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Allegiant Travel Co (NASDAQ:ALGT)
Q4 2020 Earnings Call
Feb 3, 2021, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Q4 2020 Allegiant Travel Company Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to your speaker for today, Sherry Wilson. You may begin.

Sherry Wilson -- Director, Investor Relations

Thank you, Towanda. Welcome to the Allegiant Travel Company's Fourth Quarter and Full Year 2020 Earnings Call. On the call with me today are Maury Gallagher, the company's Chairman and Chief Executive Officer; John Redmond, the company's President; Greg Anderson, our EVP and Chief Financial Officer; Scott Sheldon, our EVP and Chief Operating Officer; Scott DeAngelo, our EVP and Chief Marketing Officer; Drew Wells, our SVP of Revenue and Planning; and a handful of others to help answer questions.

We will start with some commentary and then open it up to questions. The Company's comments today will contain forward-looking statements concerning our future performance and strategic plan. Various risk factors could cause the underlying assumptions of these statements and our actual results to differ materially from those expressed or implied by our forward-looking statements. These risk factors and others are more fully disclosed in our filings with the SEC. Any forward-looking statements are based on information available to us today. We undertake no obligation to update publicly any forward-looking statements whether as a result of future events, new information, or otherwise. The company cautions investors not to place undue reliance on forward-looking statements, which may be based on assumptions and events that do not materialize. To view this earnings release, as well as the rebroadcast of the call, feel free to visit the Company's Investor Relations site at ir.allegiantair.com.

With that, I'll turn it over to Maury.

Maurice J. Gallagher, Jr. -- Chairman and Chief Executive Officer

Thank you, Sherry, and good afternoon everyone. Thank you for joining our call today. First let me thank all of our team members, their spouses and families, as we continue to fly through these difficult times and carry our passengers to their destinations. Thank you again for all your hard work and dedication.

Last quarter, we were able to report some optimism. I qualified my statement at that time by saying some, this time I can say, more in the terms of optimism. And as it turned out though, we were a little more bullish on the call last quarter than we were able to deliver. Nevertheless, we had noticeable improvements over that quarter. My hats off to Drew Wells and his team, as he had to navigate -- they had navigated their way through the increased COVID problems in November and December. They did an excellent job maneuvering us through the declining demand during those months. To that end, we flew 2,200 fewer flights during this quarter, or 9% less than what we did in the third quarter. But we saw our unit revenue numbers go the right way up. Some numbers, passengers increased overall 7%, load factor increased by 9 points to 58%, average fair increased 15% to $110, up from $96, TRASM was up 30%, thought with that combination to $0.073, total revenues were up a total of $46 million and I'm happy to say we were EBITDA positive during the quarter, our first one for the year after -- well, I guess we may have been there first quarter. But again, we did this with 2,200 fewer flights. While we still have a way to go, TRASM in 2019 was just over $0.11, we are making excellent progress.

On the balance sheet front, we improved our position from 2019, even with the pandemic sandwiched in the middle. Our cash flow was up over $200 million at year-end 2020 and while we raised $150 million of new debt in the past few months, our net debt was essentially flat year-over-year. We were one of the few airlines to not approach the equity markets during these difficult times. But we're generating the equivalent of equity raises, as I said before by our NOL refunds. We have one coming in the not too distant future of $147 million and that will add nicely to the cash balances. Adding this total to our $685 million year-end cash balance, this gives us over $800 million of cash equivalents or $320 some million increase over our balance at the end of 2019. Can't tell you how proud I am of this management group. Not only did they do a marvelous job during the down-days last spring and summer, but just as important, they have positioned the company to take advantage of the disruption we're seeing in the industry in the coming year and thereafter. We've leaned out the company during the past year, it will show in our CASM-ex, going forward and in difficult times difficult decisions are required.

Scott DeAngelo and his team working with our IT group has revamped our website and mobile app making both more user friendly and particularly the mobile portion. We are seeing meaningful uptakes in our packages and other products. It was turned on in the last month, and while we are still learning how to use it and what to do with it, the initial response has been positive. Scott will have more comments in a moment.

Our model continues to be our -- key to our success. It provides us with amazing flexibility to go in either direction, to shrink dramatically as we did this past April. We were down almost 10-fold, if you can believe that year-over-year in capacity or to lead the industry in total capacity available for sale, as we did in 2020. Our ASMs were only down 19% for the year and on the back half of the year, last two quarters, we were only 13% down for that period. The team has developed an independent forecasting tool as well to help us gauge where demand is going. Year-over-year comparisons and using that to see where we're at does not work. For the past 3 or 4 months, we've been looking at a number of data components to attempt to understand demand. These data points include our weekly survey and other meaningful metrics that show activity, what people are doing to correlate to future air travel. We are comfortable. This is a good marker for the future travel and this is pointing as well up to the right, so much so that we believe it's time to step on the gas.

You heard an announcement a couple of weeks ago of our 21 new routes, we see opportunity and want to act on it. We will now use this flexibility we have in our system to grow the company in the coming months. We have the aircraft and sufficient crews to allow us to increase capacity. While we felt we had to reduce staff this year, looking backwards, including laying off some of our crews, I'm happy to report we will be asking these crew members to return to duty shortly. We see excellent opportunities in 2021 and in the follow-on years, we believe those increasing revenue numbers I summarized for the last quarter will carry over into Q1 and beyond. US airline industry will struggle for a number of years to come, particularly with respect to the business and international traffic. But I believe we are in a better place during this time, as an example, we are forecasting a growing capacity and Drew will talk about this of up 0.5% to up 5.5% for Q1 compared to our 2019 Q1. Most other carriers are either down 35% or more for the same period. Why are we able to separate so much from the others in the coming months, once again we are showing you the benefit of our model. In particular, our focus on flying on peak days or said differently, not flying on off peak days.

