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I've said it again and again, and now you're going to hear it one more time – Allegiant Travel (Nasdaq: ALGT ) is the only company you should be considering when you're scouring the airline sector for a solid investment.
Last night, Allegiant Travel reported its 35th consecutive profitable quarter -- and built upon already strong results.
The top-line figures may not have been much to look at, considering that the company's earnings actually fell by 27% over the year-ago period. But, if we were just to consider its profit and ignore everything else, we'd miss a ridiculously bullish report and first-quarter 2012 forecast.
For starters, passenger revenue per available seat mile (PRASM) rose by an incredible 24.5%. Why is this important? Beause PRASM is an indicator that airlines use to determine how willing passengers are to accepting higher fares. Operating as a regional airline and strictly regulating its fleet to run only on the most cost-efficient routes, Allegiant has been able to easily negate the rising cost of fuel by passing along costs in the form of higher fares and costlier baggage fees. These price increases translated into a 16% jump in its average fare and a new company record for the third quarter at $120.63 per customer. This is also the fourth consecutive quarterly record for average fare price paid.
Allegiant's guidance was no slouch, either, with the company forecasting an 11%-13% fourth-quarter jump in PRASM over the year-ago period. For the first quarter of 2012 the company anticipates scheduled departures will rise by 10%-14%, with available seat miles jumping 15%-19% over last year.
This company simply doesn't stop growing , and it has prudent spending habits to thank for that. Whereas larger airlines AMR (NYSE: AMR ) , Delta Air Lines (NYSE: DAL ) , and United Continental (NYSE: UAL ) don't have the ability to start and stop their service routes with any swiftness, Allegiant is able to ground unprofitable routes with ease and adjust its service as demand calls for. Not surprisingly, even regional airlines like Alaska Air (NYSE: ALK ) and JetBlue (Nasdaq: JBLU ) -- which I like, may I add, are having trouble passing along rising fuel costs to consumers in the form of higher ticket prices, while Allegiant is having almost no trouble at all.
So what I'm really saying is this: Forget Red Bull, and let Allegiant give your portfolio wings!
What's your take on Allegiant's third-quarter performance? Weigh in with your thoughts below, and consider adding Allegiant to your free and personalized watchlist to keep up on the latest news with the company.