What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2021-03-01 compared with 2020-02-27 · 172 added, 93 removed, 272 unchanged (49% of the section changed)

2 unchanged sentences

Our unique business model provides diversified revenue streams from various travel services and product offerings which distinguish us from other travel companies.

We operate a low-cost passenger airline marketed primarily to leisure travelers in under-served cities, allowing us to sell air transportation both on a stand-alone basis and bundled with the sale of air-related and third party services and products.

We operate a low-cost, low utilization passenger airline marketed primarily to leisure travelers in under-served cities, allowing us to sell air transportation both on a stand-alone basis and bundled with the sale of air-related and third party services and products.

In addition, we provide air transportation under fixed fee flight arrangements.

Our developed nation-wide route network, pricing philosophy, advertising, and product offerings built around relationships with premier leisure companies, are all intended to appeal to leisure travelers and make it attractive for them to purchase air travel and related services and products from us.

Most recently, and in conjunction with our leisure travel focus, we are developing Sunseeker Resort in Florida, operating a golf course near the resort location, managing a golf course management solution and operating family entertainment centers in cities in our route network.

Our developed nation-wide route network, pricing philosophy, direct distribution, advertising, and product offerings built around relationships with premier leisure companies, are all intended to appeal to leisure travelers and make it attractive for them to purchase air travel and related services and products from us.

In connection with our leisure travel focus, we are seeking to finance (through debt or strategic partnership) the development of Sunseeker Resort in Florida.

Construction of the Resort has been suspended since the onset of the COVID-19 pandemic.

Below is a brief description of the travel services and products we provide to our customers:

6 unchanged sentences

We provide unbundled air-related services and products in conjunction with air transportation for an additional cost to customers.

These optional air-related services and products include baggage fees, advance seat assignments, our own travel protection product, change fees, use of our call center for purchases, priority boarding, a customer convenience fee, food and beverage purchases on board, and other air-related services.

These optional air-related services and products include baggage fees, advance seat assignments, our own travel protection product, change fees (suspended effective April 2020), use of our call center for purchases, priority boarding, a customer convenience fee, food and beverage purchases on board, and other air-related services.

The revenue for ancillary air-related products and services is reflected in the Passenger revenue income statement line item, along with scheduled service air transportation revenue and travel point redemptions from the co-branded Allegiant World Mastercard® credit card.

5 unchanged sentences

Other revenue.

We generate revenue from our non-airline activities including our Sunseeker Resort related golf course, family entertainment centers, and our management solution to golf courses around the country.

We are currently leasing spare engines to a third party and may choose to act as lessor temporarily in the future on an opportunistic basis.

We have generated revenue from our non-airline activities including our Sunseeker Resort related golf course (now temporarily closed), family entertainment centers (no longer operated, having all been closed), and our management solution to golf courses around the country (now being held for sale).

We may also choose to act as lessor temporarily from time to time in the future on an opportunistic basis.

Allegiant 2.0

Throughout our fleet transition, we have realized significant operational improvements which our customers have noticed, as evidenced by our recent JD Power Most Improved in Customer Satisfaction in 2018 award, and a recent mention in Forbes as the #2 best airline to fly, based on customer sentiment.

With the completion of the fleet transition, we are sharpening our focus on offerings to meet more of the travel and leisure needs of our customers.

We continue to sharpen our focus on offerings to meet more of the travel and leisure needs of our customers.

We have coined this next stage of our Company strategy as "Allegiant 2.0" which includes the following Company goals:

maintaining our foundation while refining and strengthening our airline business;

utilizing our customer data to provide additional direct-to-consumer revenue opportunities;

transforming our eCommerce strategy to seek to create a frictionless experience for our customers and drive increased ancillary and third party revenue generation;

– maintaining our foundation of providing affordably accessible air travel while refining and strengthening our air travel product;

– utilizing our customer data to capture accretive, asset-light direct-to-consumer revenue opportunities;

– transforming our eCommerce strategy to seek to create a frictionless experience for our customers and drive increased air ancillary and third party revenue generation;

– expanding our successful co-branded credit card program to launch our first-ever loyalty program;

enhancing our marketing investment by entering into dynamic agreements, such as the naming rights agreement with the Raiders of the National Football League for the professional football stadium in Las Vegas;

expanding our travel company focus and offerings with the construction of Sunseeker Resorts.

– enhancing our marketing investment by entering into dynamic agreements, such as the naming rights agreement with

the Raiders of the National Football League for Allegiant Stadium in Las Vegas;

– expanding our travel company focus and offerings with the construction of Sunseeker Resorts (construction having been suspended since the onset of the pandemic).

Our principal executive offices are located at 1201 N.

6 unchanged sentences

Unique Business Model

We have developed a unique business model that focuses on leisure travelers in small and medium-sized cities.

We have developed a unique business model that primarily focuses on leisure travelers in small and medium-sized cities.

The business model has evolved as our experienced management team has looked differently at the traditional way business has been conducted in the airline and travel industries.

