UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended		~~June 30, 2021~~ March 31, 2022

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

For the transition period from to _______ to_______

Commission File Number 001-33166

Allegiant Travel Company

(Exact Name of Registrant as Specified in Its Charter)


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)

Registrant’s Telephone Number, Including Area Code: (702) 851-7300

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common stock, par value $0.001

ALGT

NASDAQ Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐No ☒

As of ~~July 16, 2021,~~April 25, 2022, the registrant had ~~17,986,507~~18,117,231 shares of common stock, $0.001 par value per share, outstanding.

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	20

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	3532

ITEM 4.	Controls and Procedures	3633

PART II.	OTHER INFORMATION

ITEM 1.	Legal Proceedings	3734

ITEM 1A.	Risk Factors	3834

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3934

ITEM 3.	Defaults Upon Senior Securities	4034

ITEM 4.	Mine Safety Disclosures	4134

ITEM 5.	Other Information	4234

ITEM 6.	Exhibits	4335

	Signatures	4436

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

ALLEGIANT TRAVEL COMPANY

CONSOLIDATED BALANCE SHEETS

(in thousands)


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(unaudited)					(unaudited)
CURRENT ASSETS	CURRENT ASSETS					CURRENT ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	418,448	$	152,764	Cash and cash equivalents	$	403,085	$	363,378
Restricted cash	Restricted cash	32,942		17,555		Restricted cash	26,220		37,323
Short-term investments	Short-term investments	767,410		532,477		Short-term investments	808,949		819,478
Accounts receivable	Accounts receivable	175,388		192,215		Accounts receivable	91,070		62,659
Expendable parts, supplies and fuel, net	Expendable parts, supplies and fuel, net	30,194		24,006		Expendable parts, supplies and fuel, net	36,098		27,500
Prepaid expenses and other current assets	Prepaid expenses and other current assets	32,537		24,616		Prepaid expenses and other current assets	45,070		28,073

TOTAL CURRENT ASSETS	TOTAL CURRENT ASSETS	1,456,919		943,633		TOTAL CURRENT ASSETS	1,410,492		1,338,411
Property and equipment, net	Property and equipment, net	2,116,618		2,050,311		Property and equipment, net	2,427,180		2,259,507

Long-term investments						Long-term investments	—		2,231
Deferred major maintenance, net	Deferred major maintenance, net	145,296		127,463		Deferred major maintenance, net	145,529		146,850
Operating lease right-of-use assets, net	Operating lease right-of-use assets, net	128,537		115,911		Operating lease right-of-use assets, net	125,616		130,087
Deposits and other assets	Deposits and other assets	27,336		21,607		Deposits and other assets	122,450		113,987
TOTAL ASSETS:	TOTAL ASSETS:	$	3,874,706	$	3,258,925	TOTAL ASSETS:	$	4,231,267	$	3,991,073
CURRENT LIABILITIES	CURRENT LIABILITIES					CURRENT LIABILITIES
Accounts payable	Accounts payable	$	57,143	$	34,197	Accounts payable	$	59,140	$	43,566
Accrued liabilities	Accrued liabilities	182,914		116,093		Accrued liabilities	216,690		162,892
Current operating lease liabilities	Current operating lease liabilities	16,940		14,313		Current operating lease liabilities	19,314		19,081
Air traffic liability	Air traffic liability	436,728		307,508		Air traffic liability	452,622		307,453
Current maturities of long-term debt and finance lease obligations, net of related costs	Current maturities of long-term debt and finance lease obligations, net of related costs	144,382		217,234		Current maturities of long-term debt and finance lease obligations, net of related costs	140,450		130,053
TOTAL CURRENT LIABILITIES	TOTAL CURRENT LIABILITIES	838,107		689,345		TOTAL CURRENT LIABILITIES	888,216		663,045
Long-term debt and finance lease obligations, net of current maturities and related costs	Long-term debt and finance lease obligations, net of current maturities and related costs	1,441,083		1,441,777		Long-term debt and finance lease obligations, net of current maturities and related costs	1,634,539		1,612,486
Deferred income taxes	Deferred income taxes	310,700		301,763		Deferred income taxes	344,454		346,137
Noncurrent operating lease liabilities	Noncurrent operating lease liabilities	114,761		102,289		Noncurrent operating lease liabilities	110,210		115,067
Other noncurrent liabilities	Other noncurrent liabilities	22,921		24,388		Other noncurrent liabilities	31,552		30,786
TOTAL LIABILITIES:	TOTAL LIABILITIES:	2,727,572		2,559,562		TOTAL LIABILITIES:	3,008,971		2,767,521
SHAREHOLDERS' EQUITY	SHAREHOLDERS' EQUITY					SHAREHOLDERS' EQUITY
Common stock, par value $0.001	Common stock, par value $0.001	25		23		Common stock, par value $0.001	25		25
Treasury shares	Treasury shares	(642,177)		(646,008)		Treasury shares	(638,057)		(638,057)
Additional paid in capital	Additional paid in capital	671,893		329,753		Additional paid in capital	695,323		692,053
Accumulated other comprehensive loss, net		(125)		(27)
Accumulated other comprehensive income, net						Accumulated other comprehensive income, net	5,411		2,056
Retained earnings	Retained earnings	1,117,518		1,015,622		Retained earnings	1,159,594		1,167,475
TOTAL EQUITY:	TOTAL EQUITY:	1,147,134		699,363		TOTAL EQUITY:	1,222,296		1,223,552
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY:	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY:	$	3,874,706	$	3,258,925	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY:	$	4,231,267	$	3,991,073

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 June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
OPERATING REVENUES:	OPERATING REVENUES:									OPERATING REVENUES:
Passenger	Passenger	$	443,747	$	116,520	$	700,441	$	495,431	Passenger	$	463,961	$	256,695
Third party products	Third party products	23,001		8,443		36,622		24,419		Third party products	22,480		13,622
Fixed fee contracts	Fixed fee contracts	5,134		3,237		12,827		12,156		Fixed fee contracts	13,386		7,692
Other	Other	551		5,147		1,667		10,522		Other	282		1,115
Total operating revenues	Total operating revenues	472,433		133,347		751,557		542,528		Total operating revenues	500,109		279,124
OPERATING EXPENSES:	OPERATING EXPENSES:									OPERATING EXPENSES:
Salary and benefits		121,906		94,790		239,856		207,436
Aircraft fuel	Aircraft fuel	109,456		27,358		192,305		116,171		Aircraft fuel	164,137		82,848
Salaries and benefits										Salaries and benefits	134,010		117,950
Station operations	Station operations	57,210		27,405		100,303		68,405		Station operations	65,744		43,094
Depreciation and amortization	Depreciation and amortization	44,522		43,296		87,696		86,995		Depreciation and amortization	46,343		43,174
Maintenance and repairs	Maintenance and repairs	22,597		13,032		45,968		34,827		Maintenance and repairs	27,820		23,371
Sales and marketing	Sales and marketing	17,632		8,909		29,241		27,364		Sales and marketing	22,350		11,609
Aircraft lease rental	Aircraft lease rental	5,117		1,427		9,837		2,389		Aircraft lease rental	6,132		4,720
Other	Other	15,501		23,752		33,276		50,468		Other	26,202		17,776
Payroll Support Programs grant recognition	Payroll Support Programs grant recognition	(61,213)		(74,539)		(152,971)		(74,539)		Payroll Support Programs grant recognition	—		(91,758)
Special charges	Special charges	854		81,169		2,592		247,267		Special charges	142		1,738
Total operating expenses	Total operating expenses	333,582		246,599		588,103		766,783		Total operating expenses	492,880		254,522
OPERATING INCOME (LOSS)		138,851		(113,252)		163,454		(224,255)
OPERATING INCOME										OPERATING INCOME	7,229		24,602
OTHER (INCOME) EXPENSES:	OTHER (INCOME) EXPENSES:									OTHER (INCOME) EXPENSES:
Interest expense	Interest expense	16,720		14,053		33,508		32,206		Interest expense	19,791		16,788
Capitalized interest	Capitalized interest	0		0		0		(4,067)		Capitalized interest	(1,216)		—
Interest income	Interest income	(500)		(1,417)		(963)		(3,728)		Interest income	(773)		(463)
Loss on debt extinguishment		71		0		71		1,222
Special charges		0		19,830		0		26,632

Other, net	Other, net	(11)		698		(404)		623		Other, net	(6)		(393)
Total other expenses	Total other expenses	16,280		33,164		32,212		52,888		Total other expenses	17,796		15,932
INCOME (LOSS) BEFORE INCOME TAXES	INCOME (LOSS) BEFORE INCOME TAXES	122,571		(146,416)		131,242		(277,143)		INCOME (LOSS) BEFORE INCOME TAXES	(10,567)		8,670
INCOME TAX PROVISION (BENEFIT)	INCOME TAX PROVISION (BENEFIT)	27,544		(53,313)		29,346		(151,030)		INCOME TAX PROVISION (BENEFIT)	(2,686)		1,801
NET INCOME (LOSS)	NET INCOME (LOSS)	$	95,027	$	(93,103)	$	101,896	$	(126,113)	NET INCOME (LOSS)	$	(7,881)	$	6,869
Earnings (loss) per share to common shareholders:	Earnings (loss) per share to common shareholders:									Earnings (loss) per share to common shareholders:
Basic	Basic	$	5.49	$	(5.85)	$	6.04	$	(7.93)	Basic	$	(0.44)	$	0.42
Diluted	Diluted	$	5.49	$	(5.85)	$	6.04	$	(7.93)	Diluted	$	(0.44)	$	0.42
Shares used for computation:	Shares used for computation:									Shares used for computation:
Basic	Basic	17,064		15,902		16,618		15,927		Basic	17,954		16,167
Diluted	Diluted	17,073		15,902		16,632		15,927		Diluted	17,954		16,167

Cash dividends declared per share:	Cash dividends declared per share:	$	0	$	0	$	0	$	0.70	Cash dividends declared per share:	$	—	$	—

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 June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
NET INCOME (LOSS)	NET INCOME (LOSS)	$	95,027	$	(93,103)	$	101,896	$	(126,113)	NET INCOME (LOSS)	$	(7,881)	$	6,869
Other comprehensive income (loss):
Other comprehensive income:										Other comprehensive income:
Change in available for sale securities, net of tax	Change in available for sale securities, net of tax	(126)		1,057		(98)		324		Change in available for sale securities, net of tax	3,355		28
Foreign currency translation adjustments		0		(8)		0		3

Total other comprehensive income (loss)		(126)		1,049		(98)		327

Total other comprehensive income										Total other comprehensive income	3,355		28
TOTAL COMPREHENSIVE INCOME (LOSS)	TOTAL COMPREHENSIVE INCOME (LOSS)	$	94,901	$	(92,054)	$	101,798	$	(125,786)	TOTAL COMPREHENSIVE INCOME (LOSS)	$	(4,526)	$	6,897

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

ALLEGIANT TRAVEL COMPANY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

(unaudited)

Three Months Ended June 30, 2021
Common stock outstanding Par value Additional paid-in capital Accumulated other comprehensive income (loss) Retained earnings Treasury shares Total shareholders' equity
Balance at March 31, 2021 16,416 $ 23 $ 333,147 $ 1 $ 1,022,491 $ (646,008) $ 709,654
Share-based compensation 1 — 3,504 — — — 3,504
Issuance of common stock, net of forfeitures 1,553 2 335,137 — — — 335,139
Stock issued under employee stock purchase plan 16 — — — — 3,831 3,831
Other comprehensive income — — — (126) — — (126)
Payroll Support Programs warrant issuance — — 105 — — — 105
Net income — — — — 95,027 — 95,027
Balance at June 30, 2021 17,986 $ 25 $ 671,893 $ (125) $ 1,117,518 $ (642,177) $ 1,147,134


	Three Months Ended March 31, 2022
	Common stock outstanding	Par value		Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings		Treasury shares		Total shareholders' equity
Balance at December 31, 2021	18,111	$	25	$	692,053	$	2,056	$	1,167,475	$	(638,057)	$	1,223,552
Share-based compensation	8	—		3,270		—		—		—		3,270


Other comprehensive income	—	—		—		3,355		—		—		3,355

Net (loss)	—	—		—		—		(7,881)		—		(7,881)
Balance at March 31, 2022	18,119	$	25	$	695,323	$	5,411	$	1,159,594	$	(638,057)	$	1,222,296

