Allegiant Travel Company Annual Report 2018

FY2018 Annual Report · Allegiant Travel Company

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2018

Annual Report

Dear Allegiant Shareholder:

2018 produced another successful and profitable year – operating income was $243 million and we
continued our streak of 65 consecutive profitable quarters as of Q1 2019. We have accomplished this
remarkable feat through downturns in the economy, significant oil price spikes and most recently a
complete replacement of our fleet - all while continuing to grow. The following annual graph illustrates
our profitability history against the back drop of the price per barrel of oil and economic growth since
2003:

During the past 20 years, we have led the industry in operating income margin. Our 15.2% average
annual operating margin has been number one by a wide margin compared to number 2 Alaska at 10.9%
and number 3 Southwest at 10.5%. In 2018 we again led the industry with the highest operating margin.
While it is not uncommon for us to lead the industry in operating margin, to produce such results during
an unprecedented fleet transition, completed a year ahead of schedule, is uncommon! This remarkable
accomplishment required us to retire 37 MD80 aircraft and add 24 A320 series aircraft – more than 30%
of our entire fleet during 2018.

Since our humble beginning in 2001, we have developed one of the most defensible and sustainable
airline models in the world. The transition to an Airbus fleet was the first major step in our next chapter.

Airbus A320 Series – optimal fleet
In my previous shareholder letter, I discussed the expected efficiencies from our transition to an all-
Airbus fleet. Currently we estimate the average operating income per aircraft of an A320 series is
approximately 2.5 times greater than our MD80 aircraft results in recent years. These improvements are
increased fuel efficiency, increased utilization and improved reliability. I am pleased to report the
economic and operational results from our first quarter of an all Airbus fleet are meeting or exceeding our
expectations. We achieved benefits from each of these areas during the first quarter:

- We generated 9.6% more ASMs per gallon year over year
- We increased our fleet utilization by 17%, flying an average of 8.3 hours per day in Q1 2019

versus 7.2 hours in 2018 and

- We went 120 days plus of 100% controllable completion, namely no mechanical cancellations
beginning in mid-December through mid-April 2019. During the first quarter we led the
airline industry in completion factor

- We produced an 85% on time performance in March, which was third in the industry

We will also see indirect economic benefits from a single fleet type, the simplicity and the resultant non-
fuel cost savings. We expect our non-fuel expenses to decline this year on a unit basis. During this
transition we trained 300+ mechanics and 400 crew members resulting in extensive training costs as well
as the labor expense from carrying more than 100 extra pilots on the payroll. During 2019 we will add 17
aircraft, going from 76 to 93, yet our current pilot staffing should be sufficient to operate these additional
aircraft.

Our customers are noticing these operational improvements as evidenced by the recent industry awards
we received including the JD Power Most Improved in Customer Satisfaction in 2018. This increase in
brand loyalty will pay future dividends, particularly as we evolve our Allegiant 2.0 strategy.

Captive Customer Base
In 2018 we flew just under 14 million passengers and in 2019 we expect this number to exceed 15
million. We began 2018 serving just over 400 routes and we are currently up to 430. Nearly 75% of our
routes have no competition. Of the routes added in 2018, 90% had no non-stop competition. In many of
the 122 cities we serve, we are the only low cost service provider, particularly our originating cities. We
have identified 600 potential additional routes, of which 90% currently have no direct service.

Below is our current route map which highlights how deep our network reach is.

Network Growth
We continue to grow our destinations and add new ones. Two of our newest are Sarasota, Florida and
Nashville, Tennessee. These align with our desire to find markets we can fly between two and four times
a week but not ones so busy others might fly every day. Our primary approach is to seek out these less

obvious routes which can support a limited amount of service in a 7-day period. Because we are
constantly looking for these types of routes to operate, we would expect to maintain a similar percentage
of non-competitive routes in the future.

In April of 2019, we submitted our US DOT application for international flying into Mexico and expect
to begin selling flights by YE 19. Flying to Mexico is a natural extension to our network, namely taking
our cold climate customers to world class leisure destinations where they can find both sun and fun!

Direct access to customers – selling them 3rd party products
We have sold directly to our customers since we began our efforts in late 2001 with one aircraft. We are
one of the few airline companies in the world who own and operate their own sales and reservations
systems. This control allows us to customize our product offerings to customers. Additionally, we do not
provide our inventory to the third party distribution companies such as Sabre and others who make up
what is termed the Global Distribution System (or GDS) or to the online sales agents such as Expedia and
Priceline. Customers must come directly to our site to purchase Allegiant products. This combination of
ownership of our system and direct distribution has been core to our strategy. Knowing we would not
have the reach of the GDS, we consciously offered our services to the smaller cities in the US where we
could become a known entity. The offer of direct air service for a low base fare on a larger commercial
jet aircraft from a secondary or tertiary city to terrific destinations such as Las Vegas or Orlando enabled
us early on to gain a strong foothold in our cities. Additionally, the control of our reservations platform
has enabled us to know who our customers are. This has been a powerful combination in our success,
namely direct distribution and an understanding or ‘control’ of our customers.

An additional benefit from controlling our reservations platform has been the ability to integrate other
people’s products or 3rd party products in packages for our customers. We believed leisure customers
traveling on us for their vacations would purchase additional products such as hotels and rental cars,
thereby allowing us to capture a larger share of our customer’s leisure spend. We built these offerings
into our platform and included them in our booking path. Since 2005, we have sold over $1.3 billion of 3rd
party products, including 10.0 million rental car days and 6.5 million hotel room nights which has
contributed over $350 million of operating income. This bundling and selling of vacation packages to our
customers has been a major differentiator in our industry-leading profit margins. We believe there is
enhanced value in shifting some of our third party sales into what we term ‘first party sales’ in the coming
years, namely products we own and control.

Sunseeker Resorts and 1st party products
Last year’s letter introduced Sunseeker Resorts, our planned resort destination in the Port Charlotte area
in Southwest Florida, located on 23 acres of waterfront property, a 15-minute drive from our Punta Gorda
Airport (PGD) (one of the strongest cities in our airline network). This past year, from 45 cities, we
carried 1.6 million passengers to and from PGD on 400,000 itineraries. Additionally, we carried 2.5
million passengers to and from St. Pete/Clearwater (PIE), a 90-minute drive from Sunseeker.

In March 2019 we broke ground on Sunseeker Resort and expect to complete construction by the end of
2020. This first phase will contain over 500 hotel rooms and 189 one, two and three bedroom suites as
well as up to 14 different restaurant offerings. John Redmond and team have designed a destination resort
which will captivate vacationers interested in a place they can travel to and enjoy both the weather and the
amenities Sunseeker will offer.

Southwest Florida is a well-known destination with world class weather and waterfront locations. Having
said that, the area’s properties are tired. But prices have not abated. During the 12 months ended June
30th, 2018, we sold 7000 room nights in the Punta Gorda area for an average daily rate of $241 – average
price over a 12-month period. This is an exceptional rate. We budgeted our Sunseeker room rate at

approximately 20% less than what we sold our 3rd party rooms for even though they were built twenty to
thirty years ago versus our brand new facility.

The financial community has criticized our entry into the hotel market – ‘You are an airline; stick to what
you know.’ ‘It is too expensive.’ ‘It is a distraction.’ These statements, taken out of context, are not
inaccurate. But they misunderstand our strategy, namely to offer our leisure customers more opportunity
to purchase products directly from us, for Allegiant to capture a bigger share of our leisure customer’s
spend. This investment allows us to sell a 1st party product as compared to selling someone else’s
products - a middleman if you will in the hotel space. In the past few years, with the prolonged economic
upswing, it has been more difficult to access our 3rd party hotel products. During good times, the owners
of leisure hotels have less product for us at higher prices and during peak times shut us out completely.
During difficult times we can have all the product we want.

Our Sunseeker senior management team, headed by John Redmond, Micah Richins and Jason Shkorupa
has more than 75 years of combined experience in the Las Vegas resort hotel business as senior officers at
MGM Resorts. Our Las Vegas headquarters has provided us with a front row seat on how the world’s
best resort destinations operate. John Redmond, the former CEO of MGM, comes from this Las Vegas
background and has been affiliated with our company since 2009 as a board member and the past two
years as our President. The Board hired John to investigate developing an enhanced hotel strategy for our
travel company. Micah Richins, a 26-year veteran of MGM, oversaw all pricing and marketing for the
more than 40,000 MGM rooms. Jason Shkorupa was in charge of all of the food and beverage at MGM,
had over 4000 people in his group and a budget of more than $400 million annually. Additionally, Jason
has personally developed and opened more than 80 different restaurants and food concepts in his career.

Sunseeker is the first step in this long-term strategy. John and his team have never had access to our
millions of customers and their travel data who fly Allegiant from over 70 plus cities to Southwest
Florida. With our deep and rich customer data we will be able to target these customers and talk directly
to them about their vacation needs, customizing travel packages to fit their needs.
Recently in the hotel world there has been a great deal of discussion about what is termed long stay
products. Airbnb and other online vacation providers have developed a market wherein vacationers are
interested in a no hassle, longer stay, enhanced living product. Home-like offerings are much more in
demand for long-term experiences/vacations. Hotels in the area do not offer this type of product.
Sunseeker will have 189 suite-style units; 39 will be 1800 square foot, three bedroom units, and 75 one
and 75 two bedroom units, all of which will have full kitchens and water views in 9 story buildings.
When compared to other long-term stay options, Sunseeker will be in a class by itself.

We know our potential customers are interested in a long-term stay product. As of this writing, over
11,500 potential customers have responded to our inquiries commenting on what they would be willing to
pay and perhaps more importantly, how long they would be interested in staying. Surprisingly over 11%
would be interested in staying one month or longer; 207 responders have said they would be interested in
staying 6 months or longer. Given we will have just over 250,000 room nights per year, if these 207
different people decided to stay the entire 6 months, they alone would fill up almost 15% of our room
nights.

Based on our construction schedule, we believe we will begin offering for sale Sunseeker rooms and
suites to customers as soon as the 4th quarter this year. We have told investors we expect to run a 90%
occupancy during the first year after Sunseeker opens in late 2020. We believe there will be a
tremendous amount of interest in Sunseeker and as a result it will be in great demand when it opens. We
have seen this pattern in Las Vegas for decades, namely new properties get all the attention and are
immediately full upon opening. We expect the same at Sunseeker.

Continued Excellent Economics from Direct to Customer
We believe we will have the best economics in the industry at Sunseeker. Since the 1990s, Allegiant and
its predecessors have talked directly to their customers. As we said earlier, this direct conversation
provides critical information about customers and their travel habits. But more importantly it provides the
best economics. Most transactions in the travel and leisure business have middlemen between either the
airline or the hotel and the customer. This is particularly true in the hotel industry. Companies such as
Expedia and Priceline dominate hotel distribution, taking as much as 20% of the top line revenue for
every booking they sell. In addition, most hotels also affiliate with known brands such as Marriott or
Hilton which costs another 7% to 8% of revenue for their name.

When we began Allegiant in 2002 we consciously avoided affiliation with online distribution agencies
such as Expedia. As a result, we benefit from both knowing our customer through their travel data as
well as saving the distribution cost associated with this service. Another important feature is it has taught
us to understand how to market and talk to our customers. Today we have a 16-million-person email data
base which is invaluable to us in our relationship with our customers.

Allegiant has become a well-known brand throughout the travel industry. We intend to do the same with
Sunseeker. By branding not only the hotel, but all the restaurants affiliated with Sunseeker, we will have
total control over our property and its products which will provide us with the best economics. If one
adds back the cost of an Expedia and a third party name brand, we expect the EBITDA margin to be in
the mid-30% to approaching 40%. Again, as we have done in the airline space, we plan on leading the
hotel industry in operating and EBITDA margins.

In addition to the benefits from building, owning and operating our Sunseeker resort and the expertise of
our management team and affiliation with Allegiant, we believe we will be able to offer management
contracts to other hotels in the area. Today we allow any hotel in Southwest Florida into our Allegiant
system for sale. But at a certain point, if a hotel is not under management contract, we will not allow
them in our system. It is our belief our Sunseeker Resort will become as well-known as Allegiant in
Southwest Florida. Given this brand awareness plus our software, operational expertise, affiliation with
Allegiant and the ability to license them one or more of our different restaurant brands, we believe will
enable us to become a significant hotel manager in not only Southwest Florida but all of Florida. This
will be our ‘asset light’ hotel effort, potentially very lucrative with minimal to no capital required.

We want to further enhance our leisure product offerings to go with our airline and hotel offerings. We
began offering our golf course management product a few years ago. We now have almost 600 courses
under management. One of the key features of this product is it is cloud based and focused on capturing
customer data for our golf course owners and ourselves. We also opened our first family entertainment
center, known as Allegiant Nonstop. We plan on building a number of these centers in and around our
colder climate origination cities thereby providing us another touch point with our customers.

Lastly we signed on to become the official airline of Minor League Baseball (MiLB) late last year. This
is a terrific leisure past time in the US with 160 minor league teams who attract as many as 40 million
people annually. We will be in upwards of 50 parks this season (2019) and will grow again in 2020.
Many of the teams are located in our origination cities and are a natural fit for our leisure offering. We
will work closely with the teams to provide them with marketing opportunities on Allegiant as well as
provide them with our branded credit card, personalized for each team. Our credit card has been very
successful to date and we are looking for more opportunities to work with leisure-oriented offerings to
distribute our card.

We will begin to stitch all of these products together in the coming year with a branding strategy across
our network including introducing a loyalty program and further promoting our credit card. We expect to

offer a loyalty program later this year and are excited about its ability to enhance our branding efforts
across these many products.

Innovation (Distractions)
As we mentioned earlier, some analysts have dubbed our desire to incorporate more 1st party products
into our business as “distractions.” We certainly understand the argument. Anytime a business deviates
from what it does really well, in pursuit of something new, it could be classified as a distraction.
However, what they call a distraction, we call innovation. Was it a distraction for a root-beer salesman to
enter the hotel business? Or a cartoon-maker to develop a theme park? Absolutely. But what both Mr.
Marriott and Mr. Disney understood was distractions, in pursuit of innovation, and when executed well,
have the potential to elevate a company to new heights.

While we aren’t out to develop the next Marriott or Disney, we believe we are following in the footsteps
of companies like these – who weren’t afraid to innovate. Great organizations always focus on enhancing
revenues from existing customers first and developing new customers second. This requires developing
new products to sell, and creating additional touch points with the customer. All of our leisure offerings
are meant to do exactly that. As you know, selling an airline seat is primarily a commodity business in
which loyalty, particularly in the leisure segment, is tied to the lowest cost. The customer buying that seat,
in most cases, is already planning to spend additional funds, on lodging, food, and other leisure activities
at their destination. We can capture a greater portion of their leisure spend and engender a higher degree
of loyalty – ultimately becoming the “go-to” company for millions of Americans when they think of
leisure travel and leisure activities.

Of course, the ability to both innovate and execute depends, in large part, on the management talent and
resources available. We are extremely mindful of the need to maintain and expand the excellent
management team on the airline side, while growing and developing excellent management and talent on
the hotel/leisure offerings side. We believe we have done that. In fact, as I write this note, I am happy to
say we have the best management team in the company’s history. And that is no small statement given
the quality of management who have worked at Allegiant in years past. This team, virtually all of whom
we have grown internally, is talented, focused and efficient. Pound for pound, this group punches above
its weight better than any group in the airline industry. As investors, you have seen this first hand. The
requirements of the past three years as we have transitioned our fleet, matured our operations, and begun
our strategic move to Allegiant 2.0 including the development of Sunseeker could not have been achieved
without a highly-talented, focused, efficient team.

Studies of successful companies have shown two fundamental attributes: 1) they continuously innovate
making investments in new products which over time grow into future successes which sustains the
business long term, and 2) they grow their own personnel. Growing one’s personnel allows for the
continuity of the all-important culture of successful ventures. Above all else, maintaining the culture of
an organization, assuming it is what it should be, is job one for the CEO and the senior management team.
Growing and grooming one’s personnel from their earliest days provides the necessary continuity found
in all successful organizations.

We could choose to avoid innovation, and thereby avoid these types of distractions. However, we believe
not undertaking these ‘distractions’ may long term put the company in a position where it will have a
much larger distraction, namely more competition and a declining business. These investments in
additional products for our leisure customers, we believe, are the best way to inoculate ourselves against
future competition and to grow earnings. Furthermore, we feel have the management team, the talent,
and the vision to develop and execute our Allegiant 2.0 strategy.

Capital Allocation
In 2018 we spent $350 million of capex, primarily for the purchase of aircraft. We ended the year with 76
Airbus aircraft in our fleet. During the year we added 24 Airbus and retired the last 18 MD80 aircraft at
the end of November, finishing our transition to an Airbus fleet as forecasted. We plan to add back 17
aircraft during this year to bring the fleet count back to our 2018 levels or 93 aircraft by YE2019. Total
aircraft-related purchases for 2019 are estimated to be $400 million. Of the 17 aircraft we will add this
year, 7 were purchased in earlier years and 10 will be purchased this year. We also plan to purchase an
additional 3 aircraft this year for service in 2020. Furthermore, we have contracted with our engine
supplier to purchase 7 new engines. With the aircraft transition behind us, 2020’s aircraft capex should
return to our targeted annual 10% growth levels.

Sunseeker capex will begin in earnest this year. We have budgeted at least $250 to $300 million in
outlays in 2019 of which $245 million will come directly from us and thereafter we will have available a
$175 million commitment from TPG Sixth Street Partners and Affiliates (TPG) for construction financing
primarily in 2020, which should finish the project. This financing has a 4-year term through early 2023
with 2/3 of the proceeds nonrecourse to Allegiant Travel Company. We expect to complete the project in
the 4th quarter of 2020 and will spend approximately $420 million during the construction period.

We ended the quarter with $555 million in cash and short term investments. We will finance the 2019
capital expenditures through a combination of internally generated funds and bank financing for our
aircraft. The narrow-body aircraft financing market is extremely robust and with our industry leading
financial results we have had excellent access to these financing sources. Since 2013, we have developed
relationships with 15 US and international banks from Asia to Europe which have advanced $1.2 billion
of aircraft financing for our Airbus fleet. We are very comfortable in our banking relationships and our
ability to finance our Airbus purchases.

In January 2019, we closed on a $450 million term loan in a dollar-for-dollar refinancing of our high-
yield bond. Under challenging market conditions, we were able to maintain the flexibility to reprice
and/or repay this term loan, while also excluding our aircraft and engines as part of the collateral. In
addition, we estimate we have in excess of $350 million of borrowing capacity, the majority of which is
supported by our 28 unencumbered aircraft or approximately 1/3 of our fleet of aircraft.

Our Culture, Our Principles, Our Team members
Congratulations and thank you to our now 4,000+ team members who come to work every day with the
passion for excellence. We have a proven, seasoned model. Our team members are the backbone of our
culture which has been defined on the principles summarized earlier, with a primary emphasis on safety.
We are focused on offering our customers a value proposition exceeding their expectations. We are
focused on creating a positive, challenging and empowering environment for our team members — one
that is stimulating, where they can grow and prosper in such a way that they naturally thrive and advance
the good of the organization. Financially, we are focused on profits, growth, and the best financial returns
for our shareholders.

These principles continue to serve us well.

Maurice J. Gallagher Jr.
Chairman and CEO
Allegiant Travel Company

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

(Mark One)
È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2018

‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from

Commission File Number 001-33166

Allegiant Travel Company
(Exact Name of Registrant as Specified in Its Charter)

Nevada
(State or Other Jurisdiction of Incorporation or
Organization)

1201 North Town Center Drive
Las Vegas, Nevada
(Address of Principal Executive Offices)

20-4745737
(IRS Employer Identification No.)

89144
(Zip Code)

Registrant’s Telephone Number, Including Area Code: (702) 851-7300
Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common Stock, $0.001 Par Value

Name of each exchange on which registered
Nasdaq Global Select Market

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes È No ‘
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ‘ No È
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act

of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes È No ‘

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data

File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for
such shorter period that the registrant was required to submit and post such files). Yes È No ‘

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. È

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):

Large accelerated filer È
Non-accelerated filer ‘
(Do not check if a smaller reporting company)

Accelerated filer ‘
Smaller reporting company ‘

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with

any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ‘

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ‘ No È
The aggregate market value of common equity held by non-affiliates of the registrant was approximately $1.8 billion computed by reference to

the closing sale price of the common stock on the Nasdaq Global Select Market on June 29, 2018, the last trading day of the registrant’s most
recently completed second fiscal quarter.

The number of shares of the registrant’s common stock outstanding as of the close of business on February 15, 2019 was 16,281,038.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement to be used in connection with the solicitation of proxies to be voted at the registrant’s annual meeting to be held

on June 27, 2019, and to be filed with the Commission subsequent to the date hereof, are incorporated by reference into Part III of this Report on
Form 10-K.

EXHIBIT INDEX IS LOCATED ON PAGE 68.

Allegiant Travel Company
Form 10-K
For the Year Ended December 31, 2018

Table of Contents

Business ................................................................................................................................................................

PART I
1
ITEM 1.
12
ITEM 1A. Risk Factors .........................................................................................................................................................
................................................................................................................................ 19
ITEM 1B. Unresolved Staff Comments
Properties .............................................................................................................................................................. 19
ITEM 2.
ITEM 3.
Legal Proceedings ................................................................................................................................................. 20
ITEM 4. Mine Safety Disclosures ........................................................................................................................................ 21

PART II
ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity

22
Securities ...............................................................................................................................................................
Selected Financial Data ......................................................................................................................................... 25
ITEM 6.
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations ................................ 27
ITEM 7A. Quantitative and Qualitative Disclosures about Market Risk ............................................................................... 37
Financial Statements and Supplementary Data ..................................................................................................... 38
ITEM 8.
ITEM 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ................................ 65
ITEM 9A. Controls and Procedures ....................................................................................................................................... 65
ITEM 9B. Other Information ................................................................................................................................................. 65

PART III
ITEM 10. Directors, Executive Officers and Corporate Governance .................................................................................... 67
ITEM 11. Executive Compensation ...................................................................................................................................... 67
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ............. 67
ITEM 13. Certain Relationships and Related Transactions, and Director Independence ...................................................... 67
ITEM 14. Principal Accountant Fees and Services ............................................................................................................... 67

PART IV
ITEM 15. Exhibits and Financial Statement Schedules ........................................................................................................ 68
ITEM 16. Form 10-K Summary ............................................................................................................................................ 70
Signatures .............................................................................................................................................................. 71

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

PART I

We have made forward-looking statements in this annual report on Form 10-K, and in the section entitled “Management’s
Discussion and Analysis of Financial Condition and Results of Operations,” that are based on our management’s beliefs and
assumptions, and on information currently available to our management. Forward-looking statements include our statements
regarding future expense, capacity growth, expected capital expenditures, number of contracted aircraft to be placed in service
in the future, future expansion of our golf management and family entertainment center businesses, the development and
financing of our Sunseeker Resort, as well as other information concerning future results of operations, business strategies,
financing plans, competitive position, industry environment, potential growth opportunities, the effects of future regulation and
the effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified
by the use of forward-looking terminology such as the words "believe," "expect," "anticipate," "intend," "plan," "estimate,"
"project", "hope" or similar expressions.

Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those
expressed in the forward-looking statements. Important risk factors that could cause our results to differ materially from those
expressed in the forward-looking statements generally may be found in our periodic reports and registration statements filed
with the Securities and Exchange Commission at www.sec.gov. These risk factors include, without limitation, an accident
involving, or problems with, our aircraft, public perception of our safety, our reliance on our automated systems, limitation on
growth after our transition to a single fleet type, our reliance on third parties to deliver aircraft under contract to us on a timely
basis, risk of breach of security of personal data, volatility of fuel costs, labor issues and costs, the ability to obtain regulatory
approvals as needed, the effect of economic conditions on leisure travel, debt covenants and balances, the ability to finance
aircraft under contract, terrorist attacks, risks inherent to airlines, our competitive environment, our reliance on third parties
who provide facilities or services to us, the possible loss of key personnel, economic and other conditions in markets in which
we operate, the ability to successfully finance and develop a resort in Southwest Florida, governmental regulation, increases in
maintenance costs and cyclical and seasonal fluctuations in our operating results.

Any forward-looking statements are based on information available to us today and we undertake no obligation to update
publicly any forward-looking statements, whether as a result of future events, new information or otherwise.

Item 1. Business

Overview

We are a leisure travel company focused on providing travel services and products to residents of under-served cities in the
United States. We were founded in 1997 and, in conjunction with our initial public offering in 2006, we incorporated in the
state of Nevada. 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. In addition, we provide air transportation under fixed fee flight
arrangements. Our developed 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 beginning to open family entertainment
centers in cities in our route network.

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

Scheduled service air transportation. We provide scheduled air transportation on limited-frequency, nonstop flights
predominantly between under-served cities and popular leisure destinations. As of February 15, 2019, our operating fleet
consisted of 79 Airbus A320 series aircraft. As of that date, we were selling travel on 450 routes to 122 cities. In this document,
references to "Airbus A320 series aircraft" are intended to describe both Airbus A319 and A320 aircraft.

Ancillary air-related products and services. 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. 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.