1 unchanged sentence

We have consciously developed a business model which distinguishes us from the traditional airline approach:

Traditional Airline Approach

Allegiant Approach

Traditional Airline Approach Allegiant Approach

Customer Base:

Business and leisure

Primarily large and mid-sized markets

Primarily small/medium-sized under-served markets

Uniform throughout the week

Low frequency/variable capacity

Business and leisure Leisure

Primarily large and mid-sized markets Primarily small/medium-sized under-served markets

Uniform throughout the week Low frequency/variable capacity

Distribution:

Sell through various intermediaries

Sell only directly to travelers

Sell through various intermediaries Sell only directly to travelers

Fare Strategy:

High base fares/low ancillary revenue

Low base fares/high ancillary revenue

High base fares/low ancillary revenue Low base fares/high ancillary revenue

By unbundling our air-related services and products such as baggage fees, advance seat assignments, travel protection, change fees, priority boarding, and food and beverage purchases, we are able to lower our airfares and target leisure travelers who are more concerned with price and the ability to customize their experience with us by only purchasing the additional conveniences they value.

This strategy allows us to generate additional passenger revenues from these ancillary charges.

We have established a route network with a national footprint, providing service on 463 routes between 97 origination cities and 27 leisure destinations, and serving 43 states and Puerto Rico as of February 14, 2020 .

We have established a route network with a national footprint, providing service on 504 routes between 97 origination cities and 29 leisure destinations, and serving 43 states as of February 12, 2021.

As of this same date, we were selling 577 routes.

In most of these small and medium-sized cities, we provide service to more than one of our leisure destinations which are offered either on a year-round or seasonal basis.

In most of these cities, we provide service to more than one of our leisure destinations which are offered either on a year-round or seasonal basis.

Our vast network footprint provides us with a diversified, resilient network.

We operate to more cities than any carrier (excluding major carriers including their regional airline feeders) protecting us against overexposure to any one

geographic location.

Our 20 bases (including Des Moines starting in July 2021) provide us the flexibility to redeploy capacity to best match demand trends around the country.

The geographic diversity of our route network protects us from regional variations in the economy and helps insulate us from competitive actions, as it would be difficult for a competitor to materially impact our business by targeting one city or region.

1 unchanged sentence

The below map illustrates our route network as of February 12, 2021, including service announcements as of that date.

The orange dots represent leisure destinations and the blue dots represent origination cities.

In developing a unique business model, our ancillary offerings (ancillary air-related items included in passenger revenue as well as the sale of third party products and services) have been a significant source of our revenue growth.

7 unchanged sentences

We believe our low fare, nonstop service, along with our leisure company relationships, make it attractive for leisure travelers to purchase airfare and travel-related products from us.

The size of the markets we serve, and our focus on the leisure customer,

allow us to adequately serve these markets with less frequency, and to vary our air transportation capacity to match seasonal and day-of-the-week demand patterns.

The size of the markets we serve, and our focus on the leisure customer, allow us to adequately serve these markets with less frequency, and to vary our air transportation capacity to match seasonal and day-of-the-week demand patterns.

By focusing primarily on under-served cities and routes, we believe we avoid the intense competition in high traffic domestic air corridors.

2 unchanged sentences

Department of Transportation (“DOT”), we believe the initiation of our service stimulates demand, as we have typically seen a substantial increase in traffic subsequent to new service beginning.

Our market strategy is neither hostile to legacy carriers, whose historical focus has been connecting small cities to business markets with regional jets, nor to traditional low cost or ultra-low cost carriers generally focused on larger markets.

Our market strategy is neither hostile to legacy carriers, whose historical focus has been connecting small cities to business markets with regional jets, nor to traditional low cost or ultra-

low cost carriers generally focused on larger markets.

Additionally, major carriers have reduced service to medium-sized cities which we believe they no longer consider to be core hubs.

2 unchanged sentences

Our ability to quickly adjust capacity helps us maintain profitability in the dynamic travel industry.

Because of our low fixed costs, our low unit costs are not dependent on high utilization.

Because of our low fixed cost structure, our flexibility allows us to uniquely match capacity with the demand environment.

Our core business model manages seat capacity by increased utilization of our aircraft during periods of high leisure demand and decreased utilization in low leisure demand periods.

In 2019 , during our peak demand period in July, we averaged 9.8 system block hours per aircraft per day while in September, our lowest month for demand, we averaged only 5.0 system block hours per aircraft per day.

By way of illustration, in 2019 (as 2020 was not reflective of our normal operations), during our peak demand period in July, we averaged 9.8 system block hours per aircraft per day while in September, our lowest month for demand, we averaged only 5.0 system block hours per aircraft per day.

Our management of seat capacity also includes changes in weekly frequency of certain markets based on identified peak and off-peak travel demand throughout the year.

2 unchanged sentences

In 2019, we were able to profitably fly a disproportionately low 17.4 percent of our scheduled ASMs on off-peak days (Tuesdays and Wednesdays).

