10-Q 1 algt-20220930.htm 10-Q algt-20220930
--12-31FALSE0001362468September 30, 20222022Q30.0010.001Recent Accounting Pronouncements
The table below summarizes special charges recorded during the three and nine months ended September 30, 2022, and 2021.
Three Months Ended September 30,
(in thousands)20222021
Operating$142 $1,738 
Non-operating— — 
Total special charges$142 $1,738 
1421,738——1421,7380.10.1one1.71.2twothree0.58500013624682022-01-012022-09-3000013624682022-10-24xbrli:shares00013624682022-09-30iso4217:USD00013624682021-12-31iso4217:USDxbrli:shares00013624682022-07-012022-09-3000013624682021-07-012021-09-3000013624682021-01-012021-09-300001362468us-gaap:CommonStockMember2022-06-300001362468us-gaap:AdditionalPaidInCapitalMember2022-06-300001362468us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300001362468us-gaap:RetainedEarningsMember2022-06-300001362468us-gaap:TreasuryStockMember2022-06-3000013624682022-06-300001362468us-gaap:CommonStockMember2022-07-012022-09-300001362468us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300001362468us-gaap:ParentMember2022-07-012022-09-300001362468us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300001362468us-gaap:RetainedEarningsMember2022-07-012022-09-300001362468us-gaap:CommonStockMember2022-09-300001362468us-gaap:AdditionalPaidInCapitalMember2022-09-300001362468us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300001362468us-gaap:RetainedEarningsMember2022-09-300001362468us-gaap:TreasuryStockMember2022-09-300001362468us-gaap:CommonStockMember2021-12-310001362468us-gaap:AdditionalPaidInCapitalMember2021-12-310001362468us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001362468us-gaap:RetainedEarningsMember2021-12-310001362468us-gaap:TreasuryStockMember2021-12-310001362468us-gaap:CommonStockMember2022-01-012022-09-300001362468us-gaap:AdditionalPaidInCapitalMember2022-01-012022-09-300001362468us-gaap:ParentMember2022-01-012022-09-300001362468us-gaap:TreasuryStockMember2022-01-012022-09-300001362468us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-09-300001362468us-gaap:RetainedEarningsMember2022-01-012022-09-300001362468us-gaap:CommonStockMember2021-06-300001362468us-gaap:AdditionalPaidInCapitalMember2021-06-300001362468us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300001362468us-gaap:RetainedEarningsMember2021-06-300001362468us-gaap:TreasuryStockMember2021-06-3000013624682021-06-300001362468us-gaap:CommonStockMember2021-07-012021-09-300001362468us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300001362468us-gaap:ParentMember2021-07-012021-09-300001362468us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300001362468us-gaap:RetainedEarningsMember2021-07-012021-09-300001362468us-gaap:CommonStockMember2021-09-300001362468us-gaap:AdditionalPaidInCapitalMember2021-09-300001362468us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-300001362468us-gaap:RetainedEarningsMember2021-09-300001362468us-gaap:TreasuryStockMember2021-09-3000013624682021-09-300001362468us-gaap:CommonStockMember2020-12-310001362468us-gaap:AdditionalPaidInCapitalMember2020-12-310001362468us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001362468us-gaap:RetainedEarningsMember2020-12-310001362468us-gaap:TreasuryStockMember2020-12-3100013624682020-12-310001362468us-gaap:CommonStockMember2021-01-012021-09-300001362468us-gaap:AdditionalPaidInCapitalMember2021-01-012021-09-300001362468us-gaap:ParentMember2021-01-012021-09-300001362468algt:StockOfferingMemberus-gaap:CommonStockMember2021-01-012021-09-300001362468us-gaap:RetainedEarningsMember2021-01-012021-09-300001362468us-gaap:TreasuryStockMember2021-01-012021-09-300001362468us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-09-300001362468algt:HurricaneIanMember2022-01-012022-09-30algt:Aircraft00013624682021-01-012021-03-310001362468algt:AirbusA320AircraftSeriesMember2021-01-012021-03-31algt:engine0001362468algt:ScheduledServiceRevenueMember2022-07-012022-09-300001362468algt:ScheduledServiceRevenueMember2021-07-012021-09-300001362468algt:ScheduledServiceRevenueMember2022-01-012022-09-300001362468algt:ScheduledServiceRevenueMember2021-01-012021-09-300001362468algt:AirrelatedrevenueMember2022-07-012022-09-300001362468algt:AirrelatedrevenueMember2021-07-012021-09-300001362468algt:AirrelatedrevenueMember2022-01-012022-09-300001362468algt:AirrelatedrevenueMember2021-01-012021-09-300001362468algt:CobrandRevenueMember2022-07-012022-09-300001362468algt:CobrandRevenueMember2021-07-012021-09-300001362468algt:CobrandRevenueMember2022-01-012022-09-300001362468algt:CobrandRevenueMember2021-01-012021-09-30xbrli:pure00013624682022-01-012022-06-3000013624682020-04-012020-04-300001362468algt:FixedRateMember2022-09-300001362468algt:FixedRateMember2021-12-310001362468algt:VariableRateMember2022-09-300001362468algt:VariableRateMember2021-12-310001362468algt:SeniorSecuredNotesDue2027Memberus-gaap:SeniorNotesMember2022-08-310001362468algt:SeniorSecuredNotesDue2024Memberus-gaap:SeniorNotesMember2022-08-310001362468us-gaap:SeniorNotesMember2022-08-310001362468algt:MUFGBankLtdMemberus-gaap:RevolvingCreditFacilityMember2022-08-310001362468algt:MUFGBankLtdMemberus-gaap:RevolvingCreditFacilityMember2022-08-012022-08-310001362468algt:SeniorSecuredRevolvingLoanFacilityMemberalgt:BarclaysBankPLCMember2022-08-310001362468algt:Senior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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 September 30, 2022
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to_______