Six Months Ended June 30, 2021
Common stock outstanding Par value Additional paid-in capital Accumulated other comprehensive income (loss) Retained earnings Treasury shares Total shareholders' equity
Balance at December 31, 2020 16,405 $ 23 $ 329,753 $ (27) 0 $ 1,015,622 $ (646,008) $ 699,363
Share-based compensation 12 — 6,898 — — — 6,898
Issuance of common stock, net of forfeitures 1,553 2 335,137 — — — 335,139
Stock issued under employee stock purchase plan 16 — — — — 3,831 3,831
Other comprehensive loss — — — (98) — — (98)
Payroll Support Programs warrant issuance — — 105 — — — 105
Net income — — — — 101,896 — 101,896
Balance at June 30, 2021 17,986 $ 25 $ 671,893 $ (125) $ 1,117,518 $ (642,177) $ 1,147,134


	Three Months Ended March 31, 2021
	Common stock outstanding	Par value		Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings		Treasury shares		Total shareholders' equity
Balance at December 31, 2020	16,405	$	23	$	329,753	$	(27)	$	1,015,622	$	(646,008)	$	699,363
Share-based compensation	11	—		3,394		—		—		—		3,394


Other comprehensive income	—	—		—		28		—		—		28

Net income	—	—		—		—		6,869		—		$	6,869
Balance at March 31, 2021	16,416	$	23	$	333,147	$	1	$	1,022,491	$	(646,008)	$	709,654

Three Months Ended June 30, 2020
Common stock outstanding Par value Additional paid-in capital Accumulated other comprehensive income (loss) Retained earnings Treasury shares Total shareholders' equity
Balance at March 31, 2020 16,199 $ 23 $ 295,267 $ (624) $ 1,166,588 $ (651,352) $ 809,902
Share-based compensation — — 14,409 — — — 14,409
Shares issued under employee stock purchase plan 41 — — — — 3,234 3,234
Cash dividends, $0.70 per share — — — — 117 — 117
Other comprehensive income — — — 1,049 — — 1,049
Payroll Support Programs warrant issuance — — 952 — — — 952
Net loss — — — — (93,103) — $ (93,103)
Balance at June 30, 2020 16,240 $ 23 $ 310,628 $ 425 $ 1,073,602 $ (648,118) $ 736,560

Six Months Ended June 30, 2020
Common stock outstanding Par value Additional paid-in capital Accumulated other comprehensive income Retained earnings Treasury shares Total shareholders' equity
Balance at December 31, 2019 16,303 $ 23 $ 289,933 $ 98 $ 1,211,076 $ (617,579) $ 883,551
Share-based compensation 113 — 19,743 — — — 19,743
Shares repurchased by the Company and held as treasury shares (217) — — — — (33,773) (33,773)
Stock issued under employee stock purchase plan 41 — — — — 3,234 3,234
Cash dividends, $0.70 per share — — — — (11,361) — (11,361)
Other comprehensive income — — — 327 — — 327
Payroll Support Programs warrant issuance — — 952 — — — 952
Net loss — — — — (126,113) — (126,113)
Balance at June 30, 2020 16,240 $ 23 $ 310,628 $ 425 $ 1,073,602 $ (648,118) $ 736,560

ALLEGIANT TRAVEL COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


		Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income (loss)	Net income (loss)	$	101,896	$	(126,113)	Net income (loss)	$	(7,881)	$	6,869
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	87,696		86,995		Depreciation and amortization	46,343		43,174
Special charges	Special charges	2,592		263,497		Special charges	142		1,738
Other adjustments	Other adjustments	18,184		81,630		Other adjustments	6,155		8,318
Changes in certain assets and liabilities:	Changes in certain assets and liabilities:					Changes in certain assets and liabilities:
Air traffic liability	Air traffic liability	129,220		104,785		Air traffic liability	145,169		95,541
Deferred Payroll Support Programs grant recognition		49,210		62,814

Other - net	Other - net	16,175		(196,942)		Other - net	(13,927)		12,353
Net cash provided by operating activities	Net cash provided by operating activities	404,973		276,666		Net cash provided by operating activities	176,001		167,993
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Purchase of investment securities	Purchase of investment securities	(673,722)		(296,979)		Purchase of investment securities	(302,161)		(89,338)
Proceeds from maturities of investment securities	Proceeds from maturities of investment securities	436,364		258,751		Proceeds from maturities of investment securities	311,332		194,534
Aircraft pre-delivery deposits						Aircraft pre-delivery deposits	(46,694)		(3,300)
Purchase of property and equipment						Purchase of property and equipment	(71,659)		(66,199)

Purchase of property and equipment		(134,484)		(170,673)
Proceeds from sale-leaseback transactions		0		48,000
Other investing activities	Other investing activities	2,443		2,303		Other investing activities	(572)		(16)
Net cash used in investing activities		(369,399)		(158,598)
Net cash provided by (used in) investing activities						Net cash provided by (used in) investing activities	(109,754)		35,681
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Cash dividends paid to shareholders		0		(11,361)

Proceeds from the issuance of debt and finance lease obligations	Proceeds from the issuance of debt and finance lease obligations	106,657		175,712		Proceeds from the issuance of debt and finance lease obligations	—		105,000
Repurchase of common stock		0		(33,773)

Principal payments on debt and finance lease obligations	Principal payments on debt and finance lease obligations	(199,627)		(98,171)		Principal payments on debt and finance lease obligations	(37,335)		(151,517)
Debt issuance costs	Debt issuance costs	(606)		(2,852)		Debt issuance costs	(308)		(649)
Proceeds from issuance of common stock		335,137		0
Other financing activities		3,936		3,234
Net cash provided by financing activities		245,497		32,789

Net cash (used in) financing activities						Net cash (used in) financing activities	(37,643)		(47,166)
NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	281,071		150,857		NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	28,604		156,508
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD	170,319		136,785		CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD	400,701		170,319
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	$	451,390	$	287,642	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD	$	429,305	$	326,827

CASH PAYMENTS (RECEIPTS) FOR:	CASH PAYMENTS (RECEIPTS) FOR:					CASH PAYMENTS (RECEIPTS) FOR:
Interest paid, net of amount capitalized	Interest paid, net of amount capitalized	$	26,379	$	26,065	Interest paid, net of amount capitalized	$	18,007	$	15,059
Income tax payments (refunds)	Income tax payments (refunds)	4,873		(45,321)		Income tax payments (refunds)	17		(138)
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:	SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:					SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:
Right-of-use (ROU) assets acquired	Right-of-use (ROU) assets acquired	$	23,157	$	86,012	Right-of-use (ROU) assets acquired	$	—	$	4,733
Flight equipment acquired under finance leases	Flight equipment acquired under finance leases	13,833		0		Flight equipment acquired under finance leases	68,211		—
Purchases of property and equipment in accrued liabilities	Purchases of property and equipment in accrued liabilities	5,088		22,106		Purchases of property and equipment in accrued liabilities	37,083		4,064

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's investments in unconsolidated affiliates, which are 50 percent or less owned, are accounted for under the equity or cost method, and are insignificant to the consolidated financial statements. 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 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, ~~2020~~2021 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~~

On December 18, 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes. The standard simplifies the accounting and disclosure requirements for income taxes by clarifying existing guidance to improve consistency in application of Accounting Standards Codification ("ASC") 740. The standard also removes the requirement to calculate income tax expense for the stand-alone financial statements of wholly-owned subsidiaries. The standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020, with early adoption permitted in any interim period within that year. The Company adopted this accounting standard prospectively as of January 1, 2021, and it did not have a significant impact on the Company's consolidated financial statements.

Note 2 — Impact of the COVID-19 Pandemic

The rapid spread of COVID-19 and the related government restrictions, social distancing measures, and consumer fears have impacted flight loads, resulted in unprecedented cancellations of bookings and substantially reduced demand for new bookings throughout the airline ~~industry. Starting in March~~industry during 2020 ~~the Company experienced a severe reduction in air travel, which continued through the first quarter of~~and 2021. Demand in the foreseeable future ~~will~~may continue to be affected by fluctuations in COVID-19 cases, variants, hospitalizations, deaths, treatment efficacy and the availability of vaccines. The Company is continuously reevaluating flight schedules and adjusting capacity based on demand trends.

~~On December 27,~~During 2020 and 2021, Congress enacted various legislation which provided support for the airline industry. This included The Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") enacted in March 2020, the Consolidated Appropriations Act, 2021 enacted in December 2020 (the ~~"Payroll~~“Payroll Support Program ~~Extension"~~Extension”) ~~was signed into law. This Payroll Support Program Extension provides an additional $15.0 billion~~and the American Rescue Plan Act enacted in ~~support to the airline industry.~~March 2021 (the “ARPA”). On January 15, 2021, the Company through its airline operating subsidiary Allegiant Air, LLC entered into a Payroll Support Program Extension Agreement (the “PSP2”) with the Treasury and received $91.8 million under the Payroll Support Program Extension. ~~The funds were used exclusively for wages, salaries and benefits.~~

In April 2021, the Company received $13.8 million in additional funds related to the PSP2 which included a loan of $1.7 million. In consideration for these additional funds, the Company issued ~~additional~~ warrants ( the "PSP2 Warrants") to the Treasury to acquire 924 shares of common stock at a price of $179.23 per share (based on the price of the Company's common stock on the Nasdaq ~~Global Select~~Stock Market on December 24, 2020).

In April 2021, the Company through its airline operating subsidiary Allegiant Air, LLC entered into a Payroll Support Program 3 Agreement (the "PSP3") with the Treasury under section 7301 of the American Rescue Plan Act of ~~2021. The Company~~2021 and received a total of $98.4 ~~million in second quarter 2021.~~ million.

The funds ~~must be~~received under PSP2 and PSP3 were used exclusively for wages, salaries and benefits.

~~Based on the Company's assumptions about the future impact of COVID-19 on travel demand, which could be materially different due~~Prior to the inherent uncertainties of the current operating environment, the Company expects to meet its cash obligations as well as remain in compliance with the debt covenants in its existing financing agreements for the next 12 months based on its current level of unrestricted cash and short-term investments, its anticipated access to liquidity and tax refunds, and projected cash flows from operations.

~~Special Charges~~

~~The table below summarizes special charges recorded during the three and six months ended June 30, 2021, and 2020.~~

Three Months Ended June 30, Six Months Ended June 30,
(in thousands) 2021 2020 2021 2020
Operating $ 854 $ 81,169 $ 2,592 $ 247,267
Non-operating 0 19,830 0 26,632
Total special charges $ 854 $ 100,999 $ 2,592 $ 273,899

~~Additional detail for the $2.6 million of total special charges for the six months ended June 30, 2021 appears below:~~

•~~$2.1 million resulting from the accelerated retirements of 4 airframes and 6 engines~~

•~~$0.5 million impairment loss on a building in Chesterfield, Missouri associated with the Allegiant Nonstop family entertainment line of business.~~

~~Additional detail for the $273.9 million of total special charges (operating and non-operating) for the six months ended June 30, 2020 appears below:~~

•~~$168.4 million in impairment charges primarily in our non-airline subsidiaries~~

•~~$58.6 million resulting from the accelerated retirement of 7 airframes and 5 engines, loss on sale leaseback transaction of 4 aircraft, and write-offs of other aircraft related assets~~

•$19.7 million for additional salary and benefits expense in relation to the elimination of positions as well as other non-recurring compensation expense associated with the acceleration of certain existing stock awards

•$19.8 million accrual on termination of the loan agreement with Sixth Street Partners (formerly TSSP) intended to finance the development of Sunseeker Resorts Charlotte Harbor, which was paid in the second half of 2020

•~~$5.0 million related to suspension of construction at Sunseeker~~

•~~$2.4 million write-down on various non-aircraft assets and other various expenses~~January 1, 2022, all Payroll Support Program funds had been fully utilized.

109

Note 3 — Revenue Recognition

Passenger Revenue

Passenger revenue is the most significant category in the Company's reported operating revenues, as outlined below:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021
Scheduled service	Scheduled service	$	225,613	$	48,680	$	357,540	$	245,941	Scheduled service	$	223,854	$	131,929
Ancillary air-related charges	Ancillary air-related charges	213,445		65,294		334,518		242,258		Ancillary air-related charges	229,464		121,072
Co-brand redemptions		4,689		2,546		8,383		7,232
Allways® Allegiant World Mastercard® redemptions										Allways® Allegiant World Mastercard® redemptions	10,643		3,694
Total passenger revenue	Total passenger revenue	$	443,747	$	116,520	$	700,441	$	495,431	Total passenger revenue	$	463,961	$	256,695

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.~~provided. As of ~~June 30, 2021, approximately 69.8 percent of~~March 31, 2022, the air traffic liability balance was $452.6 million, of which approximately $394.1 million was related to forward bookings, with the remaining ~~30.2 percent~~$58.5 million related to credit vouchers for future travel.