Our strong revenue production from ancillary items, coupled with our ability to rapidly deploy or contract capacity, has allowed us to operate profitably throughout periods of high fuel prices and economic recession.

As another example of our approach, we did not operate a single scheduled flight on a Tuesday in 2021 as of February 12, 2021.

Our strong revenue production from ancillary items, coupled with our ability to rapidly deploy or contract capacity, has allowed us to consistently operate profitably throughout periods of high fuel prices and economic recession and to perform better financially than other airlines during the pandemic.

Low cost structure

We believe a low cost structure is essential to competitive success in the airline industry.

Our airline operating expense per available seat mile ("CASM") was 8.86¢ in 2019 versus 9.42¢ in 2018.

Excluding the cost of fuel, our airline-only operating CASM was 6.22¢ in 2019 versus 6.43¢ in 2018.

Our ASMs decreased 18.8 percent year over year due to capacity reduction as a result of the pandemic.

Our operating expense per available seat mile ("CASM") was 9.68¢ in 2020 versus 9.13¢ in 2019.

Excluding the cost of fuel, our operating CASM was 7.99¢ in 2020 versus 6.48¢ in 2019.

We continue to focus on maintaining low operating costs through the following tactics and strategies:

1 unchanged sentence

We achieve low aircraft ownership costs by purchasing primarily used aircraft with meaningful remaining useful lives, at reduced prices.

As of February 14, 2020 , we own all but five of the aircraft in our operating fleet and believe that we properly balance lower aircraft acquisition costs and operating costs to minimize our total costs.

As of February 14, 2020 , our operating fleet consists of 94 Airbus A320 series aircraft.

As of February 12, 2021, we own or finance lease all but 11 of the aircraft in our operating fleet and believe that we properly balance lower aircraft acquisition costs and operating costs to minimize our total costs.

As of February 12, 2021, our operating fleet consists of 97 Airbus A320 series aircraft, of which 84 were acquired used.

Low distribution costs.

Our nontraditional marketing approach results in very low distribution costs.

We do not sell our product through outside sales channels, thus avoiding the fees charged by travel web sites (Expedia, Orbitz or Travelocity) and traditional global distribution systems (“GDS”) (Sabre or Worldspan).

We do not sell our product through outside sales channels, thus avoiding the fees charged by travel websites (Expedia, Orbitz or Travelocity) and traditional global distribution systems (“GDS”) (Sabre or Worldspan).

Our customers can only purchase travel at our airport ticket counters or, for a fee, on our website or through our telephone reservation center.

1 unchanged sentence

Operational efficiencies.

With the completion of our transition to an all-Airbus fleet in November 2018, our operating performance has improved, allowing us to achieve industry leading controllable completion of over 99.9 percent, and on-time performance of 78.7 percent.

These operational efficiencies and improvements have significantly reduced the high costs associated with irregular operations.

After the completion of our transition to an all-Airbus fleet in November 2018, our operating performance has continued to improve, allowing us to achieve industry leading controllable completion of over 99.8 percent in 2020, which is 35 basis points above the industry average for the period.

We are continuing to focus on capturing data to identify trends and patterns in an effort to gain efficiencies and decrease costs.

For example, we utilize predictive maintenance to identify necessary aircraft maintenance before a problem arises, thereby avoiding unscheduled maintenance events which are costly and disruptive to our schedule.

In addition, our direct to consumer distribution method results in significant sales and marketing cost savings.

Highly productive workforce.

6 unchanged sentences

we have a single class cabin;

we do not provide any free catered

items - everything on board is for sale;

we do not provide any free catered items - everything on board is for sale;

we do not provide cargo or mail services;

18 unchanged sentences

In addition, snacks and beverages are sold individually on the aircraft, allowing passengers to purchase only items they value.

In addition, our direct to consumer distribution method enables a variety of added revenue opportunities with direct “one-stop” shopping solutions and managed product offerings.

Revenue from ancillary items will continue to be a key component in our total average fare as we believe leisure travelers are less sensitive to ancillary fees than the base fare.

6 unchanged sentences

As of December 31, 2020, we had $685.2 million of unrestricted cash, cash equivalents and investment securities, and total debt and finance lease obligations of $1.66 billion.

As of February 14, 2020 , we also had 27 unencumbered aircraft available to use as collateral in the secured debt market.

As we are profitable and have been able to consistently generate cash from operations, we believe we have more than adequate resources, along with outside financing expected to be available, to invest in the growth of our fleet, information technology, infrastructure, development, Sunseeker Resort, and our other non-airline initiatives, while meeting short-term obligations.

We had net debt (total debt and finance lease obligations less cash, cash equivalents and investment securities) of $974 million as of December 31, 2020, relatively flat from the $964 million balance as of December 31, 2019, despite the losses caused by the pandemic.

