What: U.S. budget airline Allegiant Travel (NASDAQ:ALGT) roared to life in July, with the stock gaining 20%, according to S&P Capital IQ data. This gain catapulted the stock to a new all-time high -- and it has continued to rise in the first week of August.

ALGT Chart

Allegiant Stock Performance, July 1-present; data by YCharts

So what: In early June, Allegiant revised its Q2 revenue guidance, calling for a 7% to 8% decline in total revenue per available seat mile, compared with its initial forecast for an 8% to 10% decline in that metric. That jump-started the stock's recent run.

In early July, Allegiant added that its unit costs would come in lower than expected for the quarter. The recent drop in oil prices has also been a big help, as fuel costs have traditionally represented an even higher proportion of total operating expenses at Allegiant than at most other airlines.

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Revenue and costs both came in better than expected for Allegiant in Q2. Photo Wikimedia Commons, Jonathan Palombo.

Sure enough, near the end of the month, Allegiant reported strong earnings per share of $3.18, $0.05 above the average analyst estimate and up from just $1.86 a year earlier. Analysts expect the good times to continue, with Allegiant's full-year EPS nearly doubling from $6.37 to $12.44 in 2015.

Now what: After a rough 2014 marred by delays in training new pilots and soaring IT costs, Allegiant seems to be back on track in 2015. The company can now focus on executing its long-term growth plan.

That's not to say Allegiant stock is without risks, though. The company has been caught up in a long-running dispute with its pilots. The pilots nearly went on strike in early April until a judge issued a preliminary injunction (later upheld in court) barring them from doing so.

While the immediate threat of a damaging strike was averted, investors should keep an eye on any future labor strife, as it has the potential to drive up costs or snarl Allegiant's operations.

Adam Levine-Weinberg has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.