What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-02-29 compared with 2023-02-27 · 234 added, 189 removed, 692 unchanged (38% of the section changed)

Financial Statements

Financial Statements and Supplementary Data

Index to Consolidated Financial Statements

Title Page No.

Report of Independent Registered Public Accounting Firm (PCAOB ID 165)

Consolidated Balance Sheets as of December 31, 2023 and 2022

Consolidated Statements of Income for the years ended December 31, 2023, 2022, and 2021

Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022, and 2021

Consolidated Statements of Shareholders' Equity for the years ended December 31, 2023, 2022, and 2021

Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022, and 2021

Notes to Consolidated Financial Statements for the years ended December 31, 2023, 2022, and 2021

Note 1 - Organization and Business of Company

Note 2 - Summary of Significant Accounting Policies

Note 3 - Special Charges

Note 4 - Revenue Recognition

Note 5 - Property and Equipment

Note 6 - Long-Term Debt

Note 7 - Leases

Note 8 - Shareholders' Equity

Note 9 - Fair Value Measurements

Note 10 - Income Taxes

Note 11 - Related Party Transactions

Note 12 - Employee Benefit Plans

Note 13 - Commitments and Contingencies

Note 14 - Segments

Report of Independent Registered Public Accounting Firm

22 unchanged sentences

Estimated Loss associated with Sunseeker Resort

As discussed in Note 2 to the consolidated financial statements, the Sunseeker Resort at Charlotte Harbor (Sunseeker Resort) was damaged during 2022 as a result of Hurricane Ian, another weather-related event and a fire.

Based on the Company’s assessment of these damages and the anticipated future restoration costs, which approximate the carrying amount of the portion of the assets that were damaged, an estimated $52.1 million loss was recorded as a reduction to the carrying amount of the Sunseeker Resort during the year ended December 31, 2022.

As discussed in Note 3 to the consolidated financial statements, the Sunseeker Resort at Charlotte Harbor (Sunseeker Resort) was damaged during 2023 as a result of Hurricane Idalia.

Based on the Company’s assessment of the damage and the anticipated future restoration costs, which approximate the carrying amount of the portion of the assets that were damaged, an estimated $23.6 million loss was recorded as a reduction to the carrying amount of the Sunseeker Resort during the year ended December 31, 2023.

We identified the evaluation of the estimated loss associated with the Sunseeker Resort as a critical audit matter.

2 unchanged sentences

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s property loss estimation process, including a control related to determining the assumption that the future restoration costs approximate the carrying amount of the damaged assets.

We evaluated the reasonableness of the estimated loss by obtaining a confirmation of the anticipated restoration costs estimated by the Company’s insurance claim adjustor directly from that

We compared the confirmation of the future restoration costs from the insurance claim adjustor to the estimated loss recorded by the Company.

We evaluated the reasonableness of the estimated loss by obtaining a confirmation of the anticipated restoration costs estimated by the Company’s insurance- claim adjustor directly from that adjustor.

We compared the confirmation of the future restoration costs from the insurance claim adjustor to the

estimated loss recorded by the Company.

We evaluated certain publicly available costing indices to assess the Company’s assumption that the future restoration costs approximate the carrying amount of the damaged assets.

29 unchanged sentences

Air traffic liability 353,488 379,459

Current loyalty program liability 38,447 32,888

Current maturities of long-term debt and finance lease obligations (including $ 22,627 and $ 9,315 from VIEs, Note 6), net of related costs of $ 8,038 and $ 6,599

6 unchanged sentences

Noncurrent operating lease liabilities 82,410 94,972

Noncurrent loyalty program liability 32,366 23,612

Other noncurrent liabilities 9,448 11,718

9 unchanged sentences

Additional paid in capital 741,055 709,471

Accumulated other comprehensive gain, net 1,257 2,056

Accumulated other comprehensive income, net 3,991 1,257

Retained earnings 1,265,420 1,169,968

22 unchanged sentences

Sales and marketing 114,616 100,678 72,742

Aircraft lease rental 23,621 21,242 9,828

Aircraft lease rentals 24,948 23,621 21,242

Other 133,501 113,532 83,902

Payroll Support Programs grant recognition — — ( 202,181 )

Special charges 34,612 13,998 306,299

Special charges, net of recoveries 28,645 34,612 13,998

Total operating expenses 2,288,876 2,210,183 1,444,835

OPERATING INCOME (LOSS) 91,646 263,075 ( 280,985 )

OPERATING INCOME 220,981 91,646 263,075

OTHER (INCOME) EXPENSES:

2 unchanged sentences

Capitalized interest ( 45,132 ) ( 12,640 ) —

Special charges — — 26,632

Other, net 491 91 ( 205 )

Total other expenses 61,930 86,693 66,455

INCOME (LOSS) BEFORE INCOME TAXES 4,953 196,620 ( 361,067 )

INCOME TAX PROVISION (BENEFIT) 2,460 44,767 ( 176,974 )

NET INCOME (LOSS) $ 2,493 $ 151,853 $ ( 184,093 )

Earnings (loss) per share to common shareholders:

INCOME BEFORE INCOME TAXES 159,051 4,953 196,620

INCOME TAX PROVISION 41,455 2,460 44,767

NET INCOME $ 117,596 $ 2,493 $ 151,853

Earnings per share to common shareholders:

Basic $ 6.32 $ 0.14 $ 8.69

11 unchanged sentences

2023 2022 2021

NET INCOME (LOSS) $ 2,493 $ 151,853 $ ( 184,093 )

NET INCOME $ 117,596 $ 2,493 $ 151,853

Other comprehensive income:

Change in available for sale securities, net of tax 2,734 ( 799 ) 2,083

Foreign currency translation adjustments — — 53

Total other comprehensive income (loss) ( 799 ) 2,083 ( 125 )

TOTAL COMPREHENSIVE INCOME (LOSS) $ 1,694 $ 153,936 $ ( 184,218 )

TOTAL COMPREHENSIVE INCOME $ 120,330 $ 1,694 $ 153,936

The accompanying notes are an integral part of these consolidated financial statements.

7 unchanged sentences

Share-based compensation 113 — 27,058 — — — 27,058

Shares repurchased by the Company and held as treasury shares ( 217 ) — — — — ( 33,773 ) ( 33,773 )

Stock issued under employee stock purchase plan 57 — — — — 5,344 5,344

Cash dividends declared, $0.70 per share (1)

— — — — ( 11,361 ) — ( 11,361 )

Other comprehensive income (loss) — — — ( 125 ) — — ( 125 )

Payroll Support Programs warrant issuance — — 1,375 — — — 1,375

Net Loss — — — — $ ( 184,093 ) — $ ( 184,093 )

Balance at December 31, 2020 16,405 $ 23 $ 329,753 $ ( 27 ) $ 1,015,622 $ ( 646,008 ) $ 699,363

Share-based compensation 113 — 27,058 — — — 27,058

Issuance of common stock, net of forfeitures 1,553 2 335,137 — — — 335,139

10 unchanged sentences

Balance at December 31, 2022 $ 18,128 $ 25 $ 709,471 $ 1,257 $ 1,169,968 $ ( 660,023 ) $ 1,220,698

(1) Dividend declared and paid in the first quarter of 2020 prior to the onset of the pandemic.

As a part of accepting benefits from the Treasury under payroll support programs, the Company agreed not to pay cash dividends through September 30, 2022.