The normal contract term of passenger tickets is 12 months and passenger revenue associated with future travel will principally be recognized within this time frame. ~~$150.4 million of~~Of the $307.5 million that was recorded in the air traffic liability balance as of December 31, ~~2020~~2021, approximately 56.0 percent was recognized into passenger revenue during the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022.

In 2020, the Company announced that ~~credits~~credit vouchers issued for canceled travel beginning in January 2020 would have an extended expiration date of two years from the original booking date. This policy continued for ~~bookings~~vouchers issued through June 30, 2021. ~~This change has been considered in estimating the future breakage rate, which represents the value~~Estimates of ~~credit vouchers that are not expected to be redeemed prior to their contractual expiration date. Estimates of~~passenger revenue to be recognized from air traffic liability for credit ~~vouchers~~voucher breakage may be subject to variability and differ from historical experience due to the change in contract duration and uncertainty regarding demand for future air travel. Effective July 1, 2021, vouchers issued have an expiration date of one year from the original booking date.

The Company periodically evaluates the estimated amount of credit vouchers expected to expire unused and any adjustment is removed from air traffic liability and included in passenger revenue in the period in which the evaluation is complete.

~~Co-brand~~Loyalty redemptions

In relation to the travel component of the ~~co-branded credit card~~Allways® Allegiant World Mastercard® 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. Similarly, in relation to the Allways Rewards program, points earned through the program are deferred based on the stand-alone selling price and recognized into revenue when the points are redeemed and the underlying service has been provided.

The following table presents the activity of the ~~co-brand~~ point liability for the periods indicated:


		Six Months Ended June 30,					Three Months Ended March 31,
(in thousands)	(in thousands)	2021		2020		(in thousands)	2022		2021
Balance at January 1		$	21,841	$	15,613
Points balance at January 1						Points balance at January 1	$	40,490	$	21,841
Points awarded (deferral of revenue)	Points awarded (deferral of revenue)	10,696		10,962		Points awarded (deferral of revenue)	16,957		4,571
Points redeemed (recognition of revenue)	Points redeemed (recognition of revenue)	(8,383)		(7,232)		Points redeemed (recognition of revenue)	(10,643)		(3,694)
Balance at June 30		$	24,154	$	19,343
Points balance at March 31						Points balance at March 31	$	46,804	$	22,718

As of ~~June 30,~~March 31, 2022 and 2021, ~~and 2020, $11.7~~$23.2 million and ~~$12.4~~$10.3 million, respectively, of the current points liability is reflected in accrued liabilities and represents the current estimate of revenue to be recognized in the next 12 months based on historical trends, with the remaining balance reflected in other noncurrent liabilities expected to be recognized into revenue in periods thereafter.

1110

Note 4 — Property and Equipment

The following table summarizes the Company's property and equipment as of the dates indicated:

(in thousands) June 30, 2021 December 31, 2020
Flight equipment, including pre-delivery deposits $ 2,429,482 $ 2,331,499
Computer hardware and software 154,248 149,727
Land and buildings/leasehold improvements (1)
87,116 87,030
Other property and equipment 82,613 80,601
Total property and equipment 2,753,459 2,648,857
Less accumulated depreciation and amortization (636,841) (598,546)
Property and equipment, net $ 2,116,618 $ 2,050,311

~~(1) Balance includes a building currently held for sale in Chesterfield, Missouri with a carrying value of $4.3 million~~


(in thousands)	March 31, 2022		December 31, 2021
Flight equipment, including pre-delivery deposits	$	2,685,856	$	2,573,657
Computer hardware and software	166,209		160,237
Land and buildings/leasehold improvements	59,853		59,735
Other property and equipment	83,326		78,192
Sunseeker Resort	147,645		83,864
Total property and equipment	3,142,889		2,955,685
Less accumulated depreciation and amortization	(715,709)		(696,178)
Property and equipment, net	$	2,427,180	$	2,259,507

Accrued capital expenditures as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 were ~~$5.1~~$37.1 million and ~~$16.9~~$17.7 million, respectively.

1211

Note 5 — Long-Term Debt

The following table summarizes the Company's ~~Long-term~~long-term debt and finance lease obligations as of the dates indicated:


(in thousands)	(in thousands)	June 30, 2021		December 31, 2020		(in thousands)	March 31, 2022		December 31, 2021
Fixed-rate debt and finance lease obligations due through 2030		$	621,750	$	525,240
Fixed-rate debt and finance lease obligations due through 2032						Fixed-rate debt and finance lease obligations due through 2032	$	885,302	$	827,382
Variable-rate debt due through 2029	Variable-rate debt due through 2029	963,715		1,133,771		Variable-rate debt due through 2029	889,687		915,157
Total long-term debt and finance lease obligations, net of related costs		1,585,465		1,659,011
Total debt and finance lease obligations, net of related costs						Total debt and finance lease obligations, net of related costs	1,774,989		1,742,539
Less current maturities, net of related costs	Less current maturities, net of related costs	144,382		217,234		Less current maturities, net of related costs	140,450		130,053
Long-term debt and finance lease obligations, net of current maturities and related costs	Long-term debt and finance lease obligations, net of current maturities and related costs	$	1,441,083	$	1,441,777	Long-term debt and finance lease obligations, net of current maturities and related costs	$	1,634,539	$	1,612,486

Weighted average fixed-interest rate on debt	Weighted average fixed-interest rate on debt	5.7%		5.7%		Weighted average fixed-interest rate on debt	5.8%		5.8%
Weighted average variable-interest rate on debt	Weighted average variable-interest rate on debt	2.5%		2.4%		Weighted average variable-interest rate on debt	2.9%		2.5%

Maturities of long-term debt and finance lease obligations for the remainder of ~~2021~~2022 and for the next four years and thereafter, in the aggregate, are: remaining in ~~2021 - $75.8 million;~~ 2022 - ~~$131.9~~$95.4 million; 2023 - ~~$132.5~~$133.9 million; 2024 - ~~$802.3~~$804.3 million; 2025 - ~~$85.4~~$111.1 million; 2026 - $104.7 million; and ~~$357.6~~$525.5 million thereafter.

~~Senior Secured Revolving Credit Facility~~

In March 2021, the Company entered into a new revolving credit facility under which it is entitled to borrow up to $50.0 million. The facility has a term of 24 months and the borrowing ability is based on the value of the Airbus A320 series aircraft placed into the collateral pool. The notes for amounts borrowed under the facility bear interest at a floating rate based on LIBOR and are due in March 2023. As of June 30, 2021, 0 aircraft collateral had been added to the collateral pool and the facility was undrawn.

1312

Note 6 — Income Taxes

The Company recorded an effective tax rate of ~~22.5~~25.4 percent and ~~36.4~~20.8 percent for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. The effective tax rate for the three months ended ~~June 30, 2021~~March 31, 2022 differed from the statutory Federal income tax rate of 21.0 percent primarily due to state income taxes and the impact of ~~ASU 2016-09 related to share-based payments. The effective~~permanent tax ~~rate for the three months ended June 30, 2020 differed from the statutory federal income tax rate~~differences of ~~21.0 percent primarily due to the tax accounting impact of the CARES Act~~ which ~~allowed the Company to carryback the 2020 net operating loss at the 35.0 percent rate applicable in earlier years.~~none are individually significant. While the Company expects its effective tax rate to be fairly consistent in the near term, it will vary depending on recurring items such as the amount of income earned in each state and the state tax rate applicable to such income. Discrete items during interim periods may also affect the Company's tax rates.

The Company recorded an effective tax rate of 22.4 percent and 54.5 percent for the six months ended June 30, 2021 and 2020, respectively. The effective tax rate for the six months ended June 30, 2021 differed from the statutory Federal income tax rate of 21.0 percent primarily due to state income taxes and the impact of ASU 2016-09 related to share-based payments. The 54.5 percent effective tax rate for the six months ended June 30, 2020 differed from the statutory federal income tax rate of 21.0 percent primarily due to the tax accounting impact of the CARES Act which included a $39.6 million discrete federal income tax benefit related to the full utilization of 2018 and 2019 net operating losses as well as the ability to carryback the 2020 net operating loss at a 35.0 percent rate applicable in earlier years.

1413

Note 7 ~~— Leases~~

The Company evaluates all operating leases and they are measured on the balance sheet with a lease liability and right-of-use asset (“ROU”) at inception. 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. Airport terminal leases mostly include variable lease payments outside of those based on a fixed index, and are therefore not recorded as ROU assets.

~~The following table summarizes the Company's total assets and liabilities related to leases as of the dates indicated:~~

(in thousands) Classification on the Balance Sheet June 30, 2021 December 31, 2020
Assets
Operating lease assets(1)
Operating lease right-of-use assets $ 128,537 $ 115,911
Finance lease assets(2)
Property and equipment, net 239,019 133,175
Total lease assets $ 367,556 $ 249,086
Liabilities
Current
Operating(1)
Current operating lease liabilities $ 16,940 $ 14,313
Finance(2)
Current maturities of long-term debt and finance lease obligations 13,835 9,767
Noncurrent
Operating(1)
Noncurrent operating lease liabilities 114,761 102,289
Finance(2)
Long-term debt and finance lease obligations 225,039 117,060
Total lease liabilities $ 370,575 $ 243,429

~~(1) Represents assets and liabilities of 16 aircraft, office equipment, certain airport and terminal facilities, and other assets under operating leases~~

~~(2) The June 30, 2021 number represents assets and liabilities of 10 aircraft under finance leases~~

~~Sale-Leaseback Transaction~~

During the six months ended June 30, 2021, the Company entered into a sale-leaseback transaction involving 3 aircraft and generating $105.0 million of proceeds. The lease was classified as a finance lease and as a result, the transaction did not qualify as a sale. The aircraft were not removed from property and equipment in the Company's balance sheet and the Company recorded a financial liability in the amount of $105.0 million. The proceeds from this transaction are treated as cash inflows from finance lease obligations and reported in financing activities on the statement of cash flows.

~~Note 8~~ — Fair Value Measurements

The Company utilizes the market approach to measure the fair value of its financial assets. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. The assets classified as Level 2 primarily utilize quoted market prices or alternative pricing sources including transactions involving identical or comparable assets and models utilizing market observable inputs for valuation of these securities. No changes in valuation techniques or inputs occurred during the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022.

Financial instruments measured at fair value on a recurring basis:


		June 30, 2021						December 31, 2020							March 31, 2022						December 31, 2021
(in thousands)	(in thousands)	Total		Level 1		Level 2		Total		Level 1		Level 2		(in thousands)	Total		Level 1		Level 2		Total		Level 1		Level 2
Cash equivalents	Cash equivalents													Cash equivalents
Money market funds	Money market funds	$	157,320	$	157,320	$	0	$	5,340	$	5,340	$	0	Money market funds	$	4,295	$	4,295	$	—	$	25,019	$	25,019	$	—
Commercial Paper														Commercial Paper	144,882		—		144,882		179,455		—		179,455
Municipal debt securities	Municipal debt securities	78,996		0		78,996		34,338		0		34,338		Municipal debt securities	48,066		—		48,066		63,875		—		63,875
Commercial Paper		66,292		0		66,292		48,908		0		48,908
Corporate debt securities														Corporate debt securities	7,849		—		7,849		—		—		—

Federal agency debt securities		0		0		0		51,400		0		51,400

Total cash equivalents	Total cash equivalents	302,608		157,320		145,288		139,986		5,340		134,646		Total cash equivalents	205,092		4,295		200,797		268,349		25,019		243,330
Short-term	Short-term													Short-term
Commercial paper	Commercial paper	345,809		0		345,809		229,821		0		229,821		Commercial paper	377,695		—		377,695		419,469		—		419,469

Corporate debt securities	Corporate debt securities	217,631		0		217,631		166,768		0		166,768		Corporate debt securities	255,848		—		255,848		234,436		—		234,436
Municipal debt securities	Municipal debt securities	178,870		0		178,870		87,290		0		87,290		Municipal debt securities	173,561		—		173,561		165,573		—		165,573
Federal agency debt securities	Federal agency debt securities	25,100		0		25,100		48,598		0		48,598		Federal agency debt securities	1,845		—		1,845		—		—		—
Total short-term	Total short-term	767,410		0		767,410		532,477		0		532,477		Total short-term	808,949		—		808,949		819,478		—		819,478
Long-term														Long-term

Municipal debt securities														Municipal debt securities	—		—		—		2,231		—		2,231

Total long-term														Total long-term	—		—		—		2,231		—		2,231
Total financial instruments	Total financial instruments	$	1,070,018	$	157,320	$	912,698	$	672,463	$	5,340	$	667,123	Total financial instruments	$	1,014,041	$	4,295	$	1,009,746	$	1,090,058	$	25,019	$	1,065,039

None of the Company's debt is publicly held and as a result, the Company has determined the estimated fair value of these notes to be Level 3. Certain inputs used to determine 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:


		June 30, 2021				December 31, 2020						March 31, 2022				December 31, 2021
(in thousands)	(in thousands)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value		Hierarchy Level	(in thousands)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value		Hierarchy Level
Non-publicly held debt	Non-publicly held debt	$	1,366,042	$	1,170,576	$	1,555,637	$	1,191,008	3	Non-publicly held debt	$	1,413,414	$	1,198,418	$	1,447,462	$	1,261,170	3

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

1614

Note 98 — Earnings (Loss) per Share

Basic and diluted earnings (loss) per share are computed pursuant to the two-class method. Under this method, the Company attributes net income (loss) 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 ~~June 30,~~March 31, 2022 basic and diluted (loss) per share are the same because of the (loss) position. For the three months ended March 31, 2021, the second method was used because it was more dilutive than the first method.