Commission File Number 001-33166
algt-20220930_g1.jpg
Allegiant Travel Company
(Exact Name of Registrant as Specified in Its Charter)
Nevada20-4745737
(State or Other Jurisdiction of Incorporation or Organization)(IRS Employer Identification No.)
1201 North Town Center Drive
Las Vegas,Nevada89144
(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 classTrading SymbolName of each exchange on which registered
Common stock, par value $0.001ALGTNASDAQ 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 October 24, 2022, the registrant had 18,398,569 shares of common stock, $0.001 par value per share, outstanding.


ALLEGIANT TRAVEL COMPANY
FORM 10-Q
TABLE OF CONTENTS
2

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements
ALLEGIANT TRAVEL COMPANY
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, 2022December 31, 2021
(unaudited)
CURRENT ASSETS 
Cash and cash equivalents$240,528 $363,378 
Restricted cash30,671 37,323 
Short-term investments761,362 819,478 
Accounts receivable79,150 62,659 
Expendable parts, supplies and fuel, net39,070 27,500 
Prepaid expenses and other current assets46,772 28,073 
TOTAL CURRENT ASSETS1,197,553 1,338,411 
Property and equipment, net2,738,516 2,259,507 
Long-term investments— 2,231 
Deferred major maintenance, net148,719 146,850 
Operating lease right-of-use assets, net116,471 130,087 
Deposits and other assets209,705 113,987 
TOTAL ASSETS:$4,410,964 $3,991,073 
CURRENT LIABILITIES
Accounts payable$51,394 $43,566 
Accrued liabilities256,429 162,892 
Current operating lease liabilities19,792 19,081 
Air traffic liability429,924 307,453 
Current maturities of long-term debt and finance lease obligations, net of related costs152,550 130,053 
TOTAL CURRENT LIABILITIES910,089 663,045 
Long-term debt and finance lease obligations, net of current maturities and related costs1,840,000 1,612,486 
Deferred income taxes332,506 346,137 
Noncurrent operating lease liabilities100,111 115,067 
Other noncurrent liabilities39,285 30,786 
TOTAL LIABILITIES:3,221,991 2,767,521 
SHAREHOLDERS' EQUITY
Common stock, par value $0.001
25 25 
Treasury shares(633,332)(638,057)
Additional paid in capital703,633 692,053 
Accumulated other comprehensive income, net1,154 2,056 
Retained earnings1,117,493 1,167,475 
TOTAL EQUITY:1,188,973 1,223,552 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY:$4,410,964 $3,991,073 
 
