Airline Leader Interview, Allegiant CEO Greg Anderson

Transcript

Michael Bell:Well, terrific. Greg, thank you for making the trip to join us here in beautiful Charleston.

Gregory C. Anderson:Of course. Thanks for having us. Happy to be here.

Michael Bell:Taking some time to look around a little bit?

Gregory C. Anderson:A little bit, yeah. We arrived pretty late last night, so I haven't had a chance to see much of the city yet, but no, it's beautiful what we've seen thus far. That's a great place to have an event.

Michael Bell:Well, I was up on stage with Andrew last yesterday, and we've known each other for eons. Not the case with you, Greg, but at least a couple of years now. And I've really come to admire your approach to running an airline, which is terrific. You're an extremely down-to-earth, grounded leader, and I can see why Allegiant's in really good hands. So we're going to, we're going to talk about that and the very exciting things you guys have going on. Just a quick Backdrop to that, first about Allegiant, in case you're not familiar with the airline. Ultra-low-cost carrier built around a very targeted differentiated strategy serving tertiary mid-sized cities in the US, bringing travelers from those markets typically on a leisure basis to large leisure destinations, the Myrtle Beaches, Las Vegas, Orlandos, Phoenix, Punta Gordas of the world. Been a very successful model, one that you guys have been working on in a very methodical, incremental manner for some time and grown to be a pretty big carrier. You've obviously doubled down on that recently with the acquisition of Sun Country, which we're going to talk about in some substance here. That's pushed you to be a pretty sizable carrier, $3.5 billion revenues, highly profitable, listed on the NASDAQ, coming on 9,000 people. You guys aren't a small airline anymore, right?

Gregory C. Anderson:No. Definitely, I'd like to say we're a proper-sized airline at this point with the acquisition as well.

Michael Bell:Yeah, absolutely. And a regular award recipient. Greg himself, financial background, started Ernst Young, went to US Airways. Seems like everyone in the airline industry has been a CEO at some point, rotated through US Airways. You got your badge there. Joined Allegiant in its accounting division and progressed from there into treasury, chief financial officer, President and now Chief Executive Officer and has had some pretty significant achievements under his belt. So welcome again.

Jim Quilty:Thank you.

Michael Bell:It's a great, it's a great story for you and for Allegiant. So let's talk about the big story, which is just what, a couple of weeks ago now, right? You guys closed on Sun Country?

Gregory C. Anderson:May 13th. Yeah. Congratulations.

Michael Bell:That's a big deal. Talk a little bit about the genesis of that. How did that Come about? Was that always on the radar screen? Jude Bricker, who was running that airline, is also ex-Allegiant. So maybe just what's the history to how that came about?

Gregory C. Anderson:It took time, I would say. Probably in the fall of 2024, we really started as a management team with a small group, Michael, thinking about just the industry in general, but specifically the value sector, and could consolidation make sense? And then as we looked at it, we thought it could, but from an Allegiant perspective, I felt there was a lot of like a foundation that we needed to strengthen and a lot of work we needed to do internally before we could even think about an acquisition like the one we just closed on May 13th. And so there was a lot of that that happened over the past year, 2 years that I think positioned us. And then it was really—

Michael Bell:What kind of things are we talking about that you felt you had to— Solidify, if you will?

Gregory C. Anderson:Well, we wanted to get back to our roots, focus on an airline. We had a hotel that we needed to exit. I felt that was an important part of the strategy. We needed to be a little bit more productive, push utilization in our aircraft more in the peak periods. So that was another part of it. We were bringing on a new fleet type with MAX aircraft. So that too. And then also a technology transformation.

Michael Bell:So it would've just been too much to—

Gregory C. Anderson:I think too much to bite off at one time. We wanted to, we wanted to be in a position that where We felt like if we were to take it on, we would have confidence that we could execute towards it and also recommend it to the board that, you know, we're in a position to do this. So it was probably last fall around September-ish timeframe that reached back out to Jude, who, as you mentioned, we know Jude really well. There's a lot of close cultural connections between he and Allegiant, and he also mentioned Andrew as well. We used to all work together back in the day, but Reached out to Jude as we were looking at it internally. I felt like, you know, it was the right partner for the right reasons at the right time. And by that I mean the right partner. We're more alike than we are different. We both, in the communities we serve, we try to be relevant. We own our aircraft. We have a low utilization, flexible capacity model and low fixed costs. So right partner.