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
Basic:	Basic:									Basic:
Net income (loss)	Net income (loss)	$	95,027	$	(93,103)	$	101,896	$	(126,113)	Net income (loss)		$	(7,881)	$	6,869
Less income allocated to participating securities	Less income allocated to participating securities	(1,285)		0		(1,451)		(236)		Less income allocated to participating securities		—		(103)
Net income (loss) attributable to common stock	Net income (loss) attributable to common stock	$	93,742	$	(93,103)	$	100,445	$	(126,349)	Net income (loss) attributable to common stock		$	(7,881)	$	6,766
Earnings (loss) per share, basic	Earnings (loss) per share, basic	$	5.49	$	(5.85)	$	6.04	$	(7.93)	Earnings (loss) per share, basic		$	(0.44)	$	0.42
Weighted-average shares outstanding	Weighted-average shares outstanding	17,064		15,902		16,618		15,927		Weighted-average shares outstanding		17,954		16,167
Diluted:	Diluted:									Diluted:
Net income (loss)	Net income (loss)	$	95,027	$	(93,103)	$	101,896	$	(126,113)	Net income (loss)		$	(7,881)	$	6,869
Less income allocated to participating securities	Less income allocated to participating securities	(1,284)		0		(1,449)		(236)		Less income allocated to participating securities		—		(103)
Net income (loss) attributable to common stock	Net income (loss) attributable to common stock	$	93,743	$	(93,103)	$	100,447	$	(126,349)	Net income (loss) attributable to common stock		$	(7,881)	$	6,766
Earnings (loss) per share, diluted	Earnings (loss) per share, diluted	$	5.49	$	(5.85)	$	6.04	$	(7.93)	Earnings (loss) per share, diluted		$	(0.44)	$	0.42
Weighted-average shares outstanding	Weighted-average shares outstanding	17,064		15,902		16,618		15,927		Weighted-average shares outstanding		17,954		16,167
Dilutive effect of stock options and restricted stock		123		0		128		0
Adjusted weighted-average shares outstanding under treasury stock method		17,187		15,902		16,746		15,927
Participating securities excluded under two-class method		(114)		0		(114)		0
Adjusted weighted-average shares outstanding under two-class method		17,073		15,902		16,632		15,927

1715

Note 109 — 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 potential and pending legal or administrative matters will not have a material adverse impact on its financial position, liquidity or results of operations.

Note 10 — 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 2 operating segments: Airline and Sunseeker Resort.

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 renovation of Aileron Golf Course (formerly known as Kingsway Golf Course). Plans for the resort include a 500-room hotel and 2 towers offering more than 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.

Selected information for the Company's segments and the reconciliation to the consolidated financial statement amounts are as follows:


(in thousands)	Airline		Sunseeker Resort		Consolidated
Quarter Ended March 31, 2022
Operating revenue:
Passenger	$	463,961	$	—	$	463,961
Third party products	22,480		—		22,480
Fixed fee contract	13,386		—		13,386
Other	281		1		282
Operating income (loss)	10,176		(2,947)		7,229
Interest expense, net	15,828		1,974		17,802
Depreciation and amortization	46,341		2		46,343
Capital expenditures	142,178		63,781		205,959
Quarter Ended March 31, 2021
Operating revenue:
Passenger	$	256,695	$	—	$	256,695
Third party products	13,622		—		13,622
Fixed fee contract	7,692		—		7,692
Other	1,124		(9)		1,115
Operating income (loss)	25,463		(861)		24,602
Interest expense, net	16,325		—		16,325
Depreciation and amortization	43,136		38		43,174
Capital expenditures	57,674		—		57,674

Total assets were as follows as of the dates indicated:


(in thousands)	As of March 31, 2022		As of December 31, 2021
Airline	$	4,046,505	$	3,872,041
Sunseeker Resort	184,762		119,032

Consolidated	$	4,231,267	$	3,991,073

Note 11 — Subsequent Events

~~Through a wholly-owned subsidiary, the Company executed Conditional Sale Agreements (CSA’s) on July 26, 2021 through Air Lease Corporation for 10 Airbus A320 series~~In April 2022, we borrowed $108.3 million under senior bank debt facilities secured by aircraft. These 10 aircraft are expected to be delivered to the Company between November 2021 and July 2022. Each CSA has a term of 123 months and provides for monthly payments and a purchase option exercisable at the expiration of the term. Upon delivery, the CSA’s will be recorded as finance leases on the Company’s financial statements.

~~The Company has announced~~In April 2022, the ~~recommencement of~~lender funded $87.5 million into the construction ~~of its~~disbursement account for the Sunseeker ~~Resort in Southwest Florida. The Company expects to finance the balance of the construction cost and complete the Resort by early 2023.~~project.

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 ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021. Also discussed is our financial position as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021. 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, ~~2020.~~2021. 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.

~~Second~~First Quarter ~~2021~~2022 Review

Highlights:

–~~Earnings~~Loss per share of ~~$5.49~~$(0.44) as a result of significantly higher fuel costs as fuel prices surged during the ~~PSP funds augmented our first net profit since the onset of the pandemic~~quarter and higher irregular operations costs.

–~~Restored capacity to pre-pandemic levels~~Total operating revenue was $500.1 million, up 10.7 percent when compared with ~~scheduled service capacity up 4.5 percent versus second~~the first quarter of ~~2019~~2019.

–Continued sequential ~~quarterly~~ improvement in ~~total revenue with second quarter 2021 total revenue~~load factor, which came in at 78.9 percent, up ~~69.3 percent~~nearly 2 percentage points from the ~~first~~fourth quarter ~~2021~~2021.

–Total cash and investments at ~~June 30, 2021~~March 31, 2022 were ~~$1.2 billion, up from $685 million at December 31, 2020~~$1.21 billion.

–Average total fare per passenger increased by 2.7 percent year over three-year to $131.15 despite scheduled service capacity increases of 18.7 percent.

–We began work with our ESG partner Schneider Electric in preparation for the publishing of our initial sustainability report later in the year.

–45 thousand new Allways® Allegiant World Mastercard® cardholders in first quarter 2022, the highest number of additions in a quarter in Company history.

AIRCRAFT

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


		June 30, 2021	December 31, 2020		March 31, 2022	December 31, 2021
A319	A319	35	34	A319	35	35
A320(1)	A320(1)	68	61	A320(1)	77	73
Total	Total	103	95	Total	112	108

(1) Does not include ~~seven~~eight aircraft of which we have taken delivery as of March 31, 2022, but were not yet in service as of ~~June 30, 2021.~~

that date.

As of March 31, 2022, we are party to forward purchase agreements for 51 aircraft with one Airbus A320 delivery expected in 2022, ten Boeing 737MAX aircraft in 2023 and the remainder of the Boeing aircraft under contract thereafter. Additionally, we are party to finance leases for six Airbus A320 aircraft expected to deliver in 2022.

NETWORK

As of ~~June 30, 2021,~~March 31, 2022, we were selling ~~607~~617 routes versus ~~519~~580 as of the same date ~~last year~~in 2021 and ~~459~~450 as of ~~June 30,~~March 31, 2019, which represents a ~~17.0~~6.4 and ~~32.2~~37.1 percent increase, respectively. Our total active number of origination cities and leisure destinations ~~(for operating routes)~~ were 9799 and ~~32,~~33, respectively, as of ~~June 30, 2021.~~March 31, 2022.

Our unique model is predicated around expanding and contracting capacity to meet seasonal travel demands. We maintained a broad network and selling presence during the pandemic and have grown our network as air travel is recovering. ~~We consistently monitor flights to assess for cash profitability.~~

TRENDS

COVID-19

The COVID-19 pandemic has significantly impacted our operating results ~~for~~in 2020 and 2021 and we suffered numerous cancellations due to the ~~three and six months ending June 30, 2021 and~~effect of the Omicron variant on flight crews into first quarter 2022. COVID-19 may continue to ~~do so~~impact our operations into the future. ~~Our load factors are down significantly as a result. We cannot predict when air travel will return to customary levels or at what pace. In the meantime, our revenues will be adversely affected.~~ We believe that demand in the foreseeable future ~~will continue to~~could fluctuate in response to fluctuations in COVID-19 cases, variants of the virus, hospitalizations, deaths, treatment efficacy, the availability of vaccines, CDC recommendations, and government restrictions.

Strong Demand Momentum

As concerns over COVID-19 have declined, we saw significant increases in load factors and average total fare per passenger in March which are continuing into second quarter.

Aircraft Fuel

The cost of fuel is volatile, as it is subject to many economic and geopolitical factors we can neither control nor predict. Significant increases in fuel costs could materially affect our operating results and profitability. We have not sought to use financial derivative products to hedge our exposure to fuel price volatility, nor do we have any plans to do so in the future.

The cost per gallon of fuel began to increase significantly in 2021 and the increases were exacerbated by the geopolitical impact of the war in Ukraine. As a result, the average fuel cost per gallon increased by 65.1 percent in first quarter 2022 over first quarter 2021 and 43.5 percent over first quarter 2019. We expect high fuel costs will continue to impact our total costs and operating results.

Network Growth

Despite the pandemic and airline industry challenges, since the beginning of 2021 and through ~~June 30, 2021,~~March 31, 2022, we have announced service ~~on 95~~on 123 new routes, 17 hyper seasonal routes, and to eight new cities, inincluding seasonal and temporary routes. We will continue to manage capacity to meet demand, which we believe is a core strength of our business model.

~~We plan to continue to grow our aircraft fleet and route network and~~ However, we have ~~executed agreements to acquire 21 incremental aircraft year-to-date. Our future profitability will be affected by the success~~pulled back some of our growth ~~initiatives.~~in 2022 due to staffing challenges as mentioned below.

~~Noncontrollable~~Boeing Agreement

In December 2021, we signed an agreement with The Boeing Company to purchase 50 newly manufactured 737MAX aircraft scheduled to be delivered in 2023 to 2025 with options to purchase an additional 50 737’s. We believe this new aircraft purchase is complimentary with our low cost strategy based on of our intent to retain ownership of the aircraft, the longer useful life for depreciation purposes, expected fuel savings and ~~controllable factors~~operational reliability from the use of these new aircraft.

Operations

Staffing challenges and employee call-outs continue to impact our operations and costs and we have ~~contributed~~pulled back some of our planned growth for 2022 as a result. We believe these issues are not unique to ~~a higher than normal level of cancellations during peak periods during and after second quarter 2021 and have resulted in increased~~Allegiant nor do we believe they are systemic. Our irregular operations ~~costs. The noncontrollable factors include weather, TSA delays~~costs are also impacted by our policy to compensate passengers for their inconvenience in addition to the ticket price, not generally done in the airline industry.

We are investing incrementally in our employee hiring and ~~particularly at smaller airports~~retention and ~~airport overcrowding. Controllable issues relate to various aspects of~~ our operations ~~as we had~~in an attempt to ~~readjust to providing peak capacity during~~improve performance and this may put pressure on unit costs in the ~~summer while also facing a number of external issues as indicated above. We believe many airlines are suffering from these problems at this time. We are working to resolve the controllable issues, but~~near term. However, if these problems persist, we may suffer reputational damage and incur higher costs for irregular operations.

Union Negotiations

The collective bargaining agreement with our pilots is currently amendable and the parties have begun to discuss the terms of a new labor agreement for this work group. The terms of any new collective bargaining agreement will impact our costs over the term of the contract.

Pilot Scarcity

The supply of pilots necessary for airline industry growth may be a limiting factor. The pandemic resulted in more than 3,000 early pilot retirements across U.S. mainline and cargo carriers and the pipeline for new pilots does not appear at the present time to be sufficiently robust to replace retired pilots and to allow for projected industry growth. The ability to hire and retain pilots will be critical to our and the industry’s growth.

