Thank you for joining us. My name is Dee, and I will be your conference operator today. I would like to welcome everyone to the Allegiant Travel Company First Quarter 2024 Earnings Call. All lines are muted to minimize background noise. After the speakers' remarks, we will have a question-and-answer session. Now, I will turn the call over to Sherry Wilson, Managing Director of Investor Relations. Please proceed.

Thank you, Dee. Welcome to the Allegiant Travel Company first quarter 2024 earnings call. On the call with me today are Maury Gallagher, the Company's Executive Chairman and CEO; Greg Anderson, President; Micah Richins, President of Sunseeker Resorts; Scott DeAngelo, our EVP and Chief Marketing Officer; Drew Wells, our SVP and Chief Revenue Officer; Robert Neal, SVP and Chief Financial Officer and a handful of others to help answer questions. We will start the call with commentary and then open it up to questions. We ask that you please limit yourself to one question and one follow-up. 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 due 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. And with that, I'll turn it to Maury.

Thank you, Sherry, and good morning, everyone. Thank you for joining us today. As you can see from our release, our results are not where we want them to be. Historically, our Q1 is one of our strongest quarters. Last year's 15% operating income showed this strength. If you look at our operations, operationally, we ran the same airline this Q1 that we ran in 2023. Departures ASMs, passengers all were within 2% of each other. In fact, we've had minimal growth since 2021, averaging approximately 3% per year during these past three years. Given this minimal growth, however, we have been one of the most profitable airlines during these turbulent times. But in the last year, we and the industry have experienced major expense increases, particularly salaries and specifically with our pilots. Additionally, we had problems predicting how many pilots would be available for us last year. This time last year, we were losing more than a pilot a day, annualizing out to a 40% annual attrition rate. Stuff is hemorrhaging in June, we began to accrue future bonus payable to our crew members after we signed an agreement. Through this April, we have accrued and expensed $80 million without any corresponding offset of a new pilot agreement. We hope to have this new agreement in the not too distant future. You'll hear today from Greg, Drew, Robert, Scott and Micah Richins about our current status, including comments on our revenue problems tied to our Navitaire upgrade, Boeing deliveries and the lack of productivity of our fleet and pilots, particularly due during our off-peak periods. There are a number of reasons for this drop-off in productivity. Clearly, the pandemic changed our rhythms, our routines, our annual cycle of hiring and training new pilots for the coming year in the fall, adding them in January, February for March uptick and the late spring for the summer sprint. We've been out of this rhythm for the past three years. We are about to resume this proven approach in the back half of this year and into 2025. A critical component of this rhythm is obviously having airplanes. Our Boeing order of 50 MAX plus 80 options provides us with the necessary aircraft for the anticipated growth in the coming years. Let me emphasize that the model remains the same. Going forward, we need to reinstate execution of the model that has worked so well. Additionally, we are optimizing our revenue software, finalizing MAX deliveries, as I mentioned, and working with our pilots to finish an agreement. Let me turn to Sunseeker at this point. We are excited to finally have this world-class destination resort open and operating. Initial reviews are exceptional on the quality of the personnel, the product and in particular, the quality of the cuisine. Like all new projects, however, there is a run-in time. Opening at the end of December was not ideal. The date was driven by the construction delays we experienced for most of last year. Given we made the decision to open in late October, we did not have as much time as we would have liked to market and sell this new destination resort. We're using many tools to drive traffic, not the least of which is our 18 million person customer database. We've had success with this program sending out as many as 25 million to 30 million emails per week on Sunseeker specifically. We are learning the booking patterns for Southwest Florida and what the differences are. We saw some expected strength in Q1. Q2 and Q3, however, will be slower, and we're trying to understand where they will settle. Given the patterns we are experiencing at this point, we are lowering our estimates to a negative $15 million EBITDA for this year. Micah Richins, President of Sunseeker, will have more comments in just a moment. While Sunseeker will be a project for '24 and '25, the airline problems we are currently experiencing can be addressed for the most part during the remainder of this year and into 2025. By then, we should be hitting our stride. A comment about the industry. For years, we have been grouped together with other low-cost, low-fare companies, particularly Spirit and Frontier. While all of us offer low fares and have focused on leisure customers, we would be remiss if we did not point out that our model has made money consistently during this pandemic time. In particular, I want to direct your attention to the revenue differences. In the just completed Q1, our unit revenue, or TRASM, was $0.132 compared to $0.092 average or 42% greater than the aforementioned operators. In today's inflationary world, the ability to generate sufficient revenues and increase revenues is the difference between success and failure. Cost management is also important, no doubt. Given our increased utilization later this year and into 2025, you'll see our unit cost decline accordingly. An important component of our revenues has been our third-party revenues. And while they are not that big on an absolute basis, they are very powerful for the bottom line. This quarter of our $8.21 per passenger was worth $33 million of operating income. That's a 30% increase over last year's $6.32. In spite of our problems with our revenue tools in Navitaire, we still had one of our best unit revenues in the company history. Many things go into this ability to generate stronger revenues, including brand and reputation, and we are pleased with how we have positioned ourselves. If you look at the success of the majors, one only has to point to their loyalty programs to see the power of third-party revenues. We understand this benefit and are focused on producing more of these very accretive dollars. Life is about rhythm. We all work better, have better results when what we do is known, repeatable and predictable. Looking back on our successes over the past 20 years, while the model is a critical component, namely 77% of our routes do not have direct competition, the execution component, the rhythm each year is also critical. The past many years post-COVID, the rhythm, the routine has not been present. To the contrary, there has been minimal predictability, uncertain rhythm, starts and stops. The fog is lifting in the traditional focus, and we are in better control of our own actions going forward. The model is just fine, as I mentioned, as strong as ever. The rhythm is coming back. Stay tuned for the good news.