The remainder of the industry has historically operated 7 days per week and has utilization as a result of 11 to 12 hours per day per aircraft. Our approach focusing on peak days or when our leisure customers want to travel has us only flying our aircraft an average of 6 to 7 hours per day with that pattern. Today, the industry appears to be matching our approach, given leisure traffic is all that's moving, namely they have stopped flying on the Tuesday's of the week and hence their 35% reduction or more compared to the same period in 2019. There is a good reason for them not to fly on Tuesday, namely minimal business traffic, the industry is rationalizing their offerings to customers available, the leisure customer and the leisure customer for the most part does not move on Tuesday or Wednesday. This is advantage Allegiant in my opinion, I'd like to say the other guy is playing our game. With our focus exclusively on domestic leisure traffic and our flexible model and our excellent cost structure, we should emerge from this foray better than most in the coming 12 to 24 months. Lastly, our team members have been the true heroes in our world, and I want to thank them again personally each and everyone for all they have been doing during this trying 10 months, you are the backbone of this company.

In the meantime, in the airline space, we will take care of business. We are the survivors with a great company and an excellent business model. John?

John Redmond -- President

Thank you, Maury, and good morning everyone. We're fortunate that our model and history of flying domestic leisure customers. We don't have to sit here today and predict the timing of vaccination rollouts. We are all aware of the benefits and future upside, but they are events happening beyond our control. We have been laser-focused on what we can control, which is cost, capacity, capital, and network, which leads to deleveraging and balance sheet improvement. Without giving specific guide, I thought it might be helpful to provide some directional data points to help you understand how we see things in '21. These directional guides assume no significant changes to the environment we are operating in today. With all the hard work and difficult decisions, we have pulled roughly $75 million in structural changes out of our cost structure, using '19 as the baseline, a difficult but impressive number especially for an ultra-low cost carrier. As a result, our CASM-ex for full year 2021 should be less than Q1 of '21. Greg will provide some commentary on Q1 '21 CASM-ex.

Given that, our best results and margins are ahead of us not behind. On top of that, our interest expense will be lower in '21 and '22 than 2019. I don't think another airline can make such a statement. Our capacity will be up in every quarter in '21 versus same quarter '19. Drew of course will give a little more color on Q1 of '21. We expect to be EPS positive in the first quarter of '21. Our net debt each quarter-end of '21 will be less than year-end 2019. Again, all these directional guides assume no significant changes to the environment we are operating in today.

In regards to the Sunseeker Resort, we will not invest any more meaningful capital. We remain incredible believers in the thesis and future opportunities and continue to explore other options including other equity investors and/or non-recourse project financing. The resort is far more valuable built out and provides greater flexibility and more option than how it sits today. We have had and continue to have numerous discussions about the art of the possible with various interested parties. We have never been more excited about the future potential of the airline and intend to grow in '21 and beyond. The release has a chart showing the fleet growing to 108 planes by year-end. The aircraft acquisition opportunities are generational and we intend to take advantage of that. Greg will provide a little more color about our fleet count in his commentary.

In my 41 years of working, I've never been more excited about the year ahead of us. The opportunities in '21 and beyond are significant and achievable, especially at a time when the market for planes has never been better. We all understand how terrible and devastating this pandemic has been, but this management team has stepped up in a significant way, refined our business model quickly and aggressively, which is allowing us to recover faster than anyone. I would be remiss if I not take a moment to thank each and every one of our value team members, the continuing effects of the pandemic or staying at home had not deterred anyone for performing at the highest level, which is why we find ourselves in a position, we are today and with the brightest future. To steal a line from Tina Turner, you are simply the best.

With that, I'll turn it over to Scott DeAngelo.

Scott DeAngelo -- Chief Marketing Officer

Thanks, John. In 2020, our commercial approach continued to stay disciplined by executing against our data-driven recovery road map, which enabled us to do multiple things. We reduced marketing costs while still capturing a disproportionately high share, the leisure travel demand that did exist in the markets we serve. We continued building out transformational capabilities in the digital commerce and customer loyalty areas and ultimately, we laid the groundwork to enter 2021 well equipped to drive a faster and stronger recovery in the post pandemic leisure travel era. Our direct to customer distribution model continues to allow us to stay close to what our customers are saying and how our customers are behaving. As recently as Sunday, more than half of the customers who responded to our weekly survey said they plan to travel this spring and nearly two-thirds said they plan to travel this summer. While we appreciate that the situation and customer sentiment will continue to be fluid, it's noteworthy that flight searches at allegiant.com for the next month for key spring break weeks and for Memorial Day week are near or above prior year levels overall. And both searches and bookings continue to show relative strength for destination like the beaches along Florida's West Coast and Panhandle, as well as other small and mid-sized cities nationwide that service gateways to national parks and outdoor recreation, what we marketed as non-stop to nature. And that would obviously continue to fluctuate by season on average since last March, about a third of our booked customers said they traveled to visit friends and relatives, more than 25% stayed in hotels, nearly 20% stayed in a vacation rental, and more than 20% live between their primary residence and a second vacation home.

Total web traffic to allegiant.com in 2020 was down by 26% versus 2019, but the absolute number of visitors coming the most direct and lowest cost ways either by entering the allegiant.com URL in their browser or by clicking on a link in our marketing emails was actually flat versus 2019. While visitors coming from higher cost and less direct ways search engine marketing and OTA digital advertising were down 40% to 60%. In 2019, we pointed into our $3.30 per booking sales and marketing cost, as an industry-leading benchmark, yet in 2020 we reduced that same cost on a per booking basis by nearly 50% for the year and by nearly 75% during the past three quarters. This was achieved in two fundamental ways strategically by leveraging marketing analytics to create market-specific models for optimizing our mix of fixed cost and variable cost activities and also tactically by restructuring contracts and reworking plans across our advertising, e-commerce, and loyalty function.

We also continue to do more with less. Thanks to aggressive co-marketing efforts with our great airport destination and hotel partners. Continue -- continuing to strengthen our existing relationships and build new ones with entities in and around the leisure travel space remains central to our philosophy as a leisure travel ecosystem player. We believe that pulling marketing dollars and brand equities with these partners is a key approach for maximizing the capture of demand, as it returns to the markets we collectively serve. And for the final portion of the marketing 2020 recap, the back half of the year saw unprecedented awareness of the Allegiant brand, as Allegiant Stadium played home to four nationally broadcasted NFL games, including the season’s most-watched Monday night football and most-watched Sunday night football games, the latter of which finished in the top 10 most-watched TV shows of any kind in 2020. We've commented before that our goal for Allegiant Stadium wasn't that people would see the stadium and instantly book a flight. Rather, it was at the heightened awareness driven by Allegiant Stadium's millions of exposures and billions of impressions would help drive increased efficacy across all other marketing tactics, a dynamic best exemplified by our email marketing program, where flight deal marketing emails done on the days off and after Raiders home games at Allegiant Stadium drove year-over-year web traffic increases of more than 30%.