Engagement of Schneider Electric as ESG Consultant

We have entered into a three-year partnership with Schneider Electric to help us develop an Environmental, Social and Governance (ESG) program including:

–Identifying and prioritizing relevant ESG topics through a materiality assessment

–Establishing ESG goals and environmental goal achievement plans

–Developing an inaugural ESG report referencing the Global Reporting Initiative (GRI) and Sustainability Accounting Standards Board (SASB) frameworks

–Providing ongoing carbon emissions reporting of Scope 1, 2 and 3 greenhouse gas (GHG) emissions

–Supporting the communications efforts around our ESG program

VivaAerobus Alliance

In December 2021, we announced plans for a fully-integrated commercial alliance agreement with VivaAerobus, designed to expand options for nonstop leisure air travel between our markets in the ~~recommencement~~United States and Mexico. We and VivaAerobus have submitted a joint application to the DOT requesting approval of and antitrust immunity for the alliance. The transactions are also subject to clearance by the Mexican Federal Economic Competition Commission.

We and VivaAerobus currently expect to offer new routes under the alliance beginning in the first quarter of 2023, pending governmental approval of the applications.

Sunseeker Resort

We recommenced the construction of ~~its~~our Sunseeker Resort in Southwest ~~Florida. We expect~~Florida in August 2021 and construction is ongoing with the expectation to ~~finance the balance of the construction cost and complete~~open the Resort ~~by early~~in second quarter 2023.

2425

RESULTS OF OPERATIONS

Comparison of three months ended ~~June 30, 2021~~March 31, 2022 to three months ended ~~June 30, 2020~~March 31, 2021

As comparisons of our ~~2021~~2022 results to periods during ~~2020~~2021 reflect disproportionate changes due to the continued impact of the pandemic on air travel, and particularly during first quarter 2021, we have also provided analysis of certain revenue and expense line items to 2019 results where helpful to understand trends in our performance.

Operating Revenue

Passenger revenue. For the ~~second~~first quarter ~~2021,~~2022, passenger revenue increased ~~280.8~~80.7 percent compared to the same period in ~~2020.~~2021. This increase was largely due to ~~a significant decline in~~lower passenger demand related to COVID-19 during the ~~second~~first quarter ~~2020. Revenue in the second quarter 2021 was favorably impacted by estimates of breakage on vouchers whose expiration was extended as a result of the pandemic.~~2021. Scheduled service passengers were up ~~190.7~~59.6 percent and scheduled service average base fare was up ~~54.7~~8.3 percent.

Passenger revenue for the ~~second~~first quarter ~~2021,~~2022, as compared to ~~second~~first quarter 2019, ~~decreased~~increased by ~~2.4~~10.5 percent, as ~~load factor decreased~~passengers increased by ~~13 percentage points~~8.4 percent on an 18.7 percent increase in capacity resulting in a ~~10.9 percent decline~~5.0 percentage point decrease in load factor. Average scheduled service ~~passengers. The impact of lower loads was partially offset~~revenue per passenger increased by ~~a 7.2~~1.9 percent ~~increase in average base fare~~ over the same period in ~~2019.~~2019 as a result of a 16.5 percent increase in air ancillary revenue per passenger.

~~Air~~The increase in air ancillary ~~average fare for~~revenue per passenger was primarily driven by increased revenue from the ~~second quarter 2021 increased by 12.5 percent when compared to 2020 and 12.2 percent when compared to 2019.~~sale of bundled products.

Third party products revenue. Third party products revenue for the ~~second~~first quarter ~~2021~~2022 increased ~~172.4~~65.0 percent compared to the ~~second~~first quarter ~~2020~~2021 and ~~26.3~~31.1 percent compared to the ~~second~~first quarter 2019. The increase from ~~2020~~2021 is primarily the result of greater travel demand for rental cars and hotels ~~than during~~and increased Allways® Allegiant World Mastercard® revenues. Increased rental car and hotel rates combined with a 33.2 percent increase in rental car days sold and 29.1 percent increase in room nights sold to generate the ~~early part of the pandemic.~~ substantial increase over 2021.

The increase from 2019 is attributable to increased rental car rates (which more than offset the impact of fewer rental car days) and growth in our ~~co-branded credit card~~Allways® Allegiant World Mastercard® revenues.

Fixed fee contract revenue. Fixed fee contract revenue for the ~~second~~first quarter ~~2021~~2022 increased ~~58.6~~74.0 percent compared to the same period in ~~2020~~2021 as a result of a ~~21.8~~16.0 percent increase in related departures due to ~~increased~~lower charter ~~activity.~~activity during the pandemic. In addition, charter rates were lower in 2021.

Fixed fee contract revenue for the ~~second~~first quarter ~~2021,~~2022, as compared to 2019, ~~decreased~~increased by ~~58.9~~26.6 percent ~~due to continuing depressed demand for group charters resulting from the pandemic.~~

~~Other revenue.~~ ~~Other revenue decreased 89.3~~as a result of a 4.9 percent ~~for the second quarter 2021 from the same period~~increase in ~~2020. The decrease was due to decreased~~related departures driven primarily by March Madness activity, ~~in the non-airline subsidiaries.~~

higher charter rates and higher fuel cost passthroughs.

Operating Expenses

We primarily evaluate our expense management by comparing our costs per available seat mile (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.~~periods, 2019 being included as a more representative pre-pandemic first quarter comparison. 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 June 30, Percent Change
Unitized costs (in cents) 2021 2020 2019 YoY Yo2Y
Salary and benefits 2.65 4.27 2.55 (37.9) % 3.9 %
Aircraft fuel 2.38 1.23 2.70 93.5 (11.9)
Station operations 1.25 1.23 1.03 1.6 21.4
Depreciation and amortization 0.97 1.95 0.87 (50.3) 11.5
Maintenance and repairs 0.49 0.59 0.47 (16.9) 4.3
Sales and marketing 0.38 0.40 0.46 (5.0) (17.4)
Aircraft lease rentals 0.11 0.06 — 83.3 NM
Other 0.34 1.07 0.55 (68.2) (38.2)
Payroll Support Programs grant recognition (1.33) (3.36) — (60.4) NM
Operating special charges 0.02 3.66 — (99.5) NM
CASM 7.26 11.10 8.63 (34.6) (15.9)
Operating CASM, excluding fuel 4.88 9.87 5.93 (50.6) (17.7)

~~NM - Not meaningful~~

2526


	Three Months Ended March 31,			Percent Change
Unitized costs (in cents)	2022	2021	2019	YoY		Yo3Y
Aircraft fuel	3.55	2.06	2.55	72.3	%	39.2	%
Salaries and benefits	2.90	2.94	3.05	(1.4)		(4.9)
Station operations	1.42	1.07	1.00	32.7		42.0
Depreciation and amortization	1.00	1.08	0.93	(7.4)		7.5
Maintenance and repairs	0.60	0.58	0.58	3.4		3.4
Sales and marketing	0.48	0.29	0.54	65.5		(11.1)
Aircraft lease rentals	0.13	0.12	—	8.3		NM
Other	0.59	0.44	0.57	34.1		3.5
Payroll Support Programs grant recognition	—	(2.28)	—	NM		NM
Special charges	0.00	0.04	—	NM		NM
CASM	10.67	6.34	9.22	68.3		15.7
Operating CASM, excluding fuel	7.12	4.28	6.67	66.4		6.7
Sunseeker Resort CASM	0.06	0.02	0.05	200.0		20.0
Operating CASM, excluding fuel and Sunseeker Resort activity	7.06	4.26	6.62	65.7		6.6

NM - Not meaningful

~~Salary~~Salaries and benefits expense. ~~Salary~~Salaries and benefits expense increased ~~$27.1~~$16.1 million, or ~~28.6~~13.6 percent, for the ~~second~~first quarter ~~2021~~2022 when compared to the same period in ~~2020. Although~~2021. The increase is primarily due to an 18.3 percent increase in the ~~average~~ number of full time equivalent employees ~~decreased 5.6 percent year over year, overall expense increased due to temporary voluntary leave programs offered to employees, voluntary pay reductions,~~from the first quarter 2021 and ~~suspension of~~higher wages offset by the ~~bonus accrual during the second quarter 2020.~~employee retention tax credit recognized in 2022.

When compared to the same period in 2019, salaries and benefits expense increased by ~~$8.3~~$14.6 million or ~~7.3~~12.2 percent on a ~~relatively flat~~16.3 percent increase in the number of full time equivalent employees year over ~~two year. On a per ASM basis, salary and benefits expense increased only 3.92 percent. The per ASM cost increase relates to annual increases in crew pay.~~three-year.

Aircraft fuel expense. Aircraft fuel expense increased ~~$82.1~~$81.3 million, or ~~300.1~~98.1 percent, for the ~~second~~first quarter ~~2021~~2022 compared to ~~second~~first quarter ~~2020.~~2021. This is primarily due to ~~the recovery from the COVID-19 pandemic driving increased capacity resulting~~a 65.1 percent increase in average fuel cost per gallon and a ~~119.7~~20.3 percent increase in fuel gallons consumed on a ~~108.8~~15.1 percent increase in ~~departures and an 82.0 percent increase in average fuel cost per gallon which was depressed during the pandemic.~~capacity.

When compared to the same period in 2019, aircraft fuel expense ~~decreased~~increased by ~~8.8~~64.7 percent ~~which is in line with the decrease in~~as average fuel cost per gallon ~~of 9.0~~increased 43.5 percent, ASM's increased 18.2 percent, and fuel gallons consumed increased 15.0 percent.

Station operations expense. Station operations expense for the ~~second~~first quarter ~~2021~~2022 increased ~~$29.8~~$22.7 million, or ~~108.8~~52.6 percent compared to the same period in ~~2020 primarily~~2021 due to increased departures of ~~108.8 percent.~~10.9 percent and increased costs associated with irregular operations.

~~Compared~~As compared to the same period in 2019, station operations expense increased by ~~$11.3~~$26.8 million or ~~24.7 percent. This increase is~~68.7 percent due anto a 13.1 percent increase in departures, ~~of 3.1 percent and~~ increased costs associated with irregular ~~operations.~~operations and airport fees.

Irregular operations costs in 2022 were significantly attributable to COVID absences due to the Omicron variant in January and February. These absences resulted in numerous flight cancellations. The amount of irregular operations costs is significantly impacted by our decision to compensate impacted passengers for their inconvenience in addition to the ticket price.

Depreciation and amortization expense. Depreciation and amortization expense for the ~~second~~first quarter ~~2021~~2022 increased by ~~2.8~~7.3 percent as compared to the ~~second~~first quarter ~~2020~~2021 as the average number of aircraft owned and in service increased ~~12.2~~8.6 percent year over year.

Compared to the same period in 2019, depreciation and amortization expense increased $10.2 million or 28.1 percent as the average number of aircraft owned and in service increased 28.8 percent year over three-year.

Maintenance and repairs expense. Maintenance and repairs expense for the ~~second~~first quarter ~~2021~~2022 increased ~~$9.6~~$4.4 million, or ~~73.4~~19.0 percent, compared to the same period in ~~2020.~~2021. Routine maintenance costs increased as the average number of aircraft ~~utilization~~in service increased 12.5 percent year over year and there was ~~up 97.4~~a 15.1 percent ~~during the quarter and we incurred incremental costs preparing our fleet to operate at full capacity again.~~increase in ASMs.

Compared to the same period in 2019, maintenance and repairs expense increased by ~~$1.7~~$5.0 million or ~~8.2~~21.9 percent primarily due to ~~incremental costs preparing our fleet to operate at full capacity,~~a 37.6 percent increase in the average number of aircraft in service and ~~the maintenance and repairs on additional aircraft purchased~~an 18.2 percent increase in ASM's year over ~~the past two years.~~three-year.

Sales and marketing expense. Sales and marketing expense for the ~~second~~first quarter ~~2021~~2022 increased by ~~97.9~~92.5 percent compared to the same period in ~~2020,~~2021, due to aan increase in net credit card fees as a result of ~~a 280.8~~an 80.7 percent increase in passenger revenue year-over-year as well as reduced advertising spend in ~~2020~~early 2021 during the pandemic.

Compared to the same period in 2019, sales and marketing expense ~~decreased~~increased by ~~14.2~~6.8 percent due to ~~efforts~~an increase in net credit card fees as a result of a 10.5 percent increase in passenger revenue compared to ~~more adeptly deploy advertising spend.~~the same period in 2019.

Other operating expense. Other expense ~~decreased $8.3~~increased $8.4 million for the first quarter 2022 compared to the ~~second~~first quarter ~~2020, mostly due~~2021 attributable to ~~decreased activity~~increased service and incremental increases in our ~~non-airline subsidiaries.~~employee training activity.