Third party products and services. We offer third party travel products such as hotel rooms and ground transportation (rental
cars and hotel shuttle products) for sale to our passengers. The marketing component of revenue related to our co-branded
credit card is also accounted for in this category.

Fixed fee contract air transportation. We provide air transportation through fixed fee agreements and charter service on a year-
round and ad-hoc basis.

Other revenue. We may choose to temporarily act as a lessor as an avenue to opportunistically acquire aircraft and/or engines.
Upon the expiration of the leases, we have operated the assets ourselves, or are preparing them for future service. We are also
currently leasing spare engines to a third party and may choose to act as lessor temporarily in the future on an opportunistic
basis. This line item also includes revenue from our golf course acquired in 2018 and our management solution to golf courses
around the country.

Our principal executive offices are located at 1201 N. Town Center Drive, Las Vegas, Nevada 89144. Our telephone number is
(702) 851-7300. Our website address is http://www.allegiant.com. We have not incorporated by reference into this annual
report the information on our website and investors should not consider it to be a part of this document. Our website address is
included in this document for reference only. Our annual report, quarterly reports, current reports and amendments to those
reports are made available free of charge through the investor relations section on our website as soon as reasonably practicable
after electronically filed with or furnished to the Securities and Exchange Commission (“SEC”).

Unique Business Model

We have developed a unique business model that 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. Our focus on the leisure customer allows us to eliminate the significant costs
associated with serving a wide variety of customers and to concentrate our product appeal on a customer base which is under-
served by traditional airlines. We have consciously developed a business model which distinguishes us from the traditional
airline approach:

Customer Base:
Network:

Competition:

Schedule:
Distribution:
Fare Strategy:

Traditional Airline Approach

Allegiant Approach

Business and leisure
Primarily large and mid-sized markets

Leisure
Small/medium-sized under-served markets

High

Low

Uniform throughout the week
Sell through various intermediaries
Bundled pricing

Low frequency/variable capacity
Sell only directly to travelers
Unbundled pricing of air-related services
and products

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 405 routes (and currently selling 450
routes) between 99 origination cities and 23 leisure destinations, and serving 42 states and Puerto Rico as of February 15, 2019.
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.

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. Our widespread route network also contributes to the continued growth of our customer base. The below map illustrates
our route network as of February 15, 2019, including service announcements as of that date.

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. We have increased
revenue related to these ancillary items from $5.87 per passenger in 2004 to $49.98 per passenger in 2018. We own and manage
our own air reservation system, which gives us the ability to modify our system to enhance product offerings based on specific
needs, without being dependent on non-customized product upgrades from outside suppliers. We believe the control of our
automation systems has allowed us to be innovators in the industry by providing our customers with a variety of different travel
services and products, and allowing us to seek to increase revenues through testing of alternative revenue management
approaches.

We believe the following strengths from our unique business model allow us to maintain a competitive advantage in the
markets we serve:

Focus on leisure traffic from small and medium-sized cities

We believe small and medium-sized cities represent a large, under-served market, especially for leisure travel. Prior to the
initiation of our service, leisure travelers from these markets had limited desirable options to reach leisure destinations because
existing carriers are generally focused on connecting business customers through their hub-and-spoke networks.

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.

By focusing primarily on under-served cities and routes, we believe we avoid the intense competition in high traffic domestic
air corridors. In most of our small and medium-sized city markets, travelers previously faced high airfares and cumbersome
connections (long drives) to major airports in order to reach our leisure destinations. Based on published data from the U.S.
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. Additionally, many major carriers have reduced service to medium-
sized cities which we believe they no longer consider to be core hubs.

Capacity management

We actively manage our seat capacity to match leisure demand patterns. 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.

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 2018, during our peak demand period in March, we averaged 8.3
system block hours per aircraft per day while in September, our lowest month for demand, we averaged 4.8 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. For example, the leisure destination of Palm Springs, CA, is
more desirable for our customers from Bellingham, WA during winter months. Therefore, we seasonally decrease the frequency
of our Bellingham-Palm Springs flights in the summer, and increase flights per week in the winter. Unlike other carriers which
provide a fairly consistent number of flights every day of the week, we concentrate our flights on high leisure demand travel
days and fly a smaller portion of our schedule on low demand days such as 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. We manage our capacity with a goal of
being profitable on each route.

Low cost structure

We believe a low cost structure is essential to competitive success in the airline industry. Our operating expense per available
seat mile ("CASM") was 9.56¢ in 2018 and 9.41¢ in 2017. Excluding the cost of fuel, our operating CASM was 6.57¢ in 2018
and also excluding fuel plus a one-time impairment charge to our MD-80 fleet, our operating CASM was 6.63¢ in 2017.

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

Low Aircraft Ownership Costs. We achieve low aircraft ownership costs by purchasing primarily used aircraft with meaningful
remaining useful lives, at reduced prices. As of February 15, 2019, we own all but five of our aircraft and believe that we
properly balance lower aircraft acquisition costs and operating costs to minimize our total costs. Although our 13 newly
manufactured Airbus A320 series aircraft have higher purchase prices, we expect the benefits of a greater number of seats,
better fuel efficiency, and longer depreciable lives will make these aircraft efficient additions to our fleet. In addition, our
network has evolved such that we are maintaining higher levels of daily utilization on the newly manufactured aircraft. As of
February 15, 2019, our operating fleet consists of 79 Airbus A320 series aircraft, of which 74 are owned by the Company.

Highly Productive Workforce. Our high level of employee productivity is due to our cost-driven scheduling, fewer
unproductive labor work rules, and the effective use of automation and part-time employees. Although the number of our full-
time equivalent employees per operating aircraft increased annually from 2015 to 2017 (largely as a result of the fleet
transition), this number remained consistent from 2017 to 2018. In an effort to control costs, we also outsource major
maintenance, stations and other functions to reliable third-party service providers.

Simple product. We believe offering a simple product is critical to achieving low operating costs. As such, we sell only nonstop
flights; we do not code-share or interline with other carriers; we have a single class cabin; we do not provide any free catered
items - everything on board is for sale; we do not provide cargo or mail services; and we do not offer other perks such as airport
lounges.

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). Our customers can only purchase travel at our airport
ticket counters or, for a fee, on our website or through our telephone reservation center. The purchase of travel through our
website is the least expensive form of distribution for us and accounted for 93.8 percent of our scheduled service revenue
during 2018.

Small and medium-sized city market airports. Our business model focuses on residents of small and medium-sized cities in the
United States. Typically, the airports in these cities have lower operating costs than airports in larger cities. These lower costs
are driven by less expensive passenger facilities, landing, and ground service charges. In addition to inexpensive airport costs,
many of our airports provide marketing support.

Cost-driven schedule. We aim to build our scheduled service so that our crews and aircraft return to base each night. This
allows us to maximize crew efficiency, and more cost-effectively manage maintenance, spare aircraft and spare parts.
Additionally, this structure allows us to add or subtract markets served by a base without incremental costs. We believe leisure
travelers are generally less concerned about departure and arrival times than business travelers, so we are able to schedule
flights at times that enable us to reduce costs while remaining desirable to our leisure customers.

Ancillary product offerings

We believe many leisure travelers are concerned primarily with purchasing air travel at the least expensive price. As such, we
have unbundled the air transportation product by charging fees for services many U.S. airlines have historically bundled in their
product offering. This pricing structure allows us to target travelers who are most concerned with low fare travel while also
allowing travelers to customize their experience with us by purchasing only the additional conveniences they value. For
example, we do not offer complimentary advance seat assignments; however, customers who value this product can purchase
advance seat assignments for a small incremental cost. In addition, snacks and beverages are sold individually on the aircraft,
allowing passengers to purchase only items they value.

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.

Our third party product offerings give our customers the opportunity to purchase hotel rooms, rental cars and airport shuttle
service. Our third party offerings are available to customers based on our agreements with various travel and leisure companies.
For example, we have an exclusive agreement with Enterprise Holdings Inc. for the sale of rental cars packaged with air travel,
which generated approximately 64 percent of our third party products revenue in 2018. The pricing of each product and our
margin can be adjusted based on customer demand because our customers purchase travel directly through our booking engine.

Financial position

As of December 31, 2018, we had $447.5 million of unrestricted cash, cash equivalents and investment securities, and total
debt and capital lease obligations of $1.3 billion. As of February 15, 2019, 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.

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

Routes and schedules

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 15, 2019 are summarized below (includes 405 routes we are currently serving, and 45 new routes which will begin
service in 2019):

Routes to Orlando ..................................................................................................................................................................... 70

Routes to Tampa/St. Petersburg .................................................................................................................................................. 53

Routes to Las Vegas .................................................................................................................................................................... 53

Routes to Punta Gorda .............................................................................................................................................................. 43

Routes to Phoenix ..................................................................................................................................................................... 43

Routes to Destin ....................................................................................................................................................................... 29

Routes to Los Angeles .............................................................................................................................................................. 26

Other routes .............................................................................................................................................................................. 133

Total routes ..................................................................................................................................................................................... 450

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

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.

Competition

The airline industry is highly competitive. Passenger demand and fare levels have historically been influenced by, among other
things, the general state of the economy, international events, fuel prices, industry capacity, and pricing actions taken by other
airlines. The principal competitive factors in the airline industry are price, schedule, customer service, routes served, types of
aircraft, safety record and reputation, code-sharing relationships, and frequent flyer programs.

Our competitors include legacy airlines, low cost carriers ("LCCs"), ultra-low cost carriers ("ULCC"), regional airlines, new
entrant airlines, and other forms of transportation to a much lesser extent. Many of the airlines are larger, have significantly
greater financial resources, are better known, and have more established reputations than us. In a limited number of cases,
following our entry into a market, competitors have chosen to add service, reduce their fares, or both. Competitors may also
choose to enter after we have developed a market.

We believe our under-served city strategy has reduced the intensity of competition we might otherwise face. As of February 15,
2019, we are the only mainline domestic scheduled carrier operating out of the Orlando Sanford International Airport, Phoenix-
Mesa Gateway Airport, Punta Gorda Airport, and St. Petersburg Airport. Although no other mainline domestic scheduled
carriers operate in these airports, most U.S. airlines serve the major airports for Orlando, Phoenix, and Tampa. In addition,
many U.S. airlines serve our other leisure destinations. As a result, there is potential for increased competition on our routes.

As of February 15, 2019, we face mainline competition on approximately 25 percent of our operating routes. We compete with
Southwest Airlines on 61 routes, Frontier Airlines on 60 routes, Spirit Airlines on 27 routes, American Airlines on ten routes,
Delta Airlines on ten routes, JetBlue Airlines on eight routes, United Airlines on six routes, and Sun Country Airlines on two
routes. We may also experience additional competition based on recent route announcements of other airlines.

Indirectly, we compete with Southwest and other carriers that provide nonstop service to our leisure destinations from airports
near our cities. We also face indirect competition from legacy carriers offering hub-and-spoke connections to our markets,
although these fares tend to be substantially higher, with much longer elapsed travel times. Several airlines also offer
competitive one-stop service from the medium-sized cities we serve.

In our fixed fee operations, we compete with other scheduled airlines in addition to independent passenger charter airlines. We
also compete with aircraft owned or controlled by large tour companies. The basis of competition in the fixed fee market is
cost, equipment capabilities, service, reputation, and schedule flexibility.

Data Security

We continue to invest heavily in cyber-security, cyber-risk, and privacy initiatives. We employ experienced staff dedicated to
cyber-security and cyber-risk analysis, process and technology. We continue to evaluate and proactively implement new
preventive and detective processes and technologies including forward-looking threat intelligence and data-centric security
measures.

An example of our adoption of advanced security technologies is the use of Format Preserving Encryption to protect e-
commerce payment card transactions. In essence, we do not store any credit card data, but rather we use stateless tokenization.

Aircraft Fuel

The cost of fuel is volatile, as it is subject to many economic and geopolitical factors we can neither control nor predict.
Significant increases in fuel costs could materially affect our operating results and profitability. 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.

Employees

As of December 31, 2018, we employed 3,901 full-time equivalent employees, which consisted of 3,643 full-time and 516 part-
time employees. Full-time equivalent employees consisted of approximately 860 pilots, 1,160 flight attendants, 260 airport
operations personnel, 330 mechanics, 170 reservation agents, 40 flight dispatchers, and 1,080 management and other personnel.

Salary and benefits expense was our second largest expense in 2018, having represented 29 percent of total operating expenses.
The collective bargaining agreement with our Flight Attendants went into effect in December 2017.

Our relations with labor organizations representing our employee groups are governed by the Railway Labor Act ("RLA").
Under this act, if direct negotiations do not result in an agreement, either party may request the National Mediation Board
("NMB") to appoint a federal mediator. If no agreement is reached in these mediated discussions, the NMB may offer binding
arbitration to the parties. If either party rejects binding arbitration, a “cooling off” period begins. At the end of this “cooling-
off” period, the parties may engage in self-help, which among other events, could result in a strike from employees or for us to
hire new employees to replace any striking workers. The table below identifies the status of pending collective bargaining
negotiations with employee groups:

Employee Group

Representative

Status of Agreement

Flight Dispatchers

Maintenance
Technicians

International Brotherhood of
Teamsters, Airline Division, Local
986

Elected representation in October 2016. Negotiations are
ongoing.

Elected representation in March 2018. Negotiations began in
January 2019.

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

If we are unable to reach a labor agreement with any employee group, they may seek to institute work interruptions or
stoppages. We have not previously experienced any work interruptions or stoppages from our non-unionized or unionized
employee groups.

Aircraft Maintenance

We have a Federal Aviation Administration ("FAA") approved maintenance program, which is administered by our
maintenance department headquartered in Las Vegas. Technicians employed by us have appropriate experience and hold
required licenses issued by the FAA. We provide them with comprehensive training and maintain our aircraft in accordance
with FAA regulations. The maintenance performed on our aircraft can be divided into three general categories: line
maintenance, major maintenance, and component and engine overhaul and repair. Line maintenance is generally performed by
our personnel in certain cities of our network and by contractors elsewhere. We contract with outside organizations to provide
major maintenance and component and engine overhaul and repair. We have chosen not to invest in facilities or equipment to
perform our own major maintenance, engine overhaul or component work. Our management closely supervises all maintenance
functions performed by our personnel and contractors employed by us, and by outside organizations. In addition to the
maintenance contractors we presently utilize, we believe there are sufficient qualified alternative providers of maintenance
services that we can use to satisfy our ongoing maintenance needs.

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. 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. In 2018, we donated over $0.4 million in aircraft parts to a Las Vegas high school in support of
its aviation magnet program.

Non-Airline Initiatives

Sunseeker Resort

We are developing a hotel resort in Southwest Florida. We have purchased approximately 24 acres on the harbor in Port
Charlotte, Florida for the construction of Sunseeker Resort - Charlotte Harbor. We have also purchased a nearby golf course we
plan to market with the resort. Our current plans include the construction of a 500-room hotel and two towers offering an
estimated 180 one, two and three bedroom suites, bar and restaurant options, and other amenities.

We intend to begin construction on the project in the first quarter 2019 with completion of the hotel in late 2020. We intend to
finance a significant portion of the project. Upon completion, we expect we will continue to own the hotel and all food and
beverage options on the property.

This location was particularly attractive to us because of the number of flights we operate to the Punta Gorda airport, which is a
short drive from the resort site. During 2018, we operated over 9,000 flights to Punta Gorda from our small and medium-sized
cities and carried approximately 1.4 million passengers. The resort is also within driving distance from the nearby airports in
Fort Myers, Sarasota and St. Petersburg. During 2018, we operated over 14,000 flights to St. Petersburg from our small and
medium-sized cities and carried more than 2.0 million passengers to that destination. In addition, we currently offer service to
Sarasota from three cities, and have recently announced service from nine additional cities, with routes planned to start in the
first two quarters of 2019. Southwest Florida also attracts a substantial number of tourists by car.

Teesnap

We have worked to adapt our “buy-on-board” technology into a golf course management solution. As of December 31, 2018,
we were providing these services to approximately 590 golf courses in 48 states throughout the country. To date, the financial
results have not been significant to our overall performance.

Family Entertainment Centers

Our first family entertainment center opened in January 2019 in Clearfield, UT, near the Ogden, UT airport. It features games,
attractions, and food. We plan to expand our family entertainment center offerings in locations near airports we serve. Plans for
future locations of entertainment centers include Warren, MI (near the Flint, MI airport), and Fort Wayne, IN (near the Fort
Wayne, IN airport).

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.

Insurance

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. The policies principally provide coverage for public
liability, war-risk, passenger liability, baggage and cargo liability, property damage, including coverages for loss or damage to
our flight equipment, directors and officers, workers’ compensation, and cyber security insurance. There is no assurance,
however, that the amount of insurance we carry will be sufficient to protect us from material loss in all cases. Available
commercial insurance in the future could be more expensive, could have material differences in coverage than is currently
provided, and may not be adequate to protect us from risk of loss.

Government Regulation

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.

DOT. 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. 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 a particular community
if such cessation would leave the community without scheduled airline service.

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). We also
hold DOT authority to engage in charter air transportation of passengers, property, and mail on a domestic and international
basis.

FAA. The FAA primarily regulates flight operations and safety, including matters such as airworthiness and maintenance
requirements for aircraft, pilot, mechanic, dispatcher and flight attendant training and certification, flight and duty time
limitations, and air traffic control. The FAA requires each commercial airline to obtain and hold an FAA air carrier certificate.
This certificate, in combination with operation specifications issued to the airline by the FAA, authorizes the airline to operate

at specific airports using aircraft certificated by the FAA. We have and maintain in effect FAA certificates of airworthiness for
all of our aircraft, and we hold the necessary FAA authority to fly to all of the cities we currently serve. Like all U.S.
certificated carriers, our provision of scheduled service to certain destinations may require specific governmental authorization.
The FAA has the authority to investigate all matters within its purview, to modify, suspend or revoke our authority to provide
air transportation, to approve or disapprove the addition of aircraft to our operation specifications, and to modify, suspend or
revoke FAA licenses issued to individual personnel, for failure to comply with FAA regulations. The FAA can assess civil
penalties for such failures and institute proceedings for the collection of monetary fines after notice and hearing. The FAA also
has authority to seek criminal sanctions. The FAA can suspend or revoke our authority to provide air transportation on an
emergency basis, without notice and hearing, if, in the FAA’s judgment, safety requires such action. A legal right to an
independent, expedited review of such FAA action exists. Emergency suspensions or revocations have been upheld with few
exceptions. 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.

Security. 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. The TSA has enforcement powers
similar to the DOT’s and FAA’s described above. It also has the authority to issue regulations, including in cases of emergency,
the authority to do so without advance notice, including issuance of a grounding order as occurred on September 11, 2001.

Aviation Taxes and Fees. The authority of the federal government to collect most types of aviation taxes, which are used, in
part, to finance the nation’s airport and air traffic control systems, and the authority of the FAA to expend those funds must be
periodically reauthorized by the U.S. Congress. On October 5, 2018, the FAA Reauthorization Act of 2018 was signed into law
extending certain commercial aviation taxes (known generally as Federal Excise Taxes or "FET") through September 30, 2023.
All carriers are required to collect these taxes from passengers and pass them through to the federal government.

In addition to FET, there are federal fees related to services provided by the TSA, and, in the case of international flights, U.S.
Customs and Border Protection ("CBP"), U.S. Citizenship and Immigration Services (“CIS”), and the U.S. Department of
Agriculture's Animal and Plant Health Inspection Service ("APHIS"). There are also FAA-approved Passenger Facility Charges
("PFCs") imposed by most of the airports we serve. Like FET, air carriers are required to collect these fees from passengers and
pass them through to the respective federal agency or airport authority. These fees do not need to be reauthorized, although
their amounts may be revised periodically.

In 2019 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. By thus increasing the overall price charged to passengers, such action
could lessen demand for air travel or force carriers, including us, to lower fares to maintain demand. Also in 2019 or thereafter,
Congress may consider privatization of the U.S air traffic control ("ATC") system with user fee based funding. The effect of
such action, if adopted as law, on our operating costs is unknown. Additionally, federal funding to airports and/or airport bond
financing could be affected through future legislation, which could result in higher fees, rates, and charges at many of the
airports we serve.

Environmental. We are subject to various federal, state and local laws and regulations relating to the protection of the
environment and affecting matters such as aircraft engine emissions, aircraft noise emissions, and the discharge or disposal of
materials and chemicals, which laws and regulations are administered by numerous state and federal agencies. These agencies
have enforcement powers similar to the DOT’s and FAA’s described above. In addition, we may be required to conduct an
environmental review of the effects projected from the addition of our service at airports.

In July 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.

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. These restrictions can include limiting nighttime operations, directing specific aircraft operational
procedures during takeoff and initial climb, and limiting the overall number of flights at an airport. None of the airports we
serve currently imposes restrictions on the number of flights or hours of operation that have a meaningful impact on our
operations. It is possible one or more such airports may impose additional future restrictions with or without advance notice,
which may impact our operations.

Foreign Ownership. To maintain our DOT and FAA certificates, our airline operating subsidiary and we (as the airline’s
holding company) must qualify continuously as citizens of the United States within the meaning of U.S. aeronautical laws and
regulations. 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 that not more than 25 percent of our voting stock is owned or controlled by non-U.S. citizens. The
amount of non-voting stock that may be owned or controlled by non-U.S. citizens is strictly limited as well. We believe we are
in compliance with these ownership and control criteria.

Other Regulations. Air carriers are subject to certain provisions of federal laws and regulations governing communications
because of their extensive use of radio and other communication facilities, and are required to obtain an aeronautical radio
license from the Federal Communications Commission (“FCC”). To the extent we are subject to FCC requirements, we intend
to continue to comply with those requirements.

The quality of water used for drinking and hand-washing aboard aircraft is subject to regulation by the EPA. To the extent we
are subject to EPA requirements, we intend to continue to comply with those requirements.

Working conditions of cabin crewmembers while onboard aircraft are subject to regulation by the Occupational Safety and
Health Administration ("OSHA") of the Department of Labor. To the extent we are subject to OSHA requirements, we intend to
continue to comply with those requirements.

Our operations may become subject to additional federal requirements in the future under certain circumstances. During a
period of past fuel scarcity, air carrier access to jet fuel was subject to allocation regulations promulgated by the Department of
Energy. Changes to the federal excise tax and other government fees imposed on air transportation have been proposed and
implemented from time to time and may result in an increased tax burden for airlines and their passengers.

We are also subject to state and local laws, regulations, and ordinances at locations where we operate and to the rules and
regulations of various local authorities that operate the airports we serve. None of the airports in the cities in which we operate
have slot control, gate availability, or curfews that pose meaningful limitations on our operations. However, some airports we
serve have short runways that require us to operate some flights at less than full capacity.

International air transportation, whether provided on a scheduled or charter basis, is subject to the laws, rules, regulations, and
licensing requirements of the foreign countries to, from, and over which the international flights operate. Foreign laws, rules,
regulations and licensing requirements governing air transportation are generally similar, in principle, to the regulatory scheme
of the United States as described above, although in some cases foreign requirements are comparatively less onerous and in
others, more onerous. We must comply with the laws, rules and regulations of each country to, from, or over which we operate.
International flights are also subject to U.S. Customs and Border Protection, Immigration and Agriculture requirements and the
requirements of equivalent foreign governmental agencies.

Future Laws and Regulations. Congress, the DOT, the FAA, the TSA, and other governmental agencies have under
consideration, and in the future may consider and adopt, new laws, regulations, interpretations and policies regarding a wide
variety of matters that could affect, directly or indirectly, our operations, ownership, and profitability. We cannot predict what
other matters might be considered in the future by the FAA, the DOT, the TSA, other agencies, or Congress, nor can we judge
what impact, if any, the implementation of any of these proposals or changes might have on our business.

Civil Reserve Air Fleet. We are a participant in the Civil Reserve Air Fleet (“CRAF”) Program which affords the U.S.
Department of Defense the right to charter our aircraft during national emergencies when the need for military airlift exceeds

the capability of available military resources. During the Persian Gulf War of 1990-91 and on other occasions, CRAF carriers
were required to permit the military to use their aircraft in this manner. As a result of our CRAF participation, we are eligible to
bid on and be awarded peacetime airlift contracts with the military.

Item 1A. Risk Factors

Readers should carefully consider the risks described below before making an investment decision. Our business, financial
condition or results of operations could be materially and adversely affected by any of these risks. The trading price of our
common stock could decline due to any of these risks, and investors may lose all or part of their investment.

Risks Related to Allegiant

Our reputation and financial results could be harmed in the event of an accident or restrictions affecting aircraft in our
fleet.

As of February 15, 2019, our operating fleet consists exclusively of 79 Airbus A320 series aircraft, of which all but 13 were
acquired used. Our used aircraft range from 9 to 22 years from their manufacture date at February 15, 2019. All of our MD-80
series aircraft were retired as of the end of November 2018.

An accident involving one of our aircraft, even if fully insured, could result in a public perception that we are less safe or
reliable than other airlines, which would harm our business. Further, there is no assurance that the amount of insurance we
carry would be sufficient to protect us from material loss. Because we are smaller than most airlines, an accident would likely
adversely affect us to a greater degree than a larger, more established airline.