Looking forward, while our marketing approach for 2021 remains balanced, our primary focus will be to win back customers who flew with us in 2019 and early 2020, but have not flown with any airline since the pandemic began. Based jointly on proprietary behavioral data in consumer research, we estimate this group to represent 1.9 million customers, who accounted for more than $880 million of revenue in 2019. And based on recent survey data, 40% of this customer group said they expect to book air travel at some point in the next 6 months and virtually all of them say that Allegiant will be considered for that trip. As such, we remain vigilant by tailoring our communication with this group of customers and measuring our success at winning back the potential revenue their future travel represents, as they reenter the market. When they do return to allegiant.com, they'll be welcomed by our newly redesigned website, which we rolled out two weeks ago after extensive parallel testing versus our legacy website showed that the enhanced user experience grow sustained levels of improved conversion, higher ancillary take rate and as a result, larger transaction sizes. And while the lift to air and air ancillary offerings is driving strong initial returns, overhauling the technical foundation of our leisure travel platform affords us new degrees of freedom and selling beyond the aircraft by enhancing our ability to integrate and showcase increased levels of hotel inventory along with other travel products in the future, such as vacation rental properties and Allegiant Stadium travel packages. Already, we're seeing improved attachment rates for hotel and rental car a function, not only to improve digital experience, but also the greatly reduced consumer web search and OTA traffic, I referenced earlier.

Also, you may recall, nearly 85% of our customers say that air is the first purchase they make as part of their travel planning, which means we're the first to know where they're going, putting us in prime position to present them with hotel stay and rental car offers before anyone else. We believe the new allegiant.com exhibits not only industry leading features and functionality, but also incorporates leading Internet retail elements to form the foundation for improved product merchandising, personalized recommendations, and third party advertising as we continue to expand as a holistic leisure travel provider. And while the new allegiant.com is the first to rollout, it's not the only major new commercial capability that we focus on developing during the past year. Our fully redesigned mobile app, which mirrors the improved website user experience is planned to launch in the first half of this year and can also be expected to drive meaningful impact given that about 20% of total bookings now come through the mobile app. And because it now include the instant credit approval functionality that enables users the opportunity to apply, be instantly approved, and use the Allegiant World Mastercard to book. While that will be new to the app, our website has featured this functionality for years and it's the leading method for acquiring new cardholders.

Speaking of the Allegiant World Mastercard, in addition to the winning USA Today's Readers' Choice Award as the best airline co-branded card for a second straight year, nearly half of our cardholders flew with us during 2020, averaging more than 3.5 itineraries each at above transaction sizes that reflected their higher air ancillary and third-party product take rates. And finally, our loyalty focus will be considerably expanded by the introduction of our first-ever non-credit card rewards program planned to launch later this year, pending both technical and strategic considerations.

In summary, our continuous monitoring and assessment of the COVID-19 situation along with this impact on consumer travel attitudes and behaviors are informing if, how, and where we market today, while we continue building rich commercial technical capabilities that are laying the foundation for Allegiant's recovery and growth tomorrow.

And with that, I'll turn it over to Drew Wells.

Drew Wells -- Senior Vice President of Revenue and Planning

Thank you, Scott, and thanks everyone for joining us this afternoon. All things considered, I'm very pleased with the cadence of revenue results from the depths of the pandemic, especially considering the level of flying we've been able to maintain. Our yield and load factor metrics steadily improved over the third quarter and in absolute terms, our fourth quarter revenue performance of down 46.5% year-over-year was about 7.5 points better than the third quarter. We are further encouraged by our ancillary portfolio remaining in line with prior year and per passenger was down just 0.75% for the quarter, while 2020 was up 3% year-over-year. Our fourth quarter scheduled Service ASMs were down approximately 14%, as we flew heavily during the high demand weeks and cut significantly during the lower demand weeks, as mentioned in the previous call. This approach persists into the first quarter as January flight levels were quite low, while we are looking to fly decidedly more in the latter higher demand half of the quarter.

Despite January ASMs being down roughly 15% versus 2019, we believe that first quarter ASMs will be between plus 0.5% and plus 5.5% versus 2019 level of flying. Our low-cost, high-flexibility model allows us to pull down capacity while setting us up well to operate when demand exists. As a matter of example, our typical Sunday has seen about 260 flights, while we haven't had a single scheduled Tuesday flight yet this year. Over the last several years, we have worked to increase resiliency through a diversified array of origination and destination profiles. Some of this is evident in the route expansion over the last 90 days with 36 routes and 5 new cities, including more non-traditional Allegiant destinations like Jackson Hole, Wyoming. This is assisted by the success of Scott D and team's rollout of the nonstop to nature campaign, which has not only provided a new avenue for us to pursue immediate and future network growth, but also enabled us to unlock more potential out of the existing structure. We believe with the success of these route announcements and marketing campaigns that we can continue to evolve the definition of the Allegiant network from solely serving the largest leisure destinations to serving any leisure-oriented market, a definition that is changing as rapidly as the world around us.

We have a runway of over 1,000 markets that encompasses a bevy of originations and destination profiles and will make us a more resilient and stronger airline in the future. Our fleet team has done a remarkable job to put us in the driver seat toward the back half of 2021. Their efforts enabled us to announce yesterday that we will open our Des Moines crew base in July, which will allow us to further develop our Mid-Continent basing strategy. We will now have the ability to grow the second half, nearly 20% versus 2019 levels such that demand dictates that growth. We will also have the ability to strategically replace fleet with already secured aircraft if the revenue environment does not pick up in earnest. We believe that we continue to be in a great position to capture revenue upside, when and where it's manifesting and expanding our network and fleet only further solidifies that position. I'm looking toward the future with cautious optimism, knowing what we are capable of achieving while ensuring we are practical about our short-term realities.

And with that, I'd like to pass over to Greg.

