Allegiant Travel (ALGT) Posts Dismal February Traffic Data

With air-travel demand remaining suppressed due to the ongoing coronavirus pandemic, Allegiant Travel Company (NASDAQ:ALGT)’s ALGT traffic, measured in revenue passenger miles, decreased 43.3% year over year in February for scheduled service.

To compensate for the year-over-year weakness in demand, this Las Vegas, NV-based carrier is trimming capacity. Consequently, in February, scheduled capacity (measured in available seat miles) contracted 12.2%. With traffic declining more than the extent of capacity reduction, load factor (% of seats filled by passengers) fell 29 points year over year to 52.8%. Allegiant Travel’s monthly departures for scheduled service dropped 13.1%. Capacity for the total system (scheduled service and fixed fee contract) contracted 13% year over year in February. Systemwide average fuel cost for the month is estimated by the carrier to be $1.83 per gallon.

On an encouraging note, capacity for February 2021 increased 6% from the February 2019 levels as demand for air travel moderately increased, prompting the carrier to expand supply to meet the modest uptick in demand.

Allegiant Travel expects total revenues for the March quarter to decline 35-40% from the first-quarter 2019 levels. Capacity is projected to increase between 2% and 4.5%. The projection will however, “continue to refine as dictated by demand", per Drew Wells, the company’s senior vice president, revenues.

Zacks Rank & Stocks to Consider

Allegiant Travel currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Zacks Transportation sector are Kansas City Southern (NYSE:KSU) KSU, FedEx Corporation (NYSE:FDX) FDX and Herc Holdings (NYSE:HRI) HRI. While Kansas City Southern and FedEx carry a Zacks Rank #2 (Buy), Herc Holdings sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term expected earnings per share (three to five years) growth rate for Kansas City Southern, FedEx and Herc Holdings is pegged at 15%, 12% and 31.2%, respectively.

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