Share-based compensation 415 1 31,584 — — — 31,585

Shares repurchased by the Company and held as treasury shares ( 374 ) — — — — ( 30,076 ) ( 30,076 )

Stock issued under employee stock purchase plan 100 — — — — 8,167 8,167

Cash dividends, $ 1.20 per share

— — — — ( 22,144 ) — ( 22,144 )

Other comprehensive income — — — 2,734 — — 2,734

Net income — — — — 117,596 — 117,596

Balance at December 31, 2023 18,269 $ 26 $ 741,055 $ 3,991 $ 1,265,420 $ ( 681,932 ) $ 1,328,560

The accompanying notes are an integral part of these consolidated financial statements.

5 unchanged sentences

OPERATING ACTIVITIES:

Net income (loss) $ 2,493 $ 151,853 $ ( 184,093 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net income $ 117,596 $ 2,493 $ 151,853

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 223,130 197,542 181,035

(Gain) loss on aircraft and other equipment disposals 920 2,158 ( 3,052 )

Special charges 34,268 13,998 292,790

Special charges, net of recoveries 27,189 34,268 13,998

Share-based compensation expense 29,749 15,198 16,127

16 unchanged sentences

Purchase of property and equipment, including capitalized interest ( 528,320 ) ( 434,690 ) ( 243,613 )

Proceeds from sale-leaseback transactions — — 87,580

Purchase of note receivable — — ( 50,000 )

Insurance proceeds from damage to property & equipment 35,730 5,450 98

Other investing activities 26,956 328 5,766

3 unchanged sentences

Cash dividends paid to shareholders ( 22,144 ) — —

— — ( 11,361 )

Proceeds from the issuance of debt and finance lease obligations 642,581 863,627 281,657

2 unchanged sentences

Debt issuance costs ( 7,116 ) ( 14,297 ) ( 8,287 )

Sunseeker construction financing disbursements (deposits) 102,330 ( 92,650 ) ( 30,000 )

Other financing activities 8,168 7,940 8,054

10 unchanged sentences

Flight equipment acquired under finance leases — 192,457 101,340

(1) Dividend declared and paid in the first quarter of 2020 prior to the onset of the pandemic.

As a part of accepting benefits from the Treasury under payroll support programs, the Company agreed not to pay cash dividends through September 30, 2022.

The accompanying notes are an integral part of these consolidated financial statements.

5 unchanged sentences

The Company operates a low-cost, low utilization passenger airline which sells air transportation both on a stand-alone basis and bundled with the sale of ancillary air-related and third party services and products.

The Company also provides air transportation under fixed fee flying arrangements, generates other ancillary revenues, and operates non-airline related entities which include the development of Sunseeker Resort and related golf course.

Previously, the Company also operated Allegiant Nonstop family entertainment centers and the Teesnap golf course management solution.

The Company also provides air transportation under fixed fee flying arrangements, generates other ancillary revenues, and owns and operates the Sunseeker Resort and Aileron, the related golf course.

Scheduled service and fixed fee air transportation services have similar operating margins, economic characteristics, and production processes (check-in, baggage handling and flight services) which target the same class of customers, and are subject to the same regulatory environment.

2 unchanged sentences

Refer to Note 14 for additional information.

Note 2 — Sunseeker Special Charges

As a result of Hurricane Ian’s direct hit on the southwest coast of Florida on September 28, 2022, the construction site of Sunseeker Resort at Charlotte Harbor (the "Resort" or "Sunseeker Resort") was damaged.

Additionally in the fourth quarter, there was another weather-related event and a fire that caused additional damage.

Within days after the hurricane, the Company and insurance providers began to assess the damage to the Resort and that damage assessment remains ongoing.

Based on the Company’s assessment of these damages and the anticipated future restoration costs, which approximate the carrying amount of the portion of the assets that were damaged, an estimated $ 52.1 million loss was recorded, offset by $ 18.1 million of recorded insurance recoveries during the year ended December 31, 2022, resulting in a Sunseeker special charge of $ 34.0 million.

This charge also reduced the carrying amount of the Resort.

The estimate is preliminary and subject to change as the damage assessment by the Company and the insurance providers continues.

The amount of losses recorded to date will continue to be offset in future periods by amounts to be recovered under the Company’s insurance policies.

In 2023, the Company expects to receive insurance proceeds approximating the losses recorded to date.

Note 2 — Summary of Significant Accounting Policies

34 unchanged sentences

Such expendable parts, supplies and fuel are charged to expense as they are used in operations.

An obsolescence allowance for expendable parts and supplies is based on salvage values and the average remaining useful life of the Airbus fleet.

An obsolescence allowance for expendable parts and supplies is based on salvage values and the average remaining useful life of the fleet.

The obsolescence allowance for expendable parts and supplies was $ 10.3 million and $ 8.1 million at December 31, 2023 and 2022, respectively.

Deposits and Other Assets

Deposits and Other Assets consist primarily of airport deposits, aircraft lease deposits, deposits as required by the construction loan agreement and a note receivable to the counter-party in the Company’s joint venture alliance.

The Company also had

outstanding receivables from third parties as of December 31, 2022 and 2021, of which $ 18.3 million and $ 12.4 million respectively, was due more than one year after the balance sheet date.

Deposits and Other Assets consist primarily of airport deposits, aircraft lease deposits, deposits as required by the construction loan agreement for the Sunseeker Resort and a note receivable from the counter-party in the Company’s joint venture alliance.

The Company also had outstanding receivables from third parties as of December 31, 2023 and 2022, of which $ 17.0 million and $ 18.3 million respectively, was due more than one year after the balance sheet date.

Operating Lease Right-of-Use Asset and Liability

4 unchanged sentences

ROU assets and liabilities are recognized on the lease commencement date based on the present value of lease payments over the lease term.

The present value of lease payments is calculated using an estimated incremental borrowing rate at lease commencement, which takes into consideration recent debt issuances as well as other applicable market data available.

At lease commencement, the present value of lease payments is calculated using the rate implicit in the lease, if known, or an estimated incremental borrowing rate which takes into consideration recent debt issuances as well as other applicable market data available.

Lease payments include fixed payments, variable payments based on an index or rate, reasonably certain purchase options, termination penalties, and others as required by the Accounting Standards (ASU) 2016-02, Leases (Topic 842).

5 unchanged sentences

Property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives less any estimated salvage value.

Property under finance leases and related obligations are initially recorded at an amount equal to the present value of future minimum lease payments computed on the basis of the Company’s incremental borrowing rate, and depreciation is recorded on a straight-line basis and is included within depreciation and amortization expense.

Property under finance leases and related obligations are initially recorded at an amount equal to the present value of future minimum lease payments computed using the rate implicit in the lease, if known, or on the basis of the Company’s estimated incremental borrowing rate, and depreciation is recorded on a straight-line basis and is included within depreciation and amortization expense.

The estimated useful lives of the principal asset classes are shown below.

6 unchanged sentences

Changes in the estimate for useful lives or residual values of the Company’s property and equipment could result in changes in depreciation expense.

The Company is required to make pre-delivery payments ("PDPs") towards the purchase price of new aircraft and engines prior to delivery.

These deposits are included in flight equipment on the Company's consolidated balance sheets.

Interest is capitalized by applying a capitalization rate to the weighted-average carrying amount of expenditures for qualifying assets over the period and depreciated over the estimated useful life of the related asset(s) acquired/developed.

1 unchanged sentence

The Company capitalizes certain internal and external costs related to the acquisition and development of computer software during the application development stage of projects.

The Company amortizes these capitalized costs using the straight-line method over the estimated useful life of the software, which typically ranges from three to ten years .

The Company amortizes these capitalized costs using the straight-line method over the estimated useful life of the software, which typically ranges from three to fifteen years .