Gregory Anderson -- Executive Vice President, Chief Financial Officer and Principal Accounting Officer

Thank you, Drew, and good afternoon everyone. 2020 has truly reinforced our core belief and the incredible value of the flexibility inherent in our business model. Our low cost, low utilization model has allowed us to reasonably adapt to the unprecedented time of a low-fare low demand environment. On the fortunate side, we have benefited from the fact that flexibility has always been the bedrock of our model, but the pandemic environment has further highlighted its value. I think it's worth noting a few points to illustrate this. After adjusting for special charges and for the benefits of the CARES Act, we produced a full-year 20 positive EBITDA of $35 million. Our full year adjusted unitize cost decreased by 6% despite a decrease in capacity of 18%. These are pretty impressive full year results given the circumstances.

For the fourth quarter, our daily bookings averaged just under 2.5 million. This translates into $225 million in passenger revenue, sequentially this compares favorably with an increase of 23% quarter over third quarter and a jump of more than 93% versus second quarter. While bookings ebbed and flowed throughout the fourth quarter, we are pleased to see strength as we moved into the peak holiday season. The result, we produced positive adjusted EBITDA, another key milestone we've reached on the road to recovery in the fourth quarter. We remain encouraged with recent trends of January averaged approximately 3.5 million in bookings per day with consistent improvement building throughout the month.

On the cost front, our adjusted operating expense for the fourth quarter, which excludes special items was down 30% year-over-year despite a capacity reduction of only 15.6%. This translates into an adjusted CASM-ex for the quarter of just over $0.0607, this is well below the $0.0674 averaged during the fourth quarter of 2019 and also below 2019s full year CASM-ex of $0.0648.

Turning to the balance sheet and as noted in earlier calls, defending our balance sheet has been one of our top financial priorities throughout the pandemic and we are pleased with the results today achieved without issuing any equity or participating in the CARES loan program. We ended the year with just under $700 million in cash and when adjusted for the NOL carryback refunds of approximately $150 million, our pro forma liquidity would have been around $850 million. We have already filed our refund claims with the IRS and expect to receive the cash within the coming months. During the fourth quarter, we spent roughly $100 million on three aircraft and three engines, only one of which we decided to include seller financing. This is $30 million less than we expected as two late year aircraft acquisitions shifted into '21. We ended the year with 20 unencumbered aircraft. Additionally, we ended 2020 with $1.65 billion in total debt, which reflected a fourth quarter increase of $150 million in debt proceeds offset by roughly $60 million in principal payments. Our net debt of $975 million is roughly flat when compared to year-end 2019 and would be more than 13% lower if pro forma for the remaining $150 million in NOL refunds.

Looking at '21, we have received the first half of the $92 million allocated to us as part of the second round of the federal payroll support for PSP2. As a reminder, the entire amount issued to us is a grant, as it falls below the $100 million threshold that requires a loan and warrants. We expect our full-year '21 total capex to be roughly $200 million and the majority driven by aircraft acquisitions, which we will touch on in a bit. Additionally, we expect our total debt payments to be roughly $225 million, $175 million in scheduled principal payments with the remaining being interest and expect a decrease and interest expense of 30% versus 2019. Based on current booking trends and giving our amortizing debt, we expect to further reduce our net debt position during '21. We have no intention of tapping the equity markets, capital raises in '21 if any would likely be targeted in the debt markets associated with opportunistic aircraft acquisitions. Excluding the benefits from PSP2, we expect 1Q '21 CASM-ex to be down between 4% to 5% from 1Q '19 and this is based on the midpoint of our 1Q '21 capacity guide that Drew just mentioned. We expect the first quarter to be the high point of '21 in part due to some carrying cost and adding back labor and mobilizing maintenance to get our previously parked aircraft ready to fly. The remaining quarters of '21 should see CASM-ex come in below the first quarter based on similar capacity levels. However, if the demand environment were to support as raising capacity on normalized utilization profile with the '21 fleet plan, we should see -- we should be in the low 6s and perhaps flirting with the 5-handle on our CASM-ex for the respective remaining quarters. These expected improvements to our CASM-ex are driven in part by the $75 million in annual operating cost saving John mentioned. These structural cost savings include about $25 million labor, $15 million in marketing, $15 million in IT, $15 million in non-airline and $5 million in other. You may note the total amount is consistent with the $75 million we outlined last quarter, however, the labor savings has been reduced by $15 million due to the recalling of our pilots, the adjustment has been offset by the savings in non-airline costs, which I will touch on momentarily. And on a quick and exciting note, we are positioning ourselves to hire pilots in the back half of '21 to support potential '22 growth.

Back to the non-airline real quick. As a result of the pandemic, we permanently closed our family entertainment centers and liquidated nearly all of the associated assets. These actions became necessities due to the impact of the pandemic and our cash saving strategy. I want to make a point to acknowledge the hard work of all of our non-stop team members for building that enterprise and for their tremendous efforts and support through the transition. Regarding Teesnap, at the onset of the pandemic, we restructured the business with the goal of making it a 100% self-sufficient. I am pleased to report over the past 9 months, Teesnap has been cash flow positive, producing a double-digit EBITDA margin on almost 50% increase in net revenue from 2019. In late 2020, we started rerunning a process to sell the business. I just want to also add my deepest appreciation to our Teesnap team members for their remarkable turnaround -- for the remarkable turnaround they've accomplished, particularly during this unusual time.

Turning to fleet. We ended 2020 with 95 aircraft in operation and our current fleet plan has us ending '21 with a 108 in-service aircraft, this is based on firm signed agreements. The aircraft growth in '21 is achieved by returning three aircrafts previously parked to service, adding five aircraft signed up pre-COVID, six aircrafts signed up since the onset of the pandemic, offset by one aircraft retirement. All added aircraft and excluding one will come in at 186 seats.

As we look forward into '21 and beyond, we are not burdened with the costly fleet order, which means we can maintain enormous fleet flexibility to sign up aircraft at our discretion and at prices well discounted from pre-COVID levels. We continue to explore a significant number of opportunistic aircraft deals. Based on leading indicators, we believe our '21 fleet plan supports the appropriate number of aircraft for both our short and long-term growth plans. However, if we encounter a situation when the environment does not support our plan, we have a built-in safety valve as up to 20 aircrafts could be moved to retirement status, also avoiding costly heavy maintenance visits. One metric we continue to keep an eye toward is restoring our industry-leading $6 million in annual EBITDA per aircraft. We believe our future fleet profile may help sort of the catalyst -- as a catalyst in getting us back to there as we increase our proportion of 186-seat aircraft, which is the highest EBITDA producing variant in our fleet.

