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Allegiant Earnings Down on Lower Fares This last week has been full of earnings reports, but Allegiant's was one of the more interesting ones.
The travel company which just happens to kate spade on line run an airline saw operating income drop 37 percent and net income drop 42 percent in the fourth quarter as compared to the previous year. This is a company that has been on a tear as of late, so what's slowed them down? On the air revenue side, the trend hasn't changed from previous quarters. The average fare was down 8.7 percent from just over $83 in Q4 kate spade outlet shop online 2008 to just under $76 in Q4 2009 and that stings but it's expected in this weak economy. They did say, however, that while the October average fare was a dismal $67, it bounced to $83 in December and they're seeing some strength. That's good to know, but you would expect that during the heavy leisure travel holiday season. But where things have changed is on the ancillary revenue side. That was a number that just kept climbing higher and higher, but it now looks like Allegiant's ancillary revenue growth has stalled. Q4 2008 had ancillary revenue of $32.83 per customer while Q4 2009 dropped ever so slightly to $32.78. Has Allegiant run out of new things to sell to its captive audience? Maybe they're just taking a break. They'll find something else to sell, I'm sure. Clearly they're motivated to do so, because that stuff is like gold. While the air travel business usually produces kate spade nylon tote sale single digit margins that don't have a negative sign in front of them during a good year, the ancillary business makes kate spade outlet locations near me a lot more. In the fourth quarter, Allegiant saw gross ancillary revenue of $16.5 million with a cost of only about $12 million. Yes, the 27 percent margin is quite attractive.
The good news for Allegiant is that even without the ancillary revenue, they're still quite profitable. They also are seeing some revenue strength. To be blunt, things don't suck for them, even if income is down.