Given our efforts to conserve and raise liquidity and our assumptions about the future impact of COVID-19 on travel demand, which could be materially different due to the inherent uncertainties of the current operating environment, we expect to meet our cash obligations as well as remain in compliance with the debt covenants in our existing financing agreements for the next 12 months based on our current level of unrestricted cash and short-term investments, our anticipated access to liquidity and tax refunds, and projected cash flows from operations.

Our financial position and discipline regarding use of capital allow us to have greater financial flexibility to grow our business and to efficiently and effectively adapt to changing economic conditions.

1 unchanged sentence

Our current scheduled air service (including seasonal service) predominantly consists of limited frequency, nonstop flights into leisure destinations from under-served cities across the continental United States.

The scheduled service routes we are selling as of February 14, 2020 are summarized below (includes 463 routes we are currently serving, and 58 new routes which will begin service in 2020):

The scheduled service routes we are selling as of February 12, 2021 are summarized below (includes 504 routes we are currently serving, and 73 new routes on which will begin service in 2021):

Routes to Orlando 71

1 unchanged sentence

Routes to Tampa/St.

Petersburg 54

Routes to Punta Gorda 51

2 unchanged sentences

Routes to Los Angeles 31

The number of routes served varies from time to time as some routes are offered seasonally.

Other routes 224

Total routes 577

The number of routes served varies from time to time as some routes are offered seasonally or on a temporary basis.

Marketing and Distribution

Our website is our primary distribution method, and we also sell through our call center and at our airport ticket counters.

This distribution approach creates significant cost savings and enables us to continue building loyalty with our customers through increased interaction with them.

We are also able to utilize customer email addresses in our database, which provides multiple cost effective opportunities to market products and services, including at the time of travel purchase, between purchase and travel, and after travel is complete.

In addition, we market products and services to our customers through digital advertising.

We believe the breadth of options we offer allows us to provide a “one-stop” shopping solution to enhance the customer travel experience.

When we enter new markets, we may advertise in local print publications, on the radio and/or television, to introduce our new service to the community.

These activities are often supported by the local airport authority which has sought our initiation of service to the community.

We continue to see benefit from marketing contributions of airport authorities and destination marketing organizations.

We continue to enhance our automation and expect the continuous improvements to our website and other automation enhancements will create additional revenue opportunities by allowing us to capitalize on customer loyalty with additional product offerings.

Our low cost distribution strategy results in reduced expenses by avoiding the fees associated with the use of GDS distribution points.

This distribution strategy also permits us to closely manage ancillary product offerings and pricing while developing and maintaining a direct relationship with our customers.

We believe this continuous communication will result in substantial benefits over time.

With our own automation system, we have the ability to continually change ancillary product offerings and pricing points, which allows us to find the optimal pricing levels for our various offerings.

We believe this would be difficult and impractical to achieve through the use of the GDS.

Core to Allegiant’s business model is our direct-to-consumer distribution.

In lieu of the GDS distribution points used by most airlines, allegiant.com is our primary distribution method.

This low-cost strategy results in significant cost savings by avoiding fees associated with GDS.

It also enables a variety of added revenue opportunities with direct “one-stop” shopping solutions and managed product offerings.

Automation is key to this strategy as we continue to enhance our capabilities.

Our redesigned website streamlines the booking process and strengthens our ability to sell air ancillary and third party products.

Additionally, we expect other automation enhancements will create additional revenue opportunities by allowing us to capitalize on customer loyalty with additional product offerings.

Our direct-to-customer distribution method also enables us to gather valuable customer data.

In addition to helping us better understand our customers, we utilize data like customer email addresses to market our products and services in a cost-effective way.

Database marketing opportunities span the full customer journey including the time of travel purchase, between purchase and travel, and after travel is complete.

Beyond allegiant.com, we market our products and services through a combination of digital and traditional advertising including print, radio and television.

Whether introducing new service to a community or promoting existing routes, our advertising is often supported by airport authorities and destination marketing organizations.

We continue to see benefit from these cooperative marketing campaigns, as well as from high-profile sponsorships like Allegiant Stadium.

Underpinning our advertising efforts, high-profile sponsorships add credibility to our brand and enhance our national profile.

Additionally, we are prioritizing customer loyalty and expect to expand our loyalty program in 2021.

Our co-branded Allegiant World Mastercard® incentivizes customers who fly more often to maximize their benefits with members-only promotions and travel perks like priority boarding.

Cardholders are among our most engaged customers and book air ancillary and third party products at a higher rate than other customers.

We also plan to introduce our first non-carded loyalty program, Allways, to develop and maintain direct, long-term relationships with our customers.

Similar to our cardholder program, we will provide greater value to our Allways members through personalized promotions and targeted communications which we expect will result in substantial benefits over time.

The airline industry is highly competitive.

9 unchanged sentences

Although no other mainline domestic scheduled carriers operate in these airports, most U.S.

airlines serve the major airports for Orlando, Phoenix, Fort Myers, and

airlines serve the major airports for Orlando, Phoenix, Fort Myers, and Tampa.

In addition, many U.S.