To close, we believe strongly that we are positioned to thrive in a post-pandemic world, our ability to flex up and down in any environment will continue to serve us well moving forward, adjusting for passenger demand and helping mitigate any further volatility on the path to recovery. Being as well positioned as we are, would of course not be possible without each and every one of our more than 4,000 team members and I'd be remissed if I didn't take this opportunity to not only thank them, but to highlight and for the benefit of everyone listening to this call, the importance of their work from our frontline and operational crews, who are so incredibly dedicated to ensuring every passenger can travel safely and seamlessly every day to our team members working tirelessly behind the scenes that make us strong, creative, and strategic. Please note that your work, all the extra hours, preparation, efforts does not going unnoticed and please know how much it is appreciated. You the greatest reason we have been so well prepared to meet the challenges of the pandemic in this uncertain environment, and it's because of you, we will continue to be prepared for anything the future might bring. We can't thank you enough.

With that, we'll turn it over to questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from the line of Joseph DeNardi with Stifel. Your line is open.

Joseph DeNardi -- Stifel -- Analyst

Great. Thank you. Maybe for Scott DeAngelo, there's been a lot of talk about pent-up demand, what are you seeing or hearing from your customers to support or maybe not support that notion. Are you asking customers whether they plan on devoting more wallet share travel post COVID or that they'll travel more post-COVID than they did pre-COVID, because they've been unable to or -- are you seeing any of that or the opposite?

Scott DeAngelo -- Chief Marketing Officer

Yeah. No. We're hearing that. When we survey, we do ask about the financial impact, the personal financial impact the pandemic has had and the vast majority still say that they have either not have been impacted at all or only somewhat negatively impacted and some of the items I quoted the fact that two-thirds are saying, they have summer travel plans or they plan to make summer travel and about half are seeing spring break are all consistent with it. One other quick anecdotal data point, while obviously the city we live in Las Vegas, continues to get hit hard, our casino operators have commented that retail high end dining and other high-end experiences have actually been well up over prior year, suggesting maybe the tip of the iceberg on some of this for savings as well as some of the psychology behind going on a year of realizing how valuable it is to have the ability to travel and spend freely.

Joseph DeNardi -- Stifel -- Analyst

Okay. That's helpful. And then maybe a follow-up for Scott Sheldon and Greg. I think pre-COVID, the thinking was going to induct 10 airplanes a year at most, I'm wondering if given the opportunities you're seeing and some of the favorable pricing, if you could accelerate that or if you're going to stick to kind of the 10 cap. And then Greg, were you saying that to get to a 5-handle on CASM-ex, you would need to fly 120% of 2019 capacity. Is that what you meant? Thank you.

Gregory Anderson -- Executive Vice President, Chief Financial Officer and Principal Accounting Officer

Yeah. I'll kick it off there and I'll start with the last question there first, Joe. But yeah, that's if you were to take and kind of max up the fleet on like a normal utilization profile. Yeah, so that probably be about 120% of 2019 capacity would get you down into the low 6s or potentially a 5-handle. And in terms of induction aircraft, I mean we were certainly capable of inducting more than 10 aircraft per year. That's been a good rule of thumb for growth for us 10% to 15% I think just generally. But what I'd say is we'll be opportunistic in the markets like this, where there is the opportunity potentially to buy-in or acquire aircraft at good prices, and Drew and team have the ability to deploy those aircraft and we could flex that up and we feel good about that and we have the infrastructure to support it.

Joseph DeNardi -- Stifel -- Analyst

Got it. Thank you.

Operator

Thank you. Our next question comes from the line of Duane Pfennigwerth with Evercore. Your line is open.

Duane Pfennigwerth -- Evercore Partners -- Analyst

Thank you. Close enough. Thanks for the time. It's the gift that keeps on giving. Can you just repeat what you said about the first quarter CASM and then just generally to get CASM down in the fourth quarter on this level of capacity and appreciate you're a lower utilization airline to begin with, but like how do you -- how do you do that, what are the reasons that Allegiant can get down CASM relative to '19 on capacity that's down?

Gregory Anderson -- Executive Vice President, Chief Financial Officer and Principal Accounting Officer

Sure. Duane, this is Greg. I'll take that. And maybe I'll start on the first quarter CASM-ex and the reason that's going to be top year, the highest quarter we think in the year is really given that, with the PSP2 and bringing back the labor that we're going to need to bring back, not only the pilots, but we continue to pay the management folks that were also moving -- that moved on. So that's going to put a burden there -- so it's going to put a headwind there, I should say. On top of that, you may recall or you may not, I can't remember if I've mentioned this in earnings call, but typically in the first quarter, we recognized an expense for all our PTO for our crew members based on the rules and their CBA agreements and that's roughly $10 million in and of itself. So it puts some pressure on the first quarter there for that. And then I think as you're just starting to mobilize and get ready to fly, as you're running aircraft through induction and just getting things going, there are some headwinds I guess reinvestments, if you will, back into the business and that a lot -- that will start taking place in the first quarter along with training and things like that.

On your fourth quarter comment, it's a good question, Duane, and I think the -- the way I've been thinking about it, it's almost just like this intersection at this point in time. In the fourth quarter, we didn't have the incremental labor, right. We had that out because of the CARES Act had fallen off there and we ran just all discretionary expense route. With that -- what I would say is that's just unique and as we think about the future and we think about positioning ourselves for growth, both short-term and long-term, you have to have a scalable sense – a scalable type of infrastructure in there to support that growth. And so you have to spend a buck to make a couple of bucks. And so I would just -- that fourth quarter again, that was an anomaly. We went back and we pulled out all discretionary expenses, but I wouldn't use that as like a run rate going forward, if that makes sense.

