Tag Archives: Nasdaq:ALGT

View from the Hammock: When Your Car is Officially Classified As a Clunker


Hello all.

Holly here.

I figured I’d take a minute away from my vacation mindset to drop in and say hello.

Yes, yours truly is “officially” on my usual August publishing hiatus, although with all the work I had put off doing until I had a break from publishing, I’m not sure what a real vacation looks like anymore.

One of the more distressing issues I faced in the last week or so was the fact that I am driving an official “clunker.”

Yes, that’s right. My “vintage” automobile as I prefer to call the Black Beauty, was on the government’s official list of clunkers. Not only that, but the $4500 I would have been entitled to — had I opted to go deeper into debt for an automobile that I am convinced would not be built nearly as well as mine is — is probably $1500 more than what I would get today if I tried to sell her on my own.

Let those numbers sink in and then think about what I am driving.

A 1991 Lexus LS400. In its day, a revolutionary car. Today? The damn thing still holds up very well to whatever competition you want to throw at it.

Yes, my car has all the usual 1991 LS400 quirks — a power steering pump that is going bad, brakes that have that unmistakable “soft” early Lexus feel to them, an a/c compressor that costs as much as a down payment on a small house to replace when it decides to stop working, and speakers that have finally, for the exception of two sets on the driver’s side, seen their seals rot out from old age.

But it also rides great, gets good gas mileage for its class, only has 130K miles on it — yes, after 18 years — and still looks great, both on the inside and the outside. Just two days ago, someone came up to me and starting raving about how great that particular year was. And how he wishes he still had his. (He now owns one of the much more young and nubile models. Oh, and much more expensive.) Yet, for all of these “improvements,” he told me he wished he had never traded in his 1991. “Too much crap on these new ones that can go wrong,” was one comment he muttered as he walked around the back end of the car, gazing at it as one would a prized painting. Or horse.

Unfortunately, the Black Beauty goes in tomorrow for a thorough “20 point” evaluation by a garage that has been recommended to me here in Dallas. They specialize in taking care of prized possessions such as mine. I say unfortunately because I suspect I am looking at some expensive maintenance repairs here shortly. I know the front brakes need repair. It’s time for an oil change. But then there is the power steering pump that I have continued to nurse through its dying days. Not to mention more than one “import” car center that knew nothing about the care of feeding of elder Lexii.

But back to my anticipated outlays. There is also a front suspension that needs some care and feeding. You know. Control arms. Ball joints. Bushings. Struts. The kind of things that when they need to be replaced, dollar signs begin to ring up like a pinball machine gone wild.

Then there are those speakers.

Do I pay to replace them? Or do I not?

Do I pay to repair the car? Or not?

Worse yet — do I call one of the ads I saw in Craigslist for “parted-out” LS 400s? Could I bear to go see one in pieces? Much less pick my way through the carcass to pull out the parts I need?

Is it time, finally, to bite the bullet and start looking for a new “used” car? (I long ago stopped buying new vehicles. It’s just too much money lost from the get-go in my opinion.)

The problem is — I don’t know of any new “used” cars that I would like better than this one.

While I contemplate my clunker dilemma, I suddenly realize that I am thinking about airlines again. Specifically, I am thinking about MD-80s. (I know, I’m supposed to be on vacation.)

But I would be crazy not to see the similarities to my situation and the Allegiant business model. You know — the airline that defies conventional wisdom and flies aging, maintenance-heavy MD-80s. The same MD-80s that cost next-to-nothing, resulting in ownership costs that are also next-to-nothing.

When I look at my “clunker” in that respect, while I may be looking at some hefty maintenance expenses on the horizon, and while I may pay more for gas then someone who gets 30 miles to the gallon, I have no car payments. And I haven’t had any in 10 years. (Yes, I am the Black Beauty’s second owner.)

For my purposes, the Black Beauty gets me from point A to point B quite well. Quietly. And in style.

Taking this “Allegiant” approach, the answer is obvious. I think I’ll keep her. Then again, I haven’t seen the results of the “20 point check list” I’m going to get tomorrow.

Nah, I still think I’ll keep her.

