Allegiant Travel Company (ALGT) shares have declined by double digits this year, significantly underperforming its industry and competitors such as Southwest Airlines (LUV) and Ryanair (RYAAY). The company’s disappointing performance prompted a withdrawal of its 2025 guidance due to macroeconomic challenges and production delays from Boeing, leading to missed aircraft deliveries that impact profitability. Labor costs are also projected to increase by 19.2% in 2024, adding to operational pressures.
Despite these hurdles, ALGT reported a 6.5% year-over-year increase in revenue in Q1 2025, primarily driven by a rise in passenger revenues. The company expects a 15.5% year-over-year increase in capacity for Q2 2025, supported by a strategic fleet modernization initiative that includes the addition of Boeing 737 MAX aircraft, which offer improved fuel efficiency.
As of Q1 2025, ALGT holds cash and cash equivalents of $897.6 million, surpassing its current debt of $266.6 million, reflecting a solid liquidity position. However, analysts advise caution, recommending that investors wait for a better entry point before considering ALGT stock, given ongoing economic headwinds.