Payroll Support Programs grant recognition. WeDuring 2021, we received ~~a total of $112.2~~$203.9 million in funds ~~during the second quarter 2021~~ through the payroll support ~~programs. Of the total, $110.4 million of these funds represent direct grants,~~programs and ~~will be~~ recognized ~~as a credit to operating expense on our statement of income, over the periods for which the funds were intended to compensate. We recognized $61.2~~$91.8 million as an offset to operating expense on our statement of income during the ~~second~~first quarter of 2021.

~~During 2020, we~~ The funds were fully utilized in 2021. There were no such funds received ~~$176.9 million~~ in ~~funds through the payroll support program and recognized a $74.5 million offset to operating expense on our statement of income for the second quarter 2020.~~

2022.

~~Special charges.~~ Special charges of $0.9 million were recorded within operating expenses for the second quarter 2021 compared to $81.2 million for the same period in 2020. The special charges relate to expenses that were unique and specific to COVID-19. These charges in 2021 include accelerated depreciation on airframes and engines resulting from an accelerated retirement plan, and losses within our non-airline subsidiaries. Special charges recorded in the second quarter 2020 included accelerated depreciation on airframes and engines resulting from an accelerated retirement plan, a loss on a sale-leaseback transaction which we would not likely have transacted absent cash conservation efforts as a result of COVID, salaries and benefits expense, and a non-cash impairment charge for an investment in a third party. See Note 2 of Notes to Consolidated Financial Statements (unaudited) for further information.

Interest Expense

Interest expense for the quarter ended ~~June 30, 2021~~March 31, 2022 increased by ~~$2.7~~$3.0 million, or ~~19.0~~17.9 percent over ~~second~~first quarter ~~2020,~~2021, due to ~~increased market rates for the~~new fixed rate debt and finance lease transactions entered into ~~during the pandemic offset by lower interest rates on our variable debt.~~since first quarter 2021.

Income Tax Expense

Our effective tax rate was ~~22.5~~25.4 percent and ~~36.4~~20.8 percent for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. The effective tax rate for the three months ended ~~June 30, 2021~~March 31, 2022 differed from the statutory ~~federal~~Federal income tax rate of 21.0 percent primarily due to state income taxes and the impact of ~~ASU 2016-09 related to share-based payments. The effective~~permanent tax ~~rate for the three months ended June 30, 2020 was primarily due to the tax accounting impact~~differences of ~~the CARES Act~~ which ~~allowed the Company to carryback the 2020 net operating loss at the 35.0 percent rate applicable in earlier years.~~

~~Comparison of six months ended June 30, 2021 to six months ended June 30, 2020~~

Operations during the six months ended June 30, 2021 consisted of two months of pre-pandemic activity and the period from March 2020 through June 2020 which was substantially impacted by the pandemic. The comparisons below of the results for the six month periods ended June 30, 2021 and June 30, 2020 should be read with this in mind.

As comparisons of our 2021 results to periods during 2020 reflect disproportionate changes due to the impact of the pandemic on air travel, we have also provided analysis of certain revenue and expense line items to 2019 results where helpful to understand trends in our performance.

~~Operating Revenue~~

~~Passenger revenue~~. For the six months ended June 30, 2021, passenger revenue increased 41.4 percent compared with the same period in 2020. Revenue in the second quarter 2021 was favorably impacted by estimates of breakage on vouchers whose expiration was extended as a result of the pandemic. The increase is primarily attributable to the effects of COVID-19 in 2020, where a significant decline in passenger demand impacted operations from March to June 2020. Scheduled service passengers and base fares in the current periodnone are ~~up 35.8 percent and 6.4 percent, respectively, over the same period in 2020.~~

As compared to the same period in 2019, passenger revenue decreased by 19.9 percent, as a 24.1 percent decline in scheduled service load factor was partially offset by a 3.9 percent increase in capacity.

~~Air ancillary average fare for the six months ended June 30, 2021 increased by 1.7 percent when compared to 2020 and 6.5 percent when compared to 2019.~~

~~Third party products revenue.~~ Third party products revenue for the six months ended June 30, 2021 increased 50.0 percent over the same period in 2020 and 3.6 percent when compared to 2019. The increase from 2020 is primarily the result of greater travel demand for rental cars and hotels than the early part of the pandemic. The increase from 2019 is attributable to growth in our co-branded credit card revenues.

~~Fixed fee contract revenue.~~ Fixed fee contract revenue for the six months ended June 30, 2021 increased 5.5 percent compared with the same period in 2020. This is primarily due to an 11.2 percent increase in related departures due to increased charter activity. During the six months ended June 30, 2021, ad-hoc charters increased by 217.6 percent over 2020 levels and we benefited from March Madness flying which did not occur in the prior year due to the pandemic.

Fixed fee contract revenue for the six months ended June 30, 2021 as compared to the same period in 2019, decreased by 44.4 percent due to continuing depressed demand for group charters since the onset of the pandemic.

~~Other revenue.~~ Other revenue decreased by 84.2 percent for the six months ended June 30, 2021, when compared to the same period in 2020. The decrease is due to decreased activity in the non-airline subsidiaries, including the closure of the family entertainment centers.

~~Operating Expenses~~

~~The following table presents unit costs on a per ASM basis, defined as Operating CASM, for the indicated periods:~~
Six Months Ended June 30, Percent Change
Unitized costs (in cents) 2021 2020 2019 YoY Yo2Y
Salary and benefits 2.79 3.30 2.79 (15.45) % — %
Aircraft fuel 2.23 1.85 2.63 20.54 (15.21)
Station operations 1.17 1.09 1.02 7.34 14.71
Depreciation and amortization 1.02 1.38 0.89 (26.09) 14.61
Maintenance and repairs 0.53 0.55 0.52 (3.64) 1.92
Sales and marketing 0.34 0.44 0.50 (22.73) (32.00)
Aircraft lease rentals 0.11 0.04 — 175.00 NM
Other 0.39 0.80 0.56 (51.25) (30.36)
Payroll Support Programs grant recognition (1.78) (1.19) — 49.58 NM
Operating Special charges 0.03 3.93 — (99.24) NM
CASM 6.83 12.19 8.91 (43.97) (23.34)
Operating CASM, excluding fuel 4.60 10.34 6.28 (55.51) (26.75)

~~Salary and benefits expense.~~ Salary and benefits expense increased $32.4 million, or 15.6 percent, for the six months ended June 30, 2021 compared to the same period in 2020. Although the average number of full-time equivalent employees decreasedindividually significant.

by 5.6 percent year over year, expense increased due to temporary voluntary leave programs offered to employees, voluntary pay reductions, and suspension of the bonus accrual during the six months ended June 30, 2020.

Salary and benefits expense increased by $6.9 million or 2.9% as compared to the six months ended June 30, 2019. Although the average number of full time equivalent employees decreased by 1.8 percent, overall expense increased due to annual increases in crew pay.

~~Aircraft fuel expense.~~ Aircraft fuel expense increased $76.1 million, or 65.5 percent, for the six months ended June 30, 2021 compared to the same period in 2020. This is primarily due to the recovery from the COVID-19 pandemic as departures increased by 38.1 percent resulting in an increase of 36.7 percent in fuel gallons consumed. The increase is also partially driven by an increase in fuel expense per ASM of 20.5 percent due to an increase in fuel prices.

Aircraft fuel expense decreased by $27.4 million or 12.5 percent for the six months ended June 30, 2021 compared to the same period in 2019. This is primarily driven by a decrease in average fuel cost per gallon of 10.6 percent.

~~Station operations expense.~~ Station operations expense for the six months ended June 30, 2021 increased $31.9 million or 46.6 percent primarily due to a 61.8 percent increase in airport and landing fees as a result of an increase in travel demand and

~~a 38.1 percent increase in departures.~~

As compared to the six month period ended June 30, 2019, station operations expense increased by $15.5 million or 18.2 percent due to a 2.6 percent increase in departures, increased costs associated with irregular operations and airports fees.

~~Maintenance and repairs expense~~. Maintenance and repairs expense for the six months ended June 30, 2021 increased by $11.1 million or 32.0 percent compared to the same period in 2020. This is primarily due to the increase in aircraft utilization and incremental costs preparing our fleet to operate at full capacity again.

~~As compared to the six months ended June 30, 2019, maintenance and repairs expense increased by $2.3 million or 5.2 percent as the number of aircraft in service increased by 20.9 percent.~~

~~Depreciation and amortization expense~~. Depreciation and amortization expense for the six months ended June 30, 2021 remained relatively flat as compared to the same period in 2020. Although the average number of aircraft in service increased by 8.0 percent, a majority of the increase was due to aircraft on operating lease.

~~When compared to the six months ended June 30, 2019, depreciation and amortization expense increased 17.4 percent as the average number of aircraft in service during the period increased 20.9 percent.~~

~~Sales and marketing expense.~~ Sales and marketing expense for the six months ended June 30, 2021 increased 6.9 percent compared to the same period in 2020. In 2020, advertising spend was intentionally pulled back beginning in March due to the pandemic. There was also an increase in net credit card fees in the current year as a result of a 41.4 percent increase in passenger revenue year over year.

~~As compared to the six months ended June 30, 2019, sales and marketing expense decreased by 29.5 percent due to our efforts to more adeptly deploy advertising spend.~~

~~Other expense.~~ ~~Other expense decreased by $17.2 million or 34.1 percent year over year, due to decreased activity in our non-airline subsidiaries.~~

~~Payroll Support Programs grant recognition.~~ We received a total of $203.9 million during the six months ended June 30, 2021 through the payroll support programs. The direct grants were recognized as a credit to operating expense on our statement of income, over the periods for which the funds were intended to compensate.

During 2020, we received $176.9 million in funds through the payroll support program and recognized a $74.5 million offset to operating expense on our statement of income for the six months ended June 30, 2020.

~~Special charges.~~ Special charges of $2.6 million were recorded within operating expenses for the six months ended June 30, 2021. The special charges relate to expenses that were unique and specific to COVID-19. This includes accelerated depreciation on four airframes and six engines resulting from an accelerated retirement plan, a loss on the sale-leaseback transaction we would not likely have transacted absent cash conservation efforts as a result of COVID, salary and benefits expense, and other various expenses during the six months ended June 30, 2020.

~~Non-operating special charges.~~ Special charges of $26.6 million were recorded within non-operating expenses for the six months ended June 30, 2020. We did not have any special charges for the same period in 2021. Of these special charges in 2020, $19.8 million relates to the termination of the loan agreement with Sixth Street Partners (formerly TSSP) intended to finance the development of Sunseeker Resorts Charlotte Harbor. The remaining $6.8 million relates to impairment charges for Sunseeker Resort during the first quarter 2020. These charges were reclassified from operating special expense to non-operating special expense for the six months ended June 30, 2020.

~~Income Tax Expense~~

We recorded a $29.3 million tax expense (22.4 percent effective tax rate) compared to a ($151.0 million) tax benefit (54.5 percent effective tax rate) for the six months ended June 30, 2021 and 2020 respectively. The 22.4 percent effective tax rate for the six months ended June 30, 2021 differed from the statutory federal income tax rate of 21.0 percent primarily due to state income taxes and the impact of ASU 2016-09 related to share-based payments. The 54.5 percent effective tax rate for the six months ended June 30, 2020 differed from the statutory federal income tax rate of 21.0 percent primarily due to the tax accounting impact of the CARES Act which includes a $39.6 million discrete federal income tax benefit related to the full utilization of 2018 and 2019 net operating losses as well as the ability to carryback the 2020 net operating loss at a 35.0 percent rate applicable in earlier years.