Michael Bell:Let's talk about the first part of that, 'cause you guys, if I'm not mistaken, Allegiant proper, if I can call it that, have been kind of tried to be the hometown airline of some these smaller midsize markets, whereas I thought the scheduled piece of Sun Country was really more about moving capacity around based on seasonality and picking up demand that the majors couldn't service. So how did those 2 on the scheduled side fit together?

Gregory C. Anderson:Yeah, it's a great point. And for Sun Country perspective, Minneapolis-St. Paul, they're relevant in that market. They're the number 2 carrier behind Delta, and they flex capacity. So in those peak periods, they push up utilization in the off-peak periods of demand, they pull it back. No different than how Allegiant approaches it as well. And for us, in the originating cities we serve, we try to be number 1 or number 2 in those markets as well, where we know that we can win by providing low fares, reliable service, and convenience is the real factor. Everything's nonstop and direct. So when you combine the 2 airlines, of the originating cities, we're number 1 and number 2 in like 96%.

Michael Bell:It's a great position to be competitively, right?

Gregory C. Anderson:Yeah, so that's why we felt like being the right partner.

Michael Bell:While not really being necessarily on the radar screen of Delta, United, and American, right?

Gregory C. Anderson:And that's where the flexible capacity comes in. We try to— when in those off-peak periods, we try not to fly because it's— for our models, it doesn't make as much sense. But when there's peak periods and there's excess demand, that's when we want to put the capacity in. And then the right reasons. I think the businesses are very complementary, but there's distinct strengths between the two that as we bring together, I feel like it gives us a stronger platform moving forward. And so for the right reasons, we talked about Minneapolis-St. Paul. That's a large, 17th largest metro market, I believe, in the United States, that they are the hometown airline. They have a strong presence and relevancy in. They have not— 40% of their revenues are mixed between cargo and charter. So 40%. So that's a diversified revenue stream to bring to the combined business that we think is another—

Michael Bell:I was going to ask you specifically about those 2. Let's take each one of those for a minute. Charter, you already are a player in charter, but they really consolidated charter during COVID I think you had players like Miami Air leave the business. So what does this mean for you? Does this mean that you're doubling down on charter as a big market for you guys, or what is the implication of that?

Gregory C. Anderson:Allegiant is a standalone. Charter is an important part of our business. It's roughly 5%. on a revenue basis. So 95% of our business, we focus on scheduled service, whereas Sun Country is closer to 20%. But if you bring it together, yeah, I think it's going to be a stronger platform for us. We have the way our base structure is set up. Sun Country's primary base is Minneapolis-St. Paul. Allegiant has 22 bases throughout the United States. And so we have kind of broader resources throughout that I think over time we can continue to improve our service and provide or see more opportunities through the charter side of the house.

Michael Bell:Were you guys carrying belly freight cargo prior to the Amazon transaction?

Audience:No.

Michael Bell:What does it mean to get into the cargo business? That's new territory for you guys.

Gregory C. Anderson:That's new for us as well. Sun Country, they've been very successful with the charter or the cargo business. And so for us, we think similar to what I was just talking about, the resources we have spread out over time, we feel like we could Continue to serve it at the same level, if not better, that some countries serve in that charter or that cargo business today. But you put it together, so it's going to be roughly 10-15% of the combined business will be the fixed fee, whether that's charter and cargo. That'll be 10 or 15% of revenue. And the benefit of that, Michael, is that those revenues are insulated to fuel. They're generally a fuel pass-through. So we think that—

Michael Bell:Pretty stable. piece you can count on, right?

Gregory C. Anderson:Pretty stable. And then it gives us some ability, we think, as well to help more flex on that sched service or the passenger service, flex that capacity up and down with the demand environment.

Michael Bell:And I think Sun Country was aggressively cross-utilizing its crew across those sectors as well too. I think you, you know, go in in one type of business model and come out in another. Is that how it will continue under you guys, if you will, across the business lines, if you will?

Gregory C. Anderson:Yeah, yeah. They're flying, so the cargo business is 737. The aircraft are owned by Amazon, so it's a CMI, crew maintenance and insurance. But it's, so it's asset light in that regard. But yeah, the pilots and crews are able to fly the cargo and then also on the sched service side of the house, they can bid those lines together.

