Allegiant Travel CO

Previous wording

The following discussion and analysis presents factors that had a material effect on our results of operations during the three months ended March 31, 2024 and 2023. Also discussed is our financial position as of March 31, 2024 and December 31, 2023. You should read this discussion in conjunction with our unaudited consolidated financial statements, including the notes thereto, appearing elsewhere in this Form 10-Q and our consolidated financial statements appearing in our annual report on Form 10-K for the year ended December 31, 2023. This discussion and analysis contains forward-looking statements. Please refer to the section below entitled “Cautionary Note Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements.

Current wording

The following discussion and analysis presents factors that had a material effect on our results of operations during the three and six months ended June 30, 2024 and 2023. Also discussed is our financial position as of June 30, 2024 and December 31, 2023. You should read this discussion in conjunction with our unaudited consolidated financial statements, including the notes thereto, appearing elsewhere in this Form 10-Q and our consolidated financial statements appearing in our annual report on Form 10-K for the year ended December 31, 2023. This discussion and analysis contains forward-looking statements. Please refer to the section below entitled “Cautionary Note Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements.

Previous wording

•Operating income of $15.4 million, yielding an operating margin of 2.4 percent

Current wording

•Operating income of$34.9 million, yielding an operating margin of 5.2 percent

Previous wording

•Total operating revenue of $656.4 million, up 1.0 percent over first quarter 2023

Current wording

•Total operating revenue of $666.3 million, down 2.6 percent from second quarter 2023

Previous wording

•Total fixed fee contracts revenue of $18.9 million, up 33.6 percent year-over-year

Current wording

•Total fixed fee contracts revenue of $17.7 million, up 50.7 percent over second quarter 2023

Previous wording

•$34.7 million in total cobrand credit card remuneration in first quarter 2024, up 23.7 percent from first quarter 2023

Current wording

•$36.1 million in total cobrand credit card remuneration received from Bank of America, up 24.6 percent from second quarter 2023

Previous wording

•Enrolled approximately 540,000 new Allways Rewards members during the first quarter 2024 bringing total members to 17.9 million

Current wording

•Enrolled 552 thousand new Allways Rewards members during the second quarter 2024

Previous wording

•Airline-only operating CASM excluding fuel and special charges of 8.87 ¢, up 14.5 percent year-over-year

Current wording

•Airline-only operating CASM excluding fuel and special charges of 8.23 cents, up 5.6 percent over second quarter 2023

Previous wording

(1)Does not include one aircraft of which we have taken delivery as of March 31, 2024 and December 31, 2023 and which was not in service as of that date.

Current wording

(1)December 31, 2023 figure does not include one aircraft of which we had taken delivery, but was not in service as of that date.

Previous wording

As of March 31, 2024, we are a party to forward purchase agreements for 50 aircraft with six deliveries currently expected in 2024, and the remaining 44 aircraft are expected to be delivered in 2025 or later years. The timing of these deliveries is based on management's best estimates and differs from the contract in place. The delivery schedule has been and will continue to be impacted by delay notices from Boeing and continuing regulatory reviews of Boeing.

Current wording

As of June 30, 2024, we are a party to forward purchase agreements for 50 aircraft with four deliveries currently expected in 2024, and the remaining 46 aircraft are expected to be delivered in 2025 and later years. The timing of these deliveries is based on management's best estimates at the current time and differs from the contract in place. The delivery schedule has been and will continue to be impacted by delay notices from Boeing and continuing regulatory reviews of Boeing.

Previous wording

Due to the heavy maintenance needs on certain aging Airbus airframes and capacity constraints at the maintenance, repair, and overhaul contractors, we reevaluated our fleet plan and identified 21 aging airframes for early retirement to coincide with the delivery schedule for our 737 MAX aircraft provided in an amendment to our Boeing purchase agreement signed on September 29, 2023. Two airframes were retired in 2023 and two airframes were retired in first quarter 2024. The remaining airframes are to be retired between May 2024 and September 2025. The retirements were coordinated with the revised delivery schedule for the 737 MAX aircraft to provide us with opportunities for fleet renewal and replacement. The accelerated depreciation on these airframes resulting from a change in the estimated useful life is recorded as a special charge of $14.9 million during first quarter 2024. We plan to retain the engines associated with these airframes in our spare engine pool and use the substantial remaining life on these engines to offset future overhaul costs.

