)
Average number of operating aircraft during period	79.6			90.7			(12.2	)	85.0			92.0			(7.6	)
Average block hours per aircraft per day	8.3			7.1			16.9		8.8			7.3			20.5
Full-time equivalent employees at end of period	4,067			3,776			7.7		4,179			3,840			8.8
Fuel gallons consumed (thousands)	46,474			48,640			(4.5	)	54,064			51,516			4.9
Average fuel cost per gallon	$	2.14		$	2.18		(1.8	)	$	2.22		$	2.38		(6.7	)



	Three Months Ended March,
(in thousands)	2019		2018
Scheduled service	$	234,772	$	238,520
Ancillary air-related charges	181,700		154,717
Co-brand redemptions	3,505		3,534
Total passenger revenue	$	419,977	$	396,771



	As of March 31, 2019
Remaining in 2019	$	198,110
2020	33,800
2021	500
2022	18,000
Total commitments	$	250,410


Scheduled service statistics:
Passengers	3,421,538			3,279,368			4.3		4,131,855			3,681,944			12.2
Revenue passenger miles (RPMs) (thousands)	3,191,045			3,064,619			4.1		3,603,076			3,245,774			11.0
Available seat miles (ASMs) (thousands)	3,802,132			3,602,015			5.6		4,311,182			3,795,815			13.6
Load factor	83.9		%	85.1		%	(1.2	)	83.6		%	85.5		%	(1.9	)
Departures	24,344			23,264			4.6		29,567			25,992			13.8
Block hours	57,963			55,689			4.1		66,135			58,536			13.0
Total passenger revenue per ASM (TRASM) (cents) (2)	11.50			11.30			1.8		10.97			11.15			(1.6	)
Average fare - scheduled service (3)	$	69.64		$	73.81		(5.6	)	$	58.39		$	64.62		(9.6	)
Average fare - air-related charges (3)	$	53.10		$	47.18		12.5		$	51.68		$	45.53		13.5
Average fare - third party products	$	5.01		$	3.15		59.0		$	4.40		$	4.84		(9.1	)
Average fare - total	$	127.75		$	124.14		2.9		$	114.47		$	114.99		(0.5	)
Average stage length (miles)	908			916			(0.9	)	853			864			(1.3	)
Fuel gallons consumed (thousands)	45,068			46,872			(3.8	)	52,327			49,671			5.3
Average fuel cost per gallon	$	2.13		$	2.17		(1.8	)	$	2.22		$	2.37		(6.3	)
Rental car days sold	471,598			398,587			18.3		540,960			404,355			33.8
Hotel room nights sold	105,015			108,984			(3.6	)	114,191			93,484			22.2
Percent of sales through website during period	93.6		%	93.8		%	(0.2	)	93.5		%	93.9		%	(0.4	)



Scheduled service statistics:
Passengers	7,553,393			6,961,312			8.5
Revenue passenger miles (RPMs) (thousands)	6,794,122			6,310,393			7.7
Available seat miles (ASMs) (thousands)	8,113,315			7,397,830			9.7
Load factor	83.7		%	85.3		%	(1.6	)
Departures	53,911			49,256			9.5
Block hours	124,098			114,224			8.6
Total passenger revenue per ASM (TRASM) (cents)⁽²⁾	11.22			11.23			(0.1	)
Average fare - scheduled service⁽³⁾	$	63.49		$	68.95		(7.9	)
Average fare - air-related charges⁽³⁾	$	52.32		$	46.31		13.0
Average fare - third party products	$	4.68		$	4.04		15.8
Average fare - total	$	120.49		$	119.30		1.0
Average stage length (miles)	878			889			(1.2	)
Fuel gallons consumed (thousands)	97,395			96,542			0.9
Average fuel cost per gallon	$	2.18		$	2.27		(4.0	)
Rental car days sold	1,012,558			802,942			26.1
Hotel room nights sold	219,206			202,468			8.3
Percent of sales through website during period	93.5		%	93.9		%	(0.4	)



Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of our Publicly Announced Plan	Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in thousands) (2)
January	459	$	123.09	None
February	12,921	136.87		None
March	3,565	126.82		None
Total	16,945	$	134.38		$	100,000



3.1	Articles of Incorporation (1)
3.2	Bylaws of the Company as amended on April 24, 2018 (2)
~~4.1~~10.1	~~Third Supplemental Indenture, dated as of February 5, 2019, among the Company, the subsidiary guarantors party thereto and Wells Fargo Bank, National Association, as trustee.~~ ~~(3)~~
~~10.1~~	Credit ~~and Guaranty~~ Agreement dated as of ~~February 5,~~June 24, 2019 among ~~the Company,~~Sunrise Asset Management, Bank of America Leasing and Capital, LLC, Sumitomo Mitsui Banking Corporation and Bank of Utah, as ~~borrower, certain subsidiaries of the Company party thereto, as guarantors, the lenders party thereto and Barclays PLC, as administrative~~ agent ~~syndication agent and lead arranger.~~ ~~(4)~~
~~10.2~~	Construction Loan Agreement dated as of March 18, 2019 between TPG Specialty Lending, Inc., SSPC 1, LLC, and SSPC 2, LLC (as “Lenders”), TPG Specialty Lending, Inc. (as “Agent”) and Sunseeker Florida, Inc. ~~(5)~~
~~10.3~~	~~Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated as of March 18, 2019 between TPG Specialty Lending, Inc. (“Agent”) and Sunseeker Florida, Inc.~~(3)
~~10.4~~12	~~Guaranty of Completion dated as of March 18, 2019 among Allegiant Travel Company and Sunrise Asset Management, LLC for the benefit of TPG Specialty Lending, Inc., SSPC 1, LLC and SSPC 2, LLC.~~
~~10.5~~	~~Non-Recourse Carve-out Guaranty Agreement dated as of March 18, 2019 from Allegiant Travel Company for the benefit of TPG Specialty Lending, Inc., SSPC 1, LLC and SSPC 2, LLC.~~
~~10.6~~	~~Guaranty of Payment dated as of March 18, 2019 from Allegiant Travel Company for the benefit of TPG Specialty Lending, Inc., SSPC 1, LLC and SSPC 2, LLC.~~
~~10.7~~	~~Pledge and Security Agreement dated as of March 18, 2019 by Sunseeker Resorts, Inc. for the benefit of TPG Specialty Lending, Inc., SSPC 1, LLC and SSPC 2, LLC.~~
12	Calculation of Ratio of Earnings to Fixed Charges of Allegiant Travel Company
31.1	Rule 13a - 14(a) / 15d - 14(a) Certification of Principal Executive Officer
31.2	Rule 13a - 14(a) / 15d - 14(a) Certification of Principal Financial Officer
32	Section 1350 Certifications
~~101.INS~~	~~XBRL Instance Document~~
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document



		ALLEGIANT TRAVEL COMPANY


Date:	~~May 7,~~July 31, 2019	By:	/s/ Gregory Anderson
		Gregory Anderson, as duly authorized officer of the Company (Chief Financial Officer) and as Principal Financial Officer