4 unchanged sentences

As of February 12, 2021, we face mainline competition on fewer than 17 percent of our operating and announced routes.

We compete with Southwest Airlines on 71 routes, Frontier Airlines on 47 routes, Spirit Airlines on 23 routes, American Airlines on 11 routes, Delta Airlines on 12 routes, JetBlue Airlines on six routes and United Airlines on five routes.

We compete with Southwest Airlines on 74 routes, Frontier Airlines on 46 routes, Spirit Airlines on 24 routes, American Airlines on nine routes, Delta Airlines on ten routes, JetBlue Airlines on 11 routes and United Airlines on one route.

In some cases, we face competition from more than one other airline on the same route.

We may also experience additional competition based on recent route announcements of other airlines.

12 unchanged sentences

We intend to continue investing resources in cyber security to protect our data and our customers' privacy.

Environmental

The aviation industry accounts for roughly two percent of global greenhouse gas emissions, almost all of which is attributable to aircraft fuel.

We believe we have a responsibility to reduce our overall impact on the environment.

Our unique business model of closely matching capacity with demand to provide only non-stop service from underserved cities to leisure destinations, with high load factors, aligns with this objective.

In 2013, we began the process of transitioning our fleet from a mixture of MD-80 aircraft and Boeing 757 aircraft to an all Airbus fleet with the transition concluding in November of 2018.

Throughout this transition period and continuing into 2020, we saw significant improvement in fuel efficiency.

During 2020, we consumed 149 million gallons of fuel averaging 87.8 ASMs per gallon of fuel, a 39 percent improvement when compared to 2012, and a 7 percent increase over 2019.

As of December 31, 2020, the composition of our fleet included a mix of A319 and A320 aircraft with seat configurations ranging from 156 to 186 seats, some of which are fitted with fuel-efficient Sharklets.

As we grow the fleet over the next several years, the preference will be to continue adding 186-seat aircraft.

We expect to continue to see modest improvements in fuel efficiency as a result of further upgauging.

Despite the significant fuel efficiencies gained over the past decade, we recognize we have a responsibility to do more.

We have an internal Fuel Steering Committee that meets monthly to discuss various alternatives to conserve fuel.

In conjunction with the focused efforts and contributions of our pilots, dispatchers, and stations personnel, we have implemented several fuel conservation practices, which include the following:

– Single engine taxi in and out, as time permits

– Constant descent angle approach, as permitted by air traffic

– Flaps 3 for landing, an Airbus green procedure creating less drag during the landing process, conditions permitting

– Idle thrust reverse for landing, conditions permitting

– Auxiliary power unit fuel optimization

– Route optimization

– Data collection by aircraft to identify performance deterioration and rectify where necessary

– Trial of several electric ground handling equipment

In addition to the above initiatives, the Fuel Steering Committee is currently researching sustainable aviation fuel to see if this could be a viable option on some of our routes.

Unlike many air carriers focused on business travel, our strategy is to provide access to affordable travel for leisure travelers who highly value their vacations and are likely to take vacations in any economic environment.

We are a low utilization air carrier focusing on leisure travel, thus we seek to match our available capacity with demand trends.

By way of example, in 2019 (as 2020 was not reflective of our normal operations) during our peak demand period in July, we averaged 9.8 system block hours per aircraft per day while in September, we averaged only 5.0 system block hours per aircraft per day when leisure demand is seasonally lower.

This practice of significantly reduced flying during the off-peak periods leads to consistently high load factors, and further enhances fuel efficiency.

During 2019, we consumed roughly 14.7 gallons of fuel per thousand revenue passenger miles compared with an industry average of 17.3 gallons per thousand revenue passenger miles, or 24 percent more efficient on a revenue passenger mile basis.

We offer all non-stop flights, directly from 129 cities, providing service in many markets abandoned or under-served by larger carriers.

If not for Allegiant, many of the customers we serve would not have access to direct flights by virtue of either geography or price point.

Prior to our initiation of service on these routes, many of these passengers either traveled by car, which is significantly less fuel efficient than air travel, or traveled by car to larger airports to fly, where higher cost connecting flights were the only option.

As fuel consumption is greatest during take-off, the ability to travel to the destination with a single take-off, as opposed to at least two take-offs on connecting flights, is more fuel efficient.

Aircraft Fuel

2 unchanged sentences

We have not used financial derivative products to hedge our exposure to fuel price volatility in many years, nor do we have any plans to do so in the future.

Our flexible cost structure allows us to adjust to capacity accordingly based on the fuel environment.

As of December 31, 2020, we employed 3,863 full-time equivalent employees, which consisted of 3,658 full-time and 410 part-time employees.

Full-time equivalent employees consisted of 896 pilots, 1,393 flight attendants, 258 airport operations personnel, 343 mechanics, 155 reservation agents, 41 flight dispatchers, and 777 management and other personnel.

Salary and benefits expense was our largest expense in 2019 , having represented 30 percent of total operating expenses.