Duane Pfennigwerth -- Evercore Partners -- Analyst

Does make sense. And then just for my follow-up maybe for Scott and Maury both. As you look at your portfolio of big focus destinations, who do you think is doing the best job of giving people a reason to travel, right, like we are here in the New York area. Once upon a time that was a big leisure destination, you can have various opinions but I argue maybe New York is not the best advocate for giving people a reason to travel here, whether it's Vegas or just Mother Nature as you highlighted, what are the destinations that are doing the best job of giving folks a reason to travel again?

Maurice J. Gallagher, Jr. -- Chairman and Chief Executive Officer

Well, I'll give a high level. Scott may have more detail, but you've got to point to Florida. All your -- with the international travel now that's been forced to have a test coming back, where your Latin American, your Caribbean, our testing is difficult, it's not impossible to get down there, you've got people wanting to get away the traditional spring break is coming up, Florida is the place to go, California is usually historically a good place, but it had a lot of don't come here types of messages going out, albeit they're getting better. Las Vegas is -- it's still shut down for lack of a better description and the interesting stat I heard the Highway-15 is back to its full numbers compared to a year ago. So coming out from LA, people want to move. We did a little analysis, where you took the bell curve of the population age and you get from 18 to 50 is what 65% of the people in this country and you know stuff about COVID now, you know friends that have had it, may have known unfortunately someone who passed away from it. But you don't worry that much as the sense I'm getting, if you're a 30-year-old that you're going to get it. You get it, you have a cold, you move on and they just don't want to be locked down. It's human nature, we're social animals, we want to move. I was with some people from premier car manufacturer here recently and they had a, oh my God, fourth quarter and I asked them why. So, the simple as it is, people have all this extra money if they're not spending on travel going out to eat, all the stuff you used to consume money on, it's burning a hole in your pocket, so they bought a lot of cars. So, these things are going to revert back to the norm, which is leisure traffic and leisure travel and that's why I think we are so well positioned. Business traffic, I'm not in that business, but I wouldn't want to be on a business end trying to make that model come back quickly, Scott?

Scott DeAngelo -- Chief Marketing Officer

Yeah. I would just simply add to that, I think Las Vegas is doing a good job of laying the foundation from a health and safety perspective, because the eye is more on getting the big conventions back like the CES etc., but I would double down on what Maury said. Florida and specifically in these light, visit Florida, visit St. Pete's Clearwater, Sarasota have been very actively and structurally partnering with airlines like us to go out and co-market together. The part I mentioned about that was specifically related to those partners and others like them that beyond the health and safety and all the things required to operate are making an aggressive push to once again attract vacationers to their destinations.

Duane Pfennigwerth -- Evercore Partners -- Analyst

Appreciate the thoughts.

Operator

Thank you. Our next question comes from the line of Savi Syth with Raymond James. Your line is open.

Savanthi Syth -- Raymond James -- Analyst

Thank you. Hey, good afternoon everyone. Greg, if I might, I know you're not looking at cash burn, but I know you've kind of talked to operating cash flow and you've given a lot of kind of items for us to think about, but just wondering if you could provide a little bit more color on just how much of ticket sales that are cash versus vouchers, the ETL seems pretty high on a voucher basis. And then what level of booking, you need to see kind of to get that EBITDA breakeven or better?

Gregory Anderson -- Executive Vice President, Chief Financial Officer and Principal Accounting Officer

Sure, Savi. Let me kick it off and Drew may want to add some stuff on the voucher redemptions and ETL, but yeah, what I'd say on ETL first is you probably didn't see or you probably noticed that we didn't reduce like as a percent of our outstanding ETL, the number of credit voucher. So I think in the third quarter, it was $220 million and I think in the fourth quarter, it was consistent. When you kind of peel that back a little bit and take a look, what really happened in the fourth quarter is that you've seen, what we've seen is that there are still some issuances that are largely offsetting the redemption of the credit vouchers. So, but as we looked into the first quarter that trend, meaning the redemption of the credit vouchers is nicely outpacing the issuances or I should say in January. So we're burning that out and I think just in '21, we'll continue to chew through that and then the one other thing I may add and then Drew wants to add some commentary, just to your kind of what we need to be EBITDA positive. I talked about the 3.5 million of what we're currently seeing and I want to highlight, that's not inclusive of any voucher, so that's just true cash in the door. So that's what we're seeing there. And I think where we're at today, given some of the roll-off of the taxes, such as the FET taxes, the segment taxes and things from the CARES Act. They're now back in play in '21. We've seen a spike in fuel, which is putting a little more headwind on your cash. I think you're probably closer to between 3 million, 3.5 million in daily bookings to get to that kind of EBITDA breakeven, give or take a little bit.

Drew Wells -- Senior Vice President of Revenue and Planning

I think you've captured it.

Savanthi Syth -- Raymond James -- Analyst

Great. And then, if I might just quickly ask for a clarification on the fleet. So the fleet plan that was kind of provided in the release and that you talked about, does that include any aircraft in storage or is that just the plan and excludes anything kind of that's put in short-term storage.

Drew Wells -- Senior Vice President of Revenue and Planning

So I'll take it. And yeah, so what it does, Savi, is we -- I think we talked about six aircraft in storage last quarter, three of those have already kind of run through the pipeline and are back in service, now as of the end of the year of 2020. And then yeah, for that growth, I think what we're incremental 13 aircraft, 3 of those incremental aircraft in '21 are the 3 additional storage aircraft coming back.

Savanthi Syth -- Raymond James -- Analyst

Okay. Perfect. All right. Thank you.

Operator

Thank you. Our next question comes from the line of Hunter Keay with Wolfe Research. Your line is open.

Hunter Keay -- Wolfe Research -- Analyst

Thanks. Hi, everybody. Hey Maury, you have this vision of a travel sort of like ecosystem for Allegiant when you thought about Sunseeker. I'm kind of curious if the COVID crisis and the thousand markets that you mentioned, does that open up enough growth for you organically, to the point where you're comfortable just focusing on the airline or is there still this draw to diversify the business because you just think it's sort of a good idea for your company anyway?