In-flight emergencies affecting our aircraft, and resulting media attention, could also contribute to a public perception regarding
safety concerns and a loss of business.

The FAA could suspend or restrict the use of our aircraft in the event of actual or perceived mechanical problems or safety
issues while it conducts its own investigation, whether involving our aircraft or another U.S. or foreign airline’s aircraft. Our
business could also be significantly harmed if the public avoids flying our aircraft due to an adverse perception of the aircraft
we utilize because of safety concerns or other problems, whether real or perceived, or in the event of an accident involving
these aircraft.

A breach in the security of personal data could severely damage our reputation, cause considerable additional costs and
result in regulatory penalties.

We receive, retain, and transmit certain personal information about our customers. Our on-line operations also rely on the
secure transmission of this customer data. We use third-party systems, software, and tools in order to protect the customer data
we obtain through the course of our business. Although we use these security measures to protect this customer information, a
compromise of our physical or network security systems through a cyber-security attack would create the risk that our
customers’ personal information might be obtained by unauthorized persons. A compromise in our security systems could
adversely affect our reputation, which could impact customers' willingness to do business with us using credit or debit cards,
disrupt operations, and could also result in litigation or the imposition of penalties. In addition, it could be costly to remediate.

The way businesses handle customer data is subject to increasing legislation and regulation typically intended to protect the
privacy of customer data received, retained, and transmitted. We could be adversely affected if we fail to comply with existing
rules or practices, or if legislation or regulations are expanded to require changes in our business practices. These privacy
developments are difficult to anticipate and could adversely affect our business, financial condition, and results of operations.

The successful development of our first Sunseeker Resort is dependent on commercial and economic factors, some of
which are beyond our control.

We are developing a hotel resort in Southwest Florida with construction expected to begin in the first quarter of 2019 and
completion of the hotel expected in late 2020. The successful development of the project will be subject to various risks
inherent in construction projects (such as securing sufficient financing on a timely basis, cost overruns and construction delays)
as well as risks of gaining sufficient interest from vacationers to stay in our hotel or suites, the desirability of the project’s
location, competition and the ability to profitably operate the hotel and related offerings once open.

We rely heavily on automated systems to operate our business and any failure of these systems could harm our business.

We depend on automated systems to operate our business, including our air reservation system, telecommunication systems,
our website, and other automated systems. Our continuing initiatives to enhance the capabilities of our automated systems
could increase the risk of automation failures. Any failure by us to handle our automation needs could negatively affect our
internet sales (on which we rely heavily) and customer service, and result in lost revenues and increased costs.

Our website and reservation system must be able to accommodate a high volume of traffic and deliver necessary functionality
to support our operations. Our automated systems cannot be completely protected against events that are beyond our control,
such as natural disasters, telecommunications failures, malware, ransom ware, security breaches or cyber-security attacks.
Although we have implemented security measures, have information systems disaster recovery plans in place and carry cyber-
security insurance, we cannot assure investors that these measures are adequate to prevent disruptions or that the insurance
would cover all losses. Substantial or repeated website, reservations system, or telecommunication system failures could
decrease the attractiveness of our services. Any disruption to these systems could result in the loss of important data and
revenue, increase in expenses, and harm to our business.

Increases in fuel prices or unavailability of fuel would harm our business and profitability.

Fuel costs constitute a significant portion of our total operating expenses, representing 31.3 percent, 26.8 percent and 25.6
percent during 2018, 2017 and 2016, respectively. Significant increases in fuel costs have negatively affected our operating
results in the past, and future fuel cost volatility could materially affect our financial condition and results of operations.

Both the cost and availability of aircraft fuel are subject to many economic and political factors and events occurring
throughout the world over which we have no control. Meteorological events may also result in short-term disruptions in the
fuel supply. Aircraft fuel availability is also subject to periods of market surplus and shortage, and is affected by demand for
heating oil, gasoline, and other petroleum products. Due to the effect of these events on the price and availability of aircraft
fuel, our ability to control this cost is limited, and the price and future availability of fuel cannot be predicted with any degree
of certainty. Due to the high percentage of our operating costs represented by fuel, a relatively small increase in the price of fuel
could have a significantly negative impact on our operating costs. A fuel supply shortage or higher fuel prices could result in
reduction of our service during the period affected.

We have made a business decision not to purchase financial derivatives to hedge against increases in the cost of fuel. This
decision may make our operating results more vulnerable to the impact of fuel price increases.

Increased labor costs could result from industry conditions and could be impacted by labor-related disruptions.

Labor costs constituted approximately 29 percent of our total operating costs in 2018, our second largest expense line item.
Industry demand for pilots and the supply of available pilots will impact our labor costs as we seek to retain our employees and
compete against other airlines for qualified personnel.

Further, we have four employee groups (pilots, flight attendants, flight dispatchers and maintenance technicians) which have
elected union representation. These groups represent approximately 57 percent of our employees. In 2016, we reached a
collective bargaining agreement with the International Brotherhood of Teamsters, representing our pilots, which became
effective as of August 1, 2016. The agreement provides for enhancements to pay scales, benefits, and limited work rules.

An agreement with the Transport Workers Union for the flight attendant group was approved in December 2017, which will
also increase costs over the five-year term of the contract. We are also still in the negotiation process with our flight dispatchers
and our maintenance technicians, for which negotiations commenced in February 2017 and January 2019, respectively.

Union contracts with these, or other, work groups could put additional pressure on our labor costs.

If we are unable to reach agreement on the terms of collective bargaining agreements in the future, or we experience wide-
spread employee dissatisfaction, we could be subject to work slowdowns or stoppages. Any of these events could have an
adverse effect on our operations and future results.

Increases in taxes could impact demand for our services.

In 2019, Congress may consider legislation that could increase the amount of Federal Excise Tax and/or one or more of the
other government fees imposed on air travel. By increasing the overall price charged to passengers, any additional taxes or fees
could lessen the demand for air travel or force carriers to lower fares to maintain demand. Increased taxes and fees per
passenger may impact our load factors more than other airlines as our lower fares are designed to stimulate demand for our
services.

FAA limitations could impact our ability to grow in the future.

As with all airlines, the FAA must approve all aircraft and cities to be added to our operation specifications. Although there are
no restrictions in place at the current time, future limitations from the FAA could potentially hinder our growth.

Unfavorable economic conditions may adversely affect travel from our markets to our leisure destinations.

The airline industry is particularly sensitive to changes in economic conditions. Unfavorable U.S. economic conditions have
historically driven changes in travel patterns and have resulted in reduced discretionary spending for leisure travel. Unfavorable
economic conditions could impact demand for airline travel in our small and medium-sized cities to our leisure destinations.
During difficult economic times, we may be unable to raise prices in response to fuel cost increases, labor, or other operating
costs, which could adversely affect our results of operations and financial condition.

Our indebtedness, debt service obligations and other commitments could adversely affect our business,
financial condition and results of operations as well as limit our ability to react to changes in the economy or our
industry and prevent us from servicing our debt and operating our business.

Our debt and capital lease obligations as of December 31, 2018 totaled $1.3 billion. This indebtedness and other commitments
with debt service and fixed charge obligations could:

• make it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with
the obligations of any of our debt instruments, including financial and other restrictive covenants, could result in an
event of default under agreements governing our indebtedness;

• make it more difficult to satisfy our other future obligations, including our obligations to pay the purchase price in

•

respect of current and future aircraft purchase contracts;
require us to dedicate a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce
the funds available to fund internal growth through working capital, capital expenditures, and for other purposes;
limit our flexibility in planning for, or reacting to, changes in our business, the competitive environment, legislation
and our industry;

• make us more vulnerable to adverse changes in our business, economic, industry, market or competitive conditions

•
•
•
•

•

and adverse changes in government regulation;
expose us to interest rate and pricing increases on indebtedness and financing arrangements;
restrict us from pursuing strategic acquisitions or exploiting certain business opportunities;
subject us to a greater risk of non-compliance with financial and other restrictive covenants in financing arrangements;
limit, among other things, our ability to obtain additional financing for working capital, capital expenditures, debt
service requirements, execution of our business strategy and other purposes or raise equity capital in the future and
increasing the costs of such additional financings; and
place us at a competitive disadvantage compared to our competitors who may not be as highly leveraged or who have
less debt in relation to cash flow.

In addition, our ability to service our indebtedness will depend on our future performance, which will be affected by prevailing
economic conditions and financial, business, regulatory and other factors. Many of these factors are beyond our control and
could materially adversely affect our business, results of operations, cash flows and financial condition.

At maturity, or in the event of an acceleration of payment obligations, we may be unable to pay our outstanding indebtedness
with our cash and cash equivalents then on hand. In such event, we would be required to seek alternative sources of funding,
which may not be available on commercially reasonable terms, terms as favorable as our current agreements, or at all. If we are
unable to refinance our indebtedness or find alternative means of financing our operations, we may be required to take actions
that are inconsistent with our current business practices or strategy.

Covenants in our senior secured term loan facility could limit how we conduct our business, which could affect our long-
term growth potential.

On February 5, 2019, we borrowed $450.0 million under a Credit and Guaranty Agreement (the “Term Loan”). The Term Loan
contains covenants limiting our ability to, among other things, make certain types of restricted payments, including paying
dividends, incur debt or liens, merge or consolidate with others, dispose of assets, enter into certain transactions with affiliates,
engage in certain business activities or make certain investments. In addition, the Credit and Guaranty Agreement contains
financial covenants, including requiring us, at the end of each calendar quarter, to maintain a maximum total leverage ratio of
5.00:1.00 and to maintain a minimum aggregate amount of liquidity of $300.0 million. We have pledged our assets to secure
the Term Loan with the exceptions of aircraft and aircraft engines, the Sunseeker Resort and certain other exceptions. This will
limit our ability to obtain debt secured by these pledged assets while the Term Loan is outstanding.

The Credit and Guaranty Agreement contains various events of default (including failure to comply with the covenants under
the Credit and Guaranty Agreement), and upon an event of default the lenders may, subject to various cure rights, require the
immediate payment of all amounts outstanding under the Term Loan.

As a result of these restrictive covenants, we may be limited in how we conduct business, and we may be unable to raise
additional debt or equity financing to operate during difficult times or to take advantage of new business opportunities.

Any inability to obtain financing for aircraft under contract could harm our fleet retirement and growth plan.

We typically finance our aircraft through debt financing after purchase. Although we believe debt financing will be available
for the aircraft we will acquire, we cannot provide assurance that we will be able to secure such financing on terms attractive to
us or at all. To the extent we cannot secure such financing on acceptable terms or at all, we may be required to modify our
aircraft acquisition plans, incur higher than anticipated financing costs, or use more of our cash balances for
aircraft acquisitions than we currently expect.

Our maintenance costs may increase as our fleet ages.

In general, the cost to maintain aircraft increases as they age, and exceeds the cost to maintain newer aircraft. FAA regulations,
including the Aging Aircraft Airworthiness Directives, require additional and enhanced maintenance inspections for older
aircraft. These regulations can directly impact the frequency of inspections as an aircraft ages, and vary by aircraft or engine
type, depending on the unique characteristics of each aircraft and/or engine.

Engine overhaul expenses for our Airbus A320 series aircraft will be significantly higher than similar expenses for our MD-80
aircraft, which were all retired as of the end of November 2018. These major maintenance expenses for the Airbus aircraft are
capitalized and amortized as part of depreciation and amortization expense.

In addition, we may be required to comply with any future law changes, regulations, or airworthiness directives. We cannot
assure investors our maintenance costs will not exceed our expectations.

We rely on third parties to provide us with facilities, aircraft and services that are integral to our business.

We have entered into agreements with third-party contractors to provide certain facilities and services required for our
operations, such as aircraft maintenance, ground handling, baggage services, and ticket counter space. Our reliance on others to
provide essential services on our behalf gives us less control over costs and the efficiency, timeliness and quality of contract
services.

We also rely on the owners of aircraft under contract to be able to deliver, or redeliver, aircraft in accordance with the terms of
executed agreements in a timely manner. Our planned initiation of service with these aircraft in the future could be adversely
affected if the third parties fail to perform as contractually obligated.

We may not be able to maintain or grow our ancillary revenues.

Our business strategy includes expanding our ancillary products and services. We cannot ensure that passengers will pay for
additional ancillary products and services we offer in the future, or that they will continue to pay for the ancillary products and
services we currently offer. Regulatory changes could also adversely affect our ancillary revenue opportunities. Failure to
maintain our ancillary revenues could have a material adverse effect on our results of operations, financial condition and stock
price. If we are unable to maintain and grow these revenues, we may be unable to execute our strategy to continue to offer low
base fares in order to stimulate demand.

Our business could be harmed if we lose the services of our key personnel.

Our business depends upon the efforts of our chief executive officer, Maurice J. Gallagher, Jr., president, John Redmond, and a
small number of senior management and operating personnel. We do not currently maintain key-man life insurance on
Mr. Gallagher, Mr. Redmond or any other executives. We may have difficulty replacing management or other key personnel
who leave and, therefore, the loss of the services of any of these individuals could harm our business.

Risks Associated with the Airline and Travel Industry

The airline industry is highly competitive and future competition in our under-served markets could harm our business.

The airline industry is highly competitive. The smaller cities we serve on a scheduled basis have traditionally attracted
considerably less attention from our potential competitors than larger markets, and in most of our small city markets, we are the
only provider of nonstop service to our leisure destinations. In 2014, we began service to medium-sized cities which we believe
to be under-served for nonstop service to our leisure destinations, and as of February 15, 2019, approximately 37 percent of our
routes are serving these medium-sized cities. If other airlines begin to provide nonstop services to and from these markets, or
otherwise target these markets, the increase in the amount of direct or indirect competition could cause us to reconsider service
to affected markets or could impact our margins.

A future act of terrorism, the threat of such acts, or escalation of U.S. military involvement overseas could adversely
affect our industry.

Even if not directed at the airline industry, a future act of terrorism, the threat of such acts, or escalation of U.S. military
involvement overseas could have an adverse effect on the airline industry. In the event of a terrorist attack, the industry would
likely experience significantly reduced demand for travel services. These actions, or consequences resulting from these actions,
would likely harm our business and the airline and travel industry. If we are called on to provide aircraft in the event of national
emergencies as a result of our participation in the CRAF program, our operations would be disrupted.

Changes in government laws and regulations imposing additional requirements and restrictions on our operations could
increase our operating costs.

Airlines are subject to extensive regulatory and legal compliance requirements, both domestically and internationally, that
involve significant costs. In the last several years, the FAA has issued a number of directives and other regulations relating to
the maintenance and operation of aircraft that have required us to incur significant expenditures. FAA requirements cover,
among other things, retirement of older aircraft, fleet integration of newer aircraft, security measures, collision avoidance
systems, airborne windshear avoidance systems, noise abatement, weight and payload limits, assumed average passenger
weight, and increased inspection and maintenance procedures to be conducted on aging aircraft. Proposals have also been made
to re-regulate the airline industry in varying degrees. The future cost of complying with these and other laws, rules and
regulations, including new federal legislative and DOT regulatory requirements in the consumer-protection area, cannot be
predicted and could significantly increase our costs of doing business.

In recent years, the DOT has adopted revisions and expansions to a variety of its consumer protection regulations and policies.
Additional new regulations or policies may be proposed or take effect in 2019 or thereafter, whether on DOT's initiative or as
directed by Congress. We are not able to predict the impact of any new consumer protection rules on our business, though we
monitor the progress of potential rulings. We are subject to fines or other enforcement actions if the DOT believes we are not in
compliance with these or other rules or regulations or with the federal consumer protection laws administered by the DOT.
Even if our practices are found to be in compliance with the DOT rules, we could incur substantial costs defending our
practices.

In November 2013, the FAA proposed revisions to the method by which air carriers calculate and control aircraft weight-and-
balance. The proposal is based on a continuing increase in the average weight of persons in the United States. The FAA
accepted industry comments on its proposal as amended, through mid-2017, but to date, no decision has been issued. If the
revisions are adopted as proposed by the FAA, the ability of carriers to rely on average weights for this purpose will be
complicated significantly, additional costs may result, and we may be required to carry less than full loads on certain flights.

Congress also may consider privatization of the U.S. Air Traffic Control system with user fee based funding; the potential
effect on our operating costs is unknown. Additionally, federal funding to airports and/or airport bond financing could be
affected through future deficit reduction legislation, which could result in higher fees, rates, and charges at many of the airports
we serve.

In the past, legislation to address climate change issues has been introduced in the U.S. Congress, including a proposal to
require transportation fuel producers and importers to acquire market-based allowances to offset the emissions resulting from
combustion of their fuels. We cannot predict whether this or any similar legislation will be introduced or pass the Congress or,
if enacted into law, how it would apply to the airline industry. In addition, the EPA concluded in 2016 that current and projected
concentrations of greenhouse gases emitted by various aircraft, including all of the aircraft we and other 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. These developments and any additional legislation or regulations
addressing climate change are likely to increase our costs of doing business in the future and the increases could be material.

With respect to aircraft weight and balance, consumer protection, climate change, taxation, and other matters affecting the
airline industry, whether the source of new requirements is legislative or regulatory, increased costs will adversely affect our
profitability if we are unable to pass the costs on to our customers or adjust our operations to offset the new costs.

Airlines are often affected by factors beyond their control, including air traffic congestion, weather conditions,
increased security measures, the outbreak of disease and a reduction in demand to any particular market, any of which
could harm our operating results and financial condition.

Like other airlines, we are subject to delays caused by factors beyond our control, including air traffic congestion at airports
and en route, adverse weather conditions, increased security measures, and the outbreak of disease. Delays frustrate passengers
and increase costs, which in turn could affect profitability. During periods of fog, snow, rain, storms or other adverse weather
conditions, flights may be canceled or significantly delayed. Cancellations or delays due to weather conditions, traffic control
problems, and breaches in security could harm our operating results and financial condition. Contagious illness and fear of
contagion could have a material adverse impact on the airline industry. Any general reduction in airline passenger traffic as a
result of an outbreak of disease or other travel advisories could dampen demand for our services even if not applicable to our
markets. Resulting decreases in passenger volume would harm our load factors, could increase our cost per passenger and
adversely affect our profitability.

A substantial proportion of our scheduled flights have Las Vegas, Orlando, Phoenix, Tampa/St. Petersburg, Los Angeles, Punta
Gorda, or Destin as either their destination or origin. Our business could be harmed by any circumstances causing a reduction
in demand for air transportation to one or more of these markets, or our other leisure destinations, such as adverse changes in
local economic conditions, negative public perception of the particular city, significant price increases, or the impact of future
terrorist attacks or natural disasters.

Risks Related to Our Stock Price

The market price of our common stock may be volatile, which could cause the value of an investment in our stock to
decline.

The market price of our common stock may fluctuate substantially due to a variety of factors, many of which are beyond our
control, including:

•

fuel price volatility, and the effect of economic and geopolitical factors and worldwide oil supply and consumption on
fuel availability
announcements concerning our competitors, the airline industry, or the economy in general
strategic actions by us or our competitors, such as acquisitions or restructurings

•
•
• media reports and publications about the safety of our aircraft or the aircraft types we operate
•
•
•

new regulatory pronouncements and changes in regulatory guidelines
announcements concerning our business strategy
our ability to grow service in the future as rapidly as the market anticipates as we continue to add more cities to our
network
general and industry-specific economic conditions
changes in financial estimates or recommendations by securities analysts
substantial sales of our common stock or other actions by investors with significant shareholdings
additional issuances of our common stock
labor work actions
general market conditions

•
•
•
•
•
•

The stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance
of particular companies. These types of broad market fluctuations may adversely affect the trading price of our common stock.

In the past, stockholders have sometimes instituted securities class action litigation against companies following periods of
volatility in the market price of their securities and we have been sued as a result of adverse publicity and stock price declines
during 2018. This or similar litigation could result in substantial costs, divert management’s attention and resources, and harm
our business or results of operations.

Other companies may have difficulty acquiring us, even if doing so would benefit our stockholders, due to provisions
under our corporate charter and bylaws, as well as Nevada law.

Provisions in our articles of incorporation, our bylaws, and under Nevada law could make it more difficult for other companies
to acquire us, even if doing so would benefit our stockholders. Our articles of incorporation and bylaws contain the following
provisions, among others, which may inhibit an acquisition of our company by a third party:

•
•
•

advance notification procedures for matters to be brought before stockholder meetings
a limitation on who may call stockholder meetings
the ability of our board of directors to issue up to 5,000,000 shares of preferred stock without a stockholder vote

We are also subject to provisions of Nevada law that prohibit us from engaging in any business combination with any
“interested stockholder,” meaning generally that a stockholder who beneficially owns 10 percent or more of our stock cannot
acquire us for a period of time after the date this person became an interested stockholder, unless various conditions are met,
such as approval of the transaction by our board of directors and stockholders.

Under U.S. laws and the regulations of the DOT, U.S. citizens must effectively control us. As a result, our president and at least
two-thirds of our board of directors must be U.S. citizens and not more than 25 percent of our voting stock may be owned by
non-U.S. citizens (although subject to DOT approval, the percent of foreign economic ownership may be as high as 49
percent). Any of these restrictions could have the effect of delaying or preventing a change in control.

Our corporate charter and bylaws include provisions limiting voting by non-U.S. citizens.

To comply with restrictions imposed by federal law on foreign ownership of U.S. airlines, our articles of incorporation and
bylaws restrict voting of shares of our capital stock by non-U.S. citizens. The restrictions imposed by federal law currently
require no more than 25 percent of our stock be voted, directly or indirectly, by persons who are not U.S. citizens, and that our
president and at least two-thirds of the members of our board of directors be U.S. citizens. Our bylaws provide no shares of our
capital stock may be voted by or at the direction of non-U.S. citizens unless such shares are registered on a separate stock
record, which we refer to as the foreign stock record. Our bylaws further provide no shares of our capital stock will be
registered on the foreign stock record if the amount so registered would exceed the foreign ownership restrictions imposed by
federal law. Registration on the foreign stock record is made in chronological order based on the date we receive a written
request for registration. Non-U.S. citizens will be able to own and vote shares of our common stock only if the combined
ownership by all non-U.S. citizens does not violate these requirements.

Item 1B. Unresolved Staff Comments

Not Applicable.

Item 2. Properties

Aircraft

The following table summarizes our total in-service aircraft as of December 31, 2018:

Aircraft Type
Airbus A319 (2) ..........................................................................
Airbus A320 (3) (4) ......................................................................
Total aircraft ................................................................................

Owned (1)

32
44
76

Seating
Capacity
(per aircraft)
156
177/186

Age Range
(years)

Average Age
in Years

12-15
1-22

13.5
12.3

(1) Refer to Item 8 – Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Note 6 –

Long-Term Debt for discussion of notes payable collateralized by our aircraft.

(2) Does not include five aircraft of which we had taken delivery but not placed into service as of December 31, 2018.
(3) Does not include two aircraft of which we had taken delivery but not placed into service as of December 31, 2018.
(4) Includes five aircraft under capital lease.

The below table includes the number of aircraft expected in service by March 31, 2019:

A319 ....................................................................................................................................................................................
...................................................................................................................................................................................
A320
Total ..................................................................................................................................................................................................

37
46
83

Ground Facilities

We lease facilities at the majority of our leisure destinations and several other airports we serve. Our leases for terminal
passenger service facilities (which include ticket counter and gate space, and operations support areas) generally have a term
ranging from month-to-month to several years, and may typically be terminated with a 30 to 90 day notice. We have also
entered into use agreements at each of the airports we serve which provide for non-exclusive use of runways, taxiways, and
other facilities. Landing fees under these agreements are based on the number of landings and weight of the aircraft.

We have operational bases at airports for many of the leisure destinations we serve, as well as Bellingham International Airport,
Pittsburgh International Airport, Cincinnati/Northern Kentucky International Airport, Indianapolis International Airport,
McGhee Tyson Airport, and Asheville Regional Airport. We are also developing a base in Grand Rapids, MI which is scheduled
to open in June 2019. Our operational base in Myrtle Beach is maintained on a seasonal basis.

We use leased facilities at our operational bases to perform line maintenance, overnight parking of aircraft, and other
operations' support. We lease additional space in cargo areas at McCarran International Airport, Orlando Sanford International
Airport and Phoenix-Mesa Gateway Airport for our primary line maintenance operations. We also lease approximately 100,000
square feet of warehouse space in Las Vegas, Orlando Sanford, and Phoenix-Mesa for aircraft spare parts and supplies.

The following details the airport locations we utilize as operational bases as of February 15, 2019:

Airport

Asheville Regional Airport

Bellingham International Airport

Cincinnati/Northern Kentucky International Airport

Destin-Fort Walton Beach Airport

Ft. Lauderdale-Hollywood International Airport

Indianapolis International Airport

Los Angeles International Airport

McCarran International Airport

McGhee Tyson Airport

Myrtle Beach International Airport

Oakland International Airport

Orlando Sanford International Airport

Phoenix-Mesa Gateway Airport

Pittsburgh International Airport

Punta Gorda Airport

St. Petersburg-Clearwater International Airport

Location

Fletcher, North Carolina

Bellingham, Washington

Hebron, Kentucky

Destin, Florida

Ft. Lauderdale, Florida

Indianapolis, Indiana

Los Angeles, California

Las Vegas, Nevada

Knoxville, Tennessee

Myrtle Beach, South Carolina

Oakland, California

Sanford, Florida

Mesa, Arizona

Pittsburgh, Pennsylvania

Punta Gorda, Florida

St. Petersburg, Florida

We believe we have sufficient access to gate space for current and presently contemplated future operations at all airports we
serve.