The accompanying notes are an integral part of these consolidated financial statements.
3

ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
 (unaudited)
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
OPERATING REVENUES:
Passenger$516,476 $423,796 $1,573,041 $1,124,237 
Third party products27,132 24,541 77,399 61,164 
Fixed fee contracts15,881 11,117 38,186 23,943 
Other836 15 1,654 1,682 
Total operating revenues560,325 459,469 1,690,280 1,211,026 
OPERATING EXPENSES:
Aircraft fuel208,175 118,370 629,600 310,674 
Salaries and benefits137,336 125,799 411,027 365,655 
Station operations66,302 70,943 198,954 171,246 
Depreciation and amortization50,092 46,399 145,618 134,095 
Maintenance and repairs32,177 30,451 91,120 76,419 
Sales and marketing25,815 22,047 75,462 51,288 
Aircraft lease rental5,905 5,670 17,489 15,507 
Other30,292 22,379 83,137 55,655 
Payroll Support Programs grant recognition— (49,210)— (202,181)
Special charges35,142 332 35,426 2,924 
Total operating expenses591,236 393,180 1,687,833 981,282 
OPERATING INCOME (LOSS)(30,911)66,289 2,447 229,744 
OTHER (INCOME) EXPENSES:
Interest expense34,242 16,595 78,530 50,174 
Capitalized interest(4,296)(401)(7,594)(401)
Interest income(4,918)(375)(7,909)(1,338)
Other, net223 239 318 (164)
Total other expenses25,251 16,058 63,345 48,271 
INCOME (LOSS) BEFORE INCOME TAXES(56,162)50,231 (60,898)181,473 
INCOME TAX PROVISION (BENEFIT)(9,703)10,977 (10,916)40,323 
NET INCOME (LOSS)$(46,459)$39,254 $(49,982)$141,150 
Earnings (loss) per share to common shareholders:
Basic$(2.58)$2.18 $(2.78)$8.18 
Diluted$(2.58)$2.18 $(2.78)$8.18 
Shares used for computation:
Basic18,014 17,766 17,985 17,005 
Diluted18,014 17,767 17,985 17,015 
Cash dividends declared per share:$— $— $— $— 

The accompanying notes are an integral part of these consolidated financial statements.
4

ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
 
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
NET INCOME (LOSS)$(46,459)$39,254 $(49,982)$141,150 
Other comprehensive income:  
Change in available for sale securities, net of tax(1,590)774 (902)676 
Total other comprehensive income (loss)(1,590)774 (902)676 
TOTAL COMPREHENSIVE INCOME (LOSS)$(48,049)$40,028 $(50,884)$141,826 

The accompanying notes are an integral part of these consolidated financial statements.
5

ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in thousands)
(unaudited)
Three Months Ended September 30, 2022
Common stock outstandingPar valueAdditional paid-in capitalAccumulated other comprehensive income (loss)Retained earningsTreasury sharesTotal shareholders' equity
Balance at June 30, 202218,180 $25 $698,982 $2,744 $1,163,952 $(633,332)$1,232,371 
Share-based compensation122 — 4,651 — — — 4,651 
Other comprehensive (loss)— — — (1,590)— — (1,590)
Net (loss)— — — — (46,459)— (46,459)
Balance at September 30, 202218,302 $25 $703,633 $1,154 $1,117,493 $(633,332)$1,188,973 

Nine Months Ended September 30, 2022
Common stock outstandingPar valueAdditional paid-in capitalAccumulated other comprehensive income (loss)Retained earningsTreasury sharesTotal shareholders' equity
Balance at December 31, 202118,111 $25 $692,053 $2,056 $1,167,475 $(638,057)$1,223,552 
Share-based compensation161 — 11,580 — — — 11,580 
Stock issued under employee stock purchase plan30 — — — — 4,725 4,725 
Other comprehensive income— — — (902)— — (902)
Net (loss)— — — — (49,982)— (49,982)
Balance at September 30, 202218,302 $25 $703,633 $1,154 $1,117,493 $(633,332)$1,188,973 