Michael Bell:What is, where is the growth going forward network-wise for Allegiant? You know, I remember when I first started working with you guys, The model was just sort of coming into being, and I think the statement was, well, we have something like 400 different routes we can visualize serving. It's probably even more than that. But as you think about now, you've got increased coverage with the scheduled piece from Sun Country. Where's the growth opportunity? Do you still have many of these mid, smaller-sized markets that you can serve how you're serving, or is there something else in the works?

Gregory C. Anderson:It's a great question. We don't feel constrained for Through organic growth with the combined company. The network team, they've identified over 1,000 routes that today 90% or 85 to 90% of those routes have no nonstop service that we think fit the combined model really well. That is domestic only. One thing that Sun Country brings as well is an international presence. They have 15 destinations internationally that speed to market. I think that'll help Allegiant with our originating cities as we come together, also expand internationally as well. So we just— the punchline is, yeah, we don't feel constrained by growth. We think there's a lot of opportunities for the combined company to continue to grow organically, but—

Michael Bell:Without so much hitting the radar screen on your big competitors.

Gregory C. Anderson:Yeah, yeah. I'd say something we rolled out about a year, year and a half ago, and as it relates to growth and being disciplined around growth, is earning the right to grow. We're not just going to grow for growth's sake. We need to make sure that the infrastructure is there to support the growth, that the routes are there, the demand's there for those routes to be profitable with such growth, and the balance sheet's there to support it, and the returns are there to cover your cost of capital.

Michael Bell:How did you reconcile that sort of discipline with doing a big bite like this? Sounds like you thought about it, you waited till the right time, but, you know, there are many stories of Airline acquisitions that haven't gone great. I mean, United's doing very well today, but I remember, you know, after the Continental United deal, like, that was not the greatest time for Continental, right? So, or for United. Yeah.

Gregory C. Anderson:So, well, I think for us, it's a great question because we've successfully grown the business organically for 25 years. And I think if you would have asked Andrew, who's here, who was a founder or part of that, the original business at Allegiant, he'd have said acquisition just wasn't something we were thinking about. Why it made sense, for the reasons that I mentioned earlier, but both networks were performing well. Both carriers are financially profitable. 650 routes between the combined airlines, Sun Country and Allegiant, of which one there's over— there's only one of which there's overlap. We have an order with Boeing that I think was a well-timed order. So we have aircraft coming in. They have modest CapEx as you look out through the future, so there's a complementary fleet strategy as well. We both own our aircraft, so there was a lot of decisions that came in or factors that came into the decision-making, but we felt that this was an appropriate way to expand, to bring 2 carriers together that are complementary, and to unlock more value, more growth, and more opportunities over time.

Michael Bell:What's impressive is the time from announcement to close as well. I mean, I'm hearing it might be a record time, but What was part of it? Must be just the fact you didn't overlap in any meaningful way, and the government wasn't going to oppose that, right? But what what were the factors that contributed to such a fast close?

Gregory C. Anderson:I think so. I saw Jonathan Fry here, who's head of ABA, the trade association that we're a part of, and they did a great job. Jonathan and our government affairs team of putting Jude and I in front of the right folks in D.C. shortly after the deal was announced. And it's interesting, you asked the question about like what the 650 routes— that was one of the key stats that everybody seemed to focus on. 650 routes, of which only one there was overlap.

Michael Bell:Which one is it?

Gregory C. Anderson:Appleton-Fort Myers. And so that the— to your point, though, the 4 months that it took from announcement to close, somebody should fact-check me on this, but I was told that that was one of the quickest, if not the quickest and cleanest approvals from the DOJ and the DOT. pretty much on record. Again, don't quote me on that. You may need to fact-check that.

Michael Bell:Let's run with it.

Gregory C. Anderson:Okay.

Michael Bell:But that's important too, because, you know, an organization in limbo, right, on the other end, that's not good either from a cultural standpoint, right? Not knowing if it's going to merge or not. And we saw what happened to JetBlue.

Gregory C. Anderson:Oh, that uncertainty drives so much angst.

Michael Bell:And JetBlue went into bankruptcy.

Gregory C. Anderson:Exactly. That uncertainty drives so much angst between the team members. So having that close come sooner rather than later, Absolutely, we'll take it. We were expecting it to be in the back half of this year. Our attorneys that had done this many, many times were telling us there's a less than 10% chance it closes by May, in mid-May. That was the earliest close possible, just if you looked at how everything was sequenced. But we were planning. We have an integration management office that was planning for the earliest close, just because you didn't want to be caught flat-footed in the event that happened. They're running at full speed now. We've identified meaningful synergies that we think we could capture over the next few years. The number one most important, I'd say, true north as part of this integration, Michael, and with the fast close, has been stability. Stability above all. Both airlines are well-run. Both airlines are financially healthy. Don't mess anything up.