The Company had unamortized computer software development costs of $ 139.1 million and $ 80.2 million as of December 31, 2023 and 2022, respectively.

2 unchanged sentences

Aircraft Maintenance and Repair Costs

The Company accounts for all non-major maintenance and repair costs incurred for its Airbus fleet under the direct expense method.

Under this method, maintenance and repair costs for aircraft are charged to maintenance and repair expenses as

The Company accounts for all non-major maintenance and repair costs incurred for its fleet under the direct expense method.

Under this method, maintenance and repair costs for aircraft are charged to maintenance and repair expenses as incurred.

Maintenance and repair costs include all parts, materials, and line maintenance activities required to maintain the Company's fleet.

The Company accounts for major maintenance costs of its Airbus airframes and the related CFM engines using the deferral method.

The Company accounts for major maintenance costs of its airframes and engines using the deferral method.

Under this method, the Company capitalizes the cost of major maintenance events, which are amortized as a component of depreciation and amortization expense, over the estimated period until the next scheduled major maintenance event.

During 2022 and 2021, the Company capitalized $ 4.1 million and $ 23.3 million of major maintenance costs for engines.

Amortization expense related to major maintenance costs for engines was $ 21.5 million, $ 21.0 million, and 17.6 million for the years ended December 31, 2022, 2021, and 2020 respectively.

During 2022 and 2021, the Company capitalized $ 56.5 million and $ 39.0 million of major maintenance costs for airframes.

Amortization expense related to major maintenance costs for airframes was $ 22.3 million, $ 21.1 million and $ 19.9 million for the years ended December 31, 2022, 2021 and 2020 respectively.

During 2023 and 2022, the Company capitalized $ 68.5 million and $ 60.6 million of major maintenance costs.

Amortization expense related to major maintenance costs was $ 55.5 million, $ 43.8 million, and $ 42.1 million for the years ended December 31, 2023, 2022, and 2021 respectively.

Measurement of Impairment of Long-Lived Assets

3 unchanged sentences

and (ii) estimated future cash flows expected to be generated by these assets, which are based on additional assumptions such as asset utilization, length of service for which the asset will be used in operations, and estimated salvage values.

For the year ended December 31, 2020, the Company recorded a $ 161.6 million impairment as a result of COVID-19.

For the year ended December 31, 2021, the Company recorded a $ 0.5 million impairment loss on a building in Chesterfield, Missouri associated with the Allegiant Nonstop family entertainment line of business.

The Company did not recognize any impairment for the year ended December 31, 2022.

The Company did not recognize any impairment for the years ended December 31, 2023 and December 31, 2022.

Revenue Recognition

Passenger revenue

Passenger revenue includes scheduled service revenue, ancillary air-related charges, and travel point redemptions from the co-branded Allegiant credit card and the Company's non-card loyalty program.

Passenger revenue includes scheduled service revenue, ancillary air-related charges, and travel point redemptions from the co-brand Allegiant credit card and the Company's non-card loyalty program.

Revenue from travel point redemptions from the co-brand credit card and the loyalty program are described in the Allways Rewards ® Credit Card Program and Allways Rewards ® Loyalty Program sections below.

Scheduled service revenue consists of ticket revenue generated from nonstop flights in the Company’s route network, recognized either when the transportation is provided, or when ticket voucher breakage occurs.

Nonrefundable scheduled itineraries expire on the date of the intended flight, unless the date is extended by notification from the customer in advance.

Itineraries sold for transportation not yet used, as well as unexpired credits, are included in air traffic liability.

Itineraries sold for transportation not yet used, as well as unexpired vouchers, are included in air traffic liability.

Ancillary air-related charges include various services and products related to the flight such as baggage fees, the use of the Company’s website to purchase scheduled service transportation, advance seat assignments, and other services which are not included in the base ticket price.

4 unchanged sentences

These taxes and fees are not included as revenue in the Company’s consolidated statements of income and are recorded as a liability until remitted to the appropriate taxing authority.

Revenue from travel point redemptions from the co-branded credit card and the loyalty program are described in the Affinity Credit Card Program and Allways Rewards ® Loyalty Program sections below.

Third party products revenue

Ancillary third party products revenue is generated from the sale of hotel rooms, rental cars and ticket attractions, as well as marketing revenue associated with the co-branded credit card.

Ancillary third party products revenue is generated from the sale of hotel rooms, rental cars and ticket attractions, as well as marketing revenue associated with the co-brand credit card.

Revenue from the sale of third party products is recognized at the time the product is utilized, such as the time a purchased hotel room is occupied.

Revenue from the sale of third party products is recorded net of amounts paid to wholesale providers, travel agent commissions, and transaction costs.

Revenue from travel point redemptions from the co-branded credit card and the loyalty program are described in the Affinity Credit Card Program and Allways Rewards ® Loyalty Program sections below.

Fixed fee contract revenue

Fixed fee contract revenue consists of agreements to provide charter service on a year-round and ad hoc basis.

Fixed fee contract revenue consists of fees under agreements to provide charter service on a year-round and ad hoc basis.

Fixed fee contract revenue is recognized when the transportation is provided.

Affinity Credit Card Program

The Allegiant co-branded credit card is issued by Bank of America through which arrangement points are sold and consideration is received under an agreement that expires in 2029.

Sunseeker Resort

Sunseeker Resort's revenue from contracts with customers primarily consists of sales of rooms, food and beverage, golf, retail and other goods and services.

As compensation for such goods and services, the Company is typically entitled to a fixed nightly fee for an agreed upon period and additional fixed fees for any ancillary services purchased.

These fees are generally payable at the time the hotel guest checks out of the hotel.

The Company generally satisfies the performance obligations over time, and the Company recognizes the revenue from room sales and from other ancillary guest services on a daily basis, as the rooms are occupied and the Company has rendered the services.

Sunseeker Resort revenues are included in other revenue in the consolidated statements of income.

Allways Rewards® Credit Card Program

Under the Allegiant co-brand credit card arrangement, points are sold and consideration is received under an agreement with the issuer bank that expires in 2031.

Under this arrangement, the Company identified the following deliverables:

2 unchanged sentences

The Company applied a level of management judgment and estimation in determining the best estimate of selling price for each deliverable by considering multiple inputs and methods including, but not limited to, the redemption value of points awarded, discounted cash flows, brand value, volume discounts, published selling prices, number of points to be awarded and number of points expected to be redeemed.

Revenue from the travel component is deferred based on its relative selling price and is recognized into passenger revenue when the points are redeemed by cardholders and transportation is provided.

Revenue from the travel component is deferred based on its relative selling price and is recognized into passenger revenue when the points are redeemed by cardholders and the underlying service is provided.

Revenue from the marketing component is considered earned in the period in which points are sold and is therefore recognized into third party products revenue in the same period.

2 unchanged sentences

Under the program, which launched in August 2021, members continue to accumulate points until the time they decide to redeem them.

In addition to opportunities to redeem points for flights, lodging and rental cars, the program leverages Allegiant's partnerships to offer additional rewards to Members, including sports and live music event tickets and exclusive experiences.

Members can also earn points by using their Allegiant co-branded credit card.

In addition to opportunities to redeem points for flights, lodging, rental cars, and at the Sunseeker Resort, the program leverages Allegiant's partnerships to offer additional rewards to members, including sports tickets and exclusive experiences.

Members can also earn points by using their Allegiant co-brand credit card.

Under Allways Rewards®, members receive one point for every dollar spent at Allegiant.com, and two points per $1 for spending over $500 (excluding taxes and fees).

The Company utilizes the deferred revenue method of accounting for points earned through the program based on the stand-alone selling price and revenue is recognized when points are redeemed and the underlying service has been provided.