Maury, thank you. Team Allegiant delivered another strong operational performance this quarter with a 99.7% controllable completion rate. That puts us near the top of the industry, and that's thanks to the tremendous efforts of our front-line team members. We have a long history of providing great service at an attractive price for our customers. And our differentiated model is focused on being the only nonstop carrier on the vast majority of our 525 routes. That is a structural advantage that affords us great relationships within our origination and destination market, which, in addition, contribute to our strong ancillary and third-party revenue. Our differentiation is why we have been able to generate industry-leading margins and profitability for our investors over the long term. While I am pleased with our operational and customer service metrics this quarter, our first quarter adjusted operating margin of 6.2% is disappointing and is not reflective of Allegiant's earnings potential. These results were impacted by three distinct issues: lower aircraft utilization during peak periods, Navitaire implementation timing and Boeing's delivery delays. Starting with lower utilization. March 2024 flying was about 20% less than where we would have liked it to be. The primary constraint of our peak utilization has been the uncertainty of our pilot staffing levels. We were impacted by the same industry-wide shortage faced by our peers, and our attrition levels were meaningfully elevated coming out of COVID but beginning to normalize around the middle of 2023. It was because at this time, we implemented a retention bonus for our pilots that materially helped stem attrition. It is important to us that our pilots receive fair and competitive compensation. In advance of an agreed-upon pilot contract, we are accruing upwards of $6 million per month for this bonus. Given our pilot staffing levels have turned to being stable, we are just starting to realize some of these benefits through our scheduling as we work towards restoring our peak utilization. On a related note, achieving a pilot labor contract continues to be a priority of ours, and I am optimistic that we can come to an agreement in the not-too-distant future. We value our relationships with our pilots and are encouraged by the forward movement made since the recent changes in union leadership. Since cutting over to Navitaire in the second half of '23, we have made a lot of progress in the system that runs all of our reservations and revenue management. It offers critical new features over our legacy homegrown system. This includes the ability for international expansion and further efficiencies that are expected to improve our dynamic pricing and increase ancillary revenues. That migration last year went well for the most critical aspects as customers had a seamless ability to book and to fly. However, migrating our ancillary data has taken longer than we expected, which caused a reduction of about $2 per passenger in ancillary fees in the quarter. As you all know, that is high margin revenue for us. Turning to Boeing. Due to their well-publicized issues, we are experiencing even further delivery delays since our last earnings call. As a reminder, we had originally anticipated and planned for six MAX deliveries in the first half of this year. Prior to this brand new type of aircraft entering the Allegiant fleet, we hire and train pilots, we plan our network, and we take on other preparation and infrastructure costs. These material headwinds are at a current run rate of roughly $30 million annually to operating income. At this time, we do not anticipate any MAX aircraft to be placed in service during the first half of '24, yet we continue to incur these significant expenses. Excluding these three distinct items I just outlined, our adjusted airline operating margin for the quarter would have been approximately 13%. This does not, however, change the fact that our current financial performance is not acceptable to us. The good thing is we have solutions. So I'd like to talk about the key drivers of how we will return to our normal industry-leading margins. The first driver is increasing peak flying. While the airline has recovered well from COVID, our peak flying is still 20% below 2019 levels. Fortunately, our pilot hiring and attrition issues have improved considerably, and we are seeing normalized staffing levels. Given these improvements, we are pushing up peak utilization and look to fully restore it by 2025, which we expect to add roughly four points of incremental margin. The second driver is harnessing the full power of our Navitaire's reservation system. While the implementation of the system was more complex and took longer than we expected, we are now at the right point with Drew Wells, our Chief Revenue Officer, spearheading this initiative at this pivotal time. We see a big opportunity using Navitaire's tools to drive greater ancillary revenue. Drew will talk in more detail about this platform, but we estimate enhancements to Navitaire will drive as much as three points of incremental margin at a mature state in 2025. We are also growing and improving our product offerings through other commercial opportunities in areas such as loyalty, co-brand, Allegiant Extra and our planned international expansion with Viva. Finally, the third driver is ramping up our Boeing MAX fleet. Once in service and operating at scale, we expect the MAX aircraft will provide a meaningful tailwind to our earnings. The annual operating income carrying cost of $30 million we are currently incurring will naturally subside. Furthermore, there is a 20% fuel burn savings and other advantages of this new fleet for Allegiant. We are working with Boeing to ensure an orderly delivery schedule. Given their extended delivery delays, our 2024 CapEx is expected to be significantly below our initial forecast. Last but certainly not least, we are very happy to report we have reached a deal with the TWU and our flight attendants on a new contract, a deal our in-flight team members were proud to support. And in closing, our airline is one of the best proven models in the business. This management team is laser-focused on restoring our industry-leading margins. We are executing on a clear path just as outlined and further building on our strength. I'm excited about the opportunities ahead for us. And with that, I'll turn it to Micah.