Comparative Consolidated Operating Statistics

The following tables set forth our operating statistics for the periods indicated:


		Three Months Ended June 30,						Percent Change (1)			Three Months Ended March 31,						Percent Change (1)
		2021		2020		2019		YoY	Yo2Y		2022		2021		2019		YoY		Yo3Y
Operating statistics (unaudited):	Operating statistics (unaudited):									Operating statistics (unaudited):
Total system statistics:	Total system statistics:									Total system statistics:
Passengers	Passengers	3,699,217		1,273,258		4,169,536		190.5	(11.3)	Passengers	3,734,262		2,334,503		3,450,278		60.0	%	8.2	%

Available seat miles (ASMs) (thousands)	Available seat miles (ASMs) (thousands)	4,594,542		2,220,755		4,447,066		106.9	3.3	Available seat miles (ASMs) (thousands)	4,620,144		4,013,989		3,910,239		15.1		18.2

Operating expense per ASM (CASM) (cents)	Operating expense per ASM (CASM) (cents)	7.26		11.10		8.63		(34.6)	(15.9)	Operating expense per ASM (CASM) (cents)	10.67		6.34		9.22		68.3		15.7
Fuel expense per ASM (cents)	Fuel expense per ASM (cents)	2.38		1.23		2.70		93.5	(11.9)	Fuel expense per ASM (cents)	3.55		2.06		2.55		72.3		39.2

Operating CASM, excluding fuel (cents)	Operating CASM, excluding fuel (cents)	4.88		9.87		5.93		(50.6)	(17.7)	Operating CASM, excluding fuel (cents)	7.12		4.28		6.67		66.4		6.7

ASMs per gallon of fuel	ASMs per gallon of fuel	84.8		90.0		82.3		(5.8)	3.0	ASMs per gallon of fuel	86.5		90.4		84.1		(4.3)		2.9
Departures	Departures	31,507		15,089		30,547		108.8	3.1	Departures	28,494		25,684		25,200		10.9		13.1
Block hours	Block hours	69,809		32,989		68,332		111.6	2.2	Block hours	69,655		60,373		59,819		15.4		16.4
Average stage length (miles)	Average stage length (miles)	838		850		853		(1.4)	(1.8)	Average stage length (miles)	920		898		904		2.4		1.8
Average number of operating aircraft during period	Average number of operating aircraft during period	101.8		90.7		85.0		12.2	19.8	Average number of operating aircraft during period	109.5		97.3		79.6		12.5		37.6
Average block hours per aircraft per day	Average block hours per aircraft per day	7.5		3.8		8.8		97.4	(14.8)	Average block hours per aircraft per day	7.1		7.4		8.3		(4.1)		(14.5)
Full-time equivalent employees at end of period	Full-time equivalent employees at end of period	4,104		4,349		4,179		(5.6)	(1.8)	Full-time equivalent employees at end of period	4,728		3,998		4,067		18.3		16.3
Fuel gallons consumed (thousands)	Fuel gallons consumed (thousands)	54,188		24,664		54,064		119.7	0.2	Fuel gallons consumed (thousands)	53,438		44,426		46,474		20.3		15.0
Average fuel cost per gallon	Average fuel cost per gallon	$	2.02	$	1.11	$	2.22	82.0	(9.0)	Average fuel cost per gallon	$	3.07	$	1.86	$	2.14	65.1		43.5


Scheduled service statistics:	Scheduled service statistics:												Scheduled service statistics:
Passengers	Passengers	3,680,254			1,266,077			4,131,855			190.7	(10.9)	Passengers	3,709,104			2,323,302			3,421,538			59.6	8.4
Revenue passenger miles (RPMs) (thousands)	Revenue passenger miles (RPMs) (thousands)	3,188,215			1,107,534			3,603,076			187.9	(11.5)	Revenue passenger miles (RPMs) (thousands)	3,558,045			2,166,417			3,191,045			64.2	11.5
Available seat miles (ASMs) (thousands)	Available seat miles (ASMs) (thousands)	4,505,786			2,174,683			4,311,182			107.2	4.5	Available seat miles (ASMs) (thousands)	4,512,315			3,921,090			3,802,132			15.1	18.7
Load factor	Load factor	70.8		%	50.9		%	83.6		%	19.9	(12.8)	Load factor	78.9		%	55.3		%	83.9		%	23.6	(5.0)
Departures	Departures	30,763			14,683			29,567			109.5	4.0	Departures	27,637			24,947			24,344			10.8	13.5
Block hours	Block hours	68,334			32,248			66,135			111.9	3.3	Block hours	67,829			58,851			57,963			15.3	17.0
Total passenger revenue per ASM (TRASM) (cents)(2)		10.36			5.75			10.97			80.2	(5.6)
Average fare - scheduled service(3)		$	62.58		$	40.46		$	58.39		54.7	7.2
Average fare - air-related charges(3)		$	58.00		$	51.57		$	51.68		12.5	12.2
Average seats per departure													Average seats per departure	175.6			173.6			171.4			1.2	2.5
Yield (cents) (2)													Yield (cents) (2)	6.59			6.26			7.47			5.3	(11.8)
Total passenger revenue per ASM (TRASM) (cents)(3)													Total passenger revenue per ASM (TRASM) (cents)(3)	10.78			6.89			11.50			56.5	(6.3)
Average fare - scheduled service(4)													Average fare - scheduled service(4)	$	63.22		$	58.38		$	69.64		8.3	(9.2)
Average fare - air-related charges(4)													Average fare - air-related charges(4)	$	61.87		$	52.11		$	53.10		18.7	16.5
Average fare - third party products	Average fare - third party products	$	6.25		$	6.67		$	4.40		(6.3)	42.0	Average fare - third party products	$	6.06		$	5.86		$	5.01		3.4	21.0
Average fare - total	Average fare - total	$	126.82		$	98.70		$	114.47		28.5	10.8	Average fare - total	$	131.15		$	116.35		$	127.75		12.7	2.7
Average stage length (miles)	Average stage length (miles)	842			855			853			(1.5)	(1.3)	Average stage length (miles)	926			902			908			2.7	2.0
Fuel gallons consumed (thousands)	Fuel gallons consumed (thousands)	53,022			24,124			52,327			119.8	1.3	Fuel gallons consumed (thousands)	52,110			43,306			45,068			20.3	15.6
Average fuel cost per gallon	Average fuel cost per gallon	$	2.01		$	1.08		$	2.22		86.1	(9.5)	Average fuel cost per gallon	$	3.01		$	1.82		$	2.13		65.4	41.3
Rental car days sold	Rental car days sold	404,760			135,536			540,960			198.6	(25.2)	Rental car days sold	367,094			275,584			471,598			33.2	(22.2)
Hotel room nights sold	Hotel room nights sold	72,701			12,772			114,191			469.2	(36.3)	Hotel room nights sold	72,539			56,208			105,015			29.1	(30.9)
Percent of sales through website during period	Percent of sales through website during period	94.3		%	93.8		%	93.5		%	0.5	0.8	Percent of sales through website during period	96.0		%	93.3		%	93.6		%	2.7	2.4

(1) Except load factor and percent of sales through website during period, which are presented as a percentage point change.

(2) Defined as scheduled service revenue divided by revenue passenger miles.

(3) Various components of this measure do not have a direct correlation to ASMs. This measure is provided on a per ASM basis so as to facilitate comparison with airlines reporting revenues on a per ASM basis.

~~(3)~~(4) Reflects division of passenger revenue between scheduled service (base fare) and air-related charges in our booking path.

~~Comparative Consolidated Operating Statistics~~

~~The following tables set forth our operating statistics for the periods indicated:~~

Six Months Ended June 30,
Percent Change (1)
2021 2020 2019 YoY Yo2Y
Operating statistics (unaudited):
Total system statistics:
Passengers 6,033,720 4,448,708 7,619,814 35.6 (20.8)
Available seat miles (ASMs) (thousands) 8,608,531 6,288,427 8,357,304 36.9 3.0
Operating expense per ASM (CASM) (cents) 6.83 12.19 8.90 (44.0) (23.3)
Fuel expense per ASM (cents) 2.23 1.85 2.63 20.5 (15.2)
Operating CASM, excluding fuel (cents) 4.60 10.35 6.27 (55.6) (26.6)
ASMs per gallon of fuel 87.3 87.2 83.1 0.1 5.0
Departures 57,191 41,401 55,747 38.1 2.6
Block hours 130,183 95,112 128,151 36.9 1.6
Average stage length (miles) 865 879 876 (1.6) (1.3)
Average number of operating aircraft during period 99.5 92.1 82.3 8.0 20.9
Average block hours per aircraft per day 7.2 5.5 8.6 30.9 (16.3)
Full-time equivalent employees at end of period 4,104 4,349 4,179 (5.6) (1.8)
Fuel gallons consumed (thousands) 98,614 72,143 100,537 36.7 (1.9)
Average fuel cost per gallon $ 1.95 $ 1.61 $ 2.18 21.1 (10.6)

Scheduled service statistics:
Passengers 6,003,556 4,420,683 7,553,393 35.8 (20.5)
Revenue passenger miles (RPMs) (thousands) 5,354,632 4,033,017 6,794,122 32.8 (21.2)
Available seat miles (ASMs) (thousands) 8,426,876 6,138,692 8,113,315 37.3 3.9
Load factor 63.5 % 65.7 % 83.7 % (2.2) (24.1)
Departures 55,710 40,167 53,911 38.7 3.3
Block hours 127,185 92,594 124,098 37.4 2.5
Total passenger revenue per ASM (TRASM) (cents)(2)
8.75 8.47 11.22 — (22.0)
Average fare - scheduled service(3)
$ 60.95 $ 57.27 $ 63.49 6.4 (4.0)
Average fare - air-related charges(3)
$ 55.72 $ 54.80 $ 52.32 1.7 6.5
Average fare - third party products $ 6.10 $ 5.52 $ 4.68 10.5 30.3
Average fare - total $ 122.77 $ 117.59 $ 120.49 4.4 1.9
Average stage length (miles) 869 883 878 (1.6) (1.0)
Fuel gallons consumed (thousands) 96,329 70,229 97,395 37.2 (1.1)
Average fuel cost per gallon $ 1.92 $ 1.60 $ 2.18 20.0 (11.9)
Rental car days sold 680,344 616,582 1,012,558 10.3 (32.8)
Hotel room nights sold 128,909 104,776 219,206 23.0 (41.2)
Percent of sales through website during period 93.8 % 93.7 % 93.5 % 0.1 0.3

~~(1) Except load factor and percent of sales through website during period, which are presented as a percentage point change.~~

(2) Various components of this measure do not have a direct correlation to ASMs. This measure is provided on a per ASM basis so as to facilitate comparison with airlines reporting revenues on a per ASM basis.

~~(3) Reflects division of passenger revenue between scheduled service (base fare) and air-related charges in our booking path.~~

3229

LIQUIDITY AND CAPITAL RESOURCES

Current liquidity

Cash, cash equivalents and investment securities (short-term and long-term) increased to ~~$1.2~~$1.21 billion at ~~June 30, 2021,~~March 31, 2022, from ~~$685.2 million~~$1.19 billion at December 31, ~~2020.~~2021. Investment securities represent highly liquid marketable securities which are available-for-sale.

Restricted cash represents escrowed funds under fixed fee contracts, escrowed project funds and cash collateral against letters of credit required by hotel properties for guaranteed room availability, airports and certain other parties. Under our fixed fee flying contracts, we require our customers to prepay for flights to be provided by us. The prepayments are escrowed until the flight is completed and are recorded as restricted cash with a corresponding amount reflected as air traffic liability.

~~During the six months ended June 30, 2021, we received a total of $203.9 million in assistance through the payroll support programs.~~

We suspended share repurchases and our quarterly cash dividend, as part of cash conservation efforts in response to the effects of COVID-19 on our business. In connection with our receipt of financial support under the payroll support program, we agreed not to repurchase shares or pay cash dividends through September 30, 2022.

We believe we have more than adequate liquidity resources through our cash balances, operating cash flows ~~borrowings~~ and ~~expected tax refunds,~~borrowings, to meet our future contractual obligations. We will continue to consider raising funds through debt financing on an opportunistic basis.

Debt

Our debt and finance lease obligations balance, without reduction for related issuance costs, ~~decreased~~increased from ~~$1.68~~$1.77 billion as of December 31, ~~2020~~2021 to ~~$1.60~~$1.80 billion as of ~~June 30, 2021.~~March 31, 2022. During the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, we ~~borrowed $122.1~~entered into finance leases for $68.2 million and we made principal payments of ~~$199.6 million, including $53.9 million on our senior secured revolving credit facility that matured on March 31, 2021 and a $57.0 million prepayment of debt secured by aircraft.~~

Despite substantially lower revenues caused by the pandemic compared to pre-pandemic periods, our total debt and finance lease obligations declined by 4.6 percent from December 31, 2020 to June 30, 2021.$37.3 million.

Sources and Uses of Cash

Operating Activities. Operating cash inflows are primarily derived from providing air transportation and related ancillary products and services to customers. During the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, our operating activities provided ~~$405.0~~$176.0 million of cash compared to ~~$276.7~~$168.0 million during the same period ~~of 2020.~~2021. This change is mostly attributable to a ~~$228.0~~$49.6 million larger increase in air traffic liability which more than offset a $14.8 million decrease in net ~~income offset by changes in special charges and current assets and liability accounts.~~income.

