Allegiant Travel CO

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

CONSOLIDATED STATEMENTS OF CASH FLOWS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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, 2024 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 has reclassified certain prior period amounts to conform to the current period presentation.

Note 2 —Special Charges

Sunseeker Resort

Sunseeker Resort at Charlotte Harbor (the "Resort" or "Sunseeker Resort") was impacted by Hurricanes Ian, Idalia, Debby, Helene and Milton between 2022 and 2024. While the Resort was built to withstand hurricanes and flooding, these weather events are unprecedented in their frequency and the amount of destruction caused in Southwest Florida. The Company believes these weather events will be unusual and has included the cost of these events and the related insurance recoveries in special charges. The estimated losses are recorded to special charges in the period of the event and are offset by insurance recoveries in the period they are approved for payment by the insurer.

Airline

In September 2023, the Company reevaluated its fleet plan and identified 21 airframes for early retirement to coincide with 737 MAX aircraft deliveries as scheduled under an amendment to the Company's agreement with The Boeing Company signed in September 2023. Two airframes were retired in 2023 andseven airframes were retired in 2024. Additionally, two airframes have been retired during the three months ended March 31, 2025. The remaining airframes are to be retired between August 2025 and December 2026. The accelerated depreciation on these airframes resulting from a change in the estimated useful life is recorded as a special charge in the quarters ended March 31, 2025 and March 31, 2024.

Special Charges

The table below summarizes special charges recorded during the three months ended March 31, 2025, and 2024.

(1)Includes $3.7 million and $0.7 million of business interruption insurance proceeds for the three months ended March 31, 2025 and March 31, 2024, respectively.

Note 3 —Revenue Recognition

Passenger Revenue

Passenger revenue is the most significant category in the Company's reported operating revenues, as outlined below:

Sales of passenger tickets not yet flown are recorded in air traffic liability. Passenger revenue is recognized when transportation is provided. As of March 31, 2025, the air traffic liability balance was $439.6 million, of which approximately $389.2 million was related to forward bookings, with the remaining $50.4 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 $370.9 million that was recorded in the air traffic liability balance as of December 31, 2024, approximately 72.3 percent was recognized into passenger revenue during the three months ended March 31, 2025.

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.

Resort Revenue

The Company's resort revenues for the three months ended March 31, 2025 are set forth in the table below:

Revenue from banquets, golf, retail and spa services is included in other resort revenue. Resort revenue is recognized as the underlying services or goods have been provided. There is typically little to no lag between when the services are performed and when payment is remitted. Large group reservations, conventions, and other event bookings require advance deposits which are recorded as accrued liabilities in the Company's balance sheet until the related services and goods are provided. Guest receivables are recorded in accounts receivable on the Company's balance sheet for room nights stayed prior to payment at checkout. The amounts of advance deposit liabilities and guest ledger receivables were not material as of March 31, 2025 or December 31, 2024.

Loyalty redemptions

In relation to the travel component of the Allways Rewards® co-brand credit card contract, the Company has a performance obligation to cardholders with future travel award redemptions at the airline and resort. Therefore, consideration received related to the travel component is deferred based on its relative selling price and is recognized into passenger revenue or resort revenue when the points are redeemed and the underlying service is provided. Similarly, in relation to the Allways Rewards loyalty program, points earned through the program are deferred based on the stand-alone selling price and recognized into passenger or resort revenue when the points are redeemed and the underlying service is provided.

The following table presents the activity of the co-branded credit card and the loyalty program as of the dates indicated:

The current portion of the loyalty program liability represents the estimate of revenue to be recognized in the next 12 months based on historical trends, with the remaining balance reflected in noncurrent liabilities expected to be recognized into revenue in periods thereafter.

Note 4 —Property and Equipment

The following table summarizes the Company's property and equipment as of the dates indicated:

As of March 31, 2025, the Company had firm commitments to purchase 42 aircraft.

At the end of fourth quarter 2024, the Company recorded an impairment loss of $321.8 million to reflect the difference between the carrying value of the Sunseeker Resort assets and their fair values. As the result of the recent developments related to tariffs, the potential for weakened business conditions, and the ongoing process for a full or partial sale of the Resort, it is reasonably possible that a change in the estimate of the Resort's fair value will occur in the near term and that a reduction in the estimate of fair value will result in recognition of additional impairment losses related to the Resort.

Accrued capital expenditures, which primarily relate to the airline, as of March 31, 2025 and December 31, 2024 were $8.3 million and $8.9 million, respectively.