Current wording

Due to the heavy maintenance needs on certain aging Airbus airframes and capacity constraints at the maintenance, repair, and overhaul contractors, we reevaluated our fleet plan and identified 21 aging airframes for early retirement to coincide with the delivery schedule for our 737 MAX aircraft provided in an amendment to our Boeing purchase agreement signed in September 2023. Two airframes were retired in 2023 and two airframes were retired in first quarter 2024. The remaining airframes are to be retired between August 2024 and December 2026. The timing of the retirements has been coordinated with the revised delivery schedule for the 737 MAX aircraft to provide us with opportunities for fleet renewal and replacement. The accelerated depreciation on these airframes resulting from a change in the estimated useful life is recorded as a special charge of $9.3 million during second quarter 2024. We plan to retain the engines associated with these airframes in our spare engine pool and use the substantial remaining life on these engines to offset future overhaul costs.

Previous wording

As of March 31, 2024, we were selling 565 routes versus 574 as of the same date in 2023. Growth of our network has been impacted by challenges created by delayed aircraft deliveries, the uncertainty of our pilot staffing levels and other factors. We have identified as many as 1,400 incremental domestic nonstop routes as opportunities for future network growth, of which over 77 percent currently have no current non-stop service. Our total active number of origination cities and leisure destinations were 90 and 33, respectively, as of March 31, 2024.

Current wording

As of June 30, 2024, we were selling 550 routes versus 555 as of the same date in 2023. Growth of our network has been impacted by challenges created by delayed aircraft deliveries, the uncertainty of our pilot staffing levels and other factors. We have identified over 1,400 incremental domestic nonstop routes as opportunities for future network growth, of which over 77 percent currently have no non-stop service. Our total active number of origination cities and leisure destinations were 90 and 34, respectively, as of June 30, 2024.

Previous wording

The cost per gallon of fuel began to increase significantly in 2021, and the increases were exacerbated by the geopolitical impact of the war in Ukraine. Increases in refinery costs also added to our fuel cost. Although the average fuel cost per gallon declined in first quarter 2024 when compared to the same period in 2023, the average fuel cost per gallon in the first quarter 2024 remained 62.9 percent higher than in first quarter 2021. Despite an 11.4 percent decrease in fuel cost per gallon during the first quarter 2024 compared to the same period in 2023, we expect high fuel costs will continue to impact our total costs and operating results.

Current wording

The cost per gallon of fuel began to increase significantly in 2021, and the increases were exacerbated by the geopolitical impact of the war in Ukraine. The average fuel cost per gallon increased 5.2 percent in second quarter 2024 compared to the same period in 2023 and remained 40.1 percent higher than in second quarter 2021. We expect high fuel costs to continue impacting our total costs and operating results.

Previous wording

In the interest of increased quality control at Boeing and its suppliers, the FAA has indicated aircraft production rates will be capped until they are fully satisfied with Boeing's quality practices. These factors and other Boeing delays in obtaining needed regulatory approvals could delay deliveries to us even further than management's current expectations.

Current wording

In the interest of increased quality control at Boeing and its suppliers, the Federal Aviation Administration (FAA) has indicated aircraft production rates will be capped until they are satisfied with Boeing's quality practices. These factors and other delays in Boeing obtaining needed regulatory approvals could delay deliveries to us even further than management's current expectations. Although the contract provides for more deliveries, we do not expect more than four aircraft to be delivered in 2024. Continuing delays in aircraft deliveries will impact our ability to schedule additional growth into 2025.

Previous wording

Delays for new Boeing aircraft deliveries, aircraft in heavy maintenance, uncertainty as to pilot staffing levels and airport construction disruption continue to impact our ability to schedule network growth. As a result, we have pulled back some of our capacity growth in 2024. We believe these issues are not unique to Allegiant.

Current wording

Capacity growth may also be impacted by aircraft in heavy maintenance, uncertainty as to pilot staffing levels and airport construction disruption. We believe these issues are not unique to Allegiant.

Previous wording

The collective bargaining agreement with our pilots is currently amendable. We and the International Brotherhood of Teamsters ("IBT”) jointly requested the mediation services of the National Mediation Board ("NMB") in January 2023 to assist with the negotiations. The mediation process with the NMB is continuing with new union negotiators and leadership, with dates for negotiation sessions currently scheduled through June 2024.