Our primary corporate offices are located in Las Vegas, where we own approximately 11 acres of property containing
approximately 211,000 square feet of office space. To date, we occupy approximately 182,000 square feet and the remaining
space will be used for growth and expansion as needed.

We also lease and/or own other facilities in Las Vegas and Florida, with approximately 350,000 square feet of space used for
training and other corporate purposes. These leases expire between 2019 and 2036.

Non-airline Initiatives

We own approximately 24 acres on the harbor in Port Charlotte, Florida for the construction of Sunseeker Resort - Charlotte
Harbor. Additionally, we have purchased a golf course consisting of 156 acres and an 18,000 square foot club house in Lake
Suzy, Florida.

We also have leased approximately 200,000 square feet in buildings in Clearfield, UT and Warren, MI for our family
entertainment centers, and have purchased a property in Fort Wayne, IN containing an additional 65,500 square feet on 11
acres.

Item 3. Legal Proceedings

We are subject to certain legal and administrative actions we consider routine to our business activities. We believe the ultimate
outcome of any pending legal or administrative matters will not have a material adverse effect on our financial position,
liquidity, or results of operations.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity
Securities

Market for our common stock

Our common stock is quoted on the Nasdaq Global Select Market (symbol: ALGT). On February 15, 2019, the last sale price of
our common stock was $139.21 per share. The following table sets forth the range of high and low sale prices for our common
stock for the periods indicated.

Period
2018

1st Quarter ........................................................................................................................... $
2nd Quarter .......................................................................................................................... $
3rd Quarter .......................................................................................................................... $
4th Quarter ........................................................................................................................... $

2017

1st Quarter ........................................................................................................................... $
2nd Quarter .......................................................................................................................... $
3rd Quarter ........................................................................................................................... $
4th Quarter ........................................................................................................................... $

High

Low

181.45
177.00
147.00
135.48

182.25
169.15
147.00
162.35

$
$
$
$

147.50
135.75
117.30
98.21

153.40
134.65
111.54
125.95

As of February 15, 2019, there were 199 holders of record of our common stock. Because many of our shares are held by
brokers and other institutions on behalf of shareholders, we are unable to estimate the total number of beneficial holders.

Securities Authorized for Issuance under Equity Compensation Plans

The following table provides information regarding options, warrants and other rights to acquire equity securities under our
equity compensation plans as of December 31, 2018:

Number of
Securities to be
Issued upon
Exercise of
Outstanding
Options,
Warrants and
Rights (2)

Weighted-
Average
Exercise
Price of
Outstanding
Options,
Warrants
and Rights

Number of
Securities
Remaining
Available for
Future Issuance
under Equity
Compensation
Plans (3)

Equity compensation plans approved by security holders (1) ..................

9,737

108.59

1,398,808

(1) There are no securities to be issued under any equity compensation plans not approved by our security holders.
(2) The shares shown as being issuable under equity compensation plans exclude unvested restricted stock awards of 196,194

as all restricted stock awards are deemed to have been issued, and exclude all outstanding stock appreciation rights
("SARs") which are settled in cash.

(3) Our 2016 Long-Term Incentive Plan applies a fungible ratio such that a full-value award, such as a restricted stock grant or
restricted stock unit grant, will be counted at two times its number for purposes of the plan limit. As a result, a maximum
of 699,404 shares of restricted stock are remaining for future issuance under the 2016 Long-Term Incentive Plan.

Dividend Policy

In 2018, we continued the payment of a regular quarterly dividend we began in 2016. The current dividend is set at $0.70 per
share for each quarter, bringing total regular cash dividends declared, and paid, in 2018 to $2.80 per share. Regular cash
dividends declared and paid in 2017 and 2016 were $2.80 per share and $2.40 per share, respectively. In January 2016, we also
paid a $1.65 per share special dividend that was declared in December 2015.

In addition to our regular cash dividends, our Board of Directors periodically considers the payment of special cash dividends
based on our results of operations, cash flow generation, liquidity, capital commitments, loan covenant compliance and other
relevant factors.

At December 31, 2018, the indenture governing our senior unsecured notes contained limitations on restricted payments, which
include stock repurchases and cash dividends. These restrictions were eliminated pursuant to the third supplemental indenture
finalized in February 2019.

The Credit and Guaranty Agreement we entered into in February 2019 in connection with the Term Loan provides that absent
an event of default, regularly scheduled dividends in any four-quarter period may be paid up to the lesser of $75.0 million or 20
percent of our consolidated EBITDA (as defined in the Credit and Guaranty Agreement) for the previous four-quarter period.

Our Repurchases of Equity Securities

The following table reflects repurchases of our common stock during the fourth quarter 2018:

Period
October ........................................................
November ....................................................
December .....................................................
Total ..................................................................

Total Number
of Shares
Purchased (1)
234
41
None
275

Average Price
Paid per
Share

Total Number of
Shares Purchased as
Part of our Publicly
Announced Plan

117.06
121.98
N/A
117.79

None
None
None
None

Approximate
Dollar Value of
Shares that
May Yet be
Purchased
Under the Plans or
Programs (in
thousands) (2)

100,000

(1) Reflects shares repurchased from employees who vested a portion of their restricted stock grants. These share repurchases
were made at the election of each employee pursuant to an offer to repurchase by us. In each case, the shares repurchased
constituted a portion of vested shares necessary to satisfy income tax withholding requirements.

(2) Represents the remaining dollar amount of open market purchases of our common stock which has been authorized by the

Board under a share repurchase program.

Stock Price Performance Graph

The following graph compares the cumulative total shareholder return on our common stock with the cumulative total return on
the Nasdaq Composite Index and the AMEX Airline Index since December 31, 2013. The graph assumes that the value of the
investment in our common stock and each index was $100 on December 31, 2013 and that all dividends are reinvested. Stock
price performance presented for the historical periods presented is not necessarily indicative of future results.

180

170

160

150

140

130

120

110

100

12/31/13

12/31/14

12/31/15

12/31/16

12/31/17

12/31/18

ALGT

NASDAQ Composite Index

AMEX Airline Index

ALGT ................................................. $
Nasdaq Composite Index ................... $
AMEX Airline Index .......................... $

12/31/2013
100.00
100.00
100.00

12/31/2014
144.94
$
113.40
$
149.36
$

12/31/2015
164.15
$
119.89
$
124.70
$

12/31/2016
165.07
$
128.89
$
159.03
$

12/31/2017
156.68
$
165.29
$
167.34
$

12/31/2018
107.62
$
158.87
$
129.94
$

The stock price performance graph shall not be deemed incorporated by reference by any general statement incorporating by
reference this annual report on Form 10-K into any filing under the Securities Act of 1933 or under the Securities Exchange Act
of 1934, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed
filed under such Acts.

Item 6. Selected Financial Data

The following financial information for each of the five years ended December 31, has been derived from our audited
consolidated financial statements. Readers should consider the selected consolidated financial data set forth below along with
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial
statements and related notes.

We adopted ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)" (the "New Revenue Standard") and ASU
2018-02, "Income Statement—Reporting Comprehensive Income (Topic 220) effective January 1, 2018. As such, certain prior
period results have been recast. See Note 2 to the Consolidated Financial Statements for further information.

FINANCIAL DATA (in thousands except per share
amounts):

2018

Total operating revenue ............................................... $1,667,447
Total operating expenses ............................................. 1,423,988
243,459
Operating income ........................................................
44,141
Total other expense (1) ..................................................
Income before income taxes .......................................
199,318
Net income .................................................................. $ 161,802
Earnings per share to common shareholders (2):

10.02
Basic ......................................................................... $
10.00
Diluted ......................................................................
Cash dividends declared per share...............................
2.80
Total assets ................................................................... $2,498,668
Total long-term debt, net of related costs..................... 1,271,733
690,321
Shareholders' equity ....................................................

For the Year Ended December 31,

2017 (3)
As recast
$1,511,203
1,280,573
230,630
31,623
199,007
$ 198,148

12.14
12.13
2.80
$2,180,157
1,164,892
553,311

2016
As recast
$1,378,942
1,006,375
372,567
24,600
347,967
$ 220,866

13.31
13.29
2.40
$1,671,576
808,274
475,740

2015

2014 (3)

$1,262,188
890,486
371,702
24,983
346,719
$ 220,374

12.97
12.94
2.75
$1,358,331
641,678
350,005

$1,137,046
979,701
157,345
20,214
137,131
86,689

4.87
4.86
2.50
$1,240,986
588,794
294,065

(1) Net of capitalized interest for 2018, 2017, and 2016 in the amounts of $2.4 million, $3.2 million, and $1.8 million,

respectively.

(2) Our unvested restricted stock awards are considered participating securities as they receive non-forfeitable rights to cash

dividends at the same rate as common stock. The Basic and Diluted earnings per share for the periods presented reflect the
two-class method mandated by accounting guidance for the calculation of earnings per share. The two-class method adjusts
both the net income and shares used in the calculation. Application of the two-class method did not have a significant
impact on the basic or diluted earnings per share for the periods presented.

(3) Operating expenses, operating income, net income and earnings per share in these years were impacted by special items:

(a) a non-cash impairment charge of $35.3 million to our MD-80 fleet and related assets in the fourth quarter of 2017; (b) a
$74.7 million income tax benefit from the remeasurement of deferred taxes due to the passage of the Tax Cuts and Jobs Act
of 2017; and (c) a non-cash impairment charge of $43.3 million to six Boeing 757-200 aircraft and related assets in the
fourth quarter of 2014.

OPERATING DATA: (unaudited)

2018

82.6%
9.56
2.99
6.57
77.82
101,212
230,123
868

91.0
6.9
3,901
191,471
2.33

Total system statistics:
Passengers .............................................................. 13,750,199
Revenue passenger miles (RPMs) (thousands) ...... 12,307,247
Available seat miles (ASMs) (thousands) .............. 14,899,874
Load factor .............................................................
Operating expense per ASM (CASM) (cents) (1) (2) ...
Fuel expense per ASM (cents) (2) ...........................
Operating CASM, excluding fuel (cents) (1) ..........
ASMs per gallon of fuel .........................................
Departures ..............................................................
Block hours ............................................................
Average stage length (miles) ..................................
Average number of operating aircraft during
period .....................................................................
Average block hours per aircraft per day ...............
Full-time equivalent employees at end of period ...
Fuel gallons consumed (thousands) .......................
Average fuel cost per gallon (2) ...............................$
Scheduled service statistics:
Passengers .............................................................. 13,606,103
Revenue passenger miles (RPMs) (thousands) ...... 12,145,601
Available seat miles (ASMs) (thousands) .............. 14,340,674
Load factor .............................................................
Departures ..............................................................
Block hours ............................................................
Total scheduled service revenue per ASM
(TRASM) (cents) (3) ...............................................
Average fare - scheduled service (4) .......................$
Average fare - ancillary air-related charges (4) .......$
Average fare - third party products ........................$
Average fare - total .................................................$
Average stage length (miles) ..................................
Fuel gallons consumed (thousands) .......................
Percent of sales through website during period .....
OTHER DATA: (unaudited)
409,164
Hotel room nights ...................................................
Rental car days ....................................................... 1,823,451
590
Golf courses under agreement with Teesnap ..........

11.10
67.01
45.71
4.27
116.99
875
183,798

96,554
220,760

84.7%

93.8%

For the Year Ended December 31,

2017
As recast

2016
As recast

2015

2014

12,310,122
11,106,772
13,612,003

11,128,191
10,282,827
12,375,505

9,500,611
8,944,952
10,526,610

8,154,357
7,825,962
8,945,616

81.6%
9.41
2.52
6.89
72.96
93,061
212,405
870

83.1%
8.13
2.08
6.05
71.62
82,341
190,706
889

85.0%
8.45
2.64
5.81
70.20
68,653
160,431
900

87.5%
10.95
4.34
6.61
69.38
56,961
135,572
918

87.3
6.7
3,752
186,563
1.84

83.3
6.3
3,416
172,796
1.49

74.3
5.9
2,846
149,951
1.86

68.8
5.4
2,411
128,933
3.01

12,138,146
10,901,161
13,031,824

11,003,864
10,130,675
11,921,733

9,355,097
8,821,908
10,236,075

8,017,442
7,711,696
8,693,631

83.7%

85.0%

86.2%

88.7%

88,432
202,752

10.93
67.90
45.14
4.34
117.38
876
178,298

$
$
$
$

78,747
183,290

11.02
69.86
45.47
4.08
119.41
895
166,528

$
$
$
$

65,683
155,403

11.82
78.63
46.43
4.29
129.35
915
145,654

$
$
$
$

54,440
131,210

12.66
91.30
41.37
4.56
137.23
934
125,173

$
$
$
$

94.0%

94.2%

95.1%

93.8%

390,986
1,415,901
296

439,942
1,502,326
186

452,272
1,204,982
50

528,329
916,640
3

(1)

(2)

Includes effects of special items in 2017 and 2014.

Includes effect of fuel tax refund of $8.3 million (approximately $0.05 per gallon) in 2016.

(3) Various components of this measure do not have a direct correlation to ASMs. These figures are provided on a per ASM

basis so as to facilitate comparisons with airlines reporting revenues on a per ASM basis.

(4) Reflects division of passenger revenue between scheduled service and air-related charges in the Company's booking

path.

The following terms used in this section and elsewhere in this annual report have the meanings indicated below:

“Available seat miles” or “ASMs” represents the number of seats available for passengers multiplied by the number of miles the
seats are flown.

“Average fuel cost per gallon” represents total aircraft fuel expense for our total system divided by the total number of fuel
gallons consumed in our total system.

“Average stage length” represents the average number of miles flown per flight.

“Block hours” represents the number of hours during which the aircraft is in revenue service, measured from the time of gate
departure until the time of gate arrival at the destination.

“Load factor” represents the percentage of aircraft seating capacity utilized (revenue passenger miles divided by available seat
miles).

“Operating expense per ASM” or “CASM” represents operating expenses divided by available seat miles.

“Operating CASM, excluding fuel” represents operating expenses, less aircraft fuel, divided by available seat miles. Although
Operating CASM, excluding fuel, is not a calculation based on generally accepted accounting principles and should not be
considered as an alternative to Operating Expenses as an indicator of our financial performance, this statistic provides
management and investors the ability to measure and monitor our cost performance absent fuel price volatility. Both the cost
and availability of fuel are subject to many economic and political factors and therefore are beyond our control.

“Passengers” represents the total number of passengers flown on all flight segments.

“Revenue passenger miles” or “RPMs” represents the number of miles flown by revenue passengers.

“Total scheduled service revenue per ASM” or “TRASM” represents passenger revenue divided by scheduled service available
seat miles.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis presents factors that had a material effect on our results of operations during the years
ended December 31, 2018, 2017 and 2016. Also discussed is our financial position as of December 31, 2018 and 2017.
Investors should read this discussion in conjunction with our consolidated financial statements, including the notes thereto,
appearing elsewhere in this annual report. This discussion and analysis contains forward-looking statements. Please refer to
the section entitled “Disclosure Regarding Forward-Looking Statements” at the beginning of this annual report on Form 10-K
for a discussion of the uncertainties, risks and assumptions associated with these statements.

AIRCRAFT

Operating Fleet

The following table sets forth the number and type of aircraft in service and operated by us as of the dates indicated:

December 31, 2018 December 31, 2017 December 31, 2016

A320 (1) (2) .........................................................................

A319 (3) .............................................................................

MD-80 ...............................................................................

B757-200 ...........................................................................

Total .........................................................................................

—
—
76

—

(1) Does not include two aircraft for which we have taken delivery as of December 31, 2018.
(2) Includes five aircraft under capital lease as of December 31, 2018.
(3) Does not include five aircraft for which we have taken delivery as of December 31, 2018.

As of February 15, 2019, we are party to forward purchase agreements for 14 Airbus A320 series aircraft. We expect delivery
of 11 of these aircraft in 2019, two in 2020, and one in 2022. In January 2019, we took delivery of two aircraft for which we
had a purchase agreement as of December 31, 2018. Refer to Part I - Item 2 - Properties for further detail regarding our aircraft
fleet. We continuously consider aircraft acquisitions on an opportunistic basis.

NETWORK

We use profitability management tools to manage capacity and route expansion through optimization of our flight schedule to,
among other things, better match demand in certain markets. We continually adjust our network through the addition of new
markets and routes, adjusting the frequencies into existing markets, and exiting under-performing markets, as we seek to
achieve and maintain profitability on each route we serve.

As of February 15, 2019 and including recent service announcements, we were selling 450 routes.

Our route network as of December 31, 2018 represents a 4.0 percent increase in the number of routes flown compared to the
end of 2017, and the number of medium-sized cities served is now up to 24 since we began service to these larger cities in
2014.

The following table shows the number of leisure destinations and cities served as of the dates indicated (includes cities served
seasonally):

Leisure destinations ..........................................................
Origination cities ...............................................................
Total cities ..........................................................................

December 31, 2018 December 31, 2017 December 31, 2016
21
97
118

23
98
121

19
101
120

Total routes ..........................................................................

417

401

360

TRENDS

As of the end of November 2018, we have fully transitioned to an all-Airbus A320 series fleet with the addition of 24 Airbus
A320 series aircraft and the retirement of 37 MD-80 aircraft during 2018. We expect to add 17 additional Airbus aircraft to our
operating fleet by the end of 2019.

An all-Airbus fleet is expected to bring about many improvements, including greater fuel efficiency and enhanced reliability,
which should allow us to reduce spare counts and fly more during peak days. Airbus aircraft flew 82.1 percent of our scheduled
service ASMs in 2018, compared to 59.7 percent in 2017, which drove a 6.7 percent increase in fuel efficiency (measured as
ASMs per gallon).

Throughout the transition to an all-Airbus fleet, we have also seen improvements in our operations, which is a trend expected to
continue now that the transition is complete. Our controllable flight completion rate for 2018 was 99.7 percent (among the best
in the industry) and our on-time arrival rate increased by nearly 4 percentage points.

In 2016, we announced certain initiatives intended to increase our profitability by 2020. These include fuel cost savings from
increased ASM production per gallon of fuel, efforts to decrease cost per ASM excluding fuel, revenue from our credit card
program, eCommerce initiatives and a new pricing engine, increased revenues from fixed fee flying, the modification of certain
of our Airbus aircraft to 186 seats and greater fleet productivity.

In 2018, we increased ASM production per gallon of fuel (which we estimate saved approximately $30 million of fuel cost) and
increased revenue over 2016 levels of fixed fee flying (over $18 million of increased fixed fee revenues). In addition, we have
recognized approximately $33 million in third party product revenue from our co-brand credit card program since its
introduction in 2016. We maintained additional personnel and incurred higher training expenses in connection with the fleet
transition, and expect our labor efficiency to improve, and our training expenses to decline, as we now have an all-Airbus fleet.

As of February 15, 2019, we were offering service on 151 medium-sized city routes compared to 140 as of the same date in
2018. We initiated service on nine new network routes in the fourth quarter of 2018, including service into three new cities:

Saint George, UT; Tucson, AZ; and Albany, NY. Our recently announced routes also include new service to Anchorage, AK in
2019.

Of the 450 routes we were selling as of February 15, 2019, approximately 75 percent are not competitive routes, and of the
recent service announcements, approximately 85 percent are not competitive routes. We are continually expanding our network,
and have identified approximately 600 potential routes for future growth.

In November 2018, we opened a new operational base in Knoxville, TN and announced plans to open a new operational base in
Grand Rapids, MI in June 2019, which will be our 16th year-round base of operations.

Planning and development for Sunseeker Resort - Charlotte Harbor is ongoing. Construction is expected to begin in the first
quarter of 2019, with the opening of the resort planned for late 2020.

We believe that disclosing non-airline information separately will allow investors to better understand and analyze our principal
operating performance, and we intend to begin reporting distinct operating segments (airline and non-airline) in 2019.

Our flight dispatchers voted for union representation by the International Brotherhood of Teamsters ("IBT") and negotiations
began in February 2017. The dispatchers failed to ratify a tentative agreement in May 2018 and, as a result, negotiations
continue. There are approximately 40 employees in this operating group.

In March 2018, our maintenance technicians, who represent approximately nine percent of our total employee base
(approximately 330 employees), voted for union representation by the IBT. Negotiations for an agreement with this group
began in late January 2019.

Any labor actions whether following an inability to reach a collective bargaining agreement with any employee group or
otherwise could impact our operations during the continuance of any such activity. Any labor agreement reached following
negotiations would also likely increase our operating costs.

Our Operating Expenses

A brief description of the items included in our operating expense line items follows.

Aircraft fuel expense includes the cost of aircraft fuel, fuel taxes, into plane fees and airport fuel flowage, storage or through-
put fees.

Salary and benefits expense includes wages, salaries, and employee bonuses, sales commissions for in-flight personnel, as well
as expenses associated with employee benefit plans, stock compensation expense related to equity grants, and employer payroll
taxes.

Station operations expense includes the fees charged by airports for the use or lease of airport facilities and fees charged by
third party vendors for ground handling services, commissary expenses and other related services.

Depreciation and amortization expense includes the depreciation of all owned fixed assets, including aircraft and engines. Also
included is the amortization of major maintenance expenses on our Airbus A320 series aircraft and engines, which are
capitalized under the deferral method of accounting and amortized as a component of depreciation and amortization expense
over the estimated period until the next scheduled major maintenance event.

Maintenance and repairs expense includes all parts, materials and spares required to maintain our aircraft as well as major
maintenance costs for our MD-80 aircraft (which have all been retired as of the end of November 2018). Also included are fees
for repairs performed by third party vendors.

Sales and marketing expense includes all advertising, promotional expenses, sponsorships, travel agent commissions and debit
and credit card processing fees associated with the sale of scheduled service and air-related ancillary charges.

Aircraft lease rentals expense consists of the cost for sub-service which may be contracted out in conjunction with operational
disruptions.

Other expense includes travel and training expenses for crews and ground personnel, facility lease expenses, professional fees,
personal property taxes, information technology consulting, non-salary expenses for non-airline initiatives (including Teesnap,
29

Sunseeker Resort - Charlotte Harbor, and the family entertainment centers), the cost of passenger liability insurance, aircraft
hull insurance and all other insurance policies excluding employee welfare insurance. Additionally, this expense includes loss
on disposals of aircraft and other equipment disposals, and all other administrative and operational overhead expenses not
included in other line items above.

Special charge includes the non-cash impairment charge taken in 2017 on our MD-80 series aircraft, engines and related assets.

RESULTS OF OPERATIONS

2018 compared to 2017

Operating Revenue

Passenger revenue. Passenger revenue now includes both scheduled service revenue and ancillary air-related revenue, due to
the implementation of the New Revenue Standard. Passenger revenue for 2018 increased 11.8 percent compared with 2017.
The increase was driven primarily by a 9.2 percent increase in scheduled service departures and a 1.0 percentage point increase
in load factor, which resulted in a 12.1 percent increase in scheduled service passengers. The higher number of passengers
resulted in year-over-year increases in ancillary revenue from products such as baggage, seat and convenience fees.

Third party revenue. Ancillary third party revenue increased 10.2 percent in 2018 from 2017, due primarily to an increase in
net revenue from rental cars resulting from the increase in scheduled service passengers. Our co-branded credit card program
continues to contribute to revenue and we expect meaningful incremental revenues in 2019 and going forward.

Fixed fee contract revenue. Fixed fee contract revenue for 2018 increased 3.2 percent compared with 2017 due to an increase
in ad-hoc charter flying as well as continuing fixed fee flying for Apple Vacations and the Department of Defense.

Other revenue. Other revenue for 2018 decreased $12.4 million, primarily as 12 aircraft generating lease revenue from a
European carrier during 2017 were redelivered to us throughout 2017 and 2018. The effects of this decrease were partially
offset by increases in revenue from our golf course management solution as well as revenue generated from the leasing of spare
RB-211 engines.

Operating Expenses

We primarily evaluate our expense management by comparing our costs per passenger and per ASM across different periods,
which enables us to assess trends in each expense category. The following table presents operating expense per passenger for
the indicated periods. The table also presents operating expense per passenger, excluding fuel, a statistic which provides
management and investors the ability to measure and monitor our cost performance absent fuel price volatility. Both the cost
and availability of fuel are subject to many economic and political factors beyond our control.

The following table presents operating expense per passenger for the indicated periods.

For the Year Ended December 31,

2018

2017
As recast

Percent
Change

Aircraft fuel ............................................................................................ $
Salary and benefits .................................................................................
Station operations ...................................................................................
Depreciation and amortization ...............................................................
Maintenance and repairs
........................................................................
Sales and marketing ...............................................................................
Aircraft lease rentals ..............................................................................
Other ......................................................................................................
Special charge (1) ....................................................................................
Operating expense per passenger ........................................................... $
Operating expense per passenger, excluding fuel .................................. $

32.42
30.10
11.71
9.41
7.20
5.35
0.06
7.31
—
103.56
71.14

$
$

27.89
30.19
11.58
9.89
9.22
4.61
0.25
7.54
2.86
104.03
76.14

16.2 %
(0.3)
1.1
(4.9)
(21.9)
16.1
(76.0)
(3.1)

NM
(0.5)%
(6.6)%

(1) $35.3 million impairment charge on MD-80 fleet in 2017.