Thanks, Greg, and good morning, everyone. As Maury mentioned in his opening remarks, we're extremely pleased with the progress that's been made at Sunseeker this past quarter. When we last updated you, we were in the early days of transition from a construction site to an operating resort. We still had thousands of punch list items to complete and several venues to bring online. Today, all of our outlets are online and all but a handful of the punch list items have been completed. Feedback from guests has been overwhelmingly positive with consistent month-over-month improvements in our Medallia NPS scores. Of note, our customers are not only impressed by the resort, but have been delighted by our wonderful team members. In terms of quality of experienced drivers, the leading category is helpfulness of staff. We couldn't be more proud of them. Guests and locals alike have been highly complimentary of our food and beverage offerings. Opening this many restaurants concurrently is no easy task. Despite that, all six of our specialty restaurants have satisfaction ratings over four on a scale of five with the average being 4.5. These venues, in addition to our spectacular pool experiences, allow us the ability to activate the property in meaningful ways, including sporting events like the Super Bowl and the Kentucky Derby we had just this past weekend. In terms of group business, year-to-date, we've successfully hosted more than 50 groups. Our operating and services team have worked tirelessly to ensure the satisfaction of meeting planners and the attendees alike, building reputation and credibility that will pay dividends throughout the remainder of the year and certainly into 2025 and beyond. In the hospitality business, the convention segment is the most effective leading indicator of future financial performance. While our sales teams are still fielding leads for short-term bookings, much of their activity is now focused on planners booking 2025 and beyond. Our 2025 goal for convention room nights is 60,000. We expect to open the year with 43,000 room nights on the books and 17,000 to be booked in the year. We already have 20,000 on the books with 62,000 room nights in the funnel. In future calls, I'll provide updates on our progress. Clearly, our occupancy and our resulting financial performance is not yet where we expect it to be. The repeated shifting of our opening date made it extremely challenging for our sales teams to book convention business into Q1 and Q2 of this year. Understandably, group planners are historically risk-averse when it comes to new hotel products. That's why the reputational credibility I mentioned earlier is so critical. Right now, at 785 keys, we have a short-term excess room capacity challenge with the associated cost structures. As with any new venture, particularly one of this scale, it will take time and significant effort to rectify. We've assembled an executive committee of highly skilled experienced leaders, some from Vegas, some from Florida and others from around the country. Most have been through the rigors of opening multiple properties. They know what to expect, they know what to do and how to accomplish the results we anticipate going forward. With that, I'll turn it over to Scott DeAngelo.

Thanks, Micah. Our Allegiant brand and product continue to improve and are increasingly highly regarded among our customer base. Our net promoter score rose to 55 in the first quarter, that's 4 points higher than we reported last quarter and our customers rated us materially higher than all other airlines in the nation. Our high-margin third-party product revenue increased nearly 30% during the first quarter compared to Q1 2023 with our Always Rewards Visa card leading the way as the program surpassed 500,000 cardholders in the quarter and earned nearly $35 million in total co-brand credit card compensation, up 24% versus Q1 2023. It's also noteworthy that this program was included among Newsweek's 2024 listing of America's Best Loyalty Programs for the value it delivers to consumers as voted on by consumers. We also continue to see progress during the first quarter from our marketing support for Sunseeker Resort. Primarily email marketing to our 18 million customer database, but also including prominent merchandising on our website and mobile app and onboard through our in-flight magazine Nonstop Live dedicated seat back inserts. We also enabled functionality on allegiant.com for customers to be able to book their stay without requiring a deposit. Bookings improved sequentially each month from an average of 140 room nights booked per day in December when the resort opened to an average of 265 room nights booked per day in March. While we're heading into a typical off-peak season for Southwest Florida, we expect to continue making progress on the sales and distribution front in order to be at full strength when customers begin booking in earnest for fall and winter. Lastly, our transition from legacy homegrown booking and operating systems to modern open integration technology platforms will enable us greater speed and flexibility, as we enhance our customer-facing website and mobile app to improve the booking experience and maximize customer-driven revenue. Specifically, as our Navitaire implementation unlocks its full set of features and functionalities as both Maury and Greg referenced and Drew will elaborate on, we will in parallel be enhancing our web and app booking experience and merchandising capabilities to drive increased take rates for high-margin air ancillary products and bundles along with continued increased attachment for high-margin third-party hotel, rental car and credit card. Also, the expansion of newer air ancillary products such as Allegiant Extra, Lightroom Plus and Trip Insurance along with future new product conditions such as gift card, flight subscriptions and more should collectively play key roles in driving profitable revenue growth on a per passenger basis. And with that, I'll turn it over to our Chief Revenue Officer, Drew Wells.