Michael Bell:There's a question about fleet. I'm going to come back to that in a second. You've touched on the question of integration. Talk about the integration process and plan that you have and a little bit the philosophy that governs how you're going to bring the airlines together, because we've seen them— we've seen that go wrong too, right?

Gregory C. Anderson:So yeah, we early on, we set up an integration office. It's— and it includes leaders from both companies. And so that's really important because we want to make sure that we get this right and that voices are heard and perspectives are heard from both sides. We also— this is the first time, as we talked about, that we've done this at Allegiant. First time Sun Country— well, some of the management team at Sun Country, first time they have. So those areas that we weren't experts in, we went out and we hired experts to help us. So for example, obtaining a single operating certificate, we've hired Oliver Wyman to help us through that process.

Michael Bell:You're going to try to break the record on that one too.

Gregory C. Anderson:Well, I don't know about that, but we're going to try and do it in as efficient of a manner as possible. Work closely with the FAA. They've helped other carriers through their integration to getting to a single operating certificate. So the good thing is we don't feel that we need to, to push anything too hard back to stability above all. But there's a very thoughtful plan that's already in place that the teams are working towards executing, and that's around systems. There's a lot of commonality between systems between the 2 companies, so we're sequencing those accordingly. There's also the single operating certificate that I mentioned. We'll eventually get to JCBA. Now that we've closed, we'll start working through that. But we have a plan in place and then the team's going to execute towards it. And they've done a really, really terrific job leading up to this and have all the confidence in the world.

Michael Bell:So one of the key things in integration is culture, right? So, you know, people talk about merger of equals. I think that was the intent initially with United Continental. I think they appointed 4 EVPs from each side. In the end, there was an acquirer and there was an acquiree, right? So, and it does sound like that is the case here, but it sounds like you're taking steps to make sure you're getting the best of both worlds. So how, how are you doing that? Give us an example of making sure that you do get the best of both worlds.

Gregory C. Anderson:Yeah, we're, we're the acquirer, so it's not a merger of equals. Allegiant is the acquirer, so that was an important part of the negotiations. But to your point, culture is incredibly important. It's one of the top priorities of the management team, of myself, that we want to get culture right. Even leading up back to when I was talking about the readiness, even leading up to the working through the diligence and the announcement of the deal itself. We had been working very— we had been working through improving organizational management at Allegiant for 12, 18 months to try and make sure we had the right culture as we—

Michael Bell:Your incoming culture to that organization.

Gregory C. Anderson:Yeah, there's things they do better than us, candidly, and we don't want to lose sight of that. And so it's just back to the team, having the right folks on the integration team, Feeling comfortable enough to speak up and say, look, this is what we do, and then let's pressure test it and move forward in the, in the most thoughtful way that's going to help strengthen the combined.

Michael Bell:What are some of those defining elements of the culture, even pre-merger? You think about Allegiant culture, it's kind of a unique culture. I remember the first time I walked in the office, I said, I was shown how the leadership team is set up and almost like in the center of a big wide open area where you could just literally turn your chair around and talk to the To the other member of the C-suite, right?

Gregory C. Anderson:Hasn't changed.

Michael Bell:It's still like—

Gregory C. Anderson:Still the exact same. And as we talked about before though, Jude came from Allegiant, so there are similar cultural connections between the 2 companies. And the more time I spent out at HQ and in Minneapolis-St. Paul, you saw that, you felt that. But some examples, we have no experience on the Allegiant side, we had no experience on the cargo business. So we wanted to make sure that we brought, that the right team members that were going to join the combined company that have that experience, that have that relationship. Same with Minneapolis-St. Paul in that market. And so we really try to be thoughtful to protect the strengths of the combined business. We're out there meeting with the teams regularly. So whether that be the Sun Country team members or Allegiant team members, I'm out on the road, I'm out at bases, out at HQs, trying to talk, to listen, to really understand what some of the pain points are, what some of the angst is and earn trust.

Michael Bell:What's been the response from the other side?

Gregory C. Anderson:I would say the uncertainty has caused more angst from the Minneapolis side versus the Vegas side.

Michael Bell:Which is normal, right?