Maurice J. Gallagher, Jr. -- Chairman and Chief Executive Officer

Well, it's hard to change the spots on a leopard, Hunter. Again, long term, I just -- it's proven to be just it's a huge number for us. We've done $1.7 billion of third-party revenue since 2002, of which we've made close to $550 million of operating income, pushing $600 million. So you can't say that that hasn't been a difference maker for us. We do things like we have no middleman between us and our customer. You have no Expedia charges, you have no branding charges, any of those types of things. Having said that, we're focused on the airline and we're not going to short change the airline whatsoever. We want to pick up and move as much as we can towards railcars and hotels and -- and we're doing a lot in the new website that we have opened, and that's what we're using our strength in partnering. This whole reason for this Travel Company is we have a tool that no one else in this industry has. It's -- we own our own res platform. We were the leaders in the 2000s in developing seating assignments and all the ancillary revenues and you can do that when you control the tool. So all these attributes and you add them up point toward a customer-oriented, get as much wallet share as you can out of that customer and as we lead the industry in operating margin, and we've done it year in and year out is because we have extra revenue. We have more revenue than the average carrier, who is fighting over that same person with those seats and who can commoditize it to a lower price or whatever. It's a business that we don't have a lot of separation, we have some certainly and we focus on a different customer than most at the leisure level, but you need differentiation and that word different has been a constant use in our situation. So that's a long-winded answer there that basically says we're really focused on the airline now, we're going to grow this year, I think we said 19% something like that. There is opportunity and we're going to definitely take advantage of that. As far as Sunseeker goes, that's still on the backburner, it's something that is I think a good long-term strategy for us, but near term it's -- let's keep our head down and take care of business here.

John Redmond -- President

Hunter, the one thing I may add, we're not trying to guide the full year to 19% growth, simply that we have the ability to get there in the back half of the year, such that demand calls for that. So let's not run away with it.

Hunter Keay -- Wolfe Research -- Analyst

All right, John. [Speech Overlap] John, a follow-up for John. That land across the street from Sunseeker, how does the prospect of that getting developed impact how you're thinking about the valuation or the attractiveness of finding the equity partner and Sunseeker or selling the land to third parties, is that factoring it at all to the conversations that you're having?

John Redmond -- President

No, not at all. I mean, all the people we're having conversations with, I would imagine most of them aren't even aware what may happen on the other side of the street to be honest with you. It's rather insignificant in the grant scheme of things. But no one's ever raised it or brought it up in my conversation.

Hunter Keay -- Wolfe Research -- Analyst

Okay. Got it. Thank you.

John Redmond -- President

You're welcome.

Operator

Thank you. Our next question comes from the line of Brandon Oglenski with Barclays. Your line is open.

Brandon Oglenski -- Barclays -- Analyst

Hey, good afternoon everyone and thanks for taking my question. I guess I do want to come back to the 20% comment and I realize you guys aren't guiding to full-year growth of that level. But I guess, can you give us some of the decision factors that would actually drive you to add that level of capacity in the network. Are we talking about EBITDAR margins that are matching prior levels or cash flow levels like, give us some insight into how those capacity additions would come on if they do?

Drew Wells -- Senior Vice President of Revenue and Planning

Sure. This is Drew. I'm not necessarily setting EBITDA threshold at this point, but I'd like to get back to a point where certainly we're moving past just cash profitability on flights and thinking more expanded the gross margin perspective. I'm not baking in thoughts that future PSP is going to come online and crew costs are certainly a consideration as we move forward. So while I’ll stop short of giving you specific threshold that it's more of a hopefully normalized perspective in terms of what is making money and what is best for the company and not just simply relying on cash profitability of that flight, because that's not something we can sustain for a long period.

Gregory Anderson -- Executive Vice President, Chief Financial Officer and Principal Accounting Officer

Brandon, this is Greg. I might just add one quick data point too, just the infrastructure for the '21 growth was pretty much in place, right. Maybe not to the extent of the 19% growth in the back half, but if you think about it, we had -- we have all the pilots and the crew to support it and then for the most part, we had the aircraft as well. So the large kind of infrastructure to support '21 was in place.

Maurice J. Gallagher, Jr. -- Chairman and Chief Executive Officer

Yeah. Brandon, the results will drive what we do, it's as simple as that.

Brandon Oglenski -- Barclays -- Analyst

Okay. I guess the question was just more around, is this where we should expect the network is going to grow, once you guys attain certain level of profitability. So we don't lose that returns focus long term, is that right?

Maurice J. Gallagher, Jr. -- Chairman and Chief Executive Officer

Correct. Yeah, I'm not -- I don't think anyone here is trying to suggest that we're a long-term 20% company at this point, I think we see specific opportunity to Greg's point, we have infrastructure in place to be able to do this such that demand is there. So no, by no means are we trying to reduce the margin profile of this company simply for the sake of growth, that's not at all the case.

Gregory Anderson -- Executive Vice President, Chief Financial Officer and Principal Accounting Officer

And that's why Brandon, we threw out as well the EBITDA per aircraft to $6 million that we want to get back there to show the balance, if that's -- that's our true north so to speak. And I don't think we'll be there in '21, but that's what we're looking at long-term, is to get back to that and now there are some positive catalyst to support that, that we think and that's what Maury said, he said, hey, you know that's our target, that's where we need to be economically and so we're keeping that in mind, as well.

Maurice J. Gallagher, Jr. -- Chairman and Chief Executive Officer

Yeah. Let me just clarify. We're not -- Brandon, we're not going to grow just purely market share type of thing. One of the values I very much treasured is we keep our margins up, just to end up a bigger and cut our margins down by 30% or 40%, it's kind of like why you're doing that. There's plenty of real estate out there for us to look at longer term, but this year to Greg's point we have infrastructure and ability to do it quicker, particularly in the first half of the year and we'll see where we go, all the numbers are pointing up, suggest we can go and do some things.

Brandon Oglenski -- Barclays -- Analyst

Okay. Thank you.

Maurice J. Gallagher, Jr. -- Chairman and Chief Executive Officer

Thanks, Brandon.

Operator

Thank you. Our next question comes from the line of Mike Linenberg with Deutsche Bank. Your line is open.

Michael Linenberg -- Deutsche Bank -- Analyst

Hey, good afternoon, everyone. I am -- just two here. One quick one, Greg, just the guide to positive EPS in the March quarter. What's the underlying fuel price range that you're using?