The stand alone selling price of points is adjusted for an estimate of points that will not be redeemed using a statistical model based on historical redemption patterns to develop an estimate of the likelihood of future redemption.

The stand-alone selling price of points is adjusted for an estimate of points that will not be redeemed (“breakage”) using a statistical model based on historical redemption patterns to develop an estimate of the likelihood of future redemption.

Advertising Costs

1 unchanged sentence

Advertising expense was $ 41.0 million, $ 40.1 million and $ 31.3 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Preopening expenses

Preopening expenses represent personnel, advertising, and other costs incurred prior to the opening of Sunseeker Resort and are expensed as incurred.

During the year ended December 31, 2023, the Company incurred $ 26.5 million of preopening expenses related to the opening of the Resort, which is included in salaries and benefits expense, sales and marketing expense, and other expense in the consolidated statements of income.

Earnings per Share

Basic and diluted earnings per share are computed pursuant to the two-class method as opposed to the treasury method.

Basic and diluted earnings per share are computed using the two-class method.

Under the two-class method, the Company attributes net income to two classes, common stock and unvested restricted stock awards.

6 unchanged sentences

For the years ended December 31, 2023, 2022 and 2021, the second method above was used in the computation because it was more dilutive than the first method.

Given the net loss generated in 2020, both methods yield the same result.

The following table sets forth the computation of net income (loss) per share on a basic and diluted basis for the periods indicated:

The following table sets forth the computation of net income per share on a basic and diluted basis for the periods indicated:

Year ended December 31,

(in thousands, except per share data) 2023 2022 2021

Net income (loss) $ 2,493 $ 151,853 $ ( 184,093 )

Net income $ 117,596 $ 2,493 $ 151,853

Less income allocated to participating securities ( 4,188 ) ( 32 ) ( 2,218 )

Net income (loss) attributable to common stock $ 2,461 $ 149,635 $ ( 184,329 )

Earnings (loss) per share, basic $ 0.14 $ 8.69 $ ( 11.53 )

Net income attributable to common stock $ 113,408 $ 2,461 $ 149,635

Earnings per share, basic $ 6.32 $ 0.14 $ 8.69

Weighted-average shares outstanding 17,945 17,959 17,212

Net income (loss) $ 2,493 $ 151,853 $ ( 184,093 )

Net income $ 117,596 $ 2,493 $ 151,853

Less income allocated to participating securities ( 4,175 ) ( 32 ) ( 2,215 )

Net income (loss) attributable to common stock $ 2,461 $ 149,638 $ ( 184,329 )

Earnings (loss) per share, diluted $ 0.14 $ 8.68 $ ( 11.53 )

Net income attributable to common stock $ 113,421 $ 2,461 $ 149,638

Earnings per share, diluted $ 6.29 $ 0.14 $ 8.68

Weighted-average shares outstanding 17,945 17,959 17,212

6 unchanged sentences

The Company accounts for share-based compensation in accordance with accounting standards which require the compensation cost related to share-based payment transactions be recognized in the Company’s consolidated statements of income.

The share-based cost is measured based on grant date fair value.

The share-based compensation cost is measured based on grant date fair value.

The Company’s share-based employee compensation plan is more fully discussed in Not e 12 .

1 unchanged sentence

Deferred tax assets and liabilities are determined based on the timing differences between book basis for financial reporting purposes and tax basis of the assets and liabilities and measured using the enacted tax rates and provisions of the enacted tax law.

A valuation allowance for deferred tax assets is provided if it is more likely than not that some portion or all of the deferred tax assets will not be realized.

A valuation allowance for deferred tax assets is recorded if it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company determines the net non-current deferred tax assets or liabilities separately for federal, state, foreign and other local jurisdictions.

10 unchanged sentences

Recent Accounting Pronouncements

On January 7, 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848).

This new standard provides optional temporary guidance for entities transitioning away from London Interbank Offered Rate ("LIBOR") to new reference interest rates so that derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions with Topic 848.

These amendments do not apply to any contract modifications made after December 31, 2024, any new hedging relationships entered into after December 31, 2024, or to existing hedging relationships evaluated for effectiveness existing as of December 31, 2024, that apply certain optional practical expedients.

This standard was effective immediately and may be applied (i) on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or (ii) on a prospective basis to new modifications from any date within an interim period that includes or is subsequent to the date of the issuance of a final update, up to the date that financial statements are available to be issued.

The Company had no material LIBOR-related contract modifications during the twelve months ended December 31, 2022.

In October 2023, the Financial Standards Accounting Board (FASB) issued Accounting Standards Update (ASU) 2023-06, Disclosure Improvements to align the requirements in the FASB Accounting Standards Codification with the SEC's regulations in response to the SEC's August 2018 final rule that updated and simplified certain disclosure requirements.

Each amendment in the ASU will only be effective on the date the related disclosures are removed from Regulation S-X or Regulation S-K by the SEC, and will no longer be effective if the SEC has not removed the applicable disclosure requirement by June 30, 2027.

Early adoption is prohibited.

The Company is currently evaluating the potential impact that the standard will have on its financial statement disclosures.

In November 2023, the FASB issued ASU 2023-07 "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures," which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.

ASU 2023-07 is effective for the Company's annual periods beginning January 1, 2024, and for interim periods beginning January 1, 2025, with early adoption permitted.

The Company is currently evaluating the potential effect that the updated standard will have on its financial statement disclosures.

In December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topics 740):

Improvements to Income Tax Disclosures." The new standard requires expanded income tax disclosure of specific categories in the rate reconciliation and income taxes paid, disaggregated by jurisdiction.

ASU 2023-09 is effective for the Company's annual periods beginning January 1, 2025, with early adoption and retrospective application permitted.

The Company is currently evaluating the potential effect that the updated standard will have on its financial statement disclosures.

Note 3 — Special Charges

As a result of Hurricane Ian's direct hit on the southwest coast of Florida on September 28, 2022, the construction site of Sunseeker Resort at Charlotte Harbor (the "Resort" or "Sunseeker Resort") was damaged.

Additionally in the fourth quarter of 2022, there was another weather-related event and a fire that caused additional damage.

Based on the Company’s assessment of these damages and the anticipated future restoration costs, an estimated loss of $ 52.1 million was recorded as a special charge in 2022, which was offset by $ 18.1 million of recorded insurance recoveries during 2022.

In 2023, an additional $ 2.4 million of loss was recorded as a result of updated damage assessments by the Company and the insurance providers.

During third quarter 2023, the Sunseeker Resort construction site incurred additional damages related to Hurricane Idalia.

Based on the Company’s assessment of these damages and the anticipated future restoration costs, an estimated loss of $ 23.6 million was recorded as a special charge in 2023.

The estimate is preliminary and subject to change as the damage assessment by the Company and the insurance providers continues.

During the years ended December 31, 2023 and December 31, 2022, the Company recorded losses of $ 26.0 million and $ 52.1 million, respectively, which were offset by $ 32.5 million and $ 18.1 million of insurance recoveries, respectively.

To date, the Company has recorded insurance recoveries of $ 1.0 million and $ 49.5 million, respectively, related to the 2023 and 2022 hurricanes and related weather events.

The Company anticipates that additional insurance recoveries related to the losses incurred in 2023 and 2022 will be recorded in future periods.

Due to the heavy maintenance needs on certain aging Airbus airframes and capacity constraints at the Company's maintenance, repair, and overhaul contractors, the Company reevaluated its fleet plan and identified 21 airframes for early retirement to coincide with 737 MAX aircraft deliveries as scheduled under an amendment to the Company's agreement with The Boeing Company signed in September 2023.