Gregory C. Anderson:It's normal. We've announced that the unified brand will be over time Allegiant, that HQ is going to be in Las Vegas. So corporate, from a corporate perspective—

Michael Bell:Clear direction on those matters, right?

Gregory C. Anderson:Yeah. But back to the importance that this was an acquisition and we wanted to be really When we had information that we could provide and be transparent upfront, that's always a good thing. We were trying to be clear with our communication, timely, back to being transparent. We couldn't communicate everything at once for legal reasons or other reasons, but we were really thoughtful about how we did it. Did we make mistakes here and there? Absolutely, but we tried to learn from them, fix them, and then again, back to trying to build that trust.

Michael Bell:What's keeping you up at night about them?

Gregory C. Anderson:I would say right now it's just trying to get the culture right. It's one of the things I'm most focused on from my office. I think once we get to JCBA, that's going to be an important point as well. But we just want to get it right and bring the right folks in the right room, and that's what we're trying to really build around.

Michael Bell:There was a question about fleet, which I'll bring into the discussion as we pivot to this. Now you're combined with the freighters, I think 195 airplanes. You're You're pushing scale here, right? You know, heavy Airbus narrowbody at the core, but you guys did a MAX order in the Allegiant proper. Now you're getting 737-8s from the Sun Country side. So your fleet is evolving a little bit. How are you going to manage that complexity? And I'll just ask you the question, you can throw it in, which was, can you see using the MAX airplanes on the Sun Country routes?

Gregory C. Anderson:Yeah, the short answer is yes, we could see using the MAX aircraft on the Sun Country routes. Back to managing the complexity of multiple fleet types. Back in 2016 at Allegiant, we operated 3 different fleet types. Remember, we operated the MD-80s, the 75s, and the 320 series. So we have experience with it. We're now going to 2 fleet types, the 737s and the A320 series with our base structure. So we have 22 bases.

Jim Quilty:22 bases.

Gregory C. Anderson:Combined, 23. You ice— what we've been doing is we'll ice—

Michael Bell:It's more by base than the split, is it?

Gregory C. Anderson:Exactly. And I would think of a base for us as almost an airline within an airline. Everything's out and back. Your crews are domiciled at a specific base. They'll be typed on a specific aircraft at that base. So you isolate it by base. So Vegas could be an all-320 series base, Fort Lauderdale an all-737 base, Minneapolis an all-737 base. And so that helps mitigate some of the complexities as well. But it's important for us, the way we've built our business over the years, Michael, is that we just don't want to be good operators, we want to be good traders or aircrafters. And so having that flexibility with used aircraft, with new aircraft, being opportunistic, it's an important element of our business.

Michael Bell:It's interesting you say that. I remember interviewing Jude on stage and I asked him, hey, what are the key success factors? What are the core competencies of Allegiant? of Sun Country, and I was very surprised by what he said. You know, you hear about stuff like knowing our customer or whatever. He goes, we're really good at 2 things. He said, we're really good at buying secondary market airplanes and operating them reliably in cold weather. I thought that's a really unique competency for an airline to have, but it sounds like the trading piece is obviously operative for you guys too, right? A common element of both.

Gregory C. Anderson:Absolutely. We all came up together. And again, throwing Andrew another shout out, he was part of this as well to really instill this discipline early on within Allegiant. And so that's just how we've been trained over the years. But having that fleet flexibility is incredibly important for us, for the combined business we have. So the 22 cargo aircraft, those aren't owned by Allegiant.

Michael Bell:That's a CMA agreement.

Gregory C. Anderson:That's exactly right. But the remaining aircraft are largely owned. There are 172, 163 of them are owned by the combined company with over $2 billion of equity value, embedded equity value within that fleet. I only mention that because it gives us flexibility. It helps us protect our balance sheet when we see stress-type situations or scenarios that we're in today.

Michael Bell:Well, let's talk about that. We touched on this when you were on a panel. Thank you for coming in Berlin, CAPA event there. The subject was like, what are going to be the airline leadership competencies of the future in 10 years' time? One of the ones we touched on which seemed to resonate with you is, You know, everyone talks about CASM and RASM and the income statement. Very few talk about the balance sheet and how critical that is to airline success. So how do you guys think about that, and why is the strength of your balance sheet such a key part of your success story?