Heck, maybe I’ll even call one of these guys back who are parting out some of her siblings. Yank out a few tweeters and woofers. Oh, and an instrument cluster as well. (Another legendary weak point.) And maybe a power lock switch for the driver’s door. (I broke the top off mine a few months ago.) Maybe I need to look at the process as the equivalent of performing an “organ transplant.” Or stem cell renewal. As opposed to picking the carcass of similar vehicles in an effort to keep my official “clunker” on the road.

Yep, I’m game. Better yet, I’ll still be much better off, financially, than had I sent her off to the equivalent of the automobile slaughter house. Even if I do have to spend a few bucks on getting her back into shape.

Thank you Allegiant. You’ve helped me make my decision.

Fie on the “Cash for Clunkers” program.

Allegiant Air Pre-Announces Earnings


Late Tuesday Las Vegas-based Allegiant Air pre-announced that it will report earnings for the first quarter of between $1.34 to $1.38 per share.

This estimate is far above the then-forecast estimate by analysts for the airline — which had estimated the airline would post a profit of $1.20 a share.

The airline will report earnings this coming Monday.

So why the uptick from previous company guidance?

Analyst Dave Fintzen with Barclays, who recently initiated coverage of the airline’s stock (we talked about his recent research note on the airline in the latest edition of PlaneBusiness Banter) said today that because the airline gave no details other than the higher EPS estimate, it’s a bit hard to know where the better performance for the airline was. Although he assumes it was all on the revenue side, with revenue probably outperforming even the previous management guidance.

So what is Dave going to be looking for when the airline reports on Monday? Any feedback on the airline’s booking trends in its new markets, especially Los Angeles, in addition to any updated information on where the airline is going to grow now — as we move into the second quarter and third quarters.

It’s Official: Allegiant Picks LAX for New Base City


It’s official. For those Allegiant fans out there, you know the airline talked on its recent earnings call about setting up a new base city. Last week Cranky Flier went public with his guess — and his guess wasn’t really much of a guess after the airport manager in Sioux Falls went public about it being Los Angeles. Duh.

So why was the airport manager in Sioux Falls talking about it anyway?

Because on Allegiant’s website the airline had asked folks to guess what their new base city was going to be. The only information they were giving out last week is that the airline was going to start service out of the new base city to 12 destinations. And yes, one of those destinations just happened to be ….Sioux Falls.

Here are the 12 cities that Allegiant will begin operating to out of LAX:

1, Bellingham

2. Billings

3. Des Moines

4. Fargo

5. Grand Junction

6. McAllen

7. Medford

8. Missoula

9. Monterey

10. Sioux Falls

11. Springfield

12. Wichita

Hmmmm. This should be interesting.

The Mighty Allegiant Air Trundles On — Profitably


Delta Air Lines was not the only airline that reported earnings yesterday.

One of our PlaneBusiness Banter stock faves, Allegiant, took its turn at the 2008 Fourth Quarter Confessional. The big difference with Allegiant? There were no “Hail Marys” proscribed as penance for their less-than-satisfactory performance.

Quite the opposite.

The airline with the screwy business plan once again posted what I thought were very strong earnings. Allegiant Travel Co., the parent of Allegiant Air, reported that earnings nearly quadrupled for the quarter, on 21% higher revenue.

The company posted earnings of $18.2 million, or $0.88 a share. This was up from $4.8 million or $0.23 a share the year before.

Operating revenues were up 21.3% while operating expenses were down 1.2%. The airline saw operating income soar 373.6%.

And remember what the price of oil was doing during the fourth quarter. Then remember that yes, these are the guys who fly those gas-guzzling Maddogs. (MD-80s).

Load factor? Up a sizzling 8.8 points over the fourth quarter of 2007 — to 86.5%.

And the astonishing results just continue to go on and on and on.

I’ll take a full look at the airline’s results and talk about their earnings call in this week’s PBB.

In the meantime, kudos to the management at Allegiant. I’ve said this before, and I’ll say it again — this is one of the few management teams in this industry that knows who they are, what their business model is, and how their airline makes money. Or doesn’t.