Current wording

The collective bargaining agreement with our pilots is currently amendable. We and the International Brotherhood of Teamsters ("IBT”) jointly requested the mediation services of the National Mediation Board ("NMB") in January 2023 to assist with the negotiations. The mediation process with the NMB is continuing with new union negotiators and leadership, with negotiation sessions currently scheduled through October 2024.

Previous wording

Separately from the ongoing collective bargaining agreement negotiations, to address retention and pilot pay issues and increase pilot staffing levels, effective in May 2023, we began recognizing a retention bonus for pilots who continue employment with us until a new labor agreement is approved. The amount is 35 percent of current hourly pay rates, except for the first year first officers for whom the percentage is 82 percent, calculated at a minimum of 85 pay credit hours per month. The IBT concurred with this approach. Our implementation of the retention bonus has contributed to our ability to add pilots through hiring and slower attrition.

Current wording

Separately from the ongoing collective bargaining agreement negotiations, to address retention and pilot pay issues and increase pilot staffing levels, effective in May 2023, we began recognizing a retention bonus for pilots who continue employment with us until a new labor agreement is approved. The amount being accrued is 35 percent of current hourly pay rates, except for our first year first officers for whom the percentage is 82 percent, in each case, calculated at a minimum of 85 pay credit hours per month. The IBT concurred with this approach. Our implementation of the retention bonus successfully allowed us to effectively increase pay rates for our pilot team members (by way of the accrual of the retention bonus), add pilots through hiring and significantly slow attrition.

Previous wording

For the three months ended March 31, 2024, we recorded estimated pilot retention bonus accruals of $20.4 million bringing the total accrual to $70.6 million at period end. The bonus will be paid to all pilots remaining employed with us upon ratification of a new collective bargaining agreement.

Current wording

For the three months ended June 30, 2024, we recorded estimated pilot retention bonus accruals of $23.7 million bringing the total accrual to $100.6 million at period end, including the related payroll taxes. The bonus will be paid to all pilots remaining employed with us upon ratification of a new collective bargaining agreement.

Previous wording

On April 15, 2024, our flight attendants ratified a new five-year agreement we negotiated with the Transportation Workers Union (TWU). The new contract provides for immediate wage increases, improved pay overrides, an increased 401(k) match and the payment of a $10.0 million ratification bonus in May 2024. The agreement provides us with increased flexibility in scheduling flight attendants during irregular operations, which should increase productivity and reduce operational disruptions.

Current wording

On April 15, 2024, our flight attendants ratified a new five-year agreement we negotiated with the Transportation Workers Union (TWU). The new contract provides for immediate wage increases, improved pay overrides, an increased 401(k) match, and a $10.0 million ratification bonus ($10.8 million including the related payroll tax expense), which was paid out in May 2024. The agreement provides us with increased flexibility in scheduling flight attendants during irregular operations, which should increase productivity and reduce operational disruptions.

Previous wording

In December 2021, we announced plans for a fully-integrated commercial alliance agreement with VivaAerobus, designed to expand options for nonstop leisure air travel between our markets in the United States and Mexico. We and VivaAerobus have submitted a joint application to the DOT requesting approval of and antitrust immunity for the alliance. Although the DOT process has progressed substantially, their review of our application is currently suspended pending the outcome of diplomatic engagement on broader treaty issues and, as a result, the timing of commencement of this service is uncertain as it will depend on when or if the DOT will ultimately approve the grant of antitrust immunity.

Current wording

In December 2021, we announced plans for a fully-integrated commercial alliance agreement with VivaAerobus, designed to expand options for nonstop leisure air travel between our markets in the United States and Mexico. We and VivaAerobus have submitted a joint application to the Department of Transportation (DOT) requesting approval of and antitrust immunity for the alliance. Although the DOT process has progressed substantially, their review of our application is currently suspended pending the outcome of diplomatic engagement on broader treaty issues and, as a result, the timing of commencement of this service is uncertain as it will depend on when or if the DOT will ultimately approve the grant of antitrust immunity.

Previous wording

Third party products revenue. Third party products revenue for first quarter 2024 increased 28.3 percent compared to first quarter 2023. The increase from 2023 is primarily the result of a 34.8 percent increase in the marketing component of co-brand credit card revenues.