Two airframes were fully retired in 2023 and the remaining airframes are scheduled to be retired between January 2024 and September 2025.

The accelerated depreciation on these airframes resulting from a change in the estimated useful life is recorded as a special charge of $ 35.1 million for the year ended December 31, 2023.

Special charges in 2021 were incurred due to the impacts of the COVID-19 pandemic.

The charges were related to accelerated depreciation on aircraft identified for early retirement, impairment loss on a building related to a discontinued business unit, and acceleration of certain stock awards.

A portion of the special charge recorded in 2022 relates to accelerated depreciation on the last of the COVID-19 aircraft identified for early retirement, which amount is separate from the $ 35.1 million described above.

Special Charges

The table below summarizes special charges recorded during the years ended December 31, 2023, 2022, and 2021.

Year Ended December 31,

(in thousands) 2023 2022 2021

Sunseeker weather and related events $ 26,045 $ 52,095 $ —

Sunseeker weather and related events, insurance recoveries (1)

( 32,491 ) ( 18,050 ) —

Accelerated depreciation on airframes identified for early retirement 35,091 567 2,521

COVID-19 and related charges — — 11,477

Total special charges $ 28,645 $ 34,612 $ 13,998

(1) Includes $ 8.3 million of business interruption insurance proceeds for the year ended December 31, 2023.

No business interruption insurance recoveries were received for the years ended December 31, 2022 or December 31, 2021.

Note 4 — Revenue Recognition

Passenger revenue

Passenger revenue is the most significant category in our reported operating revenues, as outlined below:

Passenger revenue is the most significant category in the Company's reported operating revenues, as outlined below:

Year Ended December 31,

8 unchanged sentences

The normal contract term of passenger tickets is 12 months and passenger revenue associated with future travel will principally be recognized within this time frame.

Of the $ 307.5 million that was recorded in the air traffic liability balance at December 31, 2021, 77.0 percent was recognized into passenger revenue during the 12 months ended December 31, 2022.

Of the $ 379.5 million that was recorded in the air traffic liability balance at December 31, 2022, substantially all was recognized into passenger revenue during the 12 months ended December 31, 2023.

In 2020, the Company announced that credit vouchers issued for canceled travel beginning in January 2020 would have an extended expiration date of two years from the original booking date.

This policy continued for credit vouchers issued through June 30, 2021.

Estimates of passenger revenue to be recognized from air traffic liability for credit voucher breakage may be subject to variability and differ from historical experience due to the change in contract duration and uncertainty regarding demand for future air travel.

Estimates of passenger revenue to be recognized from air traffic liability for credit voucher breakage during this period may be subject to variability and differ from historical experience due to the change in contract duration and uncertainty regarding demand for future air travel.

Effective July 1, 2021, vouchers issued have an expiration date of one year from the original booking date.

8 unchanged sentences

Balance at December 31 $ 70,813 $ 56,500

As of December 31, 2022 and 2021, $ 32.9 million and $ 17.8 million, respectively, of the current points liability is reflected in accrued liabilities and represents the current estimate of revenue to be recognized in the next 12 months based on historical trends, with the remaining balance reflected in other noncurrent liabilities and expected to be recognized into revenue in periods thereafter.

The current portion of the loyalty program liability represents the estimate of revenue to be recognized in the next 12 months based on historical trends, with the remaining balance reflected in other noncurrent liabilities and expected to be recognized into revenue in periods thereafter.

Note 5 — Property and Equipment

7 unchanged sentences

Sunseeker Resort

Land and buildings/leasehold improvements 559,112 —

Other property and equipment 53,743 —

Construction in progress 4,389 320,572

Total property and equipment 4,411,977 3,625,530

16 unchanged sentences

(in thousands) Maturity Dates December 31, 2023 2023 2022

Term Loan and senior secured notes 2024 — 2027 7.25 % — 8.50 % $ 700,000 $ 685,857

Senior secured notes 2027 7.25 % $ 550,000 $ 700,000

Consolidated variable interest entities 2024 — 2029 2.92 % — 5.19 % 130,650 79,453

3 unchanged sentences

Construction loan agreement 2028 5.75 % 350,000 350,000

Unsecured debt n/a n/a — 25,824

Total debt $ 2,282,169 $ 2,120,443

3 unchanged sentences

(in thousands) As of December 31, 2023

2023 $ 152,900

Thereafter 425,031

Total debt and finance lease obligations, net of related costs $ 2,259,654

(1) Includes pre-delivery deposit financing which is due upon delivery of each respective aircraft

Senior Secured Notes

1 unchanged sentence

The 2027 Notes are secured by first priority security interests in, subject to permitted liens, substantially all of the property and assets of the Company and its subsidiaries (other than Sunseeker Resort and its subsidiaries), except that the collateral package excludes aircraft, aircraft engines, real property and certain other assets.

The collateral also secures the Company’s existing $ 150.0 million 8.500 % Senior Secured Notes due 2024 and the Company’s revolving credit facility through Barclays Bank, PLC (described below), on a pari passu basis.

The 2027 Notes bear interest at a fixed rate of 7.25 percent per annum, payable in cash on February 15 and August 15 of each year, beginning February 15, 2023.

The collateral also secures the Company’s $ 75.0 million revolving credit facility (described below), on a pari passu basis.

The 2027 Notes bear interest at a fixed rate of 7.25 percent per annum, payable in cash on February 15 and August 15 of each year.

The 2027 Notes will mature on August 15, 2027.

3 unchanged sentences

(iii) create or incur certain liens;

(iv) dispose of loyalty program or brand intellectual property collateral;

(iv) dispose of loyalty program or

brand intellectual property collateral;

(v) merge, consolidate or sell all or substantially all assets and (vi) enter into certain transactions with affiliates.

1 unchanged sentence

If the Company fails to satisfy the minimum liquidity requirement, then the Company will be required to pay additional interest on all outstanding 2027 Notes in an amount equal to 2.0 % per annum of the principal amount of such 2027 Notes until the Company demonstrates compliance with the liquidity requirement.

The Company used the net proceeds from the sale of the 2027 Notes to repay the Company’s Term Loan B, which had an outstanding principal amount of $ 533.0 million, and to pay costs and expenses of the transaction.

In November 2023, the Company prepaid the entirety of the $ 150.0 million outstanding on its 8.500 % Senior Secured Notes issued in October 2020 and originally due February 2024.

Consolidated Variable Interest Entities

1 unchanged sentence

The Company consolidates a VIE when, among other criteria, it has the power to direct the activities that most significantly impact the VIE’s economic performance as well as the obligation to absorb losses or the right to receive benefits of the VIE, thus making the Company the primary beneficiary of the VIE.

In October 2019, the Company, through a wholly owned subsidiary, entered into agreements with a trust to borrow $ 23.5 million secured by one Airbus A320 series aircraft.

The trust was funded on inception.

The borrowing bears interest at a blended rate of 3.2 percent and is payable in monthly installments through October 2024, at which time the Company will have a purchase option at a fixed amount.

As this transaction is a common control transaction, the Company, as the primary beneficiary, has measured and recorded the assets and liabilities at their carrying values, which were $ 18.6 million and $ 23.5 million, respectively, at the time of borrowing.

In March 2019, the Company, through a wholly owned subsidiary, entered into agreements with a trust to borrow $ 44.0 million secured by one Airbus A320 series aircraft.

The trust was funded on inception.

The borrowing bears interest at a blended rate of 3.8 percent and is payable in quarterly installments through April 2029, at which time the Company will have a purchase option at a fixed amount.