Three Months Ended September 30, 2021
Common stock outstandingPar valueAdditional paid-in capitalAccumulated other comprehensive income (loss)Retained earningsTreasury sharesTotal shareholders' equity
Balance at June 30, 202117,986 $25 $671,893 $(125)$1,117,518 $(642,177)$1,147,134 
Share-based compensation59 — 3,902 — — — 3,902 
Other comprehensive income— — — 774 — — 774 
Net income— — — — 39,254 — 39,254 
Balance at September 30, 202118,045 $25 $675,795 $649 $1,156,772 $(642,177)$1,191,064 

Nine Months Ended September 30, 2021
Common stock outstandingPar valueAdditional paid-in capitalAccumulated other comprehensive incomeRetained earningsTreasury sharesTotal shareholders' equity
Balance at December 31, 202016,405 $23 $329,753 $(27)$1,015,622 $(646,008)$699,363 
Share-based compensation71 — 10,800 — — — 10,800 
Issuance of common stock, net of forfeitures1,553 2 335,137 — — — 335,139 
Stock issued under employee stock purchase plan16 — — — — 3,831 3,831 
Other comprehensive income— — — 676 — — 676 
Payroll Support Programs warrant issuance— — 105 — — — 105 
Net income— — — — 141,150 — 141,150 
Balance at September 30, 202118,045 $25 $675,795 $649 $1,156,772 $(642,177)$1,191,064 

6

ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 Nine Months Ended September 30,
 20222021
Cash flows from operating activities:
Net income (loss)$(49,982)$141,150 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization145,618 134,095 
Special charges35,426 2,924 
Other adjustments9,206 26,778 
Changes in certain assets and liabilities:
Air traffic liability122,471 44,014 
Other - net(40,917)24,634 
Net cash provided by operating activities221,822 373,595 
Cash flows from investing activities:
Purchase of investment securities (968,064)(1,028,481)
Proceeds from maturities of investment securities 1,024,861 679,588 
Aircraft pre-delivery deposits(88,500)(3,300)
Purchase of property and equipment(304,956)(163,202)
Other investing activities1,037 2,062 
Net cash (used in) investing activities(335,622)(513,333)
Cash flows from financing activities:
Proceeds from the issuance of debt and finance lease obligations745,800 106,657 
Principal payments on debt and finance lease obligations(666,046)(239,644)
Debt issuance costs(12,681)(705)
Proceeds from issuance of common stock— 335,139 
Other financing activities(82,775)3,936 
Net cash provided by (used in) by financing activities(15,702)205,383 
NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH(129,502)65,645 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING OF PERIOD400,701 170,319 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF PERIOD$271,199 $235,964 
CASH PAYMENTS (RECEIPTS) FOR:
Interest paid, net of amount capitalized$60,452 $30,739 
Income tax payments (refunds)36 (12,762)
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS:
Right-of-use (ROU) assets acquired$— $23,157 
Flight equipment acquired under finance leases172,507 40,826 
Purchases of property and equipment in accrued liabilities82,359 12,727 

The accompanying notes are an integral part of these consolidated financial statements.
7

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, 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.

The Company reclassified certain prior period amounts to conform to the current period presentation. Unless otherwise noted, all amounts disclosed are stated before consideration of income taxes.
8

Note 2 — Hurricane Ian

As a result of Hurricane Ian's direct hit on the southwest coast of Florida on September 28, 2022, the construction site of Sunseeker Resort at Charlotte Harbor (the "Resort" or "Sunseeker Resort") was damaged.

Within days after the hurricane, the Company began to assess the damage to the Resort. Insurance claim adjustors representing the Company and the insurance carriers are assessing the extent of the damages and the costs to restore the Resort to its condition prior to the hurricane and determining the extent of construction interruption.

