Allegiant Travel (NASDAQ:ALGT) said its fourth-quarter 2025 results exceeded its original expectations, supported by strong leisure demand, disciplined cost performance, and continued progress on operational and strategic initiatives. Management also reaffirmed plans for a proposed acquisition of Sun Country Airlines, while emphasizing that its 2026 outlook excludes any impact from the transaction.
Fourth-quarter performance and operating reliability
CEO Greg Anderson said Allegiant ended 2025 with “strong momentum,” noting that fourth-quarter TRASM declined 2.6% despite 10.5% capacity growth. While fuel came in “slightly higher than expected,” Anderson said cost execution helped the company deliver a 12.9% adjusted operating margin, which he described as among the best in the industry.
Revenue trends, demand, and capacity plans
Chief Commercial Officer Drew Wells reported fourth-quarter total airline revenue of about $656 million, up 7.6% versus the prior-year quarter and a fourth-quarter record. For the full year, Wells said Allegiant generated more than $2.5 billion in total airline revenue, up roughly 4.3% and also a record for the company.
Wells said scheduled service ASMs rose 10.5% year-over-year in the quarter, while load factor improved by about one point compared to the prior year. He described the winter holiday period as a standout, with unit revenues slightly higher year-over-year around Thanksgiving and modestly higher around Christmas and New Year’s, while also “notably shifted into January,” benefiting early 2026 trends.
Management repeatedly pointed to an “exceptional” January demand environment. In response to analyst questions, Wells said website visitation was stronger than in prior years and that improved demand manifested in both bookings and “some pricing capabilities.” However, he cautioned that visibility into summer remains limited given booking curves and recent variability in industry airfare trends.
On 2026 capacity, Wells outlined a down modestly year-over-year ASM plan. First-quarter ASMs are expected to be down about 5.7%, with the second quarter “slightly more,” which he attributed to fleet scheduling and the Easter holiday shifting earlier. He said growth is expected to ramp in the third and fourth quarters, resulting in a full-year expectation of down 0.5% versus 2025. Wells added that 2026 will bring a return to more new market flying, with about 10% of ASMs in the second and third quarters in their first 12 months of operation. He said 19 markets begin service in the first quarter and 20 more in the second quarter.
Wells also described a planning approach that concentrates flying on peak days while reducing some off-peak capacity. Anderson said this “helpful backdrop” is contributing to demand and yield performance.
Fleet, MAX integration, and fuel efficiency benefits
Management emphasized progress integrating Boeing 737 MAX aircraft. Anderson said Allegiant invested in pilot training and revamped maintenance operations after receiving its first MAX in late 2024. He said the MAX is delivering roughly a 20% fuel burn advantage versus the A320 and is expected to become a “meaningful tailwind for margins” as it represents a larger share of flying.
Wells provided additional color, saying that when comparing top-performing A320 schedules to MAX flying, the company is producing about 20% better peak-day economics (measured as revenue per hour less fuel expense per hour), and nearly 10% better economics on off-peak days. He added that Allegiant flew MAX aircraft about 30% more than comparable Airbus tails in the fourth quarter. He said the company shifted MAX deployment around mid-November away from high-cycle flying used for pilot transition training toward longer-haul, more commercially driven flying.
Neal said Allegiant ended 2025 with 123 aircraft, including 16 737 MAX and 107 A320 family aircraft. For 2026, the company expects to take delivery of 11 MAX aircraft, with nine placed into service by year-end, while retiring nine A320 family aircraft—resulting in a flat fleet count. He said a modest delay of three aircraft will push entry into service “just after the start of our summer peak,” shaping the year’s capacity profile.
Financial results, balance sheet actions, and 2026 outlook
Neal said the airline segment produced fourth-quarter net income of $50.1 million, with airline-only earnings of $2.72 per share, ahead of guidance (which he said was $2 per share at the midpoint). He attributed the outperformance to lower-than-expected salaries and benefits, timing of certain maintenance expenses, and a stronger-than-expected revenue environment following the government shutdown.