As this transaction is a common control transaction, the Company, as the primary beneficiary, has measured and recorded the assets and liabilities at their carrying values, which were $ 38.5 million and $ 44.0 million, respectively, at the time of borrowing.

In September 2018, the Company, through a wholly owned subsidiary, entered into agreements with a trust to borrow $ 44.0 million secured by one Airbus A320 series aircraft.

The trust was funded on inception.

The borrowing bears interest at a blended rate of 4.0 percent and is payable in quarterly installments through September 2028, at which time the Company will have a purchase option at a fixed amount.

As this transaction is a common control transaction, the Company, as the primary beneficiary, has measured and recorded the assets and liabilities at their carrying values, which were $ 37.8 million and $ 44.0 million, respectively, at the time of borrowing.

Payroll Support Program Loans

During 2020 and 2021, Congress enacted various legislation which provided support for the airline industry.

This included The Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") enacted in March 2020, the Consolidated Appropriations Act, 2021 enacted in December 2020, and the American Rescue Plan Act enacted in March 2021 (collectively the “Payroll Support Programs”).

In 2020 and 2021, the Company entered into low-interest rate, senior unsecured term promissory notes (the "PSP Notes") with the Treasury under the Payroll Support Programs.

The PSP Notes were to mature in full after ten years, and bore interest at a rate of 1.0 percent per annum for the first five years and, thereafter, at the secured overnight financing rate (SOFR) plus 2 percent.

The PSP Notes were prepayable at any time at par, without penalty.

As of December 31, 2022, the Company had fully repaid the PSP Notes.

During 2023, the Company, through a wholly owned subsidiary, entered into similarly structured agreements with trusts to borrow $ 63.0 million collateralized by aircraft and engines.

The trusts were funded at inception.

The borrowings bear interest at fixed rates and are payable in monthly installments through October 2028 and February 2029, at which time the Company will have purchase options at fixed amounts.

As these transactions are common control transactions, the Company, as the primary beneficiary, has measured and recorded the assets and liabilities at their carrying values, which were $ 51.6 million and $ 63.0 million respectively, at the time of borrowing.

Revolving Credit Facilities

In August, 2022, the Company entered into a credit agreement with MUFG Bank, Ltd under which the Company is entitled to borrow up to $ 100.0 million.

The revolving credit facility has a term of 24 months and the borrowing ability is based on the value of aircraft and engines placed into the collateral pool.

The notes under the facility bear interest at a floating rate based on SOFR.

In August 2022, the Company entered into a credit agreement under which the Company is entitled to borrow up to $ 100.0 million.

In October 2023, the Company extended the term of this agreement to August 2025 with all other terms to remain the same.

The borrowing ability of the facility is based on the value of aircraft and engines placed into the collateral pool.

The notes under the facility will bear interest at a floating rate based on SOFR.

As of December 31, 2023, the facility remains undrawn.

In August, 2022, the Company entered into a credit agreement with certain lenders and Barclays Bank PLC as administrative agent and lead arranger that provides a senior secured revolving loan facility of $ 75.0 million.

In August 2022, the Company entered into a credit agreement that provides a senior secured revolving loan facility of $ 75.0 million.

The facility is secured by the same collateral that secures the 2027 Notes, has a term of 57 months and notes under the facility bear interest at a floating rate based on SOFR.

As of December 31, 2023, the facility remains undrawn.

In September, 2022, the Company entered into a credit agreement with Norddeutsche Landesbank Girozentrale (acting through its New York branch) and Landesbank Hessen-Thüringen Girozentrale (the "Lenders") under which the Company is entitled to borrow up to $ 300.0 million.

The revolving credit facility has a term of 24 months and the borrowing ability is based on the amount of pre-delivery deposits paid with respect to up to 20 737-MAX aircraft, the purchase rights for which the Company may choose to place in the collateral pool.

In September 2022, the Company entered into a credit agreement under which the Company is entitled to borrow up to $ 200.0 million.

The revolving credit facility has a term of 24 months and the borrowing ability is based on the amount of pre-delivery deposits paid on certain 737 MAX aircraft, the purchase rights for which the Company may choose to place in the collateral pool.

The facility is secured by the purchase rights for the applicable aircraft.

The commitment amount at the time of signing is $ 200.0 million and the facility may be increased to $ 300.0 million subject to agreement between the Company and the Lenders.

Any notes under the facility will bear interest at a floating rate based on SOFR and all borrowings will be due no later than December 31, 2024 or upon delivery of the applicable aircraft.

As of December 31, 2022, the Company has drawn $ 30.3 million under this facility.

Any notes under the facility bear interest at a floating rate based on SOFR and all borrowings are due no later than December 31, 2024 or upon delivery of the applicable aircraft.

As of December 31, 2023, the Company has fully drawn all $ 200.0 million under this facility.

In March 2021, the Company entered into a revolving credit facility, under which it is entitled to borrow up to $ 50.0 million.

The facility has a term of 24 months and the borrowing ability is based on the value of the Airbus A320 series aircraft placed into the collateral pool.

The notes for amounts borrowed under the facility bear interest at a floating rate based on LIBOR and are due in March 2023.

As of December 31, 2022, no aircraft collateral had been added to the collateral pool and the facility was undrawn.

In February, 2023, the Company extended the term of this agreement to March 2026 and upsized the capacity to $ 100.0 million.

The borrowing ability is based on the value of the aircraft and engines placed into the collateral pool.

The notes for amounts borrowed under the facility will bear interest at a floating rate based on SOFR.

As of December 31, 2023, the facility remains undrawn.

Other Secured Debt

1 unchanged sentence

Below are described those debt transactions entered into during 2023.

In April 2022, the Company borrowed $ 62.3 million under a loan agreement secured by Airbus A320 series aircraft.

The notes bear interest at a fixed rate, payable in quarterly installments maturing in April 2027.

In April 2022, the Company borrowed $ 46.0 million under a loan agreement secured by Airbus A320 series aircraft.

The notes bear interest at a variable rate, payable in quarterly installments maturing in April 2028.

In November 2023, the Company entered into a pre-delivery deposit financing facility to borrow up to $ 158.0 million secured by the Company's purchase rights for certain Boeing 737 MAX aircraft.

The facility bears a floating interest rate based on SOFR and is due upon delivery of each aircraft or no later than June 30, 2025.

As of December 31, 2023, the Company has drawn $ 113.9 million under the facility.

In September 2023, the Company entered into a credit agreement under which the Company is entitled to borrow up to $ 412.1 million.

In September 2023, the Company received funding of $ 196.4 million under the facility, which is collateralized by aircraft.

The proceeds were used in part to pay off existing debt collateralized by aircraft.

The outstanding balance bears interest at a fixed rate, to be paid in quarterly installments of principal and interest, and matures in September 2031.

The remaining undrawn balance of the facility will be funded upon delivery of, and collateralized by, Boeing 737 MAX aircraft currently on order from Boeing.

Future draws collateralized by 737 MAX aircraft will bear interest at a rate determined at the time of drawdown and will have a term of twelve years.

In May 2023, the Company borrowed $ 92.7 million under a loan agreement secured by aircraft.

The notes bear interest at a fixed rate, payable in quarterly installments maturing in May 2028.

During the year ended December 31, 2023, the Company made a total of $ 207.8 million in payments to extinguish six variable rate facilities secured by aircraft.

Construction Loan Agreement

In October 2021, Sunseeker Florida, Inc.

