Allegiant Q3 Revenue and TRASM Set Records, 2026 EPS Outlook Reaffirmed

Allegiant (NASDAQ: ALGT) reported record third-quarter revenue and total revenue per available seat mile as stronger fares, load factor and ancillary revenue offset lower capacity and a steep increase in fuel costs. The airline also reaffirmed its full-year adjusted earnings outlook of more than $6.00 per share and expects record TRASM in the fourth quarter.

Total operating revenue reached $961.6 million, up 19.0% from the 2025 pro forma period, while total system available seat miles fell 6.0%. The pro forma comparison treats the Sun Country acquisition and Sunseeker Resort sale as if both had occurred on January 1, 2025.

Combined scheduled-service TRASM rose 28.3% to 14.18 cents, a third-quarter record for both airline brands and the company’s second-highest quarterly level. Passenger revenue increased 22.1% to $777.4 million, while charter and cargo revenue totaled a record $136 million. Allegiant said fuel pass-through arrangements support the charter and cargo business.

Revenue gains were broad-based. Load factor increased 2.3 percentage points to 86.7%, marking a fourth consecutive quarter of expansion, while average total fare rose 23.8% to $150.92. Air revenue per passenger increased 50%, and ancillary revenue per passenger grew by more than $3. Co-brand card spending and new account acquisitions each advanced more than 20% for a third consecutive quarter, while co-brand remuneration rose nearly 24%.

Operating Profit Despite Higher Fuel Costs

Allegiant generated GAAP operating income of $10.8 million, compared with a pro forma operating loss of $5.7 million a year earlier. Its GAAP operating margin was 1.1%, up from negative 0.7%.

Adjusted operating income was $29.8 million, producing a 3.1% adjusted operating margin. That exceeded the company’s guidance range of 1.0% to 3.0% and represented a 3.4-percentage-point improvement from the prior-year pro forma period. Adjusted EBITDA totaled $110.9 million, with an 11.5% margin.

The company recorded a GAAP net loss of $15.2 million, or $0.56 per share. Excluding specified items, the adjusted net loss was approximately $900,000, or $0.03 per share, near the favorable end of its guidance range of a loss of $1.00 per share to break-even.

Fuel remained a major cost pressure. The average fuel cost was $3.98 per gallon, 55% above the pro forma prior-year level and 18 cents above the assumption used in third-quarter guidance. Fuel expense increased by about $94 million to $293.6 million. Allegiant said reduced capacity, greater deployment of Boeing 737 MAX aircraft and a focus on higher-return flying helped mitigate the impact.

Non-fuel unit costs also increased. Adjusted airline cost per available seat mile excluding fuel, special charges and cargo expenses rose 9.1% to 9.23 cents as capacity declined. Management expects the third quarter to represent the peak year-over-year increase in that measure and identified crew productivity and operating efficiency as priorities heading into 2027.

Commercial Initiatives and Sun Country Integration

Allegiant’s network strategy continued to concentrate flying around peak leisure demand. July accounted for nearly half of third-quarter scheduled-service capacity, and the schedule ranged from 709 departures on a peak July Sunday to 28 on a late-August Tuesday. The summer network included 86 routes launched over the previous 18 months, with most expected to return in summer 2027.

Expedia generated about 4% of bookings, up from roughly 3% at the time of the second-quarter call. More than half of those bookings came from customers new to Allegiant. The company also said early bookings for its Allegiant First premium product were ahead of expectations, with service scheduled to begin in March 2027 on new MAX deliveries.

Integration planning for Sun Country remains focused on achieving more than $140 million of annual run-rate synergies by 2029, measured on an adjusted basis against 2025 pro forma results. Early actions include consolidating gate and ground-handling operations, combining insurance, removing duplicate corporate costs and using greater purchasing scale. Commercial and operating systems will be integrated in stages, while Minneapolis-St. Paul is expected to remain the combined company’s largest base and a long-term growth priority.

Fourth-Quarter and Full-Year Outlook

For the fourth quarter, Allegiant expects combined TRASM to increase by more than 20% from the 2025 pro forma period and reach the highest quarterly level in company history. Scheduled-service capacity is projected to rise about 1.7%, with total system capacity approximately flat. MAX aircraft are expected to account for about 20% of combined scheduled-service ASMs.

The company forecast an adjusted operating margin of 6.0% to 7.0% and adjusted earnings of $1.00 to $1.50 per share for the quarter. It is planning for fuel costs of approximately $4.75 per gallon, a substantial increase from the third-quarter average.

Allegiant reaffirmed full-year 2026 adjusted earnings guidance of more than $6.00 per share. Full-year capital spending includes $640 million to $660 million of aircraft-related expenditures, $75 million to $85 million of capitalized deferred heavy maintenance and $115 million to $125 million of other airline capital expenditures.

The company ended the quarter with $1.1 billion of liquidity, including $865 million of cash and investments and $250 million of undrawn revolving credit facilities. Total debt was $2.9 billion and net debt was $2.1 billion. The combined operating fleet contained 192 aircraft at quarter-end, and Allegiant expects about 20 deliveries in 2027, though it said next year’s fleet and capacity plans have not been finalized because of fuel costs.

Key uncertainties identified by the company include fuel-price volatility, Boeing production limits and delivery timing, labor and maintenance costs, financing and regulatory requirements, leisure-travel demand, and the execution of the Sun Country integration. Allegiant also cautioned that anticipated acquisition synergies and other benefits could take longer or cost more to achieve than expected.