Current wording

Third party products revenue. Third party products revenue for second quarter 2024 increased 28.4 percent compared to second quarter 2023. The increase from 2023 is primarily the result of a 41.7 percent increase in the marketing component of co-brand credit card revenues and $2.1 million of revenue from a new travel insurance product implemented during first quarter 2024.

Previous wording

Fixed fee contract revenue. Fixed fee contract revenue for first quarter 2024 increased 33.6 percent compared to the same period in 2023 on a 48.3 percent increase in fixed fee departures as the result of strong performance during March Madness and growth in corporate charters and other sports flying.

Current wording

Fixed fee contract revenue. Fixed fee contract revenue for second quarter 2024 increased 50.7 percent compared to the same period in 2023 on a 51.1 percent increase in fixed fee departures as the result of strong performance and growth in corporate and military charters and other sports flying.

Previous wording

We primarily evaluate our expense management by comparing our costs per available seat mile (ASM) across different periods, which enables us to assess trends in each expense category. The following table presents unit costs on a per ASM basis, or CASM, for the indicated periods. Excluding fuel on a per ASM basis provides management and investors the ability to measure and monitor our cost performance absent fuel price volatility. Both the cost and availability of fuel are subject to many economic and political factors beyond our control. Excluding special charges and Sunseeker operating costs allows management and investors to better compare our airline unit costs with those of other airlines.

Current wording

We primarily evaluate our expense management by comparing our costs per available seat mile (ASM) across different periods, which enables us to assess trends in each expense category. The following table presents unit costs on a per ASM basis, or CASM, for the indicated periods. Excluding fuel on a per ASM basis provides management and investors the ability to measure and monitor our cost performance absent fuel price volatility. Both the cost and availability of fuel are subject to many economic and political factors beyond our control. Excluding special charges and Sunseeker operating costs also allows management and investors to better compare our airline unit costs with those of other airlines.

Previous wording

Operating CASM, excluding fuel, airline special charges, and Sunseeker Resort activity. Operating CASM, excluding fuel, airline special charges and Sunseeker Resort activity, increased by 14.5 percent to 8.87 ¢ for first quarter 2024 from 7.75 ¢ in first quarter 2023. The CASM-ex increase is primarily attributable to a 26.7 percent or $42.0 million increase in airline salaries and benefits expense in first quarter 2024 over first quarter 2023 (for the reasons described in the expense line item discussion below). This increase was on a relatively flat, approximately 2.0 percent, increase in capacity as we continue to manage capacity to meet demand.

Current wording

Operating CASM, excluding fuel, airline special charges, and Sunseeker Resort activity. Operating CASM, excluding fuel, airline special charges and Sunseeker Resort activity ("CASM-ex"), increased by 5.6 percent to 8.23 ¢ for second quarter 2024 from 7.79 ¢ in second quarter 2023. The CASM-ex increase is primarily attributable to a 12.8 percent or $22.5 million increase in airline salaries and benefits expense in second quarter 2024 over second quarter 2023 (for the reasons described in the expense line item discussion below). This increase was on relatively flat capacity (a decrease of 0.8 percent) as we continue to manage capacity to meet demand while navigating other constraints to airline growth.

Previous wording

Salaries and benefits expense. Salaries and benefits expense increased $53.7 million, or 33.6 percent, in first quarter 2024 compared to first quarter 2023. Higher salaries and benefits expense was primarily driven by an 11.9 percent increase in airline full time equivalent employees (including an 18.9 percent increase in the number of pilots employed since March 31, 2023) and increased crew pay, including the impact of a $20.4 million accrual for pilot retention bonuses during first quarter 2024. The accrued pilot retention bonus is payable after completion of a new collective bargaining agreement with this work group. The grand opening of Sunseeker Resort in December 2023 further drove the increase by adding nearly 1,000 Resort team members and an increase of $11.7 million in salaries and benefits expense in first quarter 2024.

Current wording

Salaries and benefits expense. Salaries and benefits expense increased $32.8 million, or 18.5 percent, in second quarter 2024 compared to second quarter 2023. Higher salaries and benefits expense was primarily driven by a 10.2 percent increase in airline full time equivalent employees (including a 25.5 percent increase in the number of pilots employed since June 30, 2023) and increased crew pay. Increased crew pay reflects the impact of a $23.7 million accrual for pilot retention bonuses during second quarter 2024 which exceeds the second quarter 2023 accrual by $11.9 million, and a new collective bargaining agreement with our flight attendants that includes wage increases effective April 2024. The accrued pilot retention bonus is payable after ratification of a new collective bargaining agreement with this work group. The grand opening of Sunseeker Resort in December 2023 further drove the increase by adding nearly 900 Resort team members and an increase of $10.3 million in salaries and benefits expense in second quarter 2024.