Investing Activities. Cash used in investing activities was ~~$369.4~~$109.8 million during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 compared to ~~$158.6~~$35.7 million provided from investing activities for the same period in ~~2020.~~2021. The change is due to ~~an increase of $199.1~~a $96.0 million ~~of purchases~~decrease in proceeds from maturities of investment securities, net of ~~maturities,~~purchases, and ~~a decrease of $48.0~~$46.7 million related to ~~proceeds from sale-leaseback transactions during the six months ended June 30, 2020.~~aircraft pre-delivery deposits in first quarter 2022. Purchases of property and equipment were ~~$36.2 million less in the current~~relatively flat year over year.

Financing Activities. Cash ~~provided~~used by financing activities for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 was ~~$245.5~~$37.6 million, compared to ~~$32.8~~$47.2 million for the same period in ~~2020.~~2021. The ~~year-over-year~~ change ~~is mostly due to the equity offering completed on May 10, 2021 which~~ resulted ~~in the receipt of $335.1 million in cash. This was offset by the net effect of debt activity, as~~from principal payments ~~and debt issuance costs exceeded debt proceeds by $93.6~~of $37.3 million during the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, compared to ~~$74.7~~$46.5 million of ~~debt proceeds (net of related costs)~~principal payments in excess of ~~principal payments~~debt proceeds during the same period in 2020. Additionally, there were no share repurchases or dividends paid in the first half of 2021, where there was $33.8 million and $11.4 million of such activity, respectively, in the same period of 2020.

2021.

3330

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

We have made forward-looking statements in this quarterly report on Form 10-Q, and in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” that are based on our management’s beliefs and assumptions, and on information currently available to our management. Forward-looking statements include our statements regarding number of contracted aircraft to be placed in service in the future, the ~~development~~timing of aircraft deliveries and ~~financing~~retirements, the implementation of a joint alliance with VivaAerobus, the development of our Sunseeker Resort, as well as other information concerning future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, the effects of future regulation and the effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words "believe," "expect," "anticipate," "intend," "plan," "estimate," “project,” “hope” or similar expressions.

Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in the forward-looking statements. Important risk factors that could cause our results to differ materially from those expressed in the forward-looking statements may be found in our periodic reports filed with the Securities and Exchange Commission at www.sec.gov. These risk factors include, without limitation, the impact and duration of the COVID-19 pandemic on airline travel and the economy, liquidity issues resulting from the effect of the COVID-19 pandemic on our business, restrictions imposed on us a result of accepting government grants under the ~~Payroll Support Programs,~~government payroll support programs, an accident involving, or problems with, our aircraft, public perception of our safety, our reliance on our automated systems, our reliance on third parties to deliver aircraft under contract to us on a timely basis, risk of breach of security of personal data, volatility of fuel costs, labor issues and costs, the ability to obtain regulatory approvals as needed, the effect of economic conditions on leisure travel, debt covenants and balances, the ability to finance aircraft to be acquired, the ability to obtain necessary U.S. and Mexican government approvals to implement the announced alliance with VivaAerobus and to otherwise prepare to offer international service, terrorist attacks, risks inherent to airlines, our competitive environment, our reliance on third parties who provide facilities or services to us, the possible loss of key personnel, economic and other conditions in markets in which we operate, the ability to successfully develop ~~and finance~~ a resort in Southwest Florida, governmental regulation, increases in maintenance costs and cyclical and seasonal fluctuations in our operating results.

Any forward-looking statements are based on information available to us today and we undertake no obligation to publicly update any forward-looking statements, whether as a result of future events, new information or otherwise.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There have been no material changes to our critical accounting estimates during the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022. For information regarding our critical accounting policies and estimates, see disclosures in the Consolidated Financial Statements and accompanying notes contained in our ~~2020~~2021 Form 10-K, and in Note 1 of Notes to Consolidated Financial Statements (unaudited).

3431

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are subject to certain market risks, including commodity prices (specifically aircraft fuel). The adverse effects of changes in these markets could pose potential losses as discussed below. The sensitivity analysis provided does not consider the effects that such adverse changes may have on overall economic activity, nor does it consider additional actions we may take to mitigate our exposure to such changes. Actual results may differ.

Aircraft Fuel

Our results of operations can be significantly impacted by changes in the price and availability of aircraft fuel. Aircraft fuel expense for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 represented ~~32.7%~~33.3 percent of our total operating expenses. Increases in fuel prices, or a shortage of supply, could have a material impact on our operations and operating results. Based on our fuel consumption for the three ~~and six~~ months ended ~~June 30, 2021,~~March 31, 2022, a hypothetical ten percent increase in the average price per gallon of fuel would have increased fuel expense by approximately ~~$10.8 million and $19.7 million respectively.~~$16.5 million. We have not hedged fuel price risk for many years.

Interest Rates

As of ~~June 30, 2021,~~March 31, 2022, we had ~~$0.98~~$0.90 billion of variable-rate debt, including current maturities and without reduction for ~~$15.2~~$11.0 million in related costs. A hypothetical 100 basis point change in interest rates would have affected interest expense on variable rate debt by approximately ~~$5.3~~$2.2 million for the ~~six~~three months ended ~~June 30, 2021.~~

March 31, 2022.

3532

Item 4. Controls and Procedures

As of ~~June 30, 2021,~~March 31, 2022, under the supervision and with the participation of our management, including our chief executive officer ("CEO") and chief financial officer (“CFO”), we evaluated the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, or the “Exchange Act”) as of the end of the period covered by this report. Based on that evaluation, management, including our CEO and CFO, has concluded that our disclosure controls and procedures are designed, and are effective, to give reasonable assurance that the information we are required to disclose is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management, including the CEO and the CFO, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting that occurred during the quarter ending ~~June 30, 2021,~~March 31, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

3633

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are subject to certain legal and administrative actions we consider routine to our business activities. We believe the ultimate outcome of any pending legal or administrative matters will not have a material adverse impact on our financial position, liquidity or results of operations.

Item 1A. Risk Factors

We have evaluated our risk factors and determined there are no changes to those set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 and filed with the Commission on March 1, ~~2021.~~2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Our Repurchases of Equity Securities

(a) Not applicable

(b) Not applicable

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

None

4234

Item 6. Exhibits


3.1			Articles of Incorporation ~~(1)~~of Allegiant Travel Company. (Incorporated by reference to Exhibit 3.1 to Registration Statement No. 333-134145 filed with the Commission on July 6, 2006).
3.2			Bylaws of ~~the~~Allegiant Travel Company as amended on ~~May 6, 2020 (2)~~
12			~~Calculation of Ratio of Earnings~~October 18, 2021. (Incorporated by reference to ~~Fixed Charges of Allegiant Travel Company~~Exhibit 3.1 to the Current Report on Form 8-K, filed with the Commission on October 18, 2021).
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.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

~~(1) Incorporated by reference to Exhibit filed with Registration Statement #333-134145 filed by the Company with the Commission and amendments thereto.~~

~~(2) Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the Commission on May 12, 2020.~~

4335

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		ALLEGIANT TRAVEL COMPANY


Date:	~~July 30, 2021~~May 5, 2022	By:	/s/ Gregory Anderson
		Gregory Anderson, as duly authorized officer of the Company (Chief Financial Officer) and as Principal Financial Officer

4436


	Three Months Ended June 30, 2021
	Common stock outstanding	Par value		Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings		Treasury shares		Total shareholders' equity
Balance at March 31, 2021	16,416	$	23	$	333,147	$	1	$	1,022,491	$	(646,008)	$	709,654
Share-based compensation	1	—		3,504		—		—		—		3,504
Issuance of common stock, net of forfeitures	1,553	2		335,137		—		—		—		335,139
Stock issued under employee stock purchase plan	16	—		—		—		—		3,831		3,831
Other comprehensive income	—	—		—		(126)		—		—		(126)
Payroll Support Programs warrant issuance	—	—		105		—		—		—		105
Net income	—	—		—		—		95,027		—		95,027
Balance at June 30, 2021	17,986	$	25	$	671,893	$	(125)	$	1,117,518	$	(642,177)	$	1,147,134


	Six Months Ended June 30, 2021
	Common stock outstanding	Par value		Additional paid-in capital		Accumulated other comprehensive income (loss)			Retained earnings		Treasury shares		Total shareholders' equity
Balance at December 31, 2020	16,405	$	23	$	329,753	$	(27)	0	$	1,015,622	$	(646,008)	$	699,363
Share-based compensation	12	—		6,898		—			—		—		6,898
Issuance of common stock, net of forfeitures	1,553	2		335,137		—			—		—		335,139
Stock issued under employee stock purchase plan	16	—		—		—			—		3,831		3,831
Other comprehensive loss	—	—		—		(98)			—		—		(98)
Payroll Support Programs warrant issuance	—	—		105		—			—		—		105
Net income	—	—		—		—			101,896		—		101,896
Balance at June 30, 2021	17,986	$	25	$	671,893	$	(125)		$	1,117,518	$	(642,177)	$	1,147,134


	Three Months Ended June 30, 2020
	Common stock outstanding	Par value		Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings		Treasury shares		Total shareholders' equity
Balance at March 31, 2020	16,199	$	23	$	295,267	$	(624)	$	1,166,588	$	(651,352)	$	809,902
Share-based compensation	—	—		14,409		—		—		—		14,409
Shares issued under employee stock purchase plan	41	—		—		—		—		3,234		3,234
Cash dividends, $0.70 per share	—	—		—		—		117		—		117
Other comprehensive income	—	—		—		1,049		—		—		1,049
Payroll Support Programs warrant issuance	—	—		952		—		—		—		952
Net loss	—	—		—		—		(93,103)		—		$	(93,103)
Balance at June 30, 2020	16,240	$	23	$	310,628	$	425	$	1,073,602	$	(648,118)	$	736,560


	Six Months Ended June 30, 2020
	Common stock outstanding	Par value		Additional paid-in capital		Accumulated other comprehensive income		Retained earnings		Treasury shares		Total shareholders' equity
Balance at December 31, 2019	16,303	$	23	$	289,933	$	98	$	1,211,076	$	(617,579)	$	883,551
Share-based compensation	113	—		19,743		—		—		—		19,743
Shares repurchased by the Company and held as treasury shares	(217)	—		—		—		—		(33,773)		(33,773)
Stock issued under employee stock purchase plan	41	—		—		—		—		3,234		3,234
Cash dividends, $0.70 per share	—	—		—		—		(11,361)		—		(11,361)
Other comprehensive income	—	—		—		327		—		—		327
Payroll Support Programs warrant issuance	—	—		952		—		—		—		952
Net loss	—	—		—		—		(126,113)		—		(126,113)
Balance at June 30, 2020	16,240	$	23	$	310,628	$	425	$	1,073,602	$	(648,118)	$	736,560


(in thousands)	Classification on the Balance Sheet	June 30, 2021		December 31, 2020
Assets
Operating lease assets(1)	Operating lease right-of-use assets	$	128,537	$	115,911
Finance lease assets(2)	Property and equipment, net	239,019		133,175
Total lease assets		$	367,556	$	249,086

Liabilities
Current
Operating(1)	Current operating lease liabilities	$	16,940	$	14,313
Finance(2)	Current maturities of long-term debt and finance lease obligations	13,835		9,767
Noncurrent
Operating(1)	Noncurrent operating lease liabilities	114,761		102,289
Finance(2)	Long-term debt and finance lease obligations	225,039		117,060
Total lease liabilities		$	370,575	$	243,429


Scheduled service statistics:
Passengers	6,003,556			4,420,683			7,553,393			35.8	(20.5)
Revenue passenger miles (RPMs) (thousands)	5,354,632			4,033,017			6,794,122			32.8	(21.2)
Available seat miles (ASMs) (thousands)	8,426,876			6,138,692			8,113,315			37.3	3.9
Load factor	63.5		%	65.7		%	83.7		%	(2.2)	(24.1)
Departures	55,710			40,167			53,911			38.7	3.3
Block hours	127,185			92,594			124,098			37.4	2.5
Total passenger revenue per ASM (TRASM) (cents)(2)	8.75			8.47			11.22			—	(22.0)
Average fare - scheduled service(3)	$	60.95		$	57.27		$	63.49		6.4	(4.0)
Average fare - air-related charges(3)	$	55.72		$	54.80		$	52.32		1.7	6.5
Average fare - third party products	$	6.10		$	5.52		$	4.68		10.5	30.3
Average fare - total	$	122.77		$	117.59		$	120.49		4.4	1.9
Average stage length (miles)	869			883			878			(1.6)	(1.0)
Fuel gallons consumed (thousands)	96,329			70,229			97,395			37.2	(1.1)
Average fuel cost per gallon	$	1.92		$	1.60		$	2.18		20.0	(11.9)
Rental car days sold	680,344			616,582			1,012,558			10.3	(32.8)
Hotel room nights sold	128,909			104,776			219,206			23.0	(41.2)
Percent of sales through website during period	93.8		%	93.7		%	93.5		%	0.1	0.3