Thank you, Scott, and thanks to everyone for joining us today. I'm pleased to report our first quarter airline revenue of $632.5 million and TRASM of $0.1323 holds the second highest first quarter figures in Allegiant history. System ASM also increased 2% versus 1Q '23. I believe this continues to represent one of the best performances versus pre-pandemic at roughly 15% TRASM gains on over 20% ASM gains versus the first quarter of 2019, along with a record first quarter fixed fee performance. Leading the way once more was a total ancillary per passenger increase of roughly $0.50. Our core products were strong and the addition of Allianz Travel Insurance drove new opportunities in the booking path. Further, as Scott described, the Always Rewards Visa card continued to drive excellent value. The air ancillary portion was down slightly and we know that we're leaving value on the table here as Greg mentioned, but more on that later. The 1Q TRASM represents a 0.54% sequential increase versus 4Q '23 and in line with our revised guidance. While on a year-over-year basis, TRASM was down 4.8%, as communicated during last quarter's call, our peak spring break flying at the end of March was unit revenue positive versus the same weeks in 2023. Obviously, 2024 gets the benefit of Easter in that comparison. However, it is still a great signal that the best leisure travel periods remain resilient. Of course, there's the other side to Easter shifting. The first two weeks of March were weaker than anticipated and early April felt the pain of the spring travel season ending earlier. While Easter shifts every year, it landed in March just twice between 2009 and 2019. Both of those times saw 1Q to 2Q sequential TRASM decline at least 5%. The expectations for 2Q 2024 exceed those comparisons, and we expect sequential TRASM to decline just 2.5% versus 1Q '24. This represents a year-over-year decline of roughly 5.5%. While I still expect the total ancillary per passenger to grow slightly year-over-year in the second quarter, we're accomplishing this with reduced functionality versus the same time last year. Our Navitaire cutover in late August 2023 was implemented with some non-GAAP and a path to not just bridging but improving our position. Included in those GAAP were roughly $2 per passenger in booking path ancillary functionality, impacts to our ability to collect all revenues at the airport and a handful of factors driving additional call volume to our customer care team for issues previously self-serveable. And the bridges have proven significantly more challenging than initially thought. The additional upside of at least another $2 per passenger we had communicated from the increased dynamic abilities had to take a back seat. I'd like to commend the entire organization for their efforts in developing, testing, finding ways to go above and beyond and continuing to make this company great through their growing pains. As we become more familiar with the platform and its capabilities, we feel it is time to take a step back and acknowledge there may be a better way to move forward. We have incredibly high conviction in the Navitaire platform when done right, and done right is what we need to do. It won't be an overnight fix, but we believe it's the right long-term decision. We'll have more details around timing and value beyond what I've described here in the coming quarters. One of the ways we continue to offset the current integration headwind is with our Extra product. As the fleet grows and we gather more data, we continue to work to align our product mix and experience with what customers value most. The first quarter ended with 15 tails and the 180 seat extra layout. And thanks to our maintenance strategy team and our Mesa hangar, we expect as many as 11 additional aircrafts to be modified by the end of May. As we shift to the capacity front, our summer capacity did increase as indicated on the last call. The month of June is expected to grow approximately 7%. And while it offsets the 11% April decline, primarily associated with the Easter shift, we expect the quarter to have ASMs approximately 1% below 2Q '23. Despite the delays in Boeing aircraft, our planning and ops teams have found a way to preserve the selling schedule through July and August, allowing us to maintain a mid-single digit percent ASM growth in each month and about a half hour utilization per day per aircraft increase over last summer. This is generally in line with 2018 summer utilization and a solid first step toward restoring our peak period utilization. It has taken about a year from the announcement of the pilot retention bonus to have comfort levels at the appropriate lead time to push on flying a bit harder. Candidly, we ended with enough pilots to fly a little more in March. Unfortunately, that certainty occurred too close to March to react accordingly, but it does provide support for our summer plan. However, our reduced Boeing delivery expectations will impact our anticipated fourth-quarter capacity and in turn our full-year guidance, and we now expect 2% to 4% year-over-year ASM growth. The demand environment continues to be elevated well above pre-pandemic levels. Peaks have shown resiliency and the gaps between peak and off-peak leisure demand appear normal. We see a path forward with our system implementation and other plans laid out today and are confident that we are building out the tools and processes to optimize flying, revenue and most importantly profitability. And with that, I'd like to turn it over to Robert.