Note 5 —Long-Term Debt

The following table summarizes the Company's long-term debt and finance lease obligations, net of related costs, as of the dates indicated:

Maturities of long term debt as of March 31, 2025, for the next five years and thereafter, in the aggregate, are:

Debt Secured by Aircraft

In March 2024, the Company entered into credit agreements under which it was entitled to borrow up to $218.5 million, and which was to be collateralized by new aircraft upon delivery. During the three months ended March 31, 2025, the Company borrowed $174.5 million under these facilities. The loans bear interest at a variable rate based on SOFR, and are payable in quarterly installments over a term of 12 years.

Other Secured Debt

In November 2023, the Company entered into a pre-delivery deposit financing facility to borrow up to $158.0 million, secured by the Company's purchase rights for certain Boeing 737 MAX aircraft. The facility bears a floating interest rate based on SOFR and was originally due upon delivery of each aircraft or no later than June 30, 2025. In April 2025, the Company entered into an amendment to extend the maturity date of the agreement to March 2027. As of March 31, 2025, the facility had an outstanding principal balance of $132.6 million. As the extension of this facility evidences the Company's intent and ability to refinance the debt on a long-term basis, the Company has included $53.9 million of the facility's outstanding balance, which will be due upon delivery of aircraft that will occur more than one year after the balance sheet date, in long term debt as of March 31, 2025.

Construction Loan Agreement

In October 2021, Sunseeker Florida, Inc. (“SFI”), a wholly-owned subsidiary of the Company, entered into a credit agreement and borrowed $350.0 million to fund the initial phases of Sunseeker Resort construction. The loan had an original maturity date of October 2028, with semi-annual principal payments of $26.0 million beginning in 2025. Prior to first quarter 2025, the Company had prepaid $250.0 million of the loan's principal balance. During the three months ended March 31, 2025, the Company prepaid the remaining $100.0 million principal balance in full.

Unsecured Debt

In December 2024, the Company entered into an unsecured credit facility and received proceeds of $130.5 million. The loan bears interest at a floating rate based on SOFR, and principal repayments are due at the delivery of certain 737 MAX aircraft, or no later than December 2025. During the three months ended March 31, 2025, the Company made repayments totaling $95.8 million under the facility as principal amounts became due upon delivery of aircraft.

Note 6 —Income Taxes

The Company recorded a $9.8 million income tax expense at a 23.5 percent effective tax rate and a $0.4 million income tax benefit at a 31.3 percent effective tax rate for the three months ended March 31, 2025 and 2024, respectively. The effective tax rate for the three months ended March 31, 2025 differed from the statutory federal income tax rate of 21.0 percent primarily due to state income taxes and permanent tax items, neither of which are individually significant.

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 three months ended March 31, 2025.

Financial instruments measured at fair value on a recurring basis:

None of the Company's long-term debt is publicly traded. The Company has determined the estimated fair value of all this debt to be Level 3, as certain inputs used to determine the fair value of these agreements 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, including current maturities and without reduction for related costs, are as follows:

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

Note 8 —Earnings per Share

Basic and diluted earnings per share are computed pursuant to the two-class method. Under this method, the Company attributes net income 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.

The following table sets forth the computation of net income 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):

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.

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 President and CEO, who assesses segment performance and makes resource allocation decisions using information about each operating segment's operating income and pretax income. The CODM reviews separate financial information and makes resource allocation decisions for the Company'stwo 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. Scheduled service and fixed fee air transportation services have similar operating margins, economic characteristics and production processes (check-in, baggage handling and flight services) which target the same class of customers and are subject to the same regulatory environment. As a result, the Company believes its airline activities operate underone reportable segment and does not separately track expenses for scheduled service and fixed fee air transportation services.

Sunseeker Resort Segment

The Sunseeker Resort segment operates as a single business unit and includes hotel rooms and suites for occupancy, group meeting facilities, food and beverage options, Aileron Golf Course and other Resort amenities.

Segment profit or loss, revenues, significant segment expenses, and other required financial information for each of the Company's operating segments are set forth below:

(1) Other operating expenses in the Airline segment consist of insurance, crew training and travel, legal expense, gains and losses on the sale of flight equipment, and other general and administrative expenses. Other operating expenses in the Sunseeker segment consist of food and beverage cost of goods sold, contract labor, property tax, insurance, and other general and administrative expense.

Total assets were as follows as of the dates indicated:

Note 11 —Subsequent Events

In April 2025, the Company entered into a credit agreement under which the Company is entitled to borrow up to $221.3 million, which will be funded upon delivery of, and collateralized by, aircraft currently on order. The notes under the facility will bear interest at a rate determined at the time of drawdown and mature on the 12th anniversary of each draw. As of May 7, 2025, the facility remains undrawn.