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Allegiant Travel (NASDAQ:ALGT) took a dive late Monday as shares were weighed down by Q4 results and downbeat expectations for Q1 profits.
Shares closed 7.6% lower.
Special charges in the latest quarter resulted in a significant drop in operating income for the airline segment that crushed its operating margin to 6.6% from 15.1% in the same quarter last year and the consolidated operating margin to a razor thin 3.2%.
“While the team and I are proud of what we’ve accomplished this past year, we still have work to do to restore margins to historical levels. We are focused on returning to our long-term financial targets as we head into 2024,” said CEO Maurice Gallagher.
The airline’s accelerated depreciation on the revised fleet plan cost the company a special charge of $19.9M in Q4 versus a charge of just 100K last year. The carrier plans to retire all its 177-seater Airbus A320-200s by the end of 2025. The special charge left $20.6M in operating income in Q4 for the airline segment, down 77.6% from the previous year’s quarter, and a profit of $0.86 versus $3.04 a year ago.
On a consolidated basis (which includes the travel segment) Allegiant Travel (ALGT) operating income shrunk more than 88% to $10.6M resulting in an unadjusted loss per share of $0.13. Excluding these special charges, the company earned a profit of $0.11 per share, down 96.3% from a year ago, but better than Street estimates for a loss of $0.20.
For Q1 on a consolidated basis, the company expects operating margin of 8-10% and earnings of $0.50-$1.00 per share versus estimates of $1.92.