Good afternoon. As you've heard from others today, our first quarter results are below our expectations. As Greg outlined, there are several contributing factors for this underperformance. We are encouraged, however, that for each of the factors Greg identified, we have a clear and actionable plan to restore our earnings potential in the coming quarters. I'll speak today to our financial results and guidance on an adjusted basis. Looking at the first quarter, we delivered a consolidated net income of $10.4 million yielding an earnings per share of $0.57. Consolidated EBITDA came in at $92.3 million generating an EBITDA margin of just over 14%. The airline business recorded a net income of $19.8 million yielding an airline-only EPS of $1.08. The airline produced $97 million in EBITDA during the quarter for an EBITDA margin of 15.3%. Fuel continued to pressure results coming in at $3.03 per gallon for the quarter, which was $0.18 above our initial expectations. We have seen some slight relief as of late and we're estimating second quarter fuel costs to be approximately $2.90 per gallon. Non-fuel unit costs were up 14% year-over-year. 6 points of this increase were related to the accrual for our pilot retention bonus as we were not accruing during the first quarter of 2023. Three points were driven by pilot training and loss of pilot productivity awaiting delivery of the 737 MAX Aircraft. Roughly 0.5 was attributable to the maintenance CBA that was passed last May. One point came from the timing of light engine maintenance and the remainder was from a handful of various other items. Turning to the balance sheet. Our total liquidity at the end of the quarter was $1.1 billion comprised of $854 million in cash and investments and $275 million in undrawn revolvers. We made principal payments of $31.5 million during the first quarter and expect about the same during the second quarter. Net leverage was higher at the end of the quarter with net debt to trailing 12-month EBITDA at 3.4 times, which included $75 million in pilot retention bonus costs. At the end of the quarter, we had prearranged financing commitments for $435 million to cover our first nine 737 MAX deliveries, which, in aggregate, provide the business with approximately $100 million in liquidity from efficient financing vehicles that those aircraft deliver. This will give us valuable flexibility with respect to aircraft financing heading into 2025 while retaining ownership of those assets. I want to thank our committed financing partners and our PDP lenders who have been particularly supportive and flexible for us in the face of the aircraft delivery delays. We retired two A320 aircraft during the quarter and placed one A320 into service. We took delivery of one A320 aircraft during the quarter. This delivery represents our last A320 under contract, and we expect the airplane to enter revenue service for our summer peak. As Greg mentioned, we're working with Boeing to devise an orderly delivery schedule, which may moderate our capacity growth in the short to midterm but should mitigate risks to the operation and selling schedule and cost drag resulting from the disconnected timing of crew and aircraft availability. At the time of our last earnings call, we anticipated our first 737 MAX Aircraft delivery to be in March. That aircraft, the first in Allegiant spec, is awaiting FAA inspection, which will need to be completed before deliveries to Allegiant can begin. We now expect this aircraft to enter revenue service during the third quarter. We are updating our delivery expectations and planning the business for delivery of six aircraft this year rather than 12 previously communicated. This estimate is not based on guidance from Boeing but rather represents our best estimate based on information available to us today. While we remain excited about and committed to the MAX entering our fleet this year, we're very happy to own 86% of our operating fleet, providing meaningful flexibility to help manage these delays. Given the reduction in expected deliveries, we have updated our full-year airline CapEx to $475 million down roughly $315 million from the prior guide. As indicated last quarter, these expectations differ from our contractual obligations. Updated CapEx guidance consists of $240 million in aircraft and engine-related payments, $85 million related to heavy maintenance and $165 million related to other airline CapEx. Because we're planning for six fewer aircraft to deliver in 2024, we've trimmed our full-year capacity guide by one point and now expect capacity to be up 3% over the prior year. On a quarterly cadence, we're estimating second quarter capacity to remain unchanged at down 1% year-over-year, third quarter capacity to be up about 4% year-over-year and fourth quarter capacity to be up about 7% over the fourth quarter of 2023. Due to further reductions in capacity this year and uncertainty around our 2025 aircraft delivery schedule, we are now reviewing our airline infrastructure and expect to make adjustments over the coming months to align with the more moderate growth trajectory. Turning to second quarter guidance. We expect the airline to produce an adjusted earnings per share of $1.50 at the midpoint of our guide, yielding an airline operating margin of around 8%. We expect second quarter CASMx to increase by approximately 7% over the second quarter of 2023. While this assumes a slight year-over-year reduction in capacity in the quarter, the increase is due primarily to increases in the salary and benefits line, including one additional month of the pilot retention bonus accrual as well as incorporating increased wage rates for our flight attendants, technicians and dispatchers as a result of new agreements or amendments. It's worth noting that these labor agreements are part of our path back to incremental utilization and better productivity in the business. I want to congratulate our flight attendants on their recently ratified agreement. As we progress throughout the back half of the year, we expect CASMx to moderate into the third quarter with a slight year-over-year reduction expected in the fourth quarter. Based on Maury's commentary regarding Sunseeker and much of the second quarter being off-peak for the property, we are guiding consolidated earnings per share of $0.75 for the second quarter. Before I close, I want to thank our team members for all of their efforts this quarter. Despite this financial outcome, the operation again ran safely and smoothly, thanks to your hard work. And that's foundational for us as we now focus on increasing utilization in peak leisure demand periods. As we head into our peak summer schedule, thank you for all you do. And with that said, Dee, we can now turn it back to you for analyst questions.

And our first question comes from Helane Becker from TD Cowen.

Just a couple of questions on guidance. As we're looking forward to maintenance costs, is that just a one-quarter item or is that a full-year item that we should expect at that level?

Hey, Elaine, it's BJ. Thanks. Yes, it's a little bit of both. There's some noise in the comp in the first quarter of 2023. So we are running some light check and repair level maintenance visits on our engines. That will persist throughout the year, but it's offset by a nice reduction in contract labor expense. So on an ASM basis, we expect maintenance cost to be down unitized throughout the year.

And then actually a follow-up question for you. Is there a level of cash or, I don't know, if you want to measure in liquidity that you are not willing to go below as you think about it?

Sure. We normally talk on these calls about liquidity levels being maintained at 2x ATL. Now for our purposes, we would credit that with some of the available balance under our undrawn revolver facilities. So all in, we're a little bit above that today. I'd still like to maintain cash balances around 2x ATL until we have some clarity on the Boeing delivery schedules. But as we have financing lined up further and further out, we'd be comfortable at 2x ATL including balances.

Our next question comes from the line of Ravi Shanker from Morgan Stanley.

Thanks for all the detail on the call. Maybe the first question is, you said that you are taking steps to kind of improve the financials and the first step was to improve your peak flying. One of your peers also kind of increased their flying once they resolved their staffing issues, but they ended up with too much capacity and they're now pulling back. Do you have the visibility that kind of your increasing peak flying is kind of not going to end up in that outcome and will actually kind of be accretive to earnings?

This is Drew. If I'm reading between the lines properly and think of the right other airline, I believe they commented that there was outsized growth in April and May that they wish they had pulled back a little bit given current fare level. What we're talking about is summer flying, it's March, it's the holidays, where I still believe that there is immense incremental value for us to drive by flying more there and not quite as much in the April and May timeframe. So forgive me if I'm thinking of the wrong quote, but that's my position.

And Ravi, this is Greg. I just want to add a comment, to that. 80% of our earnings come in those peak periods, the March, the summers and the holidays. And Drew is still and his team is still seeing terrific demand, leisure demand in those periods as well. I don't know if you caught in his comments, but we're already taking a nice step up this summer with a half hour more of utilization per aircraft. We're going to continue to take those steps up until we get into 2025 where we want to restore that 20% delta that we're under today in terms of aircraft utilization in the peak periods.