The following table presents unit costs on a per ASM basis, or CASM, for the indicated periods. As on a per-passenger basis,
excluding fuel on a per ASM basis provides management and investors the ability to measure and monitor our cost performance
absent fuel price volatility.

The following table presents unit costs on a per ASM basis, or CASM, for the indicated periods.

Aircraft fuel ............................................................................................
Salary and benefits .................................................................................
Station operations ...................................................................................
Depreciation and amortization ...............................................................
Maintenance and repairs .........................................................................
Sales and marketing ...............................................................................
Aircraft lease rentals ...............................................................................
Other .......................................................................................................
Special charge (1) .....................................................................................
....................................................................................................
CASM
CASM, excluding fuel ............................................................................

(1) $35.3 million impairment charge on MD-80 fleet in 2017.

For the Year Ended December 31,

2018

2017
As recast

Percent
Change

2.99¢
2.78
1.08
0.87
0.66
0.49
0.01
0.68
—
9.56¢
6.57¢

2.52¢
2.73
1.05
0.89
0.83
0.42
0.02
0.69
0.26
9.41¢
6.89¢

18.7 %
1.8
2.9
(2.2)
(20.5)
16.7
(50.0)
(1.4)

NM
1.6 %
(4.6)%

Salary and benefits expense. Salary and benefits expense for 2018 increased $42.3 million, or 11.4 percent, compared with
2017. The increase was primarily the result of a 4.0 percent increase in the number of full-time equivalent employees ("FTE")
as well as an 8.3 percent increase in system block hours.

Aircraft fuel expense. Aircraft fuel expense for 2018 increased $102.5 million, or 29.8 percent, compared with 2017 as the
system average fuel cost per gallon increased by 26.6 percent, coupled with a 2.6 percent increase in system fuel gallons
consumed on a 9.5 percent increase in system ASMs. ASM growth outpaced fuel consumption as fuel efficiency (measured as
ASMs per gallon) increased 6.7 percent year over year due to increased flying on our Airbus aircraft which are more fuel
efficient than our MD-80 aircraft.

Station operations expense. Station operations expense for 2018 increased $18.4 million, or 12.9 percent, on a 9.2 percent
increase in scheduled service departures compared with 2017. The increase in expense outpaced the increase in departures due
primarily to rate increases, including landing and ground handling fees, at our larger airports which tend to be more expensive.
We continue to view airport expense as a key factor when considering new market entrance.

Depreciation and amortization expense. Depreciation and amortization expense for 2018 increased $7.6 million, or 6.3
percent, compared with 2017, partially related to a 4.2 percent increase in the average number of aircraft in service as we
continue to add Airbus aircraft into our fleet. Depreciation expense for the Airbus fleet was $85.3 million in 2018 compared to
$56.8 million in 2017 as a result of the addition of 24 Airbus aircraft during the year. Amortization of major maintenance costs
under the deferral method of accounting for the Airbus aircraft was $12.5 million for 2018 compared to $6.7 million for 2017
due to the growing number of Airbus aircraft in service and related scheduled major maintenance events.

No depreciation expense was recognized in 2018 for our MD-80 fleet as an impairment charge was taken in the fourth quarter
2017 which reduced the carrying value of this fleet to zero. Depreciation expense for our MD-80 fleet and related assets in
2017 was $20.9 million. Our remaining Boeing 757-200 aircraft and related assets were retired in 2017.

Maintenance and repairs expense. Maintenance and repairs expense for 2018 decreased $14.5 million, or 12.7 percent,
compared with 2017. The year-over-year decrease is partially due to fewer heavy maintenance events performed on our MD-80
series aircraft, as they were systematically retired from our operating fleet throughout 2018. Additionally, the cost of major
maintenance events for our Airbus aircraft is capitalized in accordance with the deferral method of accounting and the
amortization of these expenses is included under depreciation and amortization expense.

Sales and marketing expense. Sales and marketing expense for 2018 increased $16.8 million, or 29.7 percent, compared to
2017, partly due to an increase in net credit card fees paid as a result of an 11.8 percent increase in passenger revenue year over
year. There were also increased expenses related to various marketing initiatives, including our multi-year partnerships with the
Vegas Golden Knights and Minor League Baseball.

Other expense. Other expense for 2018 increased by $7.7 million, or 8.3 percent, compared with 2017. The increase is
primarily due to information technology administration expenses, as well as other expenses incurred to support our airline
operations and non-airline initiatives.

Income Tax Expense

Our effective tax rate was 18.8 percent and 0.4 percent for 2018 and 2017, respectively. The increase in the effective tax rate
year over year was primarily due to a $74.7 million one-time tax benefit related to the remeasurement of deferred tax balances
recognized in 2017 per the "Tax Cuts and Jobs Act" (the "Tax Act"). We expect our tax rate to be between 24 percent and 25
percent in the near term primarily as a result of the 21 percent federal income tax rate, as well as the estimated impact of state
taxes.

2017 compared to 2016

Operating Revenue

Passenger revenue. Passenger revenue for these years has been recast to include both scheduled service revenue and ancillary
air-related revenue, due to the implementation of the New Revenue Standard. Passenger revenue for 2017 increased 8.1
percent, or $103.0 million, compared with 2016. The increase was mostly the result of a 10.3 percent increase in the number of
scheduled service passengers offset by a 1.5 percent decrease in average scheduled service fare coupled with a 0.8 percent
decrease in average fare for air-related charges. Hurricane Irma’s largest impact was evident in Florida markets during the third
quarter 2017. The tragic Las Vegas shooting on October 1, 2017 negatively impacted scheduled service demand in this market
for several weeks in the fourth quarter 2017. Combined, the negative impact to revenue of these two events was in excess of
$8.5 million.

Third party revenue. Third party revenue increased $7.8 million, or 17.3 percent, in 2017 from 2016, primarily due to revenue
generated from our co-branded credit card program. The increase from co-branded credit card revenue was offset by a decrease
in net revenue from third party products (hotel rooms, rental cars, attraction and show tickets) resulting from an 11.1 percent
and 5.8 percent decrease in hotel room nights and rental car days, respectively. Hurricane Irma had a significant impact on
rental car sales in our Florida markets during the third quarter 2017. Overall, there was a 6.4 percent increase in third party
revenue per passenger year over year as increases from the co-branded credit card more than offset declines in other areas.

Fixed fee contract revenue. Fixed fee contract revenue for 2017 increased $16.7 million, or 52.3 percent, compared
with 2016 due to routes added to our Apple Vacations charter, as well as increased flying for the Department of Defense due to
additional spare MD-80 aircraft available as additional Airbus aircraft were placed into revenue service.

Other revenue. Other revenue for 2017 increased $4.8 million, or 14.5 percent, due mostly to engine lease revenue generated
from leasing spare engines to a third party.

Operating Expenses

The following table presents operating expense per passenger for the indicated periods.

For the Year Ended December 31,

2017
As recast

2016
As recast

Percentage
Change

Salary and benefits ................................................................................. $
Aircraft fuel (1) .......................................................................................
Station operations ...................................................................................
Maintenance and repairs .........................................................................
Depreciation and amortization ...............................................................
Sales and marketing
...............................................................................
Aircraft lease rentals ...............................................................................
Other .......................................................................................................
Special charge (2) .....................................................................................
Operating expense per passenger ........................................................... $
Operating expense per passenger, excluding fuel .................................. $

30.19
27.89
11.58
9.22
9.89
4.61
0.25
7.54
2.86
104.03
76.14

$
$

(1) Includes effect of $8.3 million fuel tax refunds in the second quarter of 2016.
(2) $35.3 million impairment charge on MD-80 fleet in 2017.

The following table presents unit costs on a per ASM basis, or CASM, for the indicated periods.

26.24
23.12
11.15
9.98
9.45
3.11
0.08
7.29
—
90.42
67.30

15.1%
20.6
3.9
(7.6)
4.7
48.2
212.5
3.4
NM
15.1%
13.1%

For the Year Ended December 31,

Percentage

2017
As recast

2016
As recast

Change

Salary and benefits ..................................................................................
Aircraft fuel (1)
.......................................................................................
Station operations ...................................................................................
Maintenance and repairs .........................................................................
Depreciation and amortization ................................................................
Sales and marketing ................................................................................
Aircraft lease rental ................................................................................
Other .......................................................................................................
Special charge (2) .....................................................................................
CASM .....................................................................................................
CASM, excluding fuel
............................................................................

(1) Includes effect of $8.3 million fuel tax refunds in the second quarter of 2016.
(2) $35.3 million impairment charge on MD-80 fleet in 2017.

2.73 ¢
2.52
1.05
0.83
0.89
0.42
0.02
0.69
0.26
9.41 ¢
6.89 ¢

2.36 ¢
2.08
1.00
0.90
0.85
0.28
0.01
0.65
—
8.13 ¢
6.05 ¢

15.7%
21.2
5.0
(7.8)
4.7
50.0
100.0
6.2
NM
15.7%
13.9%

Salary and benefits expense. Salary and benefits expense for 2017 increased $79.6 million, or 27.3 percent, compared
with 2016. The increase is largely attributable to $52.0 million in incremental expense related to the collective bargaining
agreement with our pilots (effective August 1, 2016), which also takes into consideration a 14.1 percent increase in pilot FTEs.
The overall increase also reflects costs associated with an 8.4 percent increase in the number of all other FTEs needed to
support additional operating aircraft and the transition to a single fleet type.

Aircraft fuel expense. Aircraft fuel expense for 2017 increased $86.0 million, or 33.4 percent, compared with 2016. Excluding
the effect of one-time $8.3 million in fuel tax refunds in the second quarter 2016, fuel expense would have increased 29.3
percent and the system average fuel cost per gallon would have increased by 19.5 percent. Additionally, there was
an 8.0 percent increase in system fuel gallons consumed due to a 10.0 percent increase in system capacity. ASM growth
outpaced fuel consumption as average ASMs per gallon increased 1.9 percent year over year due to the fuel efficiency of the
Airbus fleet.

Station operations expense. Station operations expense for 2017 increased $18.5 million, or 14.9 percent, on a 12.3
percent increase in scheduled service departures compared with 2016. The increase in expense outpaced the increase in
departures due to servicing more medium-sized cities at higher frequencies (these cities generally have higher costs than
smaller city airports) as well as various supplementary station expenses.

Depreciation and amortization expense. Depreciation and amortization expense for 2017 increased $16.5 million, or 15.7
percent, compared with 2016, partially related to a 4.8 percent increase in the average number of operating aircraft.
Amortization of major maintenance costs under the deferral method of accounting for the Airbus aircraft was $6.7 million
for 2017 compared to $1.5 million for 2016, as our first major maintenance event on our Airbus aircraft did not occur until
second quarter 2016. Depreciation expense related to Airbus A320 series aircraft was $56.8 million for 2017 compared to $44.9
million for 2016.

Depreciation expense related to MD-80 aircraft declined to approximately $20.9 million for 2017 from $30.0 million in 2016 as
we have continued to retire these aircraft.

Maintenance and repairs expense. Maintenance and repairs expense for 2017 increased $2.4 million, or 2.2 percent,
compared with 2016 due primarily to a 4.8 percent increase in average number of operating aircraft in service, offset by fewer
major maintenance events performed on our MD-80 series aircraft. The cost of major maintenance events for our Airbus
aircraft is capitalized in accordance with the deferral method of accounting and the amortization of these expenses is included
under depreciation and amortization expense.

Sales and marketing expense. Sales and marketing expense for 2017 increased $22.0 million compared to 2016, primarily due
to an increase in net credit card fees paid as a result of an 8.1 percent increase in passenger revenue year over year. There were
also year-over-year increased expenses related to various marketing initiatives for our nationwide network.

Other expense. Other expense for 2017 increased by $11.7 million, or 14.4 percent, compared with 2016. The increase is due to
flight crew training needed to support our fleet transition and growing route network, information technology expenses, as well
as other administrative expenses incurred to support our operational growth.

Special charge. We incurred a $35.3 million non-cash impairment charge to our MD-80 series aircraft, engines and related
assets, triggered in the fourth quarter of 2017.

Income Tax Expense

Our effective tax rate was 0.4 percent and 36.5 percent for 2017 and 2016, respectively. The decrease in the effective tax rate
was primarily due to a $74.7 million one-time tax benefit related to the remeasurement of deferred tax balances per the Tax Act
enacted in December 2017.

LIQUIDITY AND CAPITAL RESOURCES

Unrestricted cash and investment securities (short-term and long-term) decreased at December 31, 2018 to $447.5 million from
$490.7 million in 2017. Restricted cash represents escrowed funds under fixed fee contracts and cash collateralized against
letters of credit required by hotel properties for guaranteed room availability, airports, and certain other parties. Under our fixed
fee flying contracts, we require customers to prepay for flights to be provided by us. The prepayments are escrowed until the
flight is completed and are recorded as restricted cash with a corresponding amount reflected as air traffic liability. Investment
securities represent liquid marketable securities which are available-for-sale.

During 2018, our primary source of funds was $356.6 million generated by our operations in addition to $211.2 million in
proceeds from notes payable. Our operating cash flows and long-term debt borrowings have allowed us to invest in our fleet
transition and return capital to shareholders. Our future capital needs are primarily for the acquisition of additional aircraft,
including our existing Airbus A320 series aircraft commitments, as well as capital outlay for Sunseeker Resort and our other
non-airline initiatives.

We believe we have more than adequate liquidity resources through our operating cash flows, borrowings, and cash balances,
to meet our future contractual obligations. We continue to consider raising funds through debt financing on an opportunistic
basis.

In addition to our recurring quarterly cash dividend, our current share repurchase authority is $100.0 million. There is no
expiration date for the program.

Debt

Our total long-term debt and capital lease obligations balance, without reduction for related issuance costs, remained relatively
consistent at $1.3 billion and $1.2 billion as of December 31, 2018 and 2017, respectively. We borrowed additional funds
secured largely by aircraft, while making $232.2 million in scheduled repayments on existing debt. During 2018 we borrowed
$153.5 million secured by aircraft, $46.9 million against our senior secured revolving credit facility, and $10.8 million secured
by various ground equipment. In February 2019, we also borrowed $450.0 million under a Credit and Guaranty Agreement, the
proceeds from which were used to purchase $347.9 million aggregate principal amount of our outstanding senior unsecured
Notes. We expect to call the remaining balance of our senior unsecured Notes in advance of their maturity in July 2019.

Sources and Uses of Cash

Operating Activities. During 2018, our operating activities provided $356.6 million of cash compared to $390.7 million during
2017. Operating cash inflows are primarily derived from providing air transportation and related ancillary products and services
to customers, for which the vast majority of tickets are purchased prior to the day travel occurs. The year-over-year decrease in
reported cash inflows resulted primarily from a decrease in net income.

During 2017, our operating activities provided $390.7 million of cash compared to $348.2 million in 2016. The year-over-year
increase in reported cash inflows largely resulted from the increase in earnings after adjustments made for non-cash items such
as depreciation and amortization ($16.5 million higher in 2017) and the special charge in 2017 ($35.3 million), and as a result
of a $12.7 million increase in air traffic liability.

Investing Activities. During 2018, cash used for investing activities was $269.0 million compared to $618.5 million in 2017.
Cash used for capital expenditures was $334.8 million in 2018 compared to $580.2 million in 2017. The year-over-year
decrease is also due partially to investment security activity, as cash proceeds from maturities of investment securities (net of
purchases) were $65.1 million during 2018 compared to $43.4 million cash used for the purchase of investments (net of
maturities) during 2017.

During 2016, our primary use of cash was for capital expenditures of $325.2 million. Cash was also used for the purchase of
investment securities, net of maturities, of $83.5 million.

Financing Activities. Cash used in financing activities during 2018 was $62.4 million compared to cash provided by financing
activities of $222.1 million in 2017. The year-over-year change is primarily due to debt activity. In 2018, principal payments
net of proceeds from debt issuance were $21.0 million compared to proceeds of $358.7 million from the issuance of long-term
debt net of principal payments during 2017. This was slightly offset by less share repurchase activity in 2018 compared with
2017.

In 2016, cash provided by financing activities was $32.6 million. Proceeds from the issuance of long-term debt net of principal
payments of $167.1 million were offset by $67.5 million in cash dividends paid to shareholders and $66.4 million in stock
repurchases.

OFF-BALANCE SHEET ARRANGEMENTS, COMMITMENTS AND CONTRACTUAL OBLIGATIONS

The following table discloses aggregate information about our contractual cash obligations and off-balance sheet arrangements
as of December 31, 2018 and the periods in which payments are due (in thousands):

Total

Long-term debt obligations (1) .................................... $ 1,290,626
311,460
Aircraft acquisition obligations (2) (5) ..........................
29,329
Operating lease obligations (3) (5) ................................
Airport fees under use and lease agreements (4) (5) .....
15,766
Total future payments under contractual obligations .. $ 1,647,181

Less than 1
year
626,982
259,160
8,102
10,480
904,724

2-3 years

4-5 years

286,015
34,300
9,674
5,286
335,275

132,186
18,000
3,256
—
153,442

More than
5 years

245,443
—
8,297
—

253,740

(1) Long-term debt obligations (including variable interest entities) include scheduled interest payments, using LIBOR rates as

of December 31, 2018, and excludes debt issuance costs.

(2) Includes aircraft acquisition obligations under existing aircraft and engine purchase agreements.
(3) Operating lease obligations include the lease and use of gate space and areas surrounding gates, operating support areas in

airport terminals under use and lease agreements, and leases of office, warehouse and other space.

(4) Includes obligations for common and joint use space in the airport terminal facilities under use and lease agreements.
(5) Not reflected on our balance sheet.

In February 2019, we entered into the Term Loan to refinance our senior unsecured Notes due July 2019. The proceeds from
the Term Loan were used to purchase $347.9 million of the Notes and we will use the balance of the proceeds to call the
remainder of the Notes.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The discussion and analysis of our financial condition and results of operations are based on our consolidated financial
statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The
preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets
and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of our financial
statements based on events and transactions occurring during the periods reported. Note 2 to our Consolidated Financial
Statements provides a detailed discussion of our significant accounting policies.

Critical accounting policies are defined as those policies that reflect significant judgments about matters that are inherently
uncertain. Our actual results may differ from these estimates under different assumptions or conditions. We believe our critical
accounting policies are limited to those described below.

Affinity Credit Card Program

The Allegiant World Mastercard® is issued by Bank of America through which arrangement points are sold and consideration
is received under an agreement with a seven year scheduled duration which expires in 2023. Under this arrangement, we
identified the following deliverables: travel points to be awarded (the travel component), use of our brand and access to our
member lists, and certain other advertising and marketing elements (collectively the marketing component). Applying guidance
under Accounting Standards Update (“ASU”) 2009-13 - Revenue Recognition (Topic 606): Multiple-Deliverable Revenue
Arrangements, each of these deliverables is accounted for separately and allocation of the consideration from the agreement is
determined based on the relative selling price of each deliverable. We 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 to be redeemed.

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

Accounting for Long-Lived Assets

We record impairment losses on long-lived assets used in operations, consisting principally of property and equipment, when
events or changes in circumstances indicate, in management’s judgment, that the assets might be impaired and the undiscounted
cash flows estimated to be generated by those assets are less than the carrying amount of those assets. In making these
determinations, we utilize certain assumptions, including, but not limited to: (i) estimated fair value of the assets; and (ii)
estimated future cash flows expected to be generated by those assets which are based on additional assumptions such as (but
not limited to) asset utilization, average fare, block hours, fuel costs, length of service the asset will be used in operations, and
estimated salvage values.

In estimating the useful lives and residual values of our aircraft, we have primarily relied upon actual experience with the same
or similar aircraft types, current and projected future market information, and recommendations from other industry sources.
Subsequent revisions to these estimates could be caused by changing market prices of our aircraft, changes in utilization of the
aircraft, and other fleet events. We evaluate these estimates used for each reporting period and adjust when deemed necessary.
To the extent a change in estimate for useful lives or salvage values of our property and equipment occurs, there could be an
acceleration of depreciation expense associated with the change in estimate. See Note 2 to the Consolidated Financial
Statements for further detail.

Aircraft Maintenance and Repair Costs and Major Maintenance Deferral

We account for major maintenance costs of Airbus airframes and the related CFM engines using the deferral method. Under
this method, the cost of major maintenance events is capitalized and amortized as a component of depreciation and
amortization expense over the estimated period until the next scheduled major maintenance event. The timing of the next major
maintenance event is estimated based on assumptions including estimated cycles, hours and months, required maintenance
intervals, and the age/condition of related parts. These assumptions may change based on forecasted aircraft utilization
changes, updates to government regulations, and manufacturer maintenance intervals, as well as unplanned incidents causing
damage requiring a major maintenance event prior to a scheduled visit. If the estimated timing of the next maintenance event
changes, the related amortization period would also change.

RECENT ACCOUNTING PRONOUNCEMENTS

See related disclosure in Note 2 of our Consolidated Financial Statements.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

We are subject to certain market risks, including changes in interest rates and commodity prices (specifically, aircraft fuel). The
adverse effects of changes in markets could pose potential loss, as discussed below. The sensitivity analysis does not consider
the effects that such adverse changes may have on overall economic activity, nor does it consider additional actions we may
take to mitigate our exposure to such changes. Actual results may differ.

Aircraft Fuel

Our results of operations can be significantly impacted by changes in the price and availability of aircraft fuel. Aircraft fuel
expense for the year ended December 31, 2018 represented 31.3 percent of our total operating expenses. Increases in fuel prices
or a shortage of supply could have a material effect on our operations and operating results. Based on our 2018 fuel
consumption, a hypothetical ten percent increase in the average price per gallon of aircraft fuel would have increased fuel
expense by approximately $44.4 million for the 2018 year. We have not hedged fuel price risk in many years.

Interest Rates

As of December 31, 2018, we had $635.0 million of variable-rate debt, including current maturities and without reduction of
$4.1 million in related costs. A hypothetical 100 basis point change in interest rates would have affected interest expense by
approximately $6.7 million for 2018.

As of December 31, 2018, we had $518.8 million of fixed-rate debt, including current maturities and without reduction of $0.9
million in related costs. A hypothetical 100 basis point change in market interest rates would not impact interest expense on our
fixed-rate debt instruments as of such date.

Item 8. Financial Statements and Supplementary Data

Selected Quarterly Financial Data (unaudited)

Quarterly results of operations for the years ended December 31, 2018 and 2017 are summarized below and reflect amounts as
recast related to adoption of ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)" (the "New Revenue
Standard"). Amounts are shown in thousands, except for per share amounts.

March 31

June 30

September 30

December 31

2018

Operating revenues ................................................ $

425,444

436,780

393,109

Operating income ..................................................

79,968

Net income ............................................................

55,193

Earnings per share to common shareholders:

74,222

50,016

26,181

15,147

Basic ...................................................................... $

Diluted ..................................................................

3.43

3.42

3.10

0.94

2017

Operating revenues ............................................... $
Operating income ..................................................

Net income attributable to Allegiant Travel
Company ...............................................................

Earnings per share to common shareholders:

380,011

401,844

350,195

73,729

42,351

85,795

49,038

44,342

23,384

Basic ...................................................................... $
Diluted ...................................................................

2.54

2.98

2.97

1.45

412,114

63,088

41,447

2.56

379,154

26,764

83,376

5.18

The sum of the quarterly earnings per share amounts does not equal the annual amount reported as per share amounts are
computed independently for each quarter and for the full year, based on respective weighted average common shares
outstanding and other potentially dilutive common shares.

Income and earnings per share in the fourth quarter of 2017 were impacted by a non-cash impairment charge of $35.3 million
on the Company's MD-80 fleet and related assets and a $74.7 million income tax benefit from the remeasurement of deferred
tax assets and liabilities due to the passage of the Tax Cuts and Jobs Act in December 2017.

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors
Allegiant Travel Company:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets Allegiant Travel Company and subsidiaries (the “Company”)
as of December 31, 2018 and 2017, the related consolidated statements of income, comprehensive income, shareholders’
equity, and cash flows for each of the years in the three year period ended December 31, 2018, and the related notes
(collectively, the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations
and its cash flows for each of the years in the three year period ended December 31, 2018, in conformity with U.S. generally
accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2018, based on criteria established in
Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission, and our report dated February 28, 2019 expressed an unqualified opinion on the effectiveness of the Company’s
internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for revenue
from contracts with customers due to the full retrospective adoption of Accounting Standards Update 2014 09, Revenue from
Contracts with Customers (Topic 606), as amended.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a
reasonable basis for our opinion.

/s/ KPMG LLP

We have served as the Company’s auditor since 2016.

Dallas, Texas

February 28, 2019

ALLEGIANT TRAVEL COMPANY
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)

December 31,
2018

December 31,
2017
As recast

CURRENT ASSETS

Cash and cash equivalents .................................................................................................................. $

81,520

Restricted cash ....................................................................................................................................