Gregory Anderson -- Executive Vice President, Chief Financial Officer and Principal Accounting Officer

Yeah. That's -- right now we're paying just about a $1.65 per gallon and it maybe worth just clarifying too, that would include that the GAAP number, so I think that would include the benefit from the PSP, which for us, Michael is $92 million all recognized in the first quarter as an offset.

Michael Linenberg -- Deutsche Bank -- Analyst

Okay. Great. And then, second question it's probably to Drew and because -- and maybe even Maury because he sort of mentioned it talking about the model and really flying during peak periods or peak days and not flying Tuesday's, Wednesday's, etc. When we look at the March quarter, excuse me, the March schedule, which I think you just loaded, there are city pairs where, in fact several or maybe even a decent number of city pairs, where you're operating what looks like maybe two and even in some cases three daily flights. And I realize that that could be that you have Sundays or Fridays, where you're flying three or four, but the fact is it's a type of frequency that we just, we haven't seen in the past and knowing that March and especially to places like Florida can be a strong -- a strong time for Allegiant, I'm just -- I'm curious, you know, is this striking when the iron is hot, are you sort of deviating away -- maybe I shouldn't say deviating away, but sort of expanding upon your peak strategy that you've used in the past, because I did think it was quite interesting to see the type of frequency adds in some of these markets. Thanks.

Drew Wells -- Senior Vice President of Revenue and Planning

Yeah. Drew here, you can certainly look historically and find those markets, where we have operated more than two times daily. I think one of the things I'm pretty keen on and my team can dodge with it is ensuring that we are rightsizing frequencies on the markets that can -- that can take it. And so you won't see that specifically in the peak periods where there is a more resilient demand profile and we're looking to capitalize on that and part of the wide net strategy right is putting that out there, and it's a lot easier to be able to reaccom a customer and then you have to cancel to another fight on the same day than it is to try to move them days. So I think we have a little bit more flexibility as it pertains to that as well to where the wider net can be even more successful during these peak periods looking forward. So I have every intention of operating all of those on some of our thicker markets in the best of periods, but we will remain flexible in the event we need to pull down a little bit in demand and manifests quite in the way we expect it to.

Michael Linenberg -- Deutsche Bank -- Analyst

Very good. Thanks, Drew.

Operator

Thank you. Our next question comes from the line of Darryl Genovesi with Vertical Research Partners. Your line is open.

Darryl Genovesi -- Vertical Research Partners -- Analyst

Yeah. Hey everybody, thanks for the time. Hey, Maury, back on your third quarter conference call in October, you talked a lot about -- how important it is for customers to fly direct in this environment, how much more that's the case than it was pre-pandemic. Can you or Scott DeAngelo based on your survey work help us understand just how much of an opportunity that is for you. And I guess, in particular, if I might just offer this question as a guide, do you think that the desire to go direct can meaningfully influence the passengers' O and D, specifically to markets that you serve direct versus those that you don't?

Maurice J. Gallagher, Jr. -- Chairman and Chief Executive Officer

Yeah. So I'll give it a start. Thanks for the question. The answer is we continue to push non-stop both as health and safety benefits and not go into crowded hubs, but the reality is, it has been high, it remains a key distinction point and I'll tell you, as you may have seen in charts I showed during Investor Day, it's the reason we share a lot of customers with Delta and Cincinnati, because while they might fly one for business on their own money, they'll be happy to flying to Sanford to take the family to Universal Orlando or Walt Disney World. And that same thing happened in Mesa, rather than where they might fly business to Sky Harbor. We continue to see that and that continues to be distinctive point. I can't speak how much of that is the health benefit they proceed versus just the convenience, but there's no doubt that it remains a high reason that we share customers with a lot of other airlines that you wouldn't think would mix, just because on the leisure dollar and on their leisure time they want to get there nonstop.

Darryl Genovesi -- Vertical Research Partners -- Analyst

Okay. Thanks for that. And then I guess, my sense, Greg, is that the fourth CASM-ex number came in a little bit better than you might have expected and just listening you talk about 2021, the outlook sounds perhaps a little bit more optimistic than what we heard from you in Q3, is there -- and your $75 million number is the same. So I guess is there something about the more discretionary pieces of your cost profile that are perhaps coming in a little bit better, both in the fourth quarter and into '21?

Gregory Anderson -- Executive Vice President, Chief Financial Officer and Principal Accounting Officer

Hey, Darryl. Thanks for the question. And, yeah, I think it's fair. I was pleasantly surprised before we came in on the fourth quarter of this year, but there were some items there that some benefits that we saw, maybe it's one-time in nature too like we had a some insurance proceeds that came in for an event and that was helpful as well. But as we think about it in the $75 million in structural cost savings, I think what’s that worth about $0.005 CASM-ex, on a full year, thereabouts. And so that's obviously helpful but we -- I think what's giving us more conviction to come out and talk about that is just, we have more line of sight on what potential capacity could be and that's kind of the other driver in us getting down into the -- to the low 6-handle kind of range. And so, I think that's giving us a little more confidence or conviction behind it. I'd just leave it at that. I guess.

Darryl Genovesi -- Vertical Research Partners -- Analyst

Okay. Great. Thanks a lot guys.

Operator

Thank you. Ladies and gentlemen, in the interest of time, I will now turn the call back over to Management for closing remarks.

Sherry Wilson -- Director, Investor Relations

Thank you all very much. Appreciate your interest and we'll talk to you after another 90 days. Thank you.

Operator

[Operator Closing Remarks]

Duration: 62 minutes

Call participants:

Sherry Wilson -- Director, Investor Relations

Maurice J. Gallagher, Jr. -- Chairman and Chief Executive Officer

John Redmond -- President

Scott DeAngelo -- Chief Marketing Officer

Drew Wells -- Senior Vice President of Revenue and Planning

Gregory Anderson -- Executive Vice President, Chief Financial Officer and Principal Accounting Officer

Joseph DeNardi -- Stifel -- Analyst

Duane Pfennigwerth -- Evercore Partners -- Analyst

Savanthi Syth -- Raymond James -- Analyst

Hunter Keay -- Wolfe Research -- Analyst

Brandon Oglenski -- Barclays -- Analyst

Michael Linenberg -- Deutsche Bank -- Analyst

Darryl Genovesi -- Vertical Research Partners -- Analyst

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