And maybe as a follow-up, I know that a lot of the industry is kind of pushing towards premiumizing their product and some of your ULCC peers are also introducing new front of cabin product and kind of pushing the potential kind of premium offering. What are your thoughts on that? Kind of obviously, you have a good bundled product now with Sunseeker. And if anything you can do kind of on the aircraft itself to kind of push towards a premium flyer that you're thinking of?

Yes. So we're not that far removed from talking about bringing the extra products across all of our fleet. We still haven't received our first MAX aircraft, which would have materially increased the number of either extra or legroom plus seats on an aircraft. We're constantly looking and evaluating other options. I don't think we're at a position today, again, think we haven't received the MAX aircraft to say we need to be pushing harder. There's a lot of, I think, confirmation bias in what we've seen, right, and putting aircraft on the most valuable routes. So give it time. We'll continue to review everything, and maybe it makes sense, maybe it doesn't. But that's probably a little bit further down the road for us.

I think this is Maury. One other thing, when you have 77% of your routes without competition, a lot of what you're seeing is one-upmanship and competitiveness and ability to price with some majors that really rolled in, so they can roll people up in their purchasing. Having that ability to fly our customer, while we've got a great brand and we do a good job, I don't know that they're that price-sensitive. And on a two-hour flight, it's hard to see that you're really adding a lot of value in first class, but that's very much being driven by the majors and the others we're following to try and keep up.

Our next question comes from the line of Andrew Didora from Bank of America.

Maybe first question for Greg or BJ. Just given the CapEx changes in 2024 and down $315 million, what would be kind of your first look in terms of how 2025 and maybe 2026 look like? I would assume that $300 million just moves into those years. Any initial thoughts?

Andrew, it's BJ. I apologize. I'm just trying to get back to that page. But what I will say is there's just still a lot of uncertainty around 2025. And I mentioned at the moment, we're taking a close look at different areas of the business and where we need to adjust to be prepared for a little bit slower growth profile. So I think we'll have a lot more for you next quarter that maybe we can share on 2025. We were originally contracted to take 24 airplanes next year. Just given what we've learned from the risk of relying on two aircraft a month, I would expect we adjust that down somewhat. So as that does shift into 2025, some of the 2025 CapEx, I would expect to shift to 2026.

And then second question just for maybe for Maury. I mean, I guess just in terms of Sunseeker, I guess what changed so rapidly on the years that brought kind of RevPAR assumptions down about 30%? And does the year one EBITDA losses make you think any differently about owning or running the asset and potentially thinking about a potential divestiture here?

Unfortunately, we didn't have much time to market and sell effectively. I believe we are also facing the normalizing curve that began in 2021 and 2022. Personally, I noticed rates of $2,000 a night for many comparable properties in the area. However, this is an effort we need to pursue. Micah can probably provide more insight on this. Regarding exploring other options, we will definitely consider those alternatives. I see this year as a project where we will learn a lot and adapt accordingly for the following year. It's going to improve as we progress. But ultimately, we have a high-quality product, so we will fill it up; it's just a matter of how quickly. Micah, do you have any thoughts?

Yes. In terms of why the adjustment, I think there's a couple of things. One, we now have four months of data and that helps us at least think better about what's going to happen in the next coming months. Even we were talking about this in Q1, we had almost we had zero. So it helps us a little bit. Scott talked about the booking trends and the way they were ramping up like we wanted them to into March, and they slowed down a little bit. So part of the booking trend analysis that we were watching and its decline has led to us thinking about Q2 and Q3 a little differently than we were thinking about it in February and March. There's anecdotal softness in Florida. Some of you're starting to see people talking about that, so that's a part of it. We're still learning every day about how the locals behave and how they'll handle food and beverage demand in between seasons, in and out of season. And I think the last thing that I would tell you is that we didn't really know for sure when we first talked about what of our group prospects would materialize and which ones wouldn't. We kind of hope we'd play a little more lucky than we have. And I think those are probably some of the things that led to the changes in the short term.

Our next question comes from the line of Duane Pfennigwerth from Evercore ISI.

I wanted to maybe ask the CapEx question a different way. Obviously, you're disappointed in the delays. The delays drive your hiring plan and your ops plan or at least the fleet plan does. But from the outside looking in, the hiring feels like it's actually a good thing for 2024. And so the question is, do you see an opportunity to smooth out the capital commitments beyond just this year? And how do you think about the guardrails from a balance sheet perspective that shape your longer-term capital plans?

Sure, Duane. Yes, I mean, I guess, there is an ability to smooth it out. I think we'll have to wait to see just how many airplanes Boeing is going to produce in a month and how many of those are delivered to Allegiant. We do need to be careful of what I think is an outside risk for Allegiant compared to some of the other carriers with respect to these deliveries. And that what Greg mentioned is we're getting ready for these airplanes and taking pilots off of the A320 and having them standing by ready for 737s. And so sitting here relying on two aircraft a month just doesn't feel like a good recipe at the moment. And then that said, that's also creating some pressure on earnings as we talked about today, which would limit what we can do from a leverage perspective. So all things that we're mindful of, but I don't know that I have a clean answer for you as we think about '25, '26 yet.

Duane, it's Greg. I might just add, and BJ mentioned this in his opening comments, that he and the team, they're actively working with Boeing on setting up an orderly delivery schedule that we can all execute to. And so that flexibility is important and that plan is going to be important. And together, we believe we'll get to the right outcome.