Our relations with labor organizations representing our airline employee groups are governed by the Railway Labor Act ("RLA").

4 unchanged sentences

The collective bargaining agreements for our pilots, flight attendants and dispatchers last for a contractual term of five years each, expiring in 2021, 2022, and 2024, respectively.

Our maintenance technicians elected representation in March 2018 and negotiations with this group are ongoing.

If we are unable to reach a labor agreement with any employee group, they may seek to institute work interruptions or stoppages.

Our maintenance technician and related employees elected representation in March 2018 and negotiations with this group for an initial collective bargaining agreement are ongoing.

If we are unable to reach a labor agreement with any employee group, they may seek to institute work interruptions or stoppages following unsuccessful Federal mediation and other work stoppage protections provided for under the RLA.

We have not previously experienced any work interruptions or stoppages from our non-unionized or unionized employee groups.

Human Capital

As part of our human capital resource objectives, we seek to recruit, retain, and develop our existing and future workforce.

We strive to build and maintain a diverse environment that people want to join, and where team members want to stay to build their careers.

Our total rewards philosophies support these objectives.

Above all else, safety is our number one core value, along with achievement, flexibility, innovation, bias for action, teamwork, transparency and accountability, and outcome-based values that define our human capital mission.

We have long supported Diversity, Equity and Inclusion and operate a Diversity & Inclusivity Council made up of company leadership, and facilitate multiple company-wide network groups to inspire a more inclusive culture while giving a dedicated focus to our recruiting processes to continue driving diverse hiring.

Our total rewards philosophy is based around building a culture of high performance.

We utilize competitive base salaries, discretionary performance-based bonuses, profit sharing and equity as attraction and retention tools for our team members.

As of December 31, 2020, we had approximately 4,100 team members (including both full-time and part-time employees), of whom approximately 76 percent are in front line positions such as flight crew, mechanics or airport personnel.

The safety and well-being of our team members is a top priority, and we believe each and every team member plays an essential role in creating a safe and healthy workplace.

Our health and safety policies and practices are intended to protect not only our team members but also our customers in all things we do, and for 2020 include our vigorous COVID-19 response.

Additionally,

our human capital focus has been externally recognized through Allegiant’s placement on Glassdoor’s Best Companies to Work For 2020 and Forbes’ Best Mid-Size Employers 2021 lists.

Aircraft Maintenance

10 unchanged sentences

Community Involvement

We have worked with the Make-A-Wish® Foundation since 2012 by flying "wish kids" and their families to their desired destinations, at no cost, and donating the proceeds from our in-flight Wingz Snack Pack program to the Foundation.

Additionally, we donate the use of 7,500 square feet of office space at our headquarters' campus to the Southern Nevada chapter of Make-A-Wish® Foundation, providing a home for the nonprofit organization's administrative headquarters.

Allegiant has worked with the Make-A-Wish® Foundation since 2012 by flying "wish kids" and their families to their desired destinations, at no cost, and donating a portion of proceeds from our in-flight Wingz Kids Snack Pack to the organization.

Additionally, we donate the use of 7,500 square feet of office space at our headquarters campus to the Southern Nevada chapter of Make-A-Wish, providing a home for the nonprofit organization's administrative office at no cost.

The site also serves as the host location for volunteer training, meetings and a place of support for families of children receiving wishes.

We also support Science, Technology, Engineering and Mathematics ("STEM") education programs that provide access to careers in aeronautical sciences, and offer the Allegiant Careers in Aviation Scholarship to encourage students pursuing careers in the aviation industry.

Allegiant is considered a Wish Champion by Make-A-Wish America, recognizing more than $1 million in annual contributions.

We have also been a national partner with The Arc, a nonprofit organization dedicated to advocacy on behalf of people with intellectual and developmental disabilities.

Allegiant partners with the organization to offer “Wings for All” educational programs in communities we serve, helping make travel accessible for individuals with autism and other developmental disabilities.

Allegiant supports Science, Technology, Engineering and Mathematics ("STEM") education programs that provide access to careers in aeronautical sciences in under-served communities.

We have partnered with local high schools and with Embry-Riddle Aeronautical University to offer Allegiant Careers in Aviation Scholarships, assisting students pursuing careers in the aviation industry.

We also partner with the American Red Cross, supporting disaster preparedness, relief and recovery efforts in communities we serve.

In this effort, we have provided no-cost supply flights and volunteer transport to support Red Cross hurricane recovery efforts in Florida and Puerto Rico.

In addition, Allegiant has sponsored community blood drives and preparedness efforts such as home smoke detector installation in under-served neighborhoods.

During the COVID-19 pandemic, we have provided additional support in our home community of Las Vegas, donating surplus in-flight food and beverage items such as juices, sodas and snacks to a local community food bank for distribution to families in need.

We also provided flight vouchers to 800 local elementary and high school teachers as part of The Smith Center for the Performing Arts’ Heart of Education Awards program.