Short-term investments .......................................................................................................................

Accounts receivable ............................................................................................................................

Expendable parts, supplies and fuel, net of reserve of $14,410 and $13,756 .....................................

Prepaid expenses .................................................................................................................................

Other current assets .............................................................................................................................

14,391

314,464

36,014

19,516

29,122

221

TOTAL CURRENT ASSETS ...............................................................................................................

495,248

59,449

11,190

352,681

71,057

17,647

23,931

5,320

541,275

Property and equipment (including $145,393 and $112,750 from VIEs, Note 6), net of accumulated
depreciation of $373,977 and $276,548 ..................................................................................................

1,847,268

1,512,415

Long-term investments ...........................................................................................................................

Deferred major maintenance, net of accumulated amortization of $13,694 and $8,218 ........................

Deposits and other assets ........................................................................................................................

51,526

67,873

36,753

TOTAL ASSETS: .................................................................................................................................... $

2,498,668

CURRENT LIABILITIES

Accounts payable ................................................................................................................................ $

Accrued liabilities ...............................................................................................................................

Air traffic liability ................................................................................................................................
Current maturities of long-term debt and capital lease obligations (including $11,538 and $8,935
from VIEs, Note 6), net of related costs of $1,443 and $2,298 ..........................................................

TOTAL CURRENT LIABILITIES .....................................................................................................

LONG-TERM DEBT AND OTHER NONCURRENT LIABILITIES

Long-term debt and capital lease obligations (including $123,696 and $92,424 from VIEs, Note
6), net of current maturities and related costs of $3,591 and $3,812 ..................................................

Deferred income taxes ........................................................................................................................

Other noncurrent liabilities .................................................................................................................

27,452

122,027

212,230

152,287

513,996

1,119,446

164,027

10,878

78,570

31,326

16,571

2,180,157

20,108

105,127

204,299

214,761

544,295

950,131

119,013

13,407

TOTAL LIABILITIES: ........................................................................................................................

1,808,347

1,626,846

COMMITMENTS AND CONTINGENCIES (NOTE 12)

SHAREHOLDERS' EQUITY

Common stock, par value $.001, 100,000,000 shares authorized; 22,622,548 and 22,515,997
shares issued; 16,183,274 and 16,066,404 shares outstanding in 2018 and 2017, respectively .........

Treasury stock, at cost, 6,439,274 and 6,449,593 shares in 2018 and 2017, respectively ..................

Additional paid in capital ....................................................................................................................

Accumulated other comprehensive loss, net .......................................................................................

Retained earnings ................................................................................................................................

TOTAL EQUITY: ........................................................................................................................................

(605,037)

270,935

(661)

1,025,061

690,321

(605,655)

253,840

(2,840)

907,943

553,311

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY: ........................................................... $

2,498,668

2,180,157

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

ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)

Year ended December 31,

2018

2017
As recast

2016
As recast

OPERATING REVENUES:

Passenger .................................................................................................... $

1,533,701

1,372,037

1,269,067

Third party products ...................................................................................

Fixed fee contract .......................................................................................

Other ...........................................................................................................

58,060

50,286

25,400

52,707

48,708

37,751

44,940

31,972

32,963

Total operating revenues ......................................................................

1,667,447

1,511,203

1,378,942

OPERATING EXPENSES:

Aircraft fuel ................................................................................................

Salary and benefits .....................................................................................

Station operations .......................................................................................

Depreciation and amortization ...................................................................

Maintenance and repairs .............................................................................

Sales and marketing ....................................................................................

Aircraft lease rentals ...................................................................................

445,814

413,892

161,019

129,351

99,015

73,514

868

Other ...........................................................................................................

100,515

Special charge .............................................................................................

—

Total operating expenses ......................................................................

1,423,988

OPERATING INCOME ..................................................................................

243,459

OTHER (INCOME) EXPENSES:

343,333

371,599

142,581

121,713

113,481

56,675

3,098

92,840

35,253

257,332

291,974

124,052

105,216

111,070

34,629

924

81,178

—

1,280,573

230,630

1,006,375

372,567

Interest income ...........................................................................................

Interest expense ..........................................................................................

Other, net .....................................................................................................

Total other expenses ..............................................................................

INCOME BEFORE INCOME TAXES ..........................................................

PROVISION FOR INCOME TAXES ............................................................

(9,226)
53,762
(395)
44,141

199,318

37,516

NET INCOME ................................................................................................ $

161,802

Earnings per share to common shareholders:

Basic ........................................................................................................... $

Diluted ........................................................................................................ $

Shares used for computation:

Basic ...........................................................................................................

Diluted ........................................................................................................

10.02

10.00

15,941

15,967

(5,808)
38,990
(1,559)
31,623

199,007

859

198,148

12.14

12.13

16,073

16,095

(3,010)
28,836
(1,226)
24,600

347,967

127,101

220,866

13.31

13.29

16,465

16,489

Cash dividend declared per share: ..................................................................

2.80

2.40

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

ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)

Year ended December 31,

2018

2017

2016

As recast

NET INCOME ....................................................................................................... $

161,802

198,148

220,866

Other comprehensive income (loss):

Change in available for sale securities, net of tax ............................................

Foreign currency translation adjustments ........................................................

Change in derivatives, net of tax ......................................................................

Total other comprehensive income (loss) ..............................................................

(1,153)
177

3,155

2,179

TOTAL COMPREHENSIVE INCOME ................................................................ $

163,981

49
(681)
(1,978)
(2,610)
195,538

318

88
(1,470)
(1,064)
219,802

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

ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in thousands)

Accumulated

Common

Additional

other

Total

stock

Par

outstanding

value

paid-in

capital

comprehensive

income (loss)

Retained

earnings

Treasury

shareholders'

equity

Balance at December 31, 2015

...............................

16,803

$ 22

228,945

834

573,619

(453,415) $

350,005

Share-based compensation .......................................

219

—

9,291

Shares repurchased by the Company and held as
treasury shares ..........................................................

(402) —

Stock issued under employee stock purchase plan ...

Cash dividends declared, $2.40 per share ................

Other comprehensive (loss) ......................................

Net income (as recast) ..............................................

Cumulative effect of the New Revenue Standard
(see Note 2) ...............................................................

—

(1,064)

—

9,291

(66,371)

1,983

(39,812)

(1,064)

220,866

(39,812)

220,866

842

—

842

Balance at December 31, 2016 (as recast)

............

16,633

$ 22

238,236

(230) $

755,515

(517,803) $

475,740

Share-based compensation .......................................

15,604

Shares repurchased by the Company and held as
treasury shares ..........................................................

Stock issued under employee stock purchase plan ...

Cash dividends declared, $2.80 per share .................

Other comprehensive (loss) ......................................

Net income (as recast) ..............................................

(632) —

—

(2,610)

—

(45,720)

—

198,148

—

15,605

(90,457)

2,605

—

2,605

(45,720)

(2,610)

198,148

Balance at December 31, 2017 (as recast)

............

16,066

$ 23

253,840

(2,840) $

907,943

(605,655) $

553,311

Share-based compensation .......................................

107

—

17,095

Shares repurchased by the Company and held as
treasury shares ..........................................................

Stock issued under employee stock purchase plan ...

Cash dividends declared, $2.80 per share ................

Other comprehensive income ...................................

Net income ...............................................................

(23) —

—

2,179

—

(45,247)

563

161,802

—

17,095

(3,650)

4,268

—

(3,650)

4,268

(45,247)

2,742

161,802

Balance at December 31, 2018

...............................

16,183

$ 23

270,935

(661) $ 1,025,061

(605,037) $

690,321

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

ALLEGIANT TRAVEL COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

2018

Year ended December 31,
2017
As recast

2016
As recast

OPERATING ACTIVITIES:

Net income ............................................................................................................. $
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization ............................................................................
Loss on aircraft and other equipment disposals ..................................................
Special charge ......................................................................................................
Share-based compensation expense ....................................................................
Deferred income taxes .........................................................................................
Other adjustments ................................................................................................
Changes in certain assets and liabilities:

(Increase) decrease in accounts receivable .......................................................
(Increase) decrease in prepaid expenses ...........................................................
Increase (decrease) in accounts payable ...........................................................
Increase (decrease) in accrued liabilities ..........................................................
Increase (decrease) in air traffic liability ..........................................................
Change in deferred major maintenance ............................................................
Other assets/liabilities .......................................................................................
Net cash provided by operating activities ....................................................

INVESTING ACTIVITIES:

Purchase of investment securities .......................................................................
Proceeds from maturities of investment securities ..............................................
Aircraft pre-delivery deposits ..............................................................................
Purchase of property and equipment, including capitalized interest ...................
Other investing activities .....................................................................................
Net cash used in investing activities ............................................................

FINANCING ACTIVITIES:

Cash dividends paid to shareholders ...................................................................
Proceeds from the issuance of debt .....................................................................
Repurchase of common stock .............................................................................
Principal payments on debt and capital lease obligations ...................................
Other financing activities ....................................................................................
Net cash (used in) provided by financing activities .....................................
Net change in cash, cash equivalents, and restricted cash .......................................
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT BEGINNING
OF PERIOD .............................................................................................................
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT END OF
PERIOD ................................................................................................................... $

161,802

198,148

220,866

129,351
2,360
—
15,098
38,222
4,541

35,624
(5,191)
8,633
12,005
7,931
(49,622)
(4,142)
356,612

(371,461)
436,581
—
(334,774)
677
(268,977)

(45,247)
211,225
(3,650)
(232,227)
7,536
(62,363)
25,272

121,713
9,334
35,253
13,856
42,689
5,933

(30,568)
(7,654)
4,798
9,251
12,721
(20,687)
(4,113)
390,674

(363,300)
319,915
(11,810)
(568,439)
5,115
(618,519)

(45,720)
497,540
(90,457)
(138,858)
(379)
222,126
(5,719)

105,216
4,981
—
9,389
30,579
4,286

(18,201)
1,999
9,209
7,596
(6,144)
(18,857)
(2,769)
348,150

(444,532)
361,082
(125,434)
(199,743)
6,790
(401,837)

(67,540)
321,160
(66,371)
(154,080)
(594)
32,575
(21,112)

70,639

76,358

97,470

95,911

70,639

76,358

CASH PAYMENTS/(RECEIPTS) FOR:

Interest paid, net of amount capitalized .............................................................. $
Income tax (refunds)/payments ........................................................................... $

52,323
$
(41,610) $

35,998
$
(17,954) $

26,454
110,612

SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS

Flight equipment under capital lease ..................................................................... $

127,625

— $

—

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

ALLEGIANT TRAVEL COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2018, 2017 and 2016

Note 1 — Organization and Business of Company

Allegiant Travel Company (the “Company”) is a leisure travel company focused on providing travel services and products to
residents of under-served cities in the United States. The Company operates a low-cost passenger airline which sells air
transportation both on a stand-alone basis and bundled with the sale of 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, family entertainment centers, and Teesnap.

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. As a result, the Company believes it currently operates one reportable segment and does
not separately track expenses for scheduled service and fixed fee air transportation services.

Note 2 — Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Allegiant Travel Company (the "Company") and
its majority-owned operating subsidiaries. The Company has no independent assets or operations, and all guarantees of the
Company's publicly held debt are full and unconditional and joint and several. Any subsidiaries of the parent company other
than the subsidiary guarantors are minor. The Company's investments in unconsolidated affiliates, which are 50 percent or less
owned, are accounted for under the equity or cost method. All intercompany balances and transactions have been eliminated.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual
results could differ from these estimates.

The Company adopted the New Revenue Standard and ASU 2018-02, "Income Statement—Reporting Comprehensive Income
(Topic 220)" effective January 1, 2018. All amounts and disclosures in this Form 10-K reflect the adoption of these standards.
See below for further information.

The Company has reclassified certain amounts for the years ended December 31, 2017 and 2016, respectively, to conform with
current year presentation. Such reclassifications had no impact on operating income or net income.

Cash and Cash Equivalents

Cash and cash equivalents include investments and interest bearing instruments with maturities of three months or less at the
balance sheet date. Such investments are carried at cost which approximates fair value.

Restricted Cash

Restricted cash represents escrowed funds under fixed fee contracts, and cash collateral held against letters of credit required by
hotel properties for guaranteed room availability, airports and certain other parties. Restricted cash at December 31, 2018 and
2017 was $14.4 million and $11.2 million, respectively.

Accounts Receivable

Accounts receivable are carried at face amount which approximates fair value. They consist primarily of amounts due from
credit card companies associated with the sale of tickets for future travel. These receivables are short-term and generally settle
within a few days of sale. There are also receivables related to commission amounts due from Enterprise Holdings Inc. based
on terms in the rental car provider agreement, as well as income tax receivables, and amounts due related to fixed fee charter
agreements. If deemed necessary, the Company records charges to its allowance for doubtful accounts for amounts not
expected to be collected, for which the balance was immaterial for all years presented. The Company also had outstanding
receivables from a third party as of December 31, 2018 and 2017, for which $12.7 million and $6.3 million, respectively, was
due more than one year after the balance sheet date and is classified with the Company's other assets.

Short-term and Long-term Investments

The Company’s investments in marketable securities are classified as available-for-sale and are reported at fair value with the
net unrealized gain or (loss) reported as a component of accumulated other comprehensive income in shareholders’ equity.
Investment securities are classified as cash equivalents, short-term investments and long-term investments based on maturity
date as of the balance sheet date. Cash equivalents have maturities of three months or less, short-term investments have
maturities of greater than three months but equal to or less than one year, and long-term investments are those with a maturity
date greater than one year. As of December 31, 2018, the Company’s long-term investments consisted of corporate debt
securities, federal agency debt securities, US Treasury Bonds, and municipal debt securities with contractual maturities of less
than 24 months.

The amortized cost of investment securities sold is determined by the specific identification method with any realized gains or
losses reflected in other (income) expense. The Company had minimal realized losses during the years ended December 31,
2018, 2017, and 2016. The Company believes unrealized losses related to debt securities are not other-than-temporary and does
not intend to sell these securities prior to amortized cost recoverability.

The Company attempts to minimize its concentration risk with regard to its cash, cash equivalents, and investment portfolio.
This is accomplished by diversifying and limiting amounts among different counterparties, the type of investment, and the
amount invested in any individual security, commercial paper, or money market fund.

Expendable Parts, Supplies and Fuel, Net

Expendable parts, supplies and fuel inventories are valued at cost using the first-in, first-out method. Such inventories are
charged to expense as they are used in operations. An obsolescence allowance for expendable parts and supplies is based on the
remaining useful lives of the corresponding fleet type and salvage values. The allowance for expendable parts and supplies was
$14.4 million and $13.8 million at December 31, 2018 and 2017, respectively. Rotable aircraft parts inventories are included in
property and equipment.

Software Capitalization

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 seven years. The Company had
unamortized computer software development costs of $41.3 million and $41.0 million as of December 31, 2018 and 2017,
respectively. Amortization expense related to computer software was $14.1 million, $15.9 million and $13.3 million for the
years ended December 31, 2018, 2017 and 2016, respectively. Costs incurred during the preliminary and post-implementation
stages are expensed as incurred.

Property and Equipment

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

Aircraft, engines and related rotable parts ................................................................................................................... 10-25 years

Buildings ......................................................................................................................................................................

25 years

Equipment and leasehold improvements .....................................................................................................................

3-7 years

Computer hardware and software ................................................................................................................................

3-7 years

In estimating the useful lives and residual values of aircraft, the Company primarily relies upon actual experience with the
same or similar aircraft types, current and projected future market information, and recommendations from other industry
sources. Subsequent revisions to these estimates could be caused by changing market prices of the Company’s aircraft, changes
in utilization of the aircraft, and other fleet events. These estimates are evaluated each reporting period and adjusted if

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

Interest is capitalized using the Company’s weighted average borrowing rate and depreciated over the estimated useful life of
the asset(s). Capitalized interest for 2018 and 2017 was $2.4 million and $3.2 million, respectively.

Aircraft Maintenance and Repair Costs

The Company accounts for MD-80 airframes and JT8D-219 engine major maintenance, as well as all non-major maintenance
and repair costs incurred, for both the MD-80 and Airbus fleets, under the direct expense method. Under this method,
maintenance and repair costs for aircraft are charged to operating expenses as incurred. Maintenance and repair costs includes
all parts, materials, and line maintenance activities required to maintain the Company's fleet types.

The Company accounts for major maintenance costs of its Airbus airframes and the related CFM 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 2018 and 2017, the Company capitalized $49.6 million and $20.7 million of costs for major maintenance with
associated amortization expense charged to depreciation and amortization of $12.5 million and $6.7 million, respectively.

Measurement of Impairment of Long-Lived Assets

The Company records impairment losses on long-lived assets used in operations, consisting principally of property and
equipment, when events or changes in circumstances indicate, in management’s judgment, that the assets might be impaired,
and the undiscounted future cash flows estimated to be generated by those assets are less than the carrying amount of those
assets. In making these determinations, the Company utilizes certain assumptions, including, but not limited to: (i) estimated
fair value of the assets; 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 years ended December 31, 2017 and 2016, the Company incurred impairment losses related to various aircraft parts of
$1.3 million and $3.0 million, respectively, which are classified within Other operating expense. For the year ended
December 31, 2018, the Company did not incur any related impairment losses.

For the year ended December 31, 2017, the Company recorded a non-cash impairment charge of $35.3 million on its fleet of
MD-80 aircraft, engines, and related assets, as a result of its review of fleet value. This represented a full impairment of these
assets, and as such, these assets had no remaining book value as of December 31, 2017. The Company analyzed many factors,
including the accelerated retirement dates of the MD-80 fleet, a reduction in aircraft utilization due to the continued induction
of Airbus A320 series aircraft, and the significantly decreased level of demand in the secondary market for MD-80 aircraft,
spare engines, and parts.

Revenue Recognition

Passenger revenue
Passenger revenue includes scheduled service revenue, ancillary air-related charges, and travel point redemptions from the co-
branded Allegiant World Mastercard® credit card.

Scheduled service revenue, a component of passenger revenue, consists of ticket revenue generated from nonstop flights in the
Company’s route network, recognized either when the transportation is provided or when the itinerary expires unused.
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.

Ancillary air-related charges, a component of passenger revenue, include various unbundled 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. Revenues from air-related charges are recognized when the transportation is provided. If a
customer cancels a flight, a voucher may be issued for a future flight, at which time the associated revenue is recognized.
Additionally, the Company estimates the value of vouchers that will expire unused and recognizes such revenue at the time of
issuance.

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. 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. The Company follows accounting
standards for determining the amount of revenue to be recognized for each element of a bundled sale involving third party
products in addition to airfare. Revenue from the sale of third party products is recorded net (treatment as an agent) of amounts
paid to wholesale providers, travel agent commissions, and transaction costs.

Pursuant to the co-brand arrangement with Bank of America, the Company has various performance obligations which are
collectively referred to as the marketing component. These obligations consist of use of the Company’s brand and access to its
member lists, and certain other advertising and marketing elements. The marketing component is recorded as third party
products revenue in the period in which points are awarded to the credit card holders.

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 is recognized when the transportation is provided.

Other revenue
Other revenue is generated from leasing aircraft and engines, and other miscellaneous sources, including revenue from non-
airline activities. Lease revenue is recognized ratably over the lease term.

Taxes and fees
Various taxes and fees, assessed on the sale of tickets to customers, are collected by the Company serving as an agent, and
remitted to taxing authorities. 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.

Affinity Credit Card Program

The Allegiant World Mastercard® is issued by Bank of America through which arrangement points are sold and consideration
is received under an agreement with a seven year scheduled duration expiring in 2023. Under this arrangement, the Company
identified the following deliverables: travel points to be awarded (the travel component), use of the Company’s brand and
access to its member lists, and certain other advertising and marketing elements (collectively the marketing component).
Applying guidance under Accounting Standards Update (“ASU”) 2009-13 - Revenue Recognition (Topic 606): Multiple-
Deliverable Revenue Arrangements, each of these deliverables is accounted for separately and allocation of the consideration
from the agreement is determined based on the relative selling price of each deliverable. 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 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. 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.

Advertising Costs

Advertising costs are charged to expense in the period incurred. Advertising expense was $28.8 million, $20.9 million and
$13.6 million for the years ended December 31, 2018, 2017 and 2016, respectively.

Earnings per Share

Basic and diluted earnings per share are computed pursuant to the two-class method as opposed to the treasury method. Under
this method, the Company attributes net income to two classes, common stock and unvested restricted stock awards. Unvested
restricted stock awards granted to employees under the Company’s Long-Term Incentive Plan are considered participating
securities because they receive non-forfeitable rights to cash dividends at the same rate as common stock.

Diluted net income per share is calculated using the more dilutive of two methods. Under both methods, the exercise of
employee stock options is assumed using the treasury stock method. The assumption of vesting of restricted stock, however,
differs as described below:

1. Assume vesting of restricted stock using the treasury stock method.

2. Assume unvested restricted stock awards are not vested, and allocate earnings to common shares and unvested

restricted stock awards using the two-class method.

For the years ended December 31, 2018, 2017 and 2016, the second method above was used in the computation because it was
more dilutive than the first method. The following table sets forth the computation of net income per share on a basic and
diluted basis for the periods indicated (in thousands, except per share amounts):

Year ended December 31,

2018

2017

2016

As recast

Basic:

Net income ...................................................................................................................... $ 161,802
(2,106)
Net income attributable to common stock ...................................................................... $ 159,696

Less net income allocated to participating securities .....................................................

$ 198,148
(2,965)
$ 195,183

$ 220,866
(1,758)
$ 219,108

Earnings per share, basic ................................................................................................ $

Weighted-average shares outstanding ...............................................................................
Diluted:

10.02
15,941

12.14
16,073

13.31
16,465

Net income ...................................................................................................................... $ 161,802
(2,104)
Net income attributable to common stock ...................................................................... $ 159,698

Less net income allocated to participating securities .....................................................

$ 198,148
(2,962)
$ 195,186

$ 220,866
(1,756)
$ 219,110

Earnings per share, diluted ............................................................................................. $

10.00

12.13

13.29

Weighted-average shares outstanding ...............................................................................

15,941

16,073

16,465

Dilutive effect of stock options and restricted stock .........................................................

Adjusted weighted-average shares outstanding under treasury stock method ..................

Participating securities excluded under two-class method ...............................................

Adjusted weighted-average shares outstanding under two-class method .........................

15,994
(27)
15,967

16,147
(52)
16,095

16,507
(18)
16,489

Stock awards outstanding of 77,037; 5,752; and 51,439 shares (not in thousands) for 2018, 2017, and 2016, respectively, were
excluded from the computation of diluted earnings per share as they were antidilutive.

Share-Based Compensation

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 Company’s share-based employee compensation plan is more
fully discussed in Note 11.

Income Taxes

The Company recognizes deferred income taxes based on the asset and liability method required by accounting standards.
Deferred tax assets and liabilities are determined based on the timing differences between book basis for financial reporting
purposes and tax basis of the asset and liability and measured using the enacted tax rates. 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. The
Company determines the net non-current deferred tax assets or liabilities separately for federal, state, foreign and other local
jurisdictions.

The Company’s income tax returns are subject to examination by the Internal Revenue Service (“IRS”) and other tax
authorities in the jurisdictions where the Company operates. The Company assesses potentially unfavorable outcomes of such
examinations based on the criteria set forth in uncertain tax position accounting standards. The accounting standards prescribe a
minimum recognition threshold a tax position is required to meet before being recognized in the financial statements.

Accounting standards for income taxes utilize a two-step approach for evaluating tax positions. Recognition (Step I) occurs
when the Company concludes that a tax position, based on its technical merits, is more likely than not to be sustained upon
examination. Measurement (Step II) is only addressed if the position is deemed to be more likely than not to be sustained.
Under Step II, the tax benefit is measured as the largest amount of benefit that is greater than 50 percent likely of being realized
upon settlement.

The tax positions failing to qualify for initial recognition are recognized in the first subsequent interim period they meet the
“more likely than not” standard. If it is subsequently determined that a previously recognized tax position no longer meets the
“more likely than not” standard, it is required that the tax position be derecognized. As applicable, the Company will recognize
accrued penalties and interest related to unrecognized tax benefits in the provision for income taxes.

Recent Accounting Pronouncements

Standards Effective in Future Years

In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02, Leases (Topic 842), which is
effective for interim and annual reporting periods beginning after December 15, 2018 with early adoption permitted. This
standard will require leases, other than short-term, to be recognized on the balance sheet as a lease liability and a corresponding
right-of-use asset. Lease payments will include fixed payments, variable payments based on an index or rate, reasonably certain
purchase options, termination penalties, and others as required by the standard. Lease payments will not include variable lease
payments other than those that depend on an index or rate, any guarantee by the lessee of the lessor’s debt, or any amount
allocated to non-lease components.

In July 2018, the FASB issued ASU 2018-11, "Targeted Improvements - Leases (Topic 842)." This update provides an optional
modified retrospective adoption method. Under this new method, the cumulative effect adjustment to the opening balance of
retained earnings is recognized at the adoption date.