The Company has significant levels of insurance in place to cover the losses resulting from Hurricane Ian including for physical damage due to a named windstorm or flood (storm surge), business interruption and an OCIP (owner-controlled insurance program).

The Company recognized a special charge of $35.0 million during the quarter associated with the estimated loss incurred from Hurricane Ian, which charge also reduced the carrying amount of the Resort. The estimate is preliminary and subject to change as the damage assessment continues. The amount of the loss will be offset in future periods by amounts to be recovered from the Company’s insurance policies.
9

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 September 30,Nine Months Ended September 30,
(in thousands)2022202120222021
Scheduled service$254,545 $195,225 $775,740 $552,765 
Ancillary air-related charges252,080 224,170 765,096 558,687 
Loyalty redemptions
9,851 4,401 32,205 12,785 
Total passenger revenue$516,476 $423,796 $1,573,041 $1,124,237 

Sales of passenger tickets not yet flown are recorded in air traffic liability. Passenger revenue is recognized when transportation is provided. As of September 30, 2022, the air traffic liability balance was $429.9 million, of which approximately $367.8 million was related to forward bookings, with the remaining $62.1 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. Of the $307.5 million that was recorded in the air traffic liability balance as of December 31, 2021, approximately 75.1 percent was recognized into passenger revenue during the nine months ended September 30, 2022.

In 2020, the Company announced that 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 vouchers issued through June 30, 2021. 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. Estimates of passenger revenue to be recognized from air traffic liability for credit 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.

Loyalty redemptions

In relation to the travel component of the 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 passenger revenue when the points are redeemed and the underlying service has been provided.

The following table presents the activity of the point liability for the periods indicated:
Nine Months Ended September 30,
(in thousands)20222021
Points balance at January 1$40,490 $21,841 
Points awarded (deferral of revenue)54,678 23,319 
Points redeemed (recognition of revenue)(32,205)(12,785)
Points balance at September 30$62,963 $32,375 

As of September 30, 2022 and 2021, $34.0 million and $15.9 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.
10

Note 4 — Property and Equipment

The following table summarizes the Company's property and equipment as of the dates indicated:
(in thousands)September 30, 2022December 31, 2021
Flight equipment, including pre-delivery deposits$2,892,277 $2,573,657 
Computer hardware and software194,983 160,237 
Land and buildings/leasehold improvements60,036 59,735 
Other property and equipment91,199 78,192 
Sunseeker Resort277,315 83,864 
Total property and equipment3,515,810 2,955,685 
Less accumulated depreciation and amortization(777,294)(696,178)
Property and equipment, net$2,738,516 $2,259,507 

Accrued capital expenditures as of September 30, 2022 and December 31, 2021 were $82.4 million and $17.7 million, respectively.
11

Note 5 — Long-Term Debt

The following table summarizes the Company's long-term debt and finance lease obligations as of the dates indicated:
(in thousands)September 30, 2022December 31, 2021
Fixed-rate debt and finance lease obligations due through 2032$1,624,432 $827,382 
Variable-rate debt due through 2029368,118 915,157 
Total debt and finance lease obligations, net of related costs1,992,550 1,742,539 
Less current maturities, net of related costs152,550 130,053 
Long-term debt and finance lease obligations, net of current maturities and related costs$1,840,000 $1,612,486 
Weighted average fixed-interest rate on debt6.5%5.8%
Weighted average variable-interest rate on debt4.5%2.5%

Maturities of long-term debt and finance lease obligations for the remainder of 2022 and for the next four years and thereafter, in the aggregate, are: remaining in 2022 - $34.2 million; 2023 - $152.5 million; 2024 - $299.8 million; 2025 - $145.2 million; 2026 - $138.8 million; and $1,222.0 million thereafter.