Our goal was to help ensure that educators who have worked tirelessly despite the incredible challenges of the pandemic have an opportunity to take a well-deserved vacation in the future.

Non-Airline Initiatives

Sunseeker Resort

We are currently constructing Sunseeker Resort in Southwest Florida.

Our plans include the construction of a 512-room hotel and two towers offering an estimated 189 one, two and three bedroom suites, numerous bar and restaurant options, and other amenities.

We currently own and operate a golf course which is a short drive from the resort site and is considered to be an additional resort amenity.

We have made the decision to develop a 512-room hotel and two towers offering an estimated 189 one, two and three bedroom suites, numerous bar and restaurant options, and other amenities in Southwest Florida (the "Resort" or "Sunseeker Resort").

We also own a golf course which is a short drive from the Resort site and is considered to be an additional resort amenity.

Construction on the Resort began in the first quarter of 2019 but construction was suspended in March 2020 so that we could conserve liquidity during the pandemic.

The golf course closed for renovation just before the pandemic and the renovation has been suspended as we continue to conserve liquidity during the pandemic.

We do not currently intend to re-commence construction of Sunseeker Resort until we secure satisfactory financing arrangements.

We operate Teesnap as a golf course management solution.

1 unchanged sentence

To date, the financial results have not been significant to our overall performance.

As we continue to focus our business on consumer offerings, we are in the process of divesting our interest in Teesnap and, as such, are treating this subsidiary as an asset held-for-sale on our December 31, 2019 balance sheet.

As we continue to focus our business on the airline and consumer offerings, we continue to explore options to divest our interest in Teesnap.

Family Entertainment Centers

We opened two family entertainment centers ("FECs") in 2019 in Clearfield, UT and Warren, MI.

We currently expect to open a third FEC during 2020 in Chesterfield, MO, near the MidAmerica St.

Louis Airport that we serve.

We previously opened two family entertainment centers ("FECs") in 2019 in Clearfield, UT and Warren, MI.

We closed both FECs as a result of the pandemic and we have now disposed of those assets with the exception of a building in Chesterfield, Missouri, which remains on our balance sheet as of December 31, 2020.

We will no longer pursue this business line.

Other travel and leisure initiatives

Consistent with our travel and leisure company focus, we intend to pursue other travel and leisure initiatives in the future.

Consistent with our travel and leisure company focus, we may pursue other travel and leisure initiatives from time to time in the future.

We maintain insurance policies we believe are of types customary in the airline industry and as required by the DOT, and are in amounts we believe to be adequate to protect us against material loss.

4 unchanged sentences

We are subject to federal, state and local laws affecting the airline industry and to extensive regulation by the DOT, the FAA, and other governmental agencies.

The DOT primarily regulates economic issues affecting air transportation such as certification and fitness of carriers, insurance requirements, consumer protection, competitive practices, and statistical reporting.

The DOT also regulates requirements for accommodation of passengers with disabilities, including those using trained service animals and emotional

support animals.

The DOT primarily regulates economic issues affecting air transportation such as certification and fitness of carriers, consumer protection, competitive practices, insurance requirements, and statistical reporting.

The DOT also regulates requirements for accommodation of passengers with disabilities, including those using service animals.

The DOT monitors the continuing fitness of carriers and has the authority to promulgate regulations and to investigate (including by on-site inspections) and institute proceedings to enforce its regulations and related federal statutes, and may assess civil penalties, suspend or revoke operating authority, and seek criminal sanctions.

The DOT also has authority to restrict or prohibit a carrier’s cessation of service to certain communities if such cessation would leave the community without scheduled airline service.

The DOT also has authority to restrict or prohibit a carrier’s cessation of service to certain communities if such cessation would leave the community without scheduled airline service, and to require carriers to maintain certain levels of service systemwide as a condition of receiving federal financial assistance under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), signed into law on March 27, 2020.

We hold DOT certificates of public convenience and necessity authorizing us to engage in scheduled air transportation of passengers, property and mail within the United States, its territories and possessions, and between the United States and all countries that maintain a liberal aviation trade relationship with the United States (known as “open skies” countries).

14 unchanged sentences

The FAA monitors our compliance with maintenance, flight operations and safety regulations on an ongoing basis, maintains a continuous working relationship with our operations and maintenance management personnel, and performs pre-scheduled inspections as well as frequent spot inspections of our aircraft, employees and records.

The FAA also has the authority to promulgate rules and regulations and issue maintenance directives and other mandatory orders relating to, among other things, inspection, repair and modification of aircraft and engines, increased security precautions, aircraft equipment requirements, noise abatement, mandatory removal and replacement of aircraft parts and components, mandatory retirement of aircraft, and operational requirements and procedures.

Such rules, regulations and directives are normally issued after an opportunity for public comment, however, they may be issued without advance notice or opportunity for comment if, in the FAA’s judgment, safety requires such action.

We believe we are operating in compliance with applicable DOT and FAA regulations, interpretations and policies and we hold all necessary operating and airworthiness authorizations, certificates and licenses.