Yes. One other final comment, Duane. If we slow down a little bit, it won't be the end of the world. Currently, part of that process, we're going to retire some airplanes when as we took those that new equipment. But just given the way the world's developing, just taking our time a little bit longer is not a bad thing for where we see ourselves. And I think you also get some benefits maybe in interest rates that you take them all very quickly, won't have the interest rate benefits that might come a year or two later. But Boeing and we have to come to an agreement and they're certainly continuing I can't believe how they can't get off the front page. It's just astonishing. So, yes.

And then maybe you gave part of the answer with the Navitaire commentary, but can you speak to the level of integration of air and hotel packages within your booking engine? When do you think you'll have the ability to fully market Sunseeker to your airline customers?

Hi Duane, this is Scott. The answer is we've gotten there technically now. As of a couple of weeks ago, we removed one of the biggest barriers, which you may recall was requiring customers to pay for the entire AirPlus Hotel purchase at once. Now when you book Sunseeker, you actually are required to leave no deposit as you book your air and hotel together. We will begin to market that now that we've got a couple of weeks knowing that everything works from a customer experience standpoint and customer servicing standpoint, very soon. I will tell you just one other tidbit. Of the different channels, the allegiant.com, if you will, customer who books air and hotel is by far the highest value. Their length of stay is longer and they're paying more in average daily rate. So continuing to fuel that fire of AirPlus Hotel for Sunseeker is going to be critical and we're already at now the technical ability to do that in earnest.

And if I could sneak one last one in. Just on the Sunseeker OpEx run rate, is this first quarter level a good level? Do we go up from there sequentially? Or is there a way to kind of flex it down in these off-peak periods?

No, absolutely. You can flex it up and down based on seasonality. So you should see us become more efficient in Q2 and Q3 and then flex back up a little bit into Q4 as demand returns.

Our next question comes from the line of Scott Group from Wolfe Research.

So I think you talked about a 7% increase in airline CASMx in Q2. I just want to make sure, is that apples to apples with the up 14.5% in Q1? And then any thoughts on back half of the year CASM?

Sure. Hey, Scott. Yes, it’s apples to apples with the first quarter. I will mention in the second quarter, you have still one month of the pilot payroll accrual, I think, I mentioned in the script and then incorporating some of the new labor agreements. But yes, otherwise, apples to apples.

Scott, it's Greg. Just as you think about maybe even longer-term and the power of increasing utilization, I think something like an hour increase of aircraft utilization per year results in a reduction of CASMx about 0.5%. So that could be a nice tailwind. And then as we work through some of the kind of inefficiencies with the overhead getting ready to take on the new MAX aircraft, I believe as that starts to work itself through, it's another like 0.8% of CASMx that we could see there too.

And then just, Scott, as I mentioned in the prepared remarks, we expect CASMx on a year-over-year comp basis to moderate into the third quarter and end up slightly below the fourth quarter comp.

You're saying fourth-quarter CASMx should be down something year-over-year?

Right, slightly.

I know you mentioned that RASM is down about 2.5% from Q1 to Q2 in absolute terms. While it's early, do you have any initial thoughts on your expectations for the second half of your RASM?

Not particularly. There's still obviously a long ways to go again for July. It has at least 75% left to book. So everything is still early. And I think the general theme still holds that we believe there's resiliency in the peak period. I'd expect continued normalization between the peak and the off-peak. But other than that, I don't have a lot more to add to the back half of the year.

And then just last one. I know you got asked a question already about sort of liquidity targets and all that sort of stuff. To the extent that you wanted, how do you balance liquidity needs versus where you're willing to take the leverage is give or take 4x, is that as high as you're willing to take the balance sheet leverage, would you take it higher or if any incremental capital raise, is that more likely to be with equity than debt?

Sure. Yes. No plans for any equity-related capital raise at this time. I realize what that could mean for leverage if we're trying to maintain liquidity at 2x ATL. But as we've locked in financing for some of this future CapEx, we're okay with liquidity coming down a little bit, as I mentioned in response to Helane's question. Or the other part of your question, did I miss something?

No. I mean, I guess you're saying you're okay either with the liquidity coming down a little bit or the leverage metrics going up a little bit?

Yes. We had anticipated that leverage would remain high throughout this year. I believe we mentioned this in the previous call and certainly in individual discussions throughout the year. This is a period of investment with significant capital expenditures for airplanes, so we expected leverage to be somewhat pressured as we progress through 2024.

Our next question comes from the line of Mike Linenberg from Deutsche Bank.

With respect to the distribution of Sunseeker, I know that you are going through third-party channels, which I know historically was not the model for Allegiant. Can you tell us as of now maybe what you're booking through allegiant.com versus third-party channels? And I'm just curious, out of the 18 million people in your customer database, what's the uptake of them? Would you say that the majority of people at Sunseeker today are out of that 18 million database or are these just entirely new clients, new customers?

Hi, Mike. It's Scott. I'll start and let Micah chime in. So right now the majority, I put it at like 80% to 85%, and Micah you'd correct me, are coming directly either to sunseekerresorts.com or via allegiant.com. So that's great news that we're seeing the majority of bookings without requiring both the added cost and the disintermediation that comes via OTA. In terms of the majority of folks that are staying, back in January, call it, you've seen it go from about like three quarters to one quarter in favor of Allegiant customers to now close to 50-50, while the overall pie grows. So it's a good story that, yes, we're driving a lot directly and through the email, but that proportion as the pie has grown has become smaller meaning that more other people are coming into the Allegiant Travel Company family, if you will, many from places that Allegiant doesn't currently serve or serve in earnest like Atlanta or New York City, et cetera. Micah, I'd invite you for any additional commentary.

