Allegiant Travel: Take the A Plane

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As an airline company in a small-market niche, Allegiant Travel Co. (Nasdaq:ALGT) is profiting as others suffer the industry’s woes. Through a focus on managing capacity, Allegiant is spreading its wings despite a rough economy and high jet fuel costs.

Based in Las Vegas, Nevada, Allegiant specializes in linking passengers from small cities to leisure spots in the United States. It serves 68 cities on 113 routes, having added 19 new routes since August. Allegiant sells stand-alone air travel or ties packages together with hotel rooms, rental cars and other travel-related services.

Allegiant is eliminating competitors like a B-52 shooting down a flock of whirlybirds. In 2007, rivals competed on nine routes; now, that number should be one (there’s a choice for you from Las Vegas to Fresno). By eliminating others from their modest routes, Allegiant gets more and more opportunities to grow. Some opposing airlines have gone bankrupt: ATA and Aloha, and others, including Midwest, are restructuring.
Fuel prices have been a burden this year, but Allegiant still is expected to post 2008 earnings of $1.23 per share, below last year’s $1.50. Revenues are expected at $506 million, up 40% from the previous year. The airline of obscure routes intends to see 15% to 20% compound annual growth for the next five years.

To overcome the dragging economy and costly fuel, Allegiant has cut back on long-haul flights, reduced capacity in select markets and concentrated on raising . . .

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