Gregory C. Anderson:Yeah, I think, well, one thing about the business and the model and the way it was designed, it was designed to protect margins and not chase growth. And I say that is because In this industry that's capital intensive, if you're not financially healthy and producing solid margins, your balance sheet's going to go downward pretty quickly. So, but having a strong balance sheet has been incredibly important. It allows in periods like we're in today to be less reactive, more strategic, more front-footed. But for us, I think really proud of what the team has done. Back to the readiness. We're sitting today, I think, one of the highest, if not the highest, liquidity ratios in the industry. Our net leverage is at 1.8 turns trailing 12 months at March 31st. But we're also— one of the key areas that I believe from my perspective and from the team is we need to get capital allocation right. And having that balance sheet in the right place, I think, gives us a lot more flexibility for the long term to make better decisions.

Michael Bell:Cool. So in the few minutes we've got left, let's talk about leadership. Obviously, you've demonstrated that as a core skill leading up to your appointment as CEO, but you've now done a couple of big transformational things. You had Sunseeker, decided, okay, we're not going to really be in the hotel resort business. You got out of that. Now you've done the Sun Country deal. Those are 2 pretty big bites for a newly minted CEO. What have those taught you about leadership and how you go about making decisions as a CEO?

Gregory C. Anderson:That's a good question. I would say one, what it taught me is stick to your knitting, stick to your strengths. And 2, surround yourself with a really good team. So on that first part of the question, stick to your knitting, Sunseeker wasn't core to our business. It wasn't strengthening our business. You could call it non-core. So I felt it was important that we exited Sunseeker. And you did. clear the deck so we could continue to strengthen the airline. So it kind of fed it, or it led into where we're at today, where the acquisition of Sun Country helps strengthen the business, the core business. So back to sticking to your knitting, I think is something I learned pretty quickly, has been kind of helped guide the decision-making. And then we're in an industry, Michael, where it's the ultimate team sport and making sure you have the right team members in the right place was incredibly important as well, that they feel empowered to make decisions. They feel as owners in the business also, because one of the things I continue to challenge the team day in and day out is we want to out-execute everyone we can, and I want you to feel empowered to be able to do that. But it starts back to culture that you were— we were talking about earlier, folks being proud and passionate to be a part of a company, understanding the strategy, where we're going, how they fit in.

Michael Bell:Do I take from the way you've described it that it's also not what I've called a star model? So some airlines are very centric around one person who defines the company, right? And in this case, sounds like you've got a very distributed approach to leadership between you and BJ and Tyler and others.

Gregory C. Anderson:Yeah, I think we have a really solid team. It's about the name on the front of the jersey, not on the back. And that's— we talk about that as well. So I feel my role largely, I'll make the— I tell the team I want them to make decisions. Certain decisions need to bubble up into my office as well, but I wanna be there to help pressure test those decisions with them. But we try to have that tone and trickle down to really empower the team. For us, what we've experienced over the years, and I've been at Allegiant for a long time, it's as we've grown, as we got larger, that scale, It's just, it's more efficient for us to not have just one single person trying to make every decision, but really have a team focused. We get together every week in our EXCO. We go through those strategic decisions. Here's our strategic roadmap. Here's our strategy house. How do they fit in? So we're pressure testing them. We're trying to get to the right answers. We're debating. We ask somebody to take the other side of the equation, and it gets pretty heated and it gets pretty intense. But I think we're ultimately getting—

Michael Bell:You walk out aligned, right?

Gregory C. Anderson:Ownership on such decisions is important. Accountability, not a dissemination of responsibility. We're really trying to foster that type of culture, especially at the leadership, and then that tends to trickle down.

Michael Bell:Thank you. Questions for Greg from the audience?

Gregory C. Anderson:I can answer that one really easily.

Michael Bell:Are you going to build another hotel?

Gregory C. Anderson:No.

Michael Bell:I'm not sure if that's— that's about you, not the airline. The answer is no.

Gregory C. Anderson:No.

Michael Bell:Actually, I wanted to ask you about this because, you know, for years we talk about the company as ATC, Allegiant Travel Company, that it's not— yeah, it's an airline, but it's an airline really that's feeding travel sales, right? So you're high, you punch high on ancillaries, but are you sort of not really trying to be a travel company anymore? You just want to be an airline with high ancillaries? Maybe just clarify the bigger strategy for the company.