The only thing that I'd add to that, Scott, is that as you mentioned in Q1, we were just in the very early stages of ramping up OTA productivity. So for example, when you looked at January, I mean, we booked less than 15 rooms. By February, we're booking 300 to 350 and by March upwards of 1800 to 2000. And we think that will continue to grow. One of the things that we think, I think Scott mentioned that it's obviously best for us to produce as much as we can through G4 Direct as part of packages. They have long lengths of stay. They have really good rates. And then, obviously, anything that we can book directly to our own website and/or through group business is our priority. But third-party will always be a good partner for us and it's important for us to continue to grow that. And so you'll see our sales and marketing teams, particularly over the next several months, working to not only establish, but then make our partnerships that we have already established now more effective, work in marketing programs with them and see better production out of the OTA partners. But I think Scott nailed it the right way. We have a priority of how we'd like that to happen, but they are a key component for us.

Micah, is that $1800 to $2,000 in March that is that's a monthly booking rate? Is that?

No, that's an actualized in the month. So on a go-forward basis, yes, in a go-forward basis, you'd expect that to be somewhere in the $2,000 to $3,000 a month or so.

And then just my second question, with respect to this DOT, I guess, consumer protection plan or benefits as they characterize. From what we hear, you have this refund element that kicks in, I think, in the next month or so, maybe it's like at the end of June and the transparency piece. And carriers have come back and some have said that it disproportionately impacts low fare carriers. It's ultimately going to race across to the consumer which is actually, do you think that it is going to add cost, so it's going to make it harder to offer lower fares. But what are the gating issues? It seems like some of the refund elements are already being done today, but it does seem like we've gotten feedback on the technology piece that the industry may not be ready in six weeks to meet the various elements of what the DOT is requiring. Your thoughts on that?

Sure. It's Drew, I'll start and we'll probably keep it pretty high level. This is all pretty fresh, right, and we're trying to work through it. Yes, I think we do comply, particularly to the refund language. I think we comply with quite a bit of it already. I'm proud of how we've addressed a lot of that around cancels in particular. I think there's a little work we need to do around the delay side. But in terms of gating or how ready we'll be in six, we still need to kind of do some work on that. But I don't think it's quite as big of a lift given what we've already done to date. And not a lot of commentary on the transparency part of ancillary fees. I think you still need to do a lot of work to understand what that's going to look like in the booking funnel. So, sorry to keep it maybe a bit vague for today, but we're still working through just like everyone else.

Can I just add one thing, Drew? Mike, this is Greg. Just on the refund point Allegiant, we talked about this over the years, but when we have cancellations with our customers, we issue them actual what's called a pay maneuver, up to $300 and so we compensate our customers when we have cancellations. We've been doing that. I think we're one of the unique carriers in the U.S. to do that. And so when we talk about IROPs, that's a big chunk of the IROPs. So just wanted to point that out that we've already for years have tried to take care of our customers in those difficult type of situations when there's a cancellation.

Our next question comes from the line of Dan McKenzie from Seaport Global.

I know you're not guiding to the full year obviously, but the street's pretty divided. You could drive a Mack truck through estimates. I think you got a low of $2.55 to over $7. And I guess just based on what you're seeing for the summer, can we start to eliminate either the high end or the low end here? And I guess as part of that does the current plan contemplate profitability in each of the quarters?

Hey, Dan, it's BJ. I'm going to shy away from giving guidance in the third and fourth quarter. There's a lot of moving parts as we've talked about today, one which is execution of the CBA with our pilot which will have an impact on full year results as though the timing of Boeing delivery and one of their airplanes can be placed into service. And one that would be more immediate is around just around some of the improvements in Navitaire that Drew has been speaking to. So as you can see, just a lot moving and so apologies for dodging the question.

I guess second question here, leg room plus seems it's now part of the booking process. I can see it there, but it doesn't look like you're really monetizing it yet. And I just wonder if you could remind us, when did that start exactly and where are you at with this program? And then I guess what is the kind of target benefit that this could potentially provide?

Yes. So we started testing the Allegiant Extra layout in 2019, I believe. And of course, ran right into the pandemic and kind of got derailed a little bit through there. We announced probably, what, 18, 24 months ago, we were going to bring this to the full fleet. In addition to putting it on all MAX aircraft, with about double the number of seats, a little bit less than double the amount of premium seats. So, there's a little distinction between Allegiant Extra, which is kind of an all-inclusive by Allegiant standards product that has the extra legroom, comes with the priority boarding, the dedicated overhead bin space, and now a free snack on board, which complements very well for our cardholders who will get a free drink and really, maybe not to the full extent but rival kind of a Delta Comfort Plus type of experience, which I think is a remarkable perk there. So, in terms of monetizing, right, it's not only a few, what a portion of our fleet, 15 aircraft, with 11 more, primed for this summer. So, I think there's a lot left to go here in terms of experimentation with pricing and product mix. But so far, we've been responding to what our customers say is valuable to them and led us to where we are today. So still in the infancy, I think, of where this will go but absolutely thrilled with what we've been able to do with the product and monetization thus far.

This concludes our Q&A session. I will now turn the conference back over to Maury Gallagher for closing remarks.

Thank you all very much. Appreciate your input, and we'll talk to you in 90 days. Have a good day.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.