Senior Secured Notes

In August, 2022, the Company issued $550.0 million in aggregate principal amount of its 7.250% Senior Secured Notes due 2027 (the “Notes”) pursuant to an Indenture, dated as of August 17, 2022. The Notes are secured by first priority security interests in, subject to permitted liens, substantially all of the property and assets of the Company and its subsidiaries (other than Sunseeker Resort and its subsidiaries) (excluding aircraft, aircraft engines, real property and certain other assets). The collateral also secures the Company’s existing $150.0 million 8.500% Senior Secured Notes due 2024 and the Company’s new revolving credit facility through Barclays Bank, PLC (described below), on a pari passu basis. The Notes bear interest at a fixed rate of 7.25 percent per annum, payable in cash on February 15 and August 15 of each year, beginning February 15, 2023. The Notes will mature on August 15, 2027.

The Notes contain certain covenants that limit the ability of the Company to, among other things: (i) make restricted payments; (ii) incur indebtedness or issue preferred stock; (iii) create or incur certain liens; (iv) dispose of loyalty program or brand intellectual property collateral; (v) merge, consolidate or sell all or substantially all assets and (vi) enter into certain transactions with affiliates.

The Notes also require the Company to comply with certain affirmative covenants, including to maintain a minimum aggregate amount of liquidity of $300.0 million. If the Company fails to satisfy the minimum liquidity requirement, then the Company will be required to pay additional interest on all outstanding Notes in an amount equal to 2.0% per annum of the principal amount of such Notes until the Company demonstrates compliance with the liquidity requirement.

The Company used the net proceeds from the sale of the Notes to repay the Company’s Term Loan B, which had an outstanding principal amount of $533.0 million, and to pay costs and expenses of the transaction.

Senior Secured Revolving Credit Facilities

In August, 2022, the Company entered into a credit agreement with MUFG Bank, Ltd under which the Company is entitled to borrow up to $100.0 million. The revolving credit facility has a term of 24 months and the borrowing ability is based on the value of aircraft and engines placed into the collateral pool. The notes under the facility bear interest at a floating rate based on SOFR. As of September 30, 2022, the facility remains undrawn.

In August, 2022, the Company entered into a credit agreement with certain lenders and Barclays Bank PLC as administrative agent and lead arranger that provides a senior secured revolving loan facility of $75.0 million. The facility is secured by the same collateral that secures the Notes, has a term of 57 months and notes under the facility bear interest at a floating rate based on SOFR. As of September 30, 2022, the facility remains undrawn.

In September, 2022, the Company entered into a credit agreement with Norddeutsche Landesbank Girozentrale (acting through its New York branch) and Landesbank Hessen-Thüringen Girozentrale (the "Lenders") under which the Company is entitled to borrow up to $300.0 million. The revolving credit facility has a term of 24 months and the borrowing ability is based on the amount of pre-delivery deposits paid with respect to up to twenty (20) 737-MAX aircraft, the purchase rights for which the Company may choose to place in the collateral pool. The Facility is secured by the purchase rights for the applicable aircraft. The commitment amount at the time of signing is $200.0 million and the facility may be increased to $300.0 million subject to agreement between the Company and the Lenders. Any notes under the Facility will bear interest at a floating rate based on SOFR and all borrowings will be due no later than December 31, 2024 or upon delivery of the applicable aircraft. As of September 30, 2022, the facility remains undrawn.
12

Note 6 — Income Taxes

The Company recorded a $9.7 million income tax benefit at an effective tax rate of 17.3 percent and an $11.0 million income tax expense at a 21.9 percent effective tax rate for the three months ended September 30, 2022 and 2021, respectively. The effective tax rate for the three months ended September 30, 2022 differed from the statutory Federal income tax rate of 21.0 percent primarily due to state income taxes and the impact of permanent tax differences. 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 a $10.9 million income tax benefit at an effective tax rate of 17.9 percent and a $40.3 million income tax expense at a 22.2 percent effective tax rate for the nine months ended September 30, 2022 and 2021, respectively. The effective tax rate for the nine months ended September 30, 2022 differed from the statutory Federal income tax rate of 21.0 percent primarily due to state income taxes and the impact of permanent tax differences, none of which are individually significant.
13

Note 7 — 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 nine months ended September 30, 2022.