Previous wording

Aircraft fuel expense. Aircraft fuel expense decreased $19.5 million, or 10.3 percent, for first quarter 2024 compared to first quarter 2023. This is primarily due to an 11.4 percent decrease in average fuel cost per gallon, offset by a 1.4 percent increase in fuel gallons consumed.

Current wording

Aircraft fuel expense. Aircraft fuel expense increased $7.4 million, or 4.6 percent, for second quarter 2024 compared to second quarter 2023. This is primarily due to a 5.2 percent increase in average fuel cost per gallon, offset by a 0.6 percent decrease in fuel gallons consumed from a 0.8 percent decrease in total available seat miles.

Previous wording

Depreciation and amortization expense. Depreciation and amortization expense for first quarter 2024 increased by 16.8 percent compared to first quarter 2023 due to a $2.1 million increase in heavy maintenance amortization, $6.0 million of depreciation expense related to the Sunseeker Resort, and other assets placed into service since first quarter 2023.

Current wording

Depreciation and amortization expense. Depreciation and amortization expense for second quarter 2024 increased by $11.4 million or 21.2 percent compared to second quarter 2023. The increase is primarily related to $6.0 million of depreciation expense related to the Sunseeker Resort, a $2.5 million increase in heavy maintenance amortization, and an increase of $2.0 million in capitalized software depreciation related to new IT systems placed in service beginning in the second half of 2023.

Previous wording

Other operating expense. Other operating expense increased $16.8 million or 54.9 percent in first quarter 2024 compared to first quarter 2023. The increase is primarily attributable to $13.1 million in Sunseeker Resort operating expenses consisting of $3.6 million cost of sales, $2.1 million insurance, $0.9 million property taxes, and other general and administrative expenses. Incremental increases in crew travel, training, and outside labor expense also contributed to the increase in other operating expense.

Current wording

Other operating expense. Other operating expense increased $2.5 million or 7.7 percent in second quarter 2024 compared to second quarter 2023. The increase was driven by an $8.1 million increase in Sunseeker Resort operating expenses consisting of $2.4 million cost of sales (primarily food and beverage cost), $2.2 million insurance, $0.7 million property taxes, and other general and administrative expenses, and incremental software licenses, training, and support related to new IT systems. These increases were offset in part by gains on the sale of property and equipment.

Previous wording

Special charges. During first quarter 2024, we recorded $13.1 million of special charges including $14.9 million of accelerated depreciation from the early retirement of 21 airframes from 2023 through 2025 pursuant to a revised fleet plan, which was offset by net insurance recoveries related to Sunseeker Resort hurricane damages.

Current wording

Special charges. During second quarter 2024, we recorded $18.1 million of special charges including $9.3 million of accelerated depreciation from the early retirement of 21 airframes through 2026 pursuant to a revised fleet plan and $10.8 million related to the ratification bonus on our new flight attendant collective bargaining agreement, which was offset by $2.0 million of net insurance recoveries related to Sunseeker Resort hurricane damages.

Previous wording

We recorded a $0.4 million income tax benefit at an effective tax rate of 31.3 percent and an $18.3 million provision for income tax at a 24.5 percent effective tax rate for the three months ended March 31, 2024 and 2023, respectively. The effective tax rate for the three months ended March 31, 2024 differed from the statutory federal income tax rate of 21.0 percent primarily due to state income taxes, permanent tax differences, and discrete items. During the quarter, we recognized a $0.2 million income tax benefit for discrete items which were related to share based compensation and to an immaterial adjustment to a prior year uncertain tax benefit.

Current wording

We recorded a $4.3 million income tax expense at an effective tax rate of 24.0 percent and a $27.9 million income tax expense at a 24.0 percent effective tax rate for the three months ended June 30, 2024 and 2023, respectively. The effective tax rate for the three months ended June 30, 2024 differed from the statutory federal income tax rate of 21.0 percent primarily due to state income taxes and permanent tax differences.