(“SFI”), a wholly-owned subsidiary of the Company, entered into a Credit Agreement pursuant to which SFI has borrowed $ 350.0 million funded by one or more entities directly or indirectly managed by Castlelake, L.P.(“Lender”) to fund the remaining construction of the initial phases of Sunseeker Resort.

(“SFI”), a wholly-owned subsidiary of the Company, entered into a Credit Agreement pursuant to which SFI borrowed $ 350.0 million to fund the remaining construction of the initial phases of Sunseeker Resort.

The loan is secured by the Resort.

2 unchanged sentences

The credit agreement includes covenants similar to the covenants in the Company’s 2027 Notes.

To support the credit, the Company has guaranteed the full amount of the debt, has agreed to guarantee completion of the remaining construction in accordance with approved plans and specifications and made a $ 30.0 million deposit into a construction disbursement account.

The lender funded $ 175.0 million of the loan in October 2021 and in 2022, the Lender funded the remaining $ 175.0 million into the construction disbursement account for the Resort.

As of December 31, 2022, $ 117.5 million of borrowed funds remains in the construction disbursement account which is recorded in other current assets.

To support the credit, the Company has guaranteed the full amount of the debt.

As of December 31, 2023, the entirety of the borrowed funds have been released from the construction disbursement account.

Finance Leases

22 unchanged sentences

Operating lease assets Operating lease right-of-use assets, net $ 100,707 $ 111,679

Finance lease assets Property and equipment, net 537,766 338,469

Finance lease assets Property and equipment, net of accumulated depreciation 483,083 537,766

Total lease assets $ 583,790 $ 649,445

11 unchanged sentences

Other Information

The table below presents supplemental cash flow information related to leases during the year ended December 31.

The table below presents supplemental cash flow information related to leases during the years ended December 31, 2023 and 2022.

Year Ended December 31,

21 unchanged sentences

As repurchase authority is exhausted, the board of directors has, to date, authorized additional expenditures for share repurchases.

The Company suspended stock repurchases upon the onset of the pandemic and as part of accepting benefits from the Treasury under the Payroll Support Programs, the Company agreed not to repurchase stock through September 30, 2022.

The Company suspended stock repurchases upon the onset of the pandemic and as part of accepting benefits from the U.S.

Treasury under the Payroll Support Programs, the Company agreed not to repurchase stock through September 30, 2022.

The Company recommenced repurchasing shares in the fourth quarter 2022 after those restrictions expired.

6 unchanged sentences

Total (in thousands) $ 24,303 $ 29,802 $ —

(1) Share amounts shown above include only open market repurchases and do not include shares withheld from employees for tax withholding obligations related to restricted stock vestings, which were 1,423 and 19,001 shares (not in thousands) for 2022 and 2020, respectively.

(1) Share amounts shown above include only open market repurchases and do not include shares withheld from employees for tax withholding obligations related to restricted stock vestings, which were 65,284 , 1,423 , and zero shares (not in thousands) for 2023, 2022, and 2021 respectively.

Cash dividends declared by the Board and paid by the Company consisted of the following during the periods indicated:

3 unchanged sentences

Total cash dividends paid (in thousands) 22,144 — —

The Company suspended payment of cash dividends upon the onset of the pandemic and as part of accepting benefits from the Treasury under the Payroll Support Programs, the Company agreed not to pay cash dividends through September 30, 2022.

The Company has yet to recommence payment of cash dividends.

The Company suspended payment of cash dividends upon the onset of the pandemic, and as part of accepting benefits from the U.S.

Treasury under the Payroll Support Programs, the Company agreed not to pay cash dividends through September 30, 2022.

The Company recommenced payment of cash dividends in the second half of 2023.

Note 9 — Fair Value Measurements

7 unchanged sentences

The assets classified as Level 1 consist of money market funds for which original cost approximates fair value.

The assets classified as Level 2 consist of commercial paper, municipal debt securities, federal agency debt securities and corporate debt securities, which are valued using quoted market prices or alternative pricing sources including transactions involving identical or comparable assets and models utilizing market observable inputs.

The assets classified as Level 2 consist of commercial paper, municipal debt securities, federal agency debt securities, U.S.

treasury bonds and corporate debt securities, which are valued using quoted market prices or alternative pricing sources including transactions involving identical or comparable assets and models utilizing market observable inputs.

The Company has no investment securities classified as Level 3.

9 unchanged sentences

Municipal debt securities 7,848 — 7,848 8,599 — 8,599

Federal agency debt securities 8,201 — 8,201 — — —

US Treasury bonds 2,000 — 2,000 — — —

Total cash equivalents 71,237 33,613 37,624 147,463 88,073 59,390

2 unchanged sentences

Federal agency debt securities 194,522 — 194,522 107,222 — 107,222

US Treasury Bonds 14,126 — 14,126 — — —

Municipal debt securities 13,914 — 13,914 30,426 — 30,426

17 unchanged sentences

In accordance with income tax accounting standards, the Company recognizes tax benefits or expenses on the temporary differences between the financial reporting and tax bases of its assets and liabilities.

Components of Income before Income Taxes from Continuing Operations

The components of income before taxes for domestic and foreign operations consisted of the following:

Year ended December 31,

(in thousands) 2022 2021 2020

Domestic $ 4,953 $ 196,620 $ ( 361,242 )

Foreign — — 175

Total $ 4,953 $ 196,620 $ ( 361,067 )

The entirety of the Company's income before taxes are from its domestic operations.

Income Tax Provision/(Benefit)

9 unchanged sentences

Total deferred 37,945 2,172 44,715

Total income tax provision (benefit) $ 2,460 $ 44,767 $ ( 176,974 )

Total income tax provision $ 41,455 $ 2,460 $ 44,767

Reconciliation of Effective Tax Rate

2 unchanged sentences

(in thousands) 2023 2022 2021

Income tax expense (benefit) at federal statutory rate $ 1,040 $ 41,575 $ ( 70,459 )

Income tax expense at federal statutory rate $ 33,401 $ 1,040 $ 41,575

State income taxes, net of federal income tax benefit 3,503 1,189 4,257

CARES Act — — ( 97,988 )

Foreign income tax expense 204 210 ( 6 )

Executive compensation 3,692 57 2,359

Federal tax credits ( 2,034 ) ( 1,103 ) ( 385 )

Stock compensation 1,936 1,016 ( 2,058 )

Other 753 51 ( 975 )

Total income tax expense (benefit) $ 2,460 $ 44,767 $ ( 176,974 )

Total income tax expense $ 41,455 $ 2,460 $ 44,767

Deferred Taxes

6 unchanged sentences

Tax credits 4,128 4,290

30,576 18,644

valuation allowance 1,214 1,214

6 unchanged sentences

Net deferred tax liabilities $ 384,602 $ 346,388

(1) Other deferred tax assets consists of interest expense and R&D expenses.

(1) Other deferred tax assets consists of interest expense and research and development expenses.

Net Operating Loss and Tax Credit Carryforwards

At December 31, 2023, the Company recognized $ 14.0 million and $ 8.2 million of tax-effected Federal and state net operating loss carryforwards, respectively.

Under the current law, the Federal net operating losses do not expire.

While a portion of the state net operating loss carryforward amounts will expire between 2023 and 2040, the majority of these net operating losses have an indefinite carryforward period.

Under the current law, the Federal net operating losses do not expire and state net operating loss carryforward amounts begin to expire in 2024 .

Note 11— Related Party Transactions

3 unchanged sentences

Under the plan, employees may contribute up to 90 percent of their eligible annual compensation with the Company making matching contributions on employee deferrals of up to 5 percent of eligible employee wages.