Financial instruments measured at fair value on a recurring basis:
September 30, 2022December 31, 2021
(in thousands)TotalLevel 1Level 2TotalLevel 1Level 2
Cash equivalents   
Money market funds$49,106 $49,106 $— $25,019 $25,019 $— 
Commercial Paper70,450 — 70,450 179,455 — 179,455 
Municipal debt securities16,398 — 16,398 63,875 — 63,875 
Total cash equivalents135,954 49,106 86,848 268,349 25,019 243,330 
Short-term     
Commercial paper450,529 — 450,529 419,469 — 419,469 
Corporate debt securities196,962 — 196,962 234,436 — 234,436 
Municipal debt securities20,965 — 20,965 165,573 — 165,573 
Federal agency debt securities92,906 — 92,906 — — — 
Total short-term761,362 — 761,362 819,478 — 819,478 
Long-term      
Municipal debt securities— — — 2,231 — 2,231 
Total long-term— — — 2,231 — 2,231 
Total financial instruments$897,316 $49,106 $848,210 $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, excluding finance leases, including current maturities and without reduction for related costs, are as follows:
September 30, 2022December 31, 2021
(in thousands)Carrying ValueEstimated Fair ValueCarrying ValueEstimated Fair ValueHierarchy Level
Non-publicly held debt$1,538,638 $1,457,343 $1,447,462 $1,261,170 3

Due to their short-term nature, the carrying amounts of cash, restricted cash, accounts receivable and accounts payable approximate fair value.
14

Note 8 — 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 months and nine months ended September 30, 2022, basic and diluted income (loss) per share are the same because of the (loss) position.

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 September 30,Nine Months Ended September 30,
2022202120222021
Basic:  
Net income (loss)$(46,459)$39,254 $(49,982)$141,150 
Less income allocated to participating securities— (573)— (2,028)
Net income (loss) attributable to common stock$(46,459)$38,681 $(49,982)$139,122 
Earnings (loss) per share, basic$(2.58)$2.18 $(2.78)$8.18 
Weighted-average shares outstanding18,014 17,766 17,985 17,005 
Diluted:    
Net income (loss)$(46,459)$39,254 $(49,982)$141,150 
Less income allocated to participating securities— (573)— (2,027)
Net income (loss) attributable to common stock$(46,459)$38,681 $(49,982)$139,123 
Earnings (loss) per share, diluted$(2.58)$2.18 $(2.78)$8.18 
Weighted-average shares outstanding18,014 17,766 17,985 17,005 
Dilutive effect of stock options and restricted stock— 103 — 121 
Adjusted weighted-average shares outstanding under treasury stock method18,014 17,869 17,985 17,126 
Participating securities excluded under two-class method— (102)— (111)
Adjusted weighted-average shares outstanding under two-class method18,014 17,767 17,985 17,015 
15

Note 9 — 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.
16

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 two 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 two 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 (1)
Consolidated
Three Months Ended September 30, 2022
Operating revenue:
Passenger$516,476 $— $516,476 
Third party products27,132 — 27,132 
Fixed fee contract15,881 — 15,881 
Other836 — 836 
Operating income (loss)6,844 (37,755)(30,911)
Interest expense, net18,882 1,134 20,016 
Depreciation and amortization50,064 28 50,092 
Capital expenditures165,814 91,076 256,890 
Three Months Ended September 30, 2021
Operating revenue:
Passenger$423,796 $— $423,796 
Third party products24,541 — 24,541 
Fixed fee contract11,117 — 11,117 
Other15 — 15 
Operating income (loss)68,641 (2,352)66,289 
Interest expense, net16,220 (401)15,819 
Depreciation and amortization46,363 36 46,399 
Capital expenditures54,032 12,622 66,654 
(1)Includes $35.0 million special charge in the third quarter 2022 relating to Hurricane Ian damage to Sunseeker Resort.The amount of the loss will be offset in future periods by amounts to be recovered under the Company’s insurance policies.
17

(in thousands)Airline
Sunseeker Resort (1)
Consolidated
Nine Months Ended September 30, 2022
Operating revenue:
Passenger$1,573,041 $— $1,573,041 
Third party products77,399 — 77,399 
Fixed fee contract