Previous wording

Passenger revenue. First quarter 2024 passenger revenue decreased slightly compared to the same period in 2023 on relatively flat capacity. The decrease in passenger revenue was driven by lower average scheduled service base fare and lower average ancillary fare, which decreased 5.0 percent and 2.0 percent respectively, coupled with a 1.3 percent decrease in passengers flown, compared to first quarter 2023. The lower base fare is attributable to weaker demand in off-peak periods. The lower ancillary fare is due, in part, to issues faced in transitioning to the Navitaire system.

Current wording

Passenger revenue. For the six months ended June 30, 2024, passenger revenue decreased $77.6 million or 6.2 percent compared with the same period in 2023 on relatively flat capacity. The decrease in passenger revenue was primarily driven by an 8.0 percent decrease in average scheduled service base fare coupled with a 2.3 percent decrease in passengers flown. The lower base fare is attributable to weaker demand in off-peak periods.

Previous wording

Interest expense, net for the quarter ended March 31, 2024 decreased by $3.7 million, or 18.0 percent over first quarter 2023. The decrease is primarily attributable to a $6.0 million increase in capitalized interest (which consists of a $9.3 million increase in capitalized interest related to Boeing PDP deposits offset by a $3.3 million decrease in capitalized interest related to the Sunseeker Resort) and a $2.1 million increase in interest income due to higher yields on investments in debt securities. These amounts were offset by an increase of $4.4 million in interest expense due to a year-over-year increase of $142.9 million of debt outstanding.

Current wording

Interest expense, net of interest income and capitalized interest, for the six months ended June 30, 2024 decreased by $3.9 million, or 10.4 percent when compared to the same period in 2023. The decrease is primarily attributable to an $8.7 million increase in capitalized interest driven by increased pre-delivery deposits on aircraft and a $1.4 million increase in interest income, which were offset by a $6.2 million increase in interest expense on a year-over year increase of $58.5 million of debt outstanding and a 0.7 percentage point increase in weighted average variable interest rates.

Previous wording

Cash, cash equivalents and investment securities (short-term and long-term) decreased slightly to $853.7 million at March 31, 2024, from $870.7 million at December 31, 2023. Investment securities represent highly liquid marketable securities which are available-for-sale.

Current wording

Cash, cash equivalents and investment securities (short-term and long-term) decreased slightly to $851.1 million as of June 30, 2024, from $870.7 million at December 31, 2023. Investment securities represent highly liquid marketable securities which are available-for-sale.

Previous wording

Our current share repurchase authority is $75.7 million. We have not repurchased shares on the open market since December 2023.

Current wording

Our current share repurchase authority is $75.7 million. We have not repurchased shares on the open market since December 2023. We have suspended our quarterly cash dividend in anticipation of upcoming capital needs related to our fleet investments.

Previous wording

Our debt and finance lease obligations balance, without reduction for related issuance costs, decreased slightly from $2.28 billion as of December 31, 2023 to $2.27 billion as of March 31, 2024. Net debt (total debt less unrestricted cash, cash equivalents, and investments) as of March 31, 2024 was $1.40 billion, an increase of $6.1 million from December 31, 2023.

Current wording

Our debt and finance lease obligations balance, without reduction for related issuance costs, decreased by $44.5 million from $2.28 billion as of December 31, 2023 to $2.24 billion as of June 30, 2024. Net debt (total debt less unrestricted cash, cash equivalents, and investments) as of June 30, 2024 was $1.37 billion, a decrease of $21.2 million from December 31, 2023.

Previous wording

During the three months ended March 31, 2024, we entered into credit agreements for up to $218.5 million which will be collateralized by new aircraft deliveries. These commitments, along with commitments existing prior to first quarter 2024, are expected to refinance on a long term basis $121.0 million of our PDP loan balances which are presently classified as current maturities of long term debt. No draws have been made on these financing commitments to date as they will be funded when the aircraft to be pledged are delivered to us.

Current wording

During the six months ended June 30, 2024, we entered into credit agreements for up to $218.5 million which will be collateralized by new aircraft deliveries. These commitments, along with commitments existing prior to first quarter 2024, are expected to refinance on a long-term basis $121.0 million of our PDP loan balances which are presently classified as current maturities of long term debt. No draws have been made on these financing commitments to date as they will be funded when the aircraft to be pledged are delivered to us.

Previous wording

Operating Activities. Operating cash inflows are primarily derived from providing air transportation and related ancillary products and services to customers. During the three months ended March 31, 2024, our operating activities provided$167.8 million of cash compared to$215.4 million during the same period 2023. This change is primarily attributable to a$57.1 million decrease in net income compared to first quarter 2023.