The Company is in the process of assessing the impact of this standard. Real estate operating leases and various other operating
leases are expected to be placed on the balance sheet as a result of this standard but it is not expected that airport terminal
leases will have a significant impact, as they mostly include variable lease payments outside of those based on a fixed index
and, as a result, are excluded from consideration. The expected impact of applying this standard will be the recognition of
between $15 million and $25 million in right-of-use assets and corresponding lease liability. Adoption is not expected to
significantly change the recognition, measurement or presentation of associated expenses within the consolidated statements of
income or cash flows, or impact existing debt covenants. The Company also plans to elect the package of practical expedients
and will adopt this standard under the modified retrospective transition method effective January 1, 2019.

Recently Adopted Standards

In 2014, the FASB issued the New Revenue Standard. Under this ASU and subsequently issued amendments, revenue is
recognized at the time a good or service is transferred to a customer for the amount of consideration received. Entities may use
a full retrospective approach or report the cumulative effect as of the date of adoption. The Company adopted this standard
using the full retrospective transition method effective January 1, 2018 and has recast prior year results. See Note 3 for more
information on the impact of this adoption.

While the adoption of the New Revenue Standard did not have a significant effect on earnings, $621.9 million of ancillary air-
related fees for the twelve months ended December 31, 2018 are now classified as passenger revenue. Adoption also resulted in
a net reduction to air traffic liability at December 31, 2017 of $5.9 million. This change resulted from the recognition of
breakage revenue on issuance of credit vouchers that are expected to expire unused. The Company recognizes revenue from the
co-branded credit card program using the deferral method.

In February 2018, the FASB issued ASU 2018-02, "Income Statement—Reporting Comprehensive Income (Topic 220)." This
standard provides an option to reclassify stranded tax effects within accumulated other comprehensive income (loss) ("AOCI")
to retained earnings. The Company adopted this standard effective January 1, 2018 and a one-time effect of $0.6 million has
been reclassified from AOCI to retained earnings.

Note 3 — Revenue Recognition

Certain prior period amounts have been recast to conform to the adoption of the New Revenue Standard as shown in the tables
below. See Note 2 for additional information on each revenue component.

(in thousands, except per
share data)

As Previously
Reported

Adjustments

Current
Presentation

As Previously
Reported

Adjustments

Current
Presentation

Year Ended December 31, 2017

Year Ended December 31, 2016

Consolidated Statements of
Income:

Passenger revenue (1)

............ $

818,136 $

553,901 $

1,372,037

753,414 $

Air-related charges ................

Sales and marketing ..............

Income tax provision ............

546,476

52,711

644

Net income ...........................

194,902

(546,476)

3,964

215

3,246

—

56,675

859

198,148

499,542

20,527

126,368

219,590

515,653 $
(499,542)
14,102

733

1,276

Diluted earnings per share .... $

11.93 $

0.20 $

12.13

13.21 $

0.08 $

1,269,067

—

34,629

127,101

220,866

13.29

(1) Passenger revenue previously reported as Scheduled service revenue.

(in thousands)

Consolidated Balance Sheets:

December 31, 2017

As Previously
Reported

Adjustments

Current
Presentation

Air traffic liability .............................................................................................. $

210,184 $

Deferred income taxes .....................................................................................

Retained earnings ..............................................................................................

118,492

902,579

(5,885) $
521

5,364

204,299

119,013

907,943

Year ended December 31, 2017

Year ended December 31, 2016

As Previously
Reported

Adjustments

Current
Presentation

As Previously
Reported

Adjustments

Current
Presentation

(in thousands)
Consolidated Statements of
Cash Flow:
Operating activities:

Net income ........................... $

194,902 $

3,246 $

198,148

219,590 $

1,276 $

220,866

Deferred income taxes .........

Change in air traffic liability ...
Net cash provided by
operating activities .................. $

Passenger revenue allocation

42,473

16,183

216

(3,462)

42,689

12,721

29,846
(4,135)

733
(2,009)

30,579
(6,144)

253,558 $

— $

253,558

245,301 $

— $

245,301

Passenger revenue is primarily composed of passenger ticket sales, credit voucher breakage, seat fees, baggage fees, and other
travel-related services performed in conjunction with a passenger’s flight, as well as co-brand point redemptions as outlined
below:

(in thousands)

Year Ended December 31,

2018

2017

2016

Scheduled service ............................................................................................. $

898,653

821,621

Ancillary air-related charges ............................................................................

Co-brand redemptions ......................................................................................

621,939

13,109

547,860

2,556

768,721

500,346

—

Total passenger revenue .................................................................................... $

1,533,701

1,372,037

1,269,067

The contract term of passenger tickets is 12 months and revenue associated with future travel will principally be recognized
within this time frame. Substantially all of the $204.3 million that was recorded in the air traffic liability balance at December
31, 2017 was recognized into passenger revenue during the twelve months ended December 31, 2018.

Co-brand redemptions

Bank of America has issued The Allegiant World Mastercard® in which points are earned and awarded to cardholders in
exchange for consideration received under an agreement with a seven year scheduled duration expiring in 2023. Under this
arrangement, the Company identified the following deliverables: travel points to be awarded (the travel component), use of the
Company’s brand and access to its member lists, and certain other advertising and marketing elements (collectively the
marketing component). Consideration received from the Company’s co-brand agreement is allocated between the two
components based on the relative selling price of each deliverable. The Company applies 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 to be redeemed.

In relation to the travel component, the Company has a performance obligation to provide cardholders with points to be used
for future travel award redemptions. Therefore, consideration received from Bank of America related to the travel component is
deferred based on its relative selling price and is recognized into passenger revenue when the points are redeemed and the
transportation is provided.

The following table presents the activity of the current and non-current point liabilities (in thousands):

Balance at January 1 .................................................................................................................... $

8,903

Points awarded .............................................................................................................................

Points redeemed ...........................................................................................................................

Balance at December 31 .............................................................................................................. $

14,914
(13,109)
10,708

790

10,669
(2,556)
8,903

2018

2017

As of December 31, 2018, $9.6 million of the current points liability is reflected in Accrued liabilities and represents the current
estimate of revenue to be recognized in the next twelve months based on historical trends, with the remaining balance reflected
in Other noncurrent liabilities expected to be recognized into revenue in periods thereafter.

Note 4 — Property and Equipment

Property and equipment consisted of the following (in thousands):

Flight equipment, including pre-delivery deposits ............................. $
Computer hardware and software .......................................................
Land and buildings/leasehold improvements ......................................
Other property and equipment ............................................................
Total property and equipment .............................................................
Less accumulated depreciation and amortization ...............................
Property and equipment, net ............................................................... $

As of December 31, 2018 As of December 31, 2017
1,539,433
123,675
77,409
48,446
1,788,963
(276,548)
1,512,415

1,905,157
140,385
85,925
89,778
2,221,245
(373,977)
1,847,268

As of December 31, 2018, the Company had firm commitments to purchase 14 new and used Airbus A320 series aircraft which
are expected to be delivered between 2019 and 2022.

As of December 31, 2018, the majority of the year-over-year increase in Other property and equipment noted above is related
to the development of Sunseeker Resort as well as the family entertainment center initiatives.

Note 5 — Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

As of December 31, 2018 As of December 31, 2017

Salaries, wages and benefits ............................................................... $

34,406

Interest ................................................................................................

Station expenses .................................................................................

Maintenance and repairs .....................................................................

Passenger fees .....................................................................................

Loyalty card program liability ............................................................

Property taxes .....................................................................................

Advertising accruals ...........................................................................

Passenger taxes ...................................................................................

Other accruals .....................................................................................

14,276

12,918

11,016

10,465

9,625

8,017

4,337

517

16,450

Total accrued liabilities ....................................................................... $

122,027

35,516

13,326

12,026

5,481

11,420

—

7,851

4,154

447

14,906

105,127

Note 6 — Long-Term Debt

Long-term debt consisted of the following (in thousands):

As of December 31, 2018 As of December 31, 2017

.....
Fixed-rate debt and capital lease obligations due through 2030 (1) (2)
Variable-rate debt due through 2028 ..................................................
Total long-term debt and capital lease obligations, net of related
costs ....................................................................................................
Less current maturities, net of related costs (1)
...................................
Long-term debt and capital lease obligations, net of current
maturities and related costs ................................................................ $

Weighted average fixed-interest rate on debt .....................................

Weighted average variable-interest rate on debt ................................

640,806

630,927

1,271,733

152,287

1,119,446

5.3%

4.2%

465,462

699,430

1,164,892

214,761

950,131

5.4%

3.3%

(1) As of December 31, 2018, $428.0 million of the Company's Unsecured Senior Notes were classified as long-term as
management had the intent and ability to refinance the borrowings on a long-term basis. The Notes were refinanced in
February 2019, as discussed below.
(2) As of December 31, 2018, includes capital lease obligations secured by five A320 series aircraft.

Maturities of long-term debt as of December 31, 2018, for the next five years and thereafter, in the aggregate, are: 2019 -
$580.3 million; 2020 - $168.3 million; 2021 - $94.6 million; 2022 - $67.2 million; 2023 - $54.2 million; and $307.1 million
thereafter. Total long-term debt is presented net of related costs of $5.0 million and $6.1 million at December 31, 2018 and
2017, respectively.

Consolidated Variable Interest Entities

The Company evaluates ownership, contractual lease arrangements and other interests in entities to determine if they are
variable interest entities ("VIEs") based on the nature and extent of those interests. 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 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. These borrowings bear interest at a

blended rate of 4.0 percent, 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.

In December 2017, the Company entered into an agreement with a trust to finance three Airbus A320 aircraft, under which the
aircraft serve as collateral for the financing. The trust was funded on inception by a $102.0 million long-term debt agreement
entered into by the trust. These borrowings bear interest at a floating rate based on LIBOR and are payable in
quarterly installments through December 2027. 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 $112.8
million and $102.0 million, respectively, at the time of borrowing.

Senior Secured Revolving Credit Facility

In 2015, the Company, through a wholly owned subsidiary, entered into a senior secured revolving credit facility under which it
was entitled to borrow up to $56.0 million. In March 2018, the Company paid off the balance of the facility and amended it to
increase the borrowing limit to $81.0 million. The amended facility has a term of 24 months and the borrowing ability is based
on the value of the Airbus A320 series aircraft placed in the collateral pool. In July 2018, the Company drew down $46.9
million under this facility, and no principal payments have been made as of December 31, 2018. Aircraft may remain in the
collateral pool for up to two years, and, as of December 31, 2018, there were nine aircraft in the collateral pool, having been
placed into the pool in September and December 2018. The notes for the amounts borrowed under the facility bear interest at a
floating rate based on LIBOR and are due in March 2020.

Other Secured Debt

In September 2018, the Company entered into a senior secured credit facility under which it borrowed $75.0 million in
September and October 2018 secured by four Airbus A320 series aircraft. The borrowing bears interest at a floating rate based
on LIBOR, and is payable in quarterly installments over seven years.

In July 2018, the Company borrowed $34.5 million under a loan agreement secured by one Airbus A320 series aircraft. The
note bears interest at a floating rate based on LIBOR, and is payable in quarterly installments over ten years.

In June 2018, the Company borrowed $10.8 million under a loan agreement secured by various ground equipment. The note
bears interest at a fixed rate of 4.2 percent per year, and is payable in monthly installments over five years.

In February 2019, the Company entered into a Credit and Guaranty Agreement (the “Term Loan”) to borrow $450.0 million,
guaranteed by all of the Company's subsidiaries excluding Sunseeker Resorts Inc. and its subsidiaries and other insignificant
subsidiaries (the "Term Loan Guarantors"). $428.0 million net proceeds from the Term Loan have been, or will be, used to
purchase the Company's senior unsecured obligations (the "Notes") as outlined below. See Note 14 for further detail.

General Unsecured Senior Notes

In June 2014, the Company completed an offering of $300.0 million aggregate principal amount of the Notes which mature in
July 2019. In December 2016, the Company completed an offering of an additional $150.0 million principal amount of these
notes, which were issued at a price of 101.5 percent of the principal amount, plus accrued interest from July 15, 2016. The
Notes bear interest at a rate of 5.5 percent per year, payable in cash semi-annually, on January 15th and July 15th of each year.

In February 2019, the Company purchased $347.9 million aggregate principal amount of its outstanding senior unsecured
Notes validly tendered pursuant to a tender offer for such Notes, using the net proceeds of the Term Loan. The Company
expects to call the remaining balance of the Notes in advance of their maturity in July 2019.

As of December 31, 2018, the indenture pursuant to which the Notes were issued included operating and financial restrictions
on the Company. These restrictions limited or restricted, among other things, the Company’s ability and the ability of its
restricted subsidiaries to (i) incur additional indebtedness; (ii) incur liens; (iii) make restricted payments (including paying
dividends on, redeeming, repurchasing or retiring capital stock); (iv) make investments; and (v) consolidate, merge or sell all or
substantially all of its assets. These covenants were subject to various exceptions and qualifications under the terms of the
indenture, and the restrictions were eliminated pursuant to the third supplemental indenture for these notes. For the four
quarters ended December 31, 2018, the Company exceeded the consolidated total leverage ratio limit, which had no effect on
the ability to make restricted payments during 2018.

Capital Leases

The Company has capital lease obligations related to aircraft, which significantly impacted the Company's recognized assets
and liabilities as of December 31, 2018, but did not result in any significant cash receipts or cash payments during the year.

Note 7 — Shareholders’ Equity

The Company is authorized by its Board of Directors to acquire the Company’s stock through open market and private
purchases under its share repurchase program. As repurchase authority is used, the Board of Directors has, to date, authorized
additional expenditures for share repurchases.

Share repurchases consisted of the following during the periods indicated:

Shares repurchased (1)

..................................................................................

Average price per share ..............................................................................

Total (in thousands) ..................................................................................... $

Twelve Months Ended December 31,

2018

—

NA $

— $

2017

604,497

142.66

86,240

2016

391,972

164.99

64,673

(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 22,981, 27,606, and 10,103 shares for 2018, 2017
and 2016, respectively.

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

Twelve Months Ended December 31,

2018

2017

2016

Total quarterly cash dividends declared, per share .................................... $

2.80

Total cash dividends paid (in thousands) (1)

...............................................

45,247

45,720

2.40

67,540

(1) 2016 includes $27.7 million paid on January 8, 2016, as part of a special cash dividend of $1.65 per share declared by the
Board prior to year-end 2015, for shareholders of record on December 18, 2015.

As of December 31, 2018, the Company had $100.0 million in unused share repurchase authority remaining under the Board
approved program.

Note 8 — Fair Value Measurements

Investments

The Company measures certain financial assets and liabilities at fair value on a recurring basis. Fair value is an exit price,
representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants. Accounting standards pertaining to fair value measurements establish a three-tier fair value hierarchy,
which prioritizes the inputs used in measuring fair value as follows:

Level 1 - Defined as observable inputs such as quoted prices in active markets for identical assets or liabilities

Level 2 - Defined as inputs other than Level 1 inputs that are either directly or indirectly observable

Level 3 - Defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to
develop its own assumptions

The Company uses the market approach valuation technique to determine fair value for investment securities. 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, corporate debt securities, and US
treasury bonds, 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.

For those assets classified as Level 2 that are not in active markets, the Company obtains fair value from pricing sources using
quoted market prices for identical or comparable instruments, and uses pricing models which include all significant observable
inputs: maturity dates, issue dates, settlement dates, benchmark yields, reported trades, broker-dealer quotes, issue spreads,
benchmark securities, bids, offers and other market related data. These inputs are observable or can be derived from, or
corroborated by, observable market data for substantially the full term of the asset.

Financial instruments measured at fair value on a recurring basis (in thousands):

As of
December 31, 2018
Level 1

Total

Level 2

Total

As of
December 31, 2017
Level 1

Level 2

Cash equivalents

Money market funds ................ $
Commercial paper ....................
US Treasury Bonds ..................
Municipal debt securities .........
Total cash equivalents .........

Short-term

Commercial paper ....................
Corporate debt securities ..........
Municipal debt securities .........
Federal agency debt securities ..
US Treasury Bonds ..................
Total short-term ...................

Long-term

Corporate debt securities ..........
Federal agency debt securities ..
US Treasury Bonds ..................
Municipal debt securities .........
Derivative instruments .............
Total long-term ....................
Total financial instruments ......... $

43,281
29,138
1,415
—
73,834

180,846
101,489
14,252
11,887
5,990
314,464

37,334
11,291
2,901
—
—
51,526
439,824

— $

43,281
—
—
—
43,281

—
—
—
—
—
—

—
—
—
—
—
—
43,281

29,138
1,415
—
30,553

180,846
101,489
14,252
11,887
5,990
314,464

37,334
11,291
2,901
—
—
51,526
396,543

1,297
27,910
—
2,782
31,989

108,678
107,878
101,290
31,428
3,407
352,681

60,396
5,775
2,994
9,405
282
78,852
463,522

1,297
—
—
—
1,297

—
—
—
—
—
—

—
—
—
—
—
—
1,297

—
27,910
—
2,782
30,692

108,678
107,878
101,290
31,428
3,407
352,681

60,396
5,775
2,994
9,405
282
78,852
462,225

There were no significant transfers between Level 1 and Level 2 assets for the years ended December 31, 2018 or 2017.

Long-term Debt

The fair value of the Company’s publicly held long-term debt is determined based on inputs that are readily available in public
markets or can be derived from information available in publicly quoted markets; therefore, the Company has categorized its
publicly held debt as Level 2. The remaining debt agreements are not publicly held. The Company has determined the
estimated fair value of these notes to be Level 3, as certain inputs used to determine the fair value of these agreements are
unobservable and, therefore, could be sensitive to changes in inputs. The Company utilizes the discounted cash flow method to
estimate the fair value of Level 3 debt.

Carrying value and estimated fair value of long-term debt, including current maturities and without reduction for related costs
(in thousands):

As of December 31, 2018
Estimated
Carrying
Fair Value
Value

As of December 31, 2017
Estimated
Carrying
Fair Value
Value

Publicly held debt ................................................ $

450,463

451,026

451,321

462,604

Non-publicly held debt ........................................

703,372

619,379

719,681

660,065

Total long-term debt ............................................. $ 1,153,835

$ 1,070,405

$ 1,171,002

$ 1,122,669

Fair Value
Level

Other

In the fourth quarter of 2017, the Company recorded a non-cash impairment charge of $35.3 million on its fleet of MD-80
aircraft, engines, and related assets as a result of a review of fleet value. The Company concluded that the carrying value of
these aircraft and related assets was no longer fully recoverable when compared to the estimated remaining future undiscounted
cash flows from these assets. Therefore, an adjustment to their fair value with inputs classified as Level 3 was recorded. As of
December 31, 2018, the MD-80 aircraft and related engines have been retired and there was zero carrying value remaining.

Due to the short term nature, carrying amounts of cash, cash equivalents, restricted cash, accounts receivable and accounts
payable approximate fair value.

Note 9 — Income Taxes

Impact of U.S. Federal Income Tax Reform

The Company is subject to income taxation in the United States, foreign countries and various state jurisdictions in which it
operates. In accordance with income tax reporting 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. The Company has recorded
reserves for tax contingencies which relate primarily to an outstanding one-time tax refund claim.

The "Tax Cuts and Jobs Act" (the "Tax Act") signed into law in 2017 significantly changed the U.S. corporate income tax rules
including, but not limited to, the reduction of U.S. corporate income tax rate from 35.0 percent to 21.0 percent, ability to claim
100 percent bonus depreciation on qualified property placed in service from September 28, 2017 through December 31, 2022,
and elimination of certain deductions.

ASC 740, Income Taxes, requires companies to recognize the effect of the tax law changes in the period of enactment. On
December 22, 2017, the SEC staff issued Staff Accounting Bulletin 118 which allows companies to record provisional amounts
during a one-year measurement period in order to complete the accounting for income tax effects of the Tax Act. The Company
recognized a one-time tax benefit of $74.7 million due to the remeasurement of deferred tax assets and deferred tax liabilities to
the new statutory rate. The Company recognized provisional estimates which may be impacted by the Company’s
understanding and application of the Tax Act related to the deductibility of acquired assets, state conformity and additional
guidance from federal and state agencies as well as the FASB and the SEC. In 2018, the Company completed its determination
of the accounting implications of the Tax Act, and there were no material changes.

Components of Income before Income Taxes from Continuing Operations

The components of income before taxes for domestic and foreign operations consisted of the following (in thousands):

Domestic .............................................................................................. $

195,843

Foreign .................................................................................................

3,475

Total .................................................................................................................. $

199,318

As Recast

180,314

18,693

199,007

331,827

16,140

347,967

Year ended December 31,
2017

2016

2018

Income Tax Provision/(Benefit)

The provision for income taxes is composed of the following (in thousands):

Current:

Federal ................................................................................................. $
State .....................................................................................................
Foreign .................................................................................................
Total current ..........................................................................................

Deferred:

Federal .................................................................................................
State .....................................................................................................
Foreign .................................................................................................
Total deferred .........................................................................................
Total income tax provision ........................................................................ $

Reconciliation of Effective Tax Rate

2018

Year ended December 31,
2017
As recast

2016
As recast

(3,707) $
(650)
1,086
(3,271)

41,593
3,744
(4,550)
40,787
37,516

(44,385) $
664
558
(43,163)

41,015
1,978
1,029
44,022
859

89,014
5,204
1,262
95,480

28,653
1,703
1,265
31,621
127,101

The effective tax rate on income before income taxes differed from the federal statutory income tax rate as follows (in
thousands):

2018

Year ended December 31,
2017
As recast

2016
As recast

Income tax expense at federal statutory rate .......................................... $
State income taxes, net of federal income tax benefit ............................
Federal tax reform impact ......................................................................
Domestic production activities deduction ..............................................
Other .......................................................................................................

Total income tax expense ................................................................... $

41,857
3,560
—
(3,539)
(4,362)
37,516

68,639
2,739
(74,738)
—
4,219
859

121,789
5,517
—
—
(205)
127,101

Deferred Taxes

The major components of the Company’s net deferred tax assets and liabilities are as follows (in thousands)

Deferred tax assets:

Accrued vacation ............................................................................................................... $
Accrued bonus ...................................................................................................................
State taxes ..........................................................................................................................
Accrued property taxes ......................................................................................................
Stock-based compensation expense ..................................................................................
Net operating loss ..............................................................................................................
Other ..................................................................................................................................
Less: valuation allowance .................................................................................................
Total deferred tax assets .....................................................................................................

Deferred tax liabilities:

Prepaid expenses ...............................................................................................................
Depreciation ......................................................................................................................
Foreign deferred ................................................................................................................
Other ..................................................................................................................................
Total deferred tax liabilities ................................................................................................
Net deferred tax liabilities ...................................................................................................... $

Net Operating Loss and Tax Credit Carryforwards

As of December 31,

2018

2017
As recast

595
3,792
86
1,615
1,310
38,875
—
1,193
45,080

4,436
202,595
—
2,103
209,134
164,054

690
628
318
1,573
1,983
635
3,160
422
8,565

4,275
118,743
4,569
—
127,587
119,022

At December 31, 2018, the Company recognized federal and state net operating loss carryforwards for income tax purposes in
the amount of $37.4 million and $1.5 million, respectively. The federal net operating loss carryforward will not expire per the
Tax Act and the state net operating loss carryforwards will expire between 2032 and 2038.

The Company previously recognized a federal capital loss carryforward of $0.7 million, as remeasured pursuant to the Tax Act,
as of December 31, 2016 which begins to expire in 2021. As of December 31, 2018, the Company also recognized foreign tax
credit and R&D tax credit in the amount of $1.8 million and $0.9 million which will expire in 2029 and 2024, respectively.

Tax Contingencies

The reconciliation of the Company's tax contingencies is as follows (in thousands):

As of December 31,

2018

2017

2016

Beginning Balance .................................................................................... $

778

Increases for tax position of prior years ...................................................

Increases for tax position of current year .................................................

Decreases for tax positions of prior years ................................................

Settlements ...............................................................................................
Decreases for lapses in statute of limitations ............................................

Ending Balance ......................................................................................... $

3,364

293
(10)
(110)
(140)
4,175

837

251

—
(356)
—

778

512

140

492
(307)
—
—

837

The Company's policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of
income tax expense. The timing of the resolution of income tax examinations is uncertain, and the tax liability of the issues
raised by taxing authorities may differ from the amounts accrued. Therefore, the Company cannot currently provide an estimate
of the range of possible outcomes in the next twelve months.

Note 10— Related Party Transactions

During the year ended December 31, 2018, no related party transactions occurred requiring disclosure.

In December 2017, the Company completed a transaction with ISM Connect, LLC ("ISM"), an entity in which the Company's
Chairman and Chief Executive Officer ("CEO") owns a majority interest. In exchange for a noncontrolling minority interest in
ISM, the Company licensed the right to use certain portions of its internally developed software, but strictly limited to ISM's
digital media signage business. The Company retains all rights in the software without restriction. This interest was valued at
$2.3 million and no subsequent transactions with ISM are expected.

The Company previously entered into lease agreements for approximately 70,000 and 10,000 square feet of office space in
buildings in which the Company’s Chairman and CEO and the Company's President own minority interests as limited partners.
The Company exercised its option to terminate the lease for 70,000 square feet of office space effective in May 2015. In
connection with the termination of this lease, the Company paid $1.3 million for unamortized expenses in January 2016.