For full-year 2025, Neal said consolidated net income was $70.3 million, or $3.80 per share. Airline-only earnings were $5.07 per share. He said the airline generated just over $143 million of EBITDA in the fourth quarter, for an EBITDA margin of nearly 22%.
On costs, Neal said fourth-quarter fuel averaged $2.61 per gallon. He highlighted a 2.6% year-over-year increase in ASMs per gallon, reflecting early benefits from MAX aircraft and LEAP engines. Fourth-quarter adjusted non-fuel unit costs were $0.0801, a 3.4% year-over-year improvement on 10.2% higher capacity. For the full year, non-fuel unit costs were down 6.1% despite reduced planned capacity growth, which Anderson also characterized as an industry-leading unit cost improvement.
Neal also detailed balance sheet actions following the sale of Sunseeker, which closed late in the third quarter. Allegiant ended the quarter with $1.1 billion of total available liquidity, including a $250 million revolver. During the quarter, the company repaid $259 million of debt, including $224 million in voluntary prepayments. Total debt at year-end was just under $1.8 billion, down from $2.1 billion at the end of the third quarter, and net leverage improved to 2.3 times.
For 2026, Neal guided to first-quarter EPS of about $3 at the midpoint, implying a 13.5% operating margin based on an assumed fuel cost of $2.60 per gallon. For the full year, Allegiant guided to EPS of at least $8, which Anderson said would be about a 60% increase year-over-year. Management repeatedly described the full-year outlook as conservative amid macro uncertainty, with Neal confirming that the guidance does not assume January’s strength persists throughout the year.
Capital spending is expected to rise in 2026. Neal estimated full-year 2026 capital expenditures of about $750 million, including $580 million of aircraft-related capex and $85 million in deferred heavy maintenance.
In discussing leverage, Neal said he has aimed to keep net leverage in a 2.0x to 2.5x range. He also noted considerations including potential refinancing of a bond maturing in the third quarter of 2027 and maintaining cash flexibility, including for a potential pilot retention bonus payout.
Sun Country acquisition, technology modernization, and loyalty initiatives
Anderson said Allegiant’s agreement to acquire Sun Country is intended to accelerate its goal of building a leading U.S. leisure airline. He cited cultural alignment, similar fleet types, minimal network overlap, and complementary technology platforms—including Navitaire—as factors that reduce integration risk. Neal said the company expects the deal to close in the back half of 2026 and that guidance excludes any impact from the proposed transaction.
On regulatory and shareholder processes, Anderson said Allegiant expects to file for shareholder vote and Hart-Scott-Rodino (HSR) review “within the coming weeks.” Regarding the cash consideration at closing, Neal said financing will depend on timing, and the company is evaluating refinancing options. He also pointed to more than $1 billion in unencumbered aircraft and engines as a source of flexibility, and said first-quarter cash balances were tracking ahead of schedule.
Management also discussed technology modernization. Anderson said the company completed a transition away from proprietary systems to more flexible platforms and is now focused on leveraging the “state-of-the-art technology stack” to enable new tools and capabilities. He cited recent winter storms as an example of improved customer communication and reaccommodation enabled by the updated systems.
Wells highlighted continued momentum in Allegiant’s co-brand credit card program with Bank of America, noting double-digit year-over-year growth in new card acquisition in four of the last five months and strong spend trends. He said Allegiant received about $140 million in remuneration in 2025, a modest year-over-year increase, and said the company is in “constructive discussions” with Bank of America on the next phase of the program.
About Allegiant Travel (NASDAQ:ALGT)
Allegiant Travel Company is a holding company that operates Allegiant Air, a low‐cost leisure airline offering scheduled and charter air service. The company focuses on connecting underserved secondary markets with popular vacation destinations across the United States. By targeting price‐sensitive leisure travelers, Allegiant Air operates a point‐to‐point network that avoids the traditional hub‐and‐spoke model, providing non‐stop flights from smaller cities to resort and entertainment hubs.
In addition to its core flight operations, Allegiant Travel Company offers packaged travel services that include hotel accommodations, rental cars and attraction tickets through its online portal.
