Frequent Flyer: ALGT 2Q Guidance Update, FAA Proposed Supersonic Legislation, Frontier Route Expansion

Research evidence excerpt

Frequent Flyer: ALGT 2Q Guidance Update, FAA Proposed Supersonic Legislation, Frontier Route Expansion

Update

July 7, 2026 04:01 AM GMT

Morgan Stanley & Co. LLCMAirlines | North America Ravi Shanker

Equity Analyst

Frequent Flyer: ALGT 2Q Ravi.Shanker@morganstanley.comMadison J Pasterchick +1 212 761-6350

Research Associate

Madison.Pasterchick@morganstanley.com +1 212 761-3787

Guidance Update, FAA Nancy Hipp

Nancy.Hipp@morganstanley.com +1 212 761-1311

Proposed Supersonic

Airlines

North America

Industry View AttractiveLegislation, Frontier Route

Expansion

ALGT released their updated 2Q guidance inclusive of Sun

Country acquisition, the FAA has proposed ruling to allow

supersonic flights over the US, and Frontier has launched a

number of new routes backfilling Spirit capacity.

ALGT reissues 2Q guidance to incorporate Sun Country acquisition. Following

ALGT's acquisition of Sun Country on May 13, 2026, the Company's 2Q results will

include the combined performance of both airlines from the closing date through

June 30. ALGT now expects the combined entity to report adjusted EPS of at least

$1.25, based on preliminary assumptions that include fuel costs of ~ $4.20 per

gallon, a 20% effective tax rate, and 23.5 million diluted weighted average shares

outstanding. This outlook is a significant improvement from ALGT's prior standalone

guidance, which called for an adjusted loss of about $0.50 per share (note this had

also included an estimated fuel cost per gallon of ~$4.35). The stronger forecast

reflects continued robust travel demand at both airlines throughout the quarter

and lower fuel costs in June. On a standalone basis, ALGT also expects 2Q

TRASM to increase >23% y/y, exceeding its previous expectations of over the

16.4% y/y growth seen in 1Q.