Current wording

Operating Activities. Operating cash inflows are primarily derived from providing air transportation and related ancillary products and services to customers. During the six months ended June 30, 2024, our operating activities provided$236.7 million of cash compared to$346.6 million during the same period 2023. This change is primarily attributable to a$131.8 million decrease in net income compared to the 2023 period.

Previous wording

Investing Activities. Cash used for investing activities was $93.6 million during the three months ended March 31, 2024 compared to $114.2 million during the same period in 2023. The change is primarily attributable to a $33.9 million increase of proceeds from maturities of investment securities, net of purchases, offset by $10.8 million lower Sunseeker insurance proceeds during the quarter (included in the other investing activities line item) and a $3.5 million increase in purchase of property and equipment, including aircraft PDPs.

Current wording

Investing Activities. Cash used for investing activities was $109.8 million during the six months ended June 30, 2024 compared to $517.8 million during the same period in 2023. The change is primarily attributable to a $211.5 million decrease in cash used for purchase of property and equipment, including aircraft PDPs and a $193.2 million increase in proceeds from maturities of investment securities, net of purchases, as proceeds from investment securities exceeded purchases in the first six months of 2024 but not the first six months of 2023.

Previous wording

Financing Activities. Cash used in financing activities for the three months ended March 31, 2024 was $23.5 million, compared to $11.9 million of cash used in the same period in 2023. The change was primarily driven by a $40.8 million decrease in proceeds from issuance of debt, offset by a $20.0 million decrease in principal repayments on long term debt and finance lease obligations and a $6.9 million decrease in other financing activities primarily related to the disbursement of funds related to the Sunseeker construction loan. We also paid $11.0 million in cash dividends during the quarter, compared to $12.3 million cash used for repurchases of common stock in the same period of 2023.

Current wording

Financing Activities. Cash used in financing activities for the six months ended June 30, 2024 was $54.4 million, compared to $94.4 million provided by financing activities during the same period in 2023. The change was primarily driven by a $189.4 million decrease in proceeds from issuance of debt offset by an $86.1 million decrease in principal repayments on long term debt and finance lease obligations. Other factors included a $38.1 million decrease in financing disbursements related to the Sunseeker construction loan and the payment of $21.9 million in cash dividends in 2024 compared to none in the same period in 2023 offset by a decrease of $12.4 million in cash used for common stock repurchases.

Previous wording

We have made forward-looking statements in this quarterly report on Form 10-Q, and in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” that are based on our management’s beliefs and assumptions, and on information currently available to our management. Forward-looking statements include our statements regarding the number of contracted aircraft to be placed in service in the future, the timing of aircraft deliveries and retirements, the number of possible future markets that may be served, the implementation of a joint alliance with VivaAerobus, the operations of our Sunseeker Resort, as well as other information concerning future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, the effects of future regulation and the effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words "believe," "expect," "anticipate," "intend," "plan," "estimate," “project,” “hope” or similar expressions.

Current wording

We have made forward-looking statements in this quarterly report on Form 10-Q, and in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” that are based on our management’s beliefs and assumptions, and on information currently available to our management. Forward-looking statements include our statements regarding the number of contracted aircraft to be placed in service in the future, the timing of aircraft deliveries and retirements, our ability to increase aircraft utilization and also to increase per passenger revenue with our new revenue management system, the implementation of a joint alliance with VivaAerobus, the operations of our Sunseeker Resort, as well as other information concerning future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, the effects of future regulation and the effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words "believe," "expect," "anticipate," "intend," "plan," "estimate," “project,” “hope” or similar expressions.

Previous wording

There have been no material changes to our critical accounting estimates during the three months ended March 31, 2024. For information regarding our critical accounting policies and estimates, see disclosures in the Consolidated Financial Statements and accompanying notes contained in our 2023 Form 10-K, and in Note 1 of Notes to Consolidated Financial Statements (unaudited).

Current wording

There have been no material changes to our critical accounting estimates during the six months ended June 30, 2024. For information regarding our critical accounting policies and estimates, see disclosures in the Consolidated Financial Statements and accompanying notes contained in our 2023 Form 10-K, and in Note 1 of Notes to Consolidated Financial Statements (unaudited).