The FAA also has the authority to promulgate rules and regulations and issue maintenance directives and other mandatory orders relating to, among other things, inspection, repair and modification of aircraft and engines, safety management systems, aircraft equipment requirements, noise abatement, mandatory removal and replacement of aircraft parts and components, mandatory retirement of aircraft, operational requirements and procedures, and employee drug and alcohol testing.

Such rules, regulations and directives are normally issued after an opportunity for public comment;

however, they may be issued without advance notice or opportunity for comment if, in the FAA’s judgment, safety requires such action.

We believe we are operating in

compliance with applicable DOT and FAA regulations, interpretations and policies and we hold all necessary operating and airworthiness authorizations, certificates and licenses.

The FAA periodically conducts extensive or targeted audits of our operations.

We have satisfactorily responded to any and all findings on all Certificate Holder Evaluation Process inspections conducted.

We have satisfactorily responded to any and all findings on all Certificate Holder Evaluation Process and other inspections conducted.

Within the United States, civil aviation security functions, including review and approval of the content and implementation of air carriers’ security programs, passenger and baggage screening, cargo security measures, airport security, assessment and distribution of intelligence, threat response, and security research and development are the responsibility of the Transportation Security Administration (“TSA”) of the Department of Homeland Security.

5 unchanged sentences

All carriers are required to collect these taxes from passengers and pass them through to the federal government.

Under the CARES Act, signed into law on March 27, 2020, applicability of FET was suspended for the remainder of 2020;

it was reinstated as of January 1, 2021.

In addition to FET, there are federal fees related to services provided by the TSA, and, in the case of international flights, U.S.

6 unchanged sentences

In 2021 or thereafter, Congress may consider legislation that could increase the amount of FET and/or one or more of the other federally imposed or approved fees identified above.

Increasing the overall price charged to passengers could lessen demand

for air travel or force carriers, including us, to lower fares to maintain demand.

Increasing the overall price charged to passengers could lessen demand for air travel or force carriers, including us, to lower fares to maintain demand.

Also in 2021 or thereafter, Congress may consider privatization of the U.S air traffic control ("ATC") system with user fee based funding.

6 unchanged sentences

In 2016 the U.S.

Environmental Protection Agency (“EPA”) formally concluded that current and projected concentrations of greenhouse gases emitted by various aircraft, including all of the aircraft we and other air carriers operate, threaten public health and welfare.

This finding is a precursor to EPA regulation of commercial aircraft emissions in the United States, as has taken effect for operations within the European Union under EU legislation.

Binding international measures adopted under the auspices of the International Civil Aviation Organization (“ICAO”), a specialized agency of the United Nations, are scheduled to become effective over the next several years.

In 2016 the EPA indicated the regulations it intends to propose will be no less stringent than the ICAO standards.

In its regulatory agenda issued in Fall 2019, the EPA expressed an intent to publish these proposed regulations in early 2020;

based on previous postponements, the agency may or may not meet that target.

Environmental Protection Agency (“EPA”) formally concluded that current and projected concentrations of greenhouse gases ("GHG") emitted by various aircraft, including all of the aircraft we and other air carriers operate, threaten public health and welfare.

This finding may be a precursor to EPA regulation of commercial aircraft emissions in the United States, as has taken effect for operations within the European Union under EU legislation.

In January 2021 the EPA adopted regulations setting emissions standards equivalent to ICAO’s for newly-designed aircraft, with immediate effect, and for in-production aircraft, effective 2028.

The aircraft we currently operate are not affected by these standards.

We anticipate that in 2021 and thereafter, legislative and regulatory concern with the environmental impacts of the air transportation industry will increase, and that the longer-term effects on our fleet and operating costs may be substantial.

Aviation accounts for approximately 2.6 percent of total U.S.

GHG emissions and approximately 9 percent of emissions by the U.S.

transportation sector as a whole.

As recently as February 2021, legislation was introduced in the U.S.

Congress to incentivize the production of sustainable aviation fuel (also known as biofuel) and to assist the aviation industry in reducing GHG emissions.

If enacted as proposed, the legislation would establish a national goal for the U.S.

aviation sector to achieve a net 35 percent reduction in GHG emissions by 2035 and net zero emissions by 2050.

We cannot predict whether this or any similar legislation will be introduced or pass the Congress or, if enacted into law, how it ultimately would apply to the airline industry.

Federal law recognizes the right of airport operators with special noise problems to implement local noise abatement procedures so long as those procedures do not interfere unreasonably with interstate and foreign commerce and the national air transportation system.

6 unchanged sentences

This means we must be under the actual control of U.S.

citizens and we must satisfy certain other requirements, including that our president/chief executive officer and at least two-thirds of our board of directors and other managing officers are U.S.

citizens and we must satisfy certain other requirements,

including that our president/chief executive officer and at least two-thirds of our board of directors and other managing officers are U.S.

citizens, and that not more than 25 percent of our voting stock is owned or controlled by non-U.S.

29 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business