Key Takeaways:
Allegiant Travel Co. guided second-quarter adjusted earnings per share to at least $1.25 for the combined entity with Sun Country Airlines, reversing a prior forecast of a loss as fuel costs declined.
The improved outlook reflects the favorable demand environment at both airlines through the quarter and lower fuel expense during June, the company said. Average fuel cost per gallon is now expected at about $4.20, down from a prior view of $4.35. The Zacks consensus estimate had called for a loss of 54 cents per share.
Oil prices fell about 31% during the April-to-June period, with June alone seeing a 20% decline. Fuel represents a key input cost for airlines, and the drop provides meaningful margin relief. On a standalone basis, Allegiant now expects total revenue per available seat mile to increase more than 23% from a year earlier, exceeding its prior expectations.
The company also guided for a 20% effective tax rate and 23.5 million diluted weighted average shares outstanding for the quarter. The updated guidance incorporates the Sun Country acquisition, which closed on May 13, and reflects the combined company's operations from that date through June 30.
Shares of Allegiant closed at $117.60 on June 30, up 2.9%, after the announcement. The stock has gained about 15% year to date, outperforming the broader market as airline stocks have benefited from falling fuel prices and sustained travel demand.
The guidance raise shows management expects air-travel demand to remain strong while benefiting from lower fuel costs. Investors will watch the combined company's full Q2 results, due in the coming weeks, for further detail on margin performance and integration progress.
This article is for informational purposes only and does not constitute investment advice.