Entities owned or controlled by the Company's Chairman and CEO have been paid for the building of corporate training
content. The Company made no payments during 2018 and paid $0.2 million and $1.7 million in 2017 and 2016, respectively.
No further payments are expected.

Note 11 — Employee Benefit Plans

401(k) Plan

The Company has a defined contribution plan covering all eligible employees. 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. In January 2017, the Company increased its matching contributions on pilot deferrals
to 10 percent of eligible wages resulting from the pilot collective bargaining agreement.

The Company recognized expense under this plan of $19.1 million, $14.2 million and $5.8 million for the years ended
December 31, 2018, 2017 and 2016, respectively.

Share-based employee compensation

The Company reserved 2,000,000 shares of common stock for the Company to grant stock options, restricted stock, cash-
settled stock appreciation rights ("SARs") and other stock-based awards to certain officers, directors and employees of the
Company under the 2016 Long-Term Incentive Plan (the "2016 Plan"). The 2016 Plan is administered by the Company’s
compensation committee of the Board of Directors. As of December 31, 2018, a portion of unvested restricted stock, and
unexercised stock options and cash-settled SARs remain outstanding under the 2006 Long-Term Incentive Plan which has
otherwise expired.

Employee Stock Purchase Plan

The Company reserved 1,000,000 shares of common stock for employee purchases under the 2014 Employee Stock Purchase
Plan ("ESPP"). Shares are purchased semi-annually, at a discount, based on the market value at period-end. Employees may
contribute up to 25 percent of their base pay per offering period, not to exceed $25,000 each calendar year, for the purchase of
common stock. The ESPP is a compensatory plan under applicable accounting guidance and results in the recognition of
compensation expense.

The following table provides information about the Company’s ESPP activity during 2018, 2017, and 2016:

Total number of
shares purchased

Average price paid
per share

Weighted-average
fair value of
discount under the
ESPP (1)

As of December 31, 2016 ................................................

As of December 31, 2017 ................................................

As of December 31, 2018 ................................................

13,400

18,498

33,300

120.63

126.81

134.31

14.80

14.09

16.79

(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. The Company increased the discount from 10
percent to 15 percent for the second offering period of 2018. 15 percent is the maximum allowable discount under the ESPP.

Compensation expense

For the years ended December 31, 2018, 2017 and 2016, the Company recorded compensation expense of $15.6 million, $14.0
million and $9.6 million, respectively, related to stock options, restricted stock, cash-settled SARs 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 $17.5 million for unvested restricted stock expected to be recognized over a
weighted-average period of 1.49 years. As of December 31, 2018, there is no unrecognized compensation cost for either cash-
settled SARs or stock options.

Stock options

The fair value of stock options granted is estimated as of the grant date using the Black-Scholes option pricing model. The
contractual terms of the Company’s stock option awards granted range from five to ten years. A summary of option activity as
of December 31, 2018, 2017 and 2016, and changes during the years then ended, is presented below:

Outstanding at December 31, 2015 .....................................
Exercised .............................................................................
Outstanding at December 31, 2016 .....................................
Exercised .............................................................................
Outstanding at December 31, 2017 .....................................
Exercised .............................................................................
Outstanding at December 31, 2018 .....................................
Fully vested and expected to vest at December 31, 2018 ...
Exercisable at December 31, 2018 ......................................

Weighted
Average
Exercise
Price

Options

48,781
(5,192)
43,589
(16,014)
27,575
(17,838)
9,737
9,737
9,737

$
$
$

86.65
108.59
84.04
60.20
97.88
92.04
108.59
108.59
108.59

Weighted
Average
Remaining
Contractual
Life (years)
2.62

Aggregate
Intrinsic
Value
(thousands)
3,960
$

1.55

0.72

0.18
0.18
0.18

$
$
$

3,590

1,568

—
—
—

During the years ended December 31, 2018, 2017 and 2016, the total intrinsic value of options exercised was $1.4 million, $1.3
million and $0.2 million, respectively. Cash received from option exercises for the years ended December 31, 2018, 2017 and
2016 was $1.6 million, $1.0 million and $0.6 million, respectively.

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. A
summary of the status of non-vested restricted stock grants during the years ended December 31, 2018, 2017 and 2016 is
presented below:

Non-vested at December 31, 2015 .........................................................................................
Granted ...................................................................................................................................
Vested ..................................................................................................................................................
Forfeited .................................................................................................................................
Non-vested at December 31, 2016 .........................................................................................
Granted ...................................................................................................................................
Vested ..................................................................................................................................................
Forfeited .................................................................................................................................
Non-vested at December 31, 2017 .........................................................................................
Granted ...................................................................................................................................
Vested ..................................................................................................................................................
Forfeited .................................................................................................................................
Non-vested at December 31, 2018 .........................................................................................

Weighted
Average Grant
Date Fair
Value

82,957
224,018
(43,310)
(10,007)
253,658
125,442
(91,338)
(94,872)
192,890
102,842
(85,410)
(14,128)
196,194

155.30
144.74
129.96
158.74
146.01
165.61
145.08
157.95
153.32
155.02
153.85
154.65
153.88

The total fair value of restricted stock that vested during the years ended December 31, 2018, 2017 and 2016 was $13.4 million,
$13.3 million and $5.6 million, respectively.

Cash-settled SARs

Cash-settled SARs are liability classified awards for which the fair value and compensation expense recognized are updated
monthly using the Black-Scholes option pricing model.

The following range of assumptions in the Black-Scholes pricing model was used to determine fair value as of December 31 of
the years indicated below:

Weighted-average volatility ......................................................................
Expected term (in years) ...........................................................................
Risk-free interest rate ...............................................................................
Dividend yield ..........................................................................................

2018

2017

2016

35.0%
0.8
2.6%
1.68%

32.8%
0.2 - 1.9
0.6% - 1.9%
1.62%

33.2%
0.3 - 3.1
0.4% - 1.5%
1.51%

Expected volatilities used for award valuation are based on the historical volatility of the Company's common stock price.

Expected term represents the weighted average time between the award’s grant date and its expected exercise date. The
Company estimated the expected term assumption in 2018, 2017 and 2016 using historical award exercise activity and
employee termination activity.

The risk-free interest rate for periods equal to the expected term of an award is based on a blended historical rate using Federal
Reserve rates for U.S. Treasury securities.

The dividend yield reflects the effect that paying a dividend has on the fair value of the Company's stock.

The contractual term of the Company’s cash-settled SARs awards granted is five years.

A summary of cash-settled SARs awards activity during the years ended December 31, 2018, 2017 and 2016 is presented
below:

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Term (years)

Aggregate
Intrinsic
Value
(thousands)

# of SARs

Balance at December 31, 2015

.............................................

131,741

Granted ...................................................................................

Forfeited .................................................................................

Exercised ................................................................................
.............................................
Balance at December 31, 2016

Forfeited .................................................................................

Exercised ................................................................................
.............................................
Balance at December 31, 2017

Forfeited .................................................................................
Exercised ................................................................................
.............................................
Balance at December 31, 2018

Vested or expected to vest at December 31, 2018

...............
.......................................

Exercisable at December 31, 2018

15,000
(10,083)
(32,050)
104,608
(14,682)
(9,462)
80,464
(12,890)
(13,642)
53,932

53,482

48,932

136.13

146.03

170.21

89.19

153.86

177.6

106.25

155.13

181.47
98.37

163.19

163.34

164.95

1.47

1.46

1.34

—

Note 12 — Commitments and Contingencies

The Company leases assets including office facilities, office equipment, certain airport and terminal facilities, and other space.
These commitments have remaining non-cancelable lease terms, which range from 2019 to 2036. Total rental expense for
operating leases for the years ended December 31, 2018, 2017 and 2016 was $12.7 million, $9.0 million and $8.1 million,
respectively. Future minimum fixed payments for commitments under aircraft acquisition, certain airport and terminal facilities,
and other operating lease obligations as of December 31, 2018 (in thousands) are:

2019

2020

2021

2022

2023

2024 -
Thereafter

Aircraft and engine purchase obligations ....... $ 259,160

33,800

500

18,000

— $

Airport fees under use and lease agreements ..

Operating lease obligations .............................

10,480

8,102

5,223

6,031

3,643

—

1,630

—

1,626

Total future payments ...................................... $ 277,742

45,054

4,206

19,630

1,626

—

8,297

Aircraft sub-service expense was $0.9 million, $3.1 million, and $0.9 million, in 2018, 2017 and 2016, respectively.

The Company's Airbus fleet also includes five aircraft currently under capital lease.

Aircraft Commitments

During 2018, the Company entered into purchase agreements for eight Airbus A320 series aircraft as well as a purchase
agreement for seven spare engines. Under these contracts and others previously entered into, we expect 11 aircraft to be acquired
in 2019, two in 2020, and one in 2022. The seven spare engines are all expected to be acquired in 2019. Additionally, in February
2019, the Company entered into an agreement for two Airbus A320 series aircraft, for which delivery is expected in the first half
of 2019.

During 2017, the Company entered into purchase agreements for six Airbus A320 series aircraft. Four of these aircraft were
acquired in 2017 and the remaining two were acquired in 2018.

During 2017, the Company also entered into 13 capital lease agreements, each for one Airbus A320 series aircraft. Of these
agreements, the Company received five aircraft in 2018, and the remaining eight agreements were terminated in the fourth quarter
2018 due to extensive delivery delays.

During 2016, the Company entered into purchase agreements for six Airbus A320 series aircraft that have yet to be purchased as
of the end of 2018. These aircraft are expected to be acquired in 2019 and 2020.

Facility Lease Obligations

The Company leases other facilities in Las Vegas, Florida and throughout the network with approximately 650,000 square feet of
space used for other corporate purposes. These leases expire between 2019 and 2036. The Company is responsible for its share of
common area maintenance charges under each lease.

Airport and terminal facility leases are entered into with a number of local governments and other third parties. These lease
arrangements have a variety of terms and conditions.

Contingencies

The Company is subject to certain legal and administrative actions it considers routine to its business activities. The Company
believes the ultimate outcome of any pending legal or administrative matters will not have a material adverse impact on its
financial position, liquidity or results of operations.

Note 13 — Valuation and Qualifying Accounts (in thousands)

Balance at
Beginning of
Year

Changes
Charged to
Statement of
Income
Accounts

Write Offs
(net of
recoveries)

Balance at
End of Year

Allowance for expendable parts and supplies

For the Year Ended December 31, 2018

.......................

13,756

2,624

For the Year Ended December 31, 2017 (1)

.......................
For the Year Ended December 31, 2016 .......................
.......................

7,205

4,607

6,551

2,598

(1,970) $
—

—

14,410

13,756

7,205

(1) Changes during the year and ending balance include additional reserve of $2.0 million related to the MD-80 impairment
charge.

Note 14 — Subsequent Events

In February 2019, the Company entered into the Term Loan to borrow $450.0 million, guaranteed by the Term Loan
Guarantors, which is secured by substantially all property and assets of the Company and the Term Loan Guarantors, excluding
aircraft and aircraft engines, and excluding certain other assets. The Term Loan has a five-year term and bears interest based on
LIBOR plus 4.5 percent or an alternate base rate plus 3.5 percent, respectively, subject to certain adjustments. The Term Loan
provides for quarterly interest payments along with quarterly principal payments of $1.1 million through February 2024, at
which time the Term Loan is due. The Term Loan may be prepaid at any time without penalty.

In connection with the Term Loan, the Company conducted a tender offer for its 5.5 percent Notes due 2019. As a result of the
tender offer, the Company purchased $347.9 million of its Notes and the indenture governing the Notes was amended to
eliminate most of the restrictive covenants and certain events of default, reduce the minimum notice period required for
redemptions of the Notes from 30 days as previously required by the indenture to three business days, and amend certain other
provisions applicable to the Notes. The Company expects to call the remaining balance of the Notes in advance of their
maturity in July 2019.

In February 2019, the Company executed a purchase agreement for two Airbus A320 series aircraft. The Company expects
delivery of one of these aircraft in the first quarter 2019 and the other in the second quarter 2019.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A. Controls and Procedures

Evaluation of disclosure controls and procedures. As of the end of the period covered by this report, under the supervision and
with the participation of our management, including our CEO and chief financial officer (“CFO”), we evaluated the design and
operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange
Act of 1934, as amended, or the “Exchange Act”) as of the end of the period covered by this report. Based on that evaluation,
management, including our CEO and CFO, has concluded that our disclosure controls and procedures are designed, and are
effective, to give reasonable assurance that the information we are required to disclose is recorded, processed, summarized and
reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the
Company’s management, including the CEO and the CFO, as appropriate to allow timely decisions regarding required
disclosure.

Changes in internal controls. There were no changes in our internal control over financial reporting (as defined in
Rule 13a-15(f) of the Exchange Act) that occurred during the fourth quarter of our year ended December 31, 2018, that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Annual Report on Internal Control over Financial Reporting. Management, under the supervision of the CEO
and CFO, is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in
Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our management has assessed the effectiveness of our internal control over
financial reporting as of December 31, 2018. In making this assessment, management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) Internal Control- Integrated Framework
(2013 Framework). Based on the assessment, management has concluded that, as of December 31, 2018, our internal control
over financial reporting was effective based on those criteria.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. As such,
even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.
We intend to review and evaluate the design and effectiveness of our disclosure controls and procedures and internal control
over financial reporting on a regular basis, to improve these controls and procedures over time, and to correct any deficiencies
that may be discovered. Future events affecting our business may cause us to modify our controls and procedures.

Our independent registered public accounting firm has issued an attestation report regarding its assessment of the effectiveness
of our internal control over financial reporting as of December 31, 2018.

Item 9B. Other Information

Not applicable.

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors
Allegiant Travel Company:

Opinion on Internal Control Over Financial Reporting

We have audited Allegiant Travel Company’s and subsidiaries’ (the “Company”) internal control over financial reporting as of
December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control -
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2018 and 2017, the related consolidated
statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year
period ended December 31, 2018, and the related notes (collectively, the “consolidated financial statements”), and our report
dated February 28, 2019 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

Dallas, Texas

February 28, 2019

Item 10. Directors, Executive Officers, and Corporate Governance

PART III

The information required by this Item is incorporated herein by reference to the data under the headings “ELECTION OF
DIRECTORS,” “EXECUTIVE OFFICERS” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy
Statement to be used in connection with the solicitation of proxies for our annual meeting of shareholders to be held June 27,
2019, which Proxy Statement is to be filed with the Commission.

Item 11. Executive Compensation

The information required by this Item is incorporated herein by reference to the data under the headings “EXECUTIVE
COMPENSATION” and “REPORT OF THE COMPENSATION COMMITTEE” in the Proxy Statement to be used in
connection with the solicitation of proxies for our annual meeting of shareholders to be held June 27, 2019, which Proxy
Statement is to be filed with the Commission.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this Item is incorporated herein by reference to the data under the heading “STOCK
OWNERSHIP” in the Proxy Statement to be used in connection with the solicitation of proxies for our annual meeting of
shareholders to be held June 27, 2019, which Proxy Statement is to be filed with the Commission. The information required by
this item with respect to securities authorized for issuance under our equity compensation plans is included in Part II, Item 5 of
this Annual Report on Form 10-K.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this Item is incorporated herein by reference to the data under the heading “RELATED PARTY
TRANSACTIONS” and “Director Independence” in the Proxy Statement to be used in connection with the solicitation of
proxies for our annual meeting of shareholders to be held June 27, 2019, which Proxy Statement is to be filed with the
Commission.

Item 14. Principal Accountant Fees and Services

The information required by this Item is incorporated herein by reference to the data under the heading “PRINCIPAL
ACCOUNTANT FEES AND SERVICES” in the Proxy Statement to be used in connection with the solicitation of proxies for
our annual meeting of shareholders to be held June 27, 2019, which Proxy Statement is to be filed with the Commission.

Item 15. Exhibits and Financial Statement Schedules

PART IV

— Financial Statements and Supplementary Data. The financial statements included in Item 8 - Financial Statements and

Supplementary Data above are filed as part of this annual report.

— Financial Statement Schedules. Schedules are not submitted because they are not required or are not applicable, or the

required information is shown in the consolidated financial statements or notes thereto.

— Exhibits. The Exhibits listed below are filed or incorporated by reference as part of this Form 10-K. Where so indicated,

exhibits which were previously filed are incorporated by reference.

Exhibit
Number

Description

3.1 Articles of Incorporation of Allegiant Travel Company. (Incorporated by reference to Exhibit 3.1 to Registration

Statement No. 333-134145 filed with the Commission on July 6, 2006).

3.2 Bylaws of Allegiant Travel Company as amended on February 17, 2015. (Incorporated by reference to Exhibit 3.2

to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, filed with the Commission on
November 1, 2016).

3.3 Specimen Stock Certificate (Incorporated by reference to Exhibit 3.3 to the Form 8-A filed with the Commission

on November 22, 2006).

4.1

Indenture dated as of June 13, 2014, between Allegiant Travel Company and Wells Fargo Bank, National
Association, as trustee. (Incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-3 (Reg. No.
333-196738) filed with the Commission on June 13, 2014.)

4.2 First Supplemental Indenture dated as of June 25, 2014, among the Company, the guarantors named therein and
Wells Fargo Bank, National Association, as trustee (including the Form of Note). (Incorporated by reference to
Exhibit 4.2 to Form 8-K filed with the Commission on June 25, 2014.)

4.3 Second Supplemental Indenture dated as of December 5, 2016, among the Company, the guarantors named therein
and Wells Fargo Bank, National Association, as trustee (including the form of New Note). (Incorporated by
reference to Exhibit 4.3 to Form 8-K filed with the Commission on December 5, 2016.)

4.4 Form of 5.50% Notes due 2019 (included as Exhibit A in Exhibit 4.2 incorporated by reference).

4.5 Form of Additional 5.50% Notes due 2019 (included as Exhibit A in Exhibit 4.3 incorporated by reference.)

4.6 Third Supplemental Indenture, dated as of February 5, 2019, among the Company, the subsidiary guarantors party
thereto and Wells Fargo Bank, National Association, as trustee. (Incorporated by reference to Exhibit 4.1 to
Current Report on Form 8-K filed with the Commission on February 5, 2019.)

10.1

2006 Long-Term Incentive Plan, as amended on July 19, 2009. (Incorporated by reference to Exhibit 10.1 to the
Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, filed with the Commission on
November 9, 2009-SEC File No. 001-33166). (1)

10.2 Form of Indemnification Agreement. (Incorporated by reference to Exhibit 10.4 to the Annual Report on Form 10-
K for the year ended December 31, 2012, filed with the Commission on February 26, 2013-SEC File No.
001-33166).

10.5 Airport Use and Lease Agreement signed on March 17, 2011 between the Company and Clark County Department

of Aviation. (Incorporated by reference to Exhibit 10.20 to the Annual Report on Form 10-K for the year ended
December 31, 2011, filed with the Commission on February 27, 2012-SEC File No. 001-33166).

Exhibit
Number

Description

10.9 Employment Agreement dated as of September 9, 2016, between the Company and John Redmond. (Incorporated

by reference to Exhibit 10.3 to Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, filed
with the Commission on November 1, 2016.) (1)

10.10 Stock Appreciation Rights Agreement dated September 9, 2016, between the Company and John Redmond.

(Incorporated by reference to Exhibit 10.4 to Quarterly Report on Form 10-Q for the quarter ended September 30,
2016, filed with the Commission on November 1, 2016.) (1)

10.11 Restricted Stock Agreement dated September 9, 2016, between the Company and John Redmond. (Incorporated
by reference to Exhibit 10.5 to Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, filed
with the Commission on November 1, 2016.) (1)

10.12

2016 Long-Term Incentive Plan. (Incorporated by reference to Exhibit 10.6 to Quarterly Report on Form 10-Q for
the quarter ended September 30, 2016, filed with the Commission on November 1, 2016.) (1)

10.13 Form of Restricted Stock Agreement used for Directors of the Company. (Incorporated by reference to Exhibit

10.7 to Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, filed with the Commission on
November 1, 2016.) (1)

10.14 Form of Stock Option Agreement used for Employees of the Company. (Incorporated by reference to Exhibit 10.8
to Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, filed with the Commission on
November 1, 2016.) (1)

10.15 Form of Restricted Stock Agreement used for Employees of the Company. (Incorporated by reference to Exhibit
10.9 to Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, filed with the Commission on
November 1, 2016.) (1)

10.16 Form of Stock Appreciation Rights Agreement used for Employees of the Company. (Incorporated by reference to
Exhibit 10.10 to Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, filed with the
Commission on November 1, 2016.) (1)

10.17 Separation agreement and Mutual Release of All Claims dated January 12, 2018, between the Company and Scott
M. Allard (Incorporated by reference to Exhibit 10.17 to Annual Report on Form 10-K for the year ended
December 31, 2017, filed with the Commission on February 28, 2018).

10.18 Credit and Guaranty Agreement, dated as of February 5, 2019, among the Company, as borrower, certain
subsidiaries of the Company party thereto, as guarantors, the lenders party thereto and Barclays PLC, as
administrative agent, syndication agent and lead arranger. (Incorporated by reference to Exhibit 10.1 to Current
Report on Form 8-K filed with the Commission on February 5, 2019.)

12 Calculation of Ratio of Earnings to Fixed Charges of Allegiant Travel Company.

21 List of Subsidiaries

23.1 Consent of KPMG LLP, independent registered public accounting firm

31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer

32 Section 1350 Certifications

101 The following financial information from the Company’s Annual Report on Form 10-K for the year ended

December 31, 2017 filed with the SEC on February 28, 2018, formatted in XBRL includes (i) Consolidated
Balance Sheets as of December 31, 2017 and December 31, 2016 (ii) Consolidated Statements of Income for the
years ended December 31, 2018, 2017 and 2016 (iii) Consolidated Statements of Comprehensive Income for the
years ended December 31, 2018, 2017 and 2016 (iv) Consolidated Statements of Shareholders’ Equity for the
years ended December 31, 2018, 2017 and 2016 (v) Consolidated Cash Flow Statements for the years ended
December 31, 2018, 2017 and 2016 (vi) the Notes to the Consolidated Financial Statements. (2)

(1) Management contract or compensation plan or agreement required to be filed as an Exhibit to this Report on

Form 10-K pursuant to Item 15(b) of Form 10-K.

(2) Pursuant to Rule 406 of Regulation S-T, the XBRL related information in Exhibit 101 to this annual report on Form
10-K shall be deemed to be not filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the
liability of that section, and shall not be deemed part of a registration statement, prospectus or other document filed
under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such
filing.

Item 16. Form 10-K Summary

None

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Las Vegas, State of Nevada on
February 28, 2019.

Signatures

Allegiant Travel Company

By:

/s/ Scott Sheldon
Scott Sheldon
Chief Financial Officer

POWERS OF ATTORNEY

Each person whose signature appears below hereby appoints Scott Sheldon and Maurice J. Gallagher, Jr., and each of them
acting alone, as his or her true and lawful attorneys-in-fact and agent, with full power of substitution and resubstitution, for him
or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this annual report on
Form 10-K, and to file the same, with all exhibits thereto and all other documents in connection therewith, with the
Commission, granting unto said attorneys-in-fact and agents full power and authority to perform each and every act and thing
appropriate or necessary to be done, as fully and for all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to
be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/s/ Maurice J. Gallagher, Jr

Chief Executive Officer and Director

February 28, 2019

Maurice J. Gallagher, Jr.

(Principal Executive Officer)

/s/ John Redmond
John Redmond

President and Director

February 28, 2019

/s/ Scott Sheldon
Scott Sheldon

Chief Financial Officer
(Principal Financial Officer)

February 28, 2019

/s/ Gregory Anderson
Gregory Anderson

Montie Brewer

/s/ Gary Ellmer
Gary Ellmer

/s/ Linda Marvin
Linda Marvin

/s/ Charles W. Pollard
Charles W. Pollard

Principal Accounting Officer

February 28, 2019

Director

February 28, 2019

[THIS PAGE INTENTIONALLY LEFT BLANK]

Board of Directors

Corporate Headquarters

Maurice J. Gallagher, Jr.
Chairman of the Board,
Chief Executive Officer

1201 N. Town Center Drive
Las Vegas, NV 89144
702.851.7300
www.allegiant.com

John Redmond
President,
Director

Montie Brewer
Director

Gary Ellmer
Director

Linda A. Marvin
Director

Charles Pollard
Director

Executive Officers

Maurice J. Gallagher, Jr.
Chairman of the Board,
Chief Executive Officer

John Redmond
President,
Director

Scott Sheldon
Executive Vice President,
Chief Operating Officer

Gregory C. Anderson
Executive Vice President,
Chief Financial Officer,
Principal Accounting Officer

Robert Wilson
Executive Vice President,
Chief Information Officer

Form 10-K

Additional copies of the Company’s
Annual Report on Form 10-K, filed
with the Securities and Exchange
Commission are available to
stockholders without charge upon
request in writing to:

Christopher Allen
Allegiant Travel Company
Investor Relations
1201 N. Town Center Drive
Las Vegas, NV 89144

Independent Public Accounting Firm

KPMG LLP
Dallas, TX

Transfer Agent

Broadridge Financial Solutions, Inc.
51 Mercedes Way
Edgewood, NY 11711