The matching contributions on pilot deferrals is 200 percent for the first 5 percent of eligible wages as provided under the pilot collective bargaining agreement.

The Company recognized expense under this plan of $ 25.5 million, $ 24.0 million, and $ 21.4 million for the years ended December 31, 2023, 2022 and 2021, respectively.

8 unchanged sentences

The following table provides information about the Company’s ESPP activity during 2023, 2022, and 2021:

Total number of shares purchased in year Average price paid per share Weighted-average fair value of discount under the ESPP (1)

As of December 31, 2020 56,866 $ 90.63 $ 14.10

As of December 31, 2021 39,760 $ 174.68 $ 30.00

As of December 31, 2022 73,268 $ 97.85 $ 16.25

Year Ended Total number of shares purchased in year Average price paid per share Weighted-average fair value of discount under the ESPP (1)

December 31, 2021 39,760 $ 174.68 $ 30.00

December 31, 2022 73,268 $ 97.85 $ 16.25

December 31, 2023 99,802 $ 85.27 $ 14.44

(1) The weighted-average fair value of the discount under the ESPP granted is equal to a percentage discount from the market value of the common stock at the end of each semi-annual purchase period.

1 unchanged sentence

Compensation expense

For the years ended December 31, 2022, 2021 and 2020, the Company recorded compensation expense of $ 16.3 million, $ 17.2 million and $ 20.1 million, respectively, related to restricted stock, stock options, cash-settled SARs and the ESPP.

For the years ended December 31, 2023, 2022 and 2021, the Company recorded compensation expense of $ 31.5 million, $ 16.3 million and $ 17.2 million, respectively, related to restricted stock, stock options and the ESPP.

Forfeiture rates are estimated at the time of grant based on historical actuals for similar grants and are matched to actuals over the vesting period.

The unrecognized compensation cost was $ 39.7 million as of December 31, 2023 for unvested restricted stock expected to be recognized over a weighted-average period of 2.69 years.

As of December 31, 2022, there was $ 0.9 million unrecognized compensation cost related to stock options and no unrecognized compensation cost for cash-settled SARs.

As of December 31, 2023, there was $ 0.1 million unrecognized compensation cost related to stock options.

Restricted stock awards

The closing price of the Company's stock on the date of grant is used as the fair value for the issuance of restricted stock.

The majority of the Company's unvested restricted stock awards, subject generally to the individual's continued employment or service, vest one third each year over a three year period.

Most of the Company's unvested restricted stock awards, subject generally to the individual's continued employment or service, vest over a three year period or longer for certain of the Company's executive officers.

A summary of the status of non-vested restricted stock grants during the y ears ended December 31, 2023, 2022 and 2021 is presented below:

13 unchanged sentences

Non-vested at December 31, 2023 607,393 $ 94.64

The total fair value of restricted stock that vested during the years ended December 31, 2022, 2021 and 2020 was $ 13.4 million, $ 27.0 million and $ 43.0 million, respectively.

The total grant date fair value of restricted stock that vested during the years ended December 31, 2023, 2022 and 2021 was $ 28.3 million, $ 13.4 million and $ 27.0 million, respectively.

Note 13 — Commitments and Contingencies

5 unchanged sentences

(in thousands) As of December 31, 2023

2024 $ 866,545

Total purchase commitments $ 1,699,836

Aircraft Commitments

As of December 31, 2022, the Company had entered into purchase agreements for 54 aircraft which are expected to deliver between 2023 through 2025.

As of December 31, 2023, the Company had entered into purchase agreements for 51 aircraft which are expected to deliver from 2024 through 2026.

Contingencies

2 unchanged sentences

As of December 31, 2023

Pilots 17.9 %

Flight Attendants 23.4

1 unchanged sentence

Flight Dispatchers 0.9

As of December 31, 2022, the Company employed approximately 5,300 full-time equivalent employees, 53.6 percent of whom are covered by collective bargaining agreements with various labor unions that are currently amendable or will become amendable in one year.

As of December 31, 2023, the Company employed approximately 6,700 full-time equivalent employees, 41.3 percent of whom are covered by collective bargaining agreements with various labor unions that are currently amendable and are i n negotiation.

See Item I - Business, for further discussion on the status of each group which has elected union representation.

9 unchanged sentences

Sunseeker Resort Segment

The Sunseeker Resort segment represents activity related to the development and construction of Sunseeker Resort in Southwest Florida, as well as the renovation of Aileron Golf Course (formerly known as Kingsway Golf Course).

Plans for the resort include a 500 -room hotel and two towers offering an estimated 180 one, two and three-bedroom suites, bar and restaurant options, and other amenities.

The golf course is a short drive from the resort site and is considered, from a planning and strategic perspective, to be an additional resort amenity.

The construction of Sunseeker Resort is an extension of the Company's leisure travel focus and it is expected that many customers flying to Southwest Florida on Allegiant will elect to stay at this resort and enjoy its amenities.

The Sunseeker Resort segment operates as a single business unit and includes hotel rooms and suites for occupancy, group meeting facilities, food and beverage options, the Aileron Golf Course and other Resort amenities.

The Resort opened on December 15, 2023.

The CODM evaluation includes, but is not limited to, demand for hospitality offerings, occupancy rates, room pricing, food and beverage offerings, other charge points at the Resort and competitive information when making resource allocations with the goal of optimizing consolidated financial results.

For the year ended December 31, 2023, the Company recorded $ 26.5 million of preopening expenses related to the opening of the Resort, which is included in salaries and benefits expense, sales and marketing expense, and other expense in the consolidated statements of income.

Selected information for the Company's segments and the reconciliation to the consolidated financial statement amounts are as follows:

7 unchanged sentences

Operating income (loss) 251,468 ( 30,487 ) 220,981

Interest expense, net (1)

Interest income ( 46,615 ) — ( 46,615 )

Interest expense (1)

130,512 21,868 152,380

Capitalized interest ( 21,838 ) ( 23,294 ) ( 45,132 )

Depreciation and amortization 220,915 2,215 223,130

7 unchanged sentences

Operating income (loss) 136,968 ( 45,322 ) 91,646

Interest expense, net (1)

Interest income ( 16,469 ) — ( 16,469 )

Interest expense (1)

92,785 16,046 108,831

Capitalized interest ( 4,308 ) ( 8,332 ) ( 12,640 )

Depreciation and amortization 197,433 109 197,542

7 unchanged sentences

Operating income (loss) 271,073 ( 7,998 ) 263,075

Interest expense, net (1)

Interest income ( 1,814 ) — ( 1,814 )

Interest expense (1)

66,585 1,818 68,403

7 unchanged sentences

Consolidated $ 4,869,410 $ 4,511,297

Note 15 — Subsequent Events

On February 1, 2023, the Company, through a wholly owned subsidiary, entered into a new senior secured revolving credit facility under which it will be able to borrow up to $ 100.0 million based on the value of new and used aircraft and engines which the Company may choose (subject to certain concentration limits and asset age restrictions) to place in the collateral pool.

The facility has a term of 36 months and once placed in the facility, such aircraft and engines may remain in the facility for the duration of the term at Company discretion.

This credit facility will replace the revolving credit facility with the same lender which was to expire in March 2023.

In February 2023, the Company, through a wholly owned subsidiary, entered into agreements with a trust to borrow $ 27.0 million secured by one Airbus A320 aircraft.

The borrowing bears interest at a fixed rate and will be payable in monthly installments through March 2029, at which time, the Company will have a purchase option at a fixed amount.

The aircraft was previously under a finance lease and a portion of the funds were used to exercise the purchase option.

The balance of the proceeds from the loan will be used for general corporate purposes.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data