Gregory C. Anderson:Yeah, we're an airline, and the value proposition that we offer our customers starts with the seat. It starts with low fares, convenience, and reliability. And then you build and deepen that relationship with the customer, then you add ancillaries on top. Allegiant, the communities that we serve that we talk about, I think it's underappreciated the affluent number of citizens in those communities and the loyalty they have for that type of model. And so once you have that foundation right, you can add the ancillaries on top. You can add the non-ASM revenue on top, which should be hotel sales, third-party hotel sales, car rentals, or loyalty. It's a big part of our business as well as our co-brand credit card. And so one of the asks or the initiatives that we've been putting out there and I put to the commercial team, back to earning the right to grow on non-ASM revenue, Michael, I want to see the growth of non-ASM revenue outpace the growth of ASM revenue, if that makes sense. Continue to try and drive ways to have more revenue.

Michael Bell:But all built around being an airline.

Gregory C. Anderson:Yeah, they're linked. You can't have one without the other. And the seat is how we start that relationship with our customers.

Michael Bell:I think we have got a question there. I see someone standing up. Is that correct?

Jim Quilty:Good morning, gentlemen. Jim Quilty with IBS Software. Greg, congratulations on the acquisition. It's a great story for the industry. My question for you is, what are you hearing from customers? What do they want you to keep doing, continue to do, what to do differently? What are you hearing from them?

Gregory C. Anderson:Yeah, the specific, Jim, to the Minneapolis-St. Paul customers or just broadly? I'll take it for both, but I would say one, Our customer, our NPS scores are at or near all-time highs. And one of the things that has really changed the game for us in that regard is operations. We've really stepped up our game operationally over the past few years. Everything at an airline begins and ends by running a good operations gym, and then good things will follow after that. But in terms of the actual transaction, I think from a Minneapolis-St. Paul perspective, the customers, there's about 4 million customers. in that area from Sun Country that are the— that'll be part of the combined business. They are very loyal. They love the Sun Country brand, and we want to make sure that we don't denigrate that, that we honor that, that we step up our game and continue to serve that market successfully for many years to come, just as Sun Country has for the past 40, 43 years.

Jim Quilty:Thank you.

Gregory C. Anderson:You're welcome.

Michael Bell:We have a question here at the front. If we could have the mic, please. Thank you.

Audience:Hi, Andrew.

Michael Bell:Just speak up a little bit till the mic comes, please. Thank you. Thank you.

Audience:Okay, thank you. Hey, Andrew, my question is probably from the travel agency perspective. So we are, you know, one of the travel agents for Sun Country. I know Sun Country is already acquired by Allegiant, and also we have a very strong Asian customer base, they do have a lot of the language barriers, you know, culture barriers. They do require the Allegiant tickets as well. So from the travel agent's perspective, what is the Allegiant distribution strategy and how Allegiant is going to satisfy the customers from out of the country with the language, culture barriers? We really want to support our customers for this space. And also, honestly, in the past, we have requested a couple of times from Allegiant to satisfy these customers. So for this point, what is the Allegiant strategy for the next 1 to 2 years, even 5 years?

Gregory C. Anderson:Thank you. Thank you for the question. It's important that we're able to speak to our customers in the manner of which is the most effective. And with our travel agents, it's been a very manual process, candidly, for Allegiant for many, many years. So we're actually looking at better tools and software to help streamline that for the combined business. It's part of the roadmap and the integration. So hopefully more to come and it'll be a better experience. But it's an important part of the business that we still are going to be focused on improving.

Audience:Yeah, thank you.

Gregory C. Anderson:You're welcome.

Audience:Do you have a timeline?

Gregory C. Anderson:It's— I don't have any specific timelines that I could share. It's just part of the broader integration roadmap. Thank you.

Michael Bell:We're at time, so I'm going to ask one other quick question and then a closing comment. But the quick question is, are you going to build another hotel? The answer seems to be no. Well, I'll just say this. I mean, I've been doing what I've been doing for over 30 years, and When I started, like, I think the academy for recruiting talent was American. And then I think it evolved continental, I'd say, under Bethune and Brenneman, you know, fielded a lot of great leaders. I think Delta, although they tend not to leave the company, you know, has— Delta Northwest, really, right? But when I think about the new academy, I think about Allegiant. And you make the point, like, Andrew at Avelo and many at Breeze and many other places, Sun Country. You guys have populated many other airlines, right? So, uh, kudos to you for building a great culture and great leaders there.

Gregory C. Anderson:Well, thank you. That's an important part.

Michael Bell:Yep. And please join me in thanking Greg for his time today.

Gregory C. Anderson:Thank you so much.

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