Allegiant’s Revenue and Profit Was Up

Allegiant finally announced its Q2 earnings, and the carrier posted $158 million in EBITDA in its first earnings since the close of its merger with Sun Country on May 13.

The two carriers combined for $943.5 million in operating revenue, including $776 million for Allegiant alone, a record for G4 and 16% higher than last year despite capacity being down nearly 7%. The carrier says air-related ancillary revenue stayed flat, and its increase in revenue (and profit) came from higher fares, increased bundle sales, and upsells to Allegiant Extra. It also saw credit card and other third-party-product revenue increase 32% to $44.5 million. Its average fare was $76.90, 47% higher than last year’s $52.20.

Costs rose for the airline travel company airline as they did for everyone else. CASM jumped 28% to nearly $0.14, thanks in-part to a 71% increase in fuel costs. It ended the year’s first half with $1.3B in liquidity, most it which it plans to spend at next month’s company picnic in Lodi, Colorado which is located halfway between Minneapolis/St Paul and Las Vegas. We assume this gateway to 29,000-person Morgan County will become the airline’s newest base.

737-7 MAX Finally Receives FAA Certification

Nearly 10 years after it was first delayed for safety reviews, the Federal Aviation Authority finally signed off on the airworthiness of the Boeing 737-7 MAX. Despite being smallest of the 737 MAX family, some say it’s the mightiest of the bunch. (And by some, we mean one airline….)

Southwest has been, and will be the launch customer for the type and is certainly eager to get its hands on the first deliveries. Before they can be delivered to WN, they’ll be retrofitted with the airline’s new extra legroom seats and a sprinkling of LUV. The airline is expecting to put the MAX 7 fleet into service next year. Boeing has built 30 MAX 7s and nine MAX 10s to this point, with the MAX 10s accounting for about 30% of its outstanding orders.

As part of the certification process, Boeing was required to redesign the engine’s anti-ice system, the flight control and crew alerting systems, and for WN specifically: the tap to pay in the restroom which charges customers $0.25 for the first two minutes, $0.10 for every 30 seconds thereafter, and $0.49 per toilet paper square used.

American Makes Complimentary Upgrades Tougher

American Airlines AAnounced Thursday that it would no longer permit complimentary upgrades from Main Cabin to First/Business on domestic flights sold with three cabins. Passengers with elite status seated in the back will be permitted to upgrade one class to Premium Economy but can say goodbye to the fancy seats in the front.

This means on nine AA routes, the ability to skip Premium Economy on a complimentary upgrade is no more — but those who purchase Premium to begin with will be able to upgrade to Business. Other than the obvious Boston to Rochester (NY) route, the nine domestic routes AA currently flies with three cabins are:

• Boston: Los Angeles
• Chicago/ORD: Honolulu, Kahului
• Dallas/Fort Worth: Honolulu, Kahului, Kona
• New York/JFK: Los Angeles, San Francisco
• Phoenix: Honolulu

So we’re talking about three of the most premium coast-to-coast routes and a bunch to Hawai’i.

It doesn’t matter how you get to Premium Economy — purchasing it outright, using miles to upgrade, or a systemwide upgrade certificate — you are still eligible for the bump to Business. This new policy is expected to go live on August 25 or as soon as AA’s IT team can figure out how to implement it without shutting down the entire airline on accident.

Good News/Bad News for Pilots at Allegiant

Allegiant’s 1,300 pilots ratified a new two-year collective bargaining agreement to maintain labor peace in the cockpit at the recently-merged carrier. The agreement comes after typically feisty negotiations that included picketing by pilots at nearly two dozen airports late last year.

Highlights of the deal include a 40% raise off the bat, 54% in increased wages by January, and other gains in retirement benefits and workplace policies. Ninety nine percent of eligible pilots voted, with it passing at an 80-20 clip. So all is well with Allegiant pilots, but unfortunately we can’t say the same about the other half of the Allegiant – Sun Country merger as that airline is concerned it’s losing its skygods to its MSP rival Delta.

CEO Greg Anderson said this week that elevated attrition amongst the pilot ranks of Sun Country is mostly from the MSP area. Anderson says those pilots are moving to the “largest full-service carrier in MSP” and we can assure you he’s not talking about Mesaba. Sun Country removed nearly 350 September departures from its schedule to account for the loss of so many pilots, while the Las Vegas-based carrier hopes to use the savings from cutting flights and paying less pilots to grow its deicing capacity up from its current level of “it doesn’t get cold in Vegas.”

End of the Road at Chicago/ORD

American Airlines partnership with Landline in Chicago will end later this year as the carrier elects to eliminate one route entirely, and switch the other to (gasp) being operated by an airplane.

AA will completely exit the market in Rockford (IL) at the “Chicago” Rockford International Airport. AA’s departure from the airport located about three hours west of Chicago/ORD will leave Allegiant as its lone carrier. The other Landline route for AA in Chicago was to wake up the echoes in South Bend. Despite the ending of the bus route, American will continue serving ORD-SBN, flying 3x daily beginning October 5. Both Landline routes began last October and will not survive to see a second birthday.

These reductions do not apply to AA and Landline’s relationship in Philadelphia, where it’ll continue to offer connecting “flights” to five destinations. ORD exiting the Landline family will leave it with four current hub airports for “connecting service” including: Minneapolis/St Paul, Montréal, Philadelphia, and Toronto. It operates its own shuttle services to-and-from the airports in Boston and Denver.

• Air India appointed former Ethiopian Airlines CEO Tewolde Gebremariam to the same position.
• Aircalin is making moves.
• Azul‘s received approval from the Brazilian government for American’s $100 million investment.
• Brussels is putting a freeze on long-haul expansion fleet.
• Delta is once again expanding its service into and out of LAS for CES in January. It’ also adding 1x daily Seattle – Tokyo/Narita next year on an A330neo.
• Frontier has another GoWild! pass sale for those who have a macabre sense of humor.
• Jetstar will begin charging customers for a carry-on bag beginning in February.
• JSX intends to grow the size of its fleet.
• Korean delayed the buyback of its catering until to later this fall.
• LATAM‘s Q2 earnings were strong.
• Qantas is selling its stake in Jetstar Japan back to the carrier for $52 million.
• Southwest added a heap of flights for this fall coinciding with college football games across the country.
• Spirit sold its hangar in Detroit for $18 million.
• SWISS posted a Q2 profit of $200 million, making it the shining star amongst its Lufthansa Group brethren.
• Sun Country moved from T3 to T1 to join up with Allegiant in Las Vegas.
• United is adding both Cincinnati (1x daily) and West Palm Beach (1x weekly) from San Francisco this fall.
• Vietnam Airlines expects to have as many as 30 widebodies in its fleet by 2035.
• Volaris is adding three to the U.S. Guadalajara to both Atlanta and Washington/Dulles and Puebla to Chicago/ORD.
• Wizz Air is in the red for Q2.

A man walks into a bar carrying a large piece of asphalt.

He says to the bartender,
“A beer for me… and one for the road.”