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COVID-19 (Notes) | 3 Months Ended
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Mar. 31, 2020
Unusual or Infrequent Items, or Both [Abstract] |
Unusual or Infrequent Items, or Both, Disclosure [Text Block] | Impact of the COVID-19 Pandemic In December 2019, a novel strain of coronavirus (“COVID-19”) was reported in Wuhan, China. The World Health Organization (“WHO”) declared COVID-19 a “pandemic” on March 11, 2020 and the U.S. government declared a national state of emergency on March 13, 2020. The U.S. government has implemented enhanced screenings, quarantine requirements and other travel restrictions in connection with the COVID-19 outbreak. U.S. state governments have instituted similar measures, such as “shelter-in-place” requirements, and declared states of emergency. In addition, the U.S. government has strongly recommended “social distancing” measures, including avoiding gathering in groups of more than 10 people and avoiding discretionary travel. Many attractions in the leisure destinations the Company serves, such as Walt Disney World in Orlando, Florida and Las Vegas hotels, have temporarily closed, also impacting travel to these destinations. Government restrictions and consumer fears relating to COVID-19 have impacted flight loads, resulted in unprecedented cancellations of bookings and substantially reduced demand for new bookings. While the Company performed largely as expected in January and February of 2020, a severe reduction in air travel during March 2020 resulted in a 36.0 percent decline in operating revenues for March 2020 as compared to March 2019. To the date of this report, a steep decline in demand has continued throughout the airline industry, and the Company is continuously reevaluating flight schedules based on demand trends. The Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") was enacted in March 2020, providing support for the airline industry and other businesses and individuals. The Company has taken many actions to mitigate the effects of COVID-19 on its business, as outlined below: Network and Customer Experience
• | Reduced April capacity by 87.4 percent
• | Continually evaluating forward schedules to adjust capacity according to demand trends
• | Waived change and cancellation fees for all customers
• | Extended expiry on credit vouchers to two years
• | Offered refunds on all flights canceled by the Company and also on itineraries canceled by customers
Cash Outlay Reduction
• | Suspended all stock buybacks and dividends
• | Executives have reduced salaries by 50 percent and Board members are foregoing cash compensation
• | Enacted a hiring freeze and offering voluntary leave
– | More than 1,100 team members are currently participating in some form of pay reduction program
• | Suspended nearly all contractor positions, subscriptions, non-essential training and travel
• | Suspended all non-essential capital expenditures including, but not limited to, Sunseeker Resorts, Teesnap and Allegiant Nonstop family entertainment centers
• | Extended payment terms and renegotiating contracts with vendors
Liquidity Response
• | Implemented immediate and meaningful cash burn reductions, which is the Company's most effective way to manage liquidity
• | Received additional financing of $31.0 million in April 2020, secured by two aircraft
• | As of April 30, 2020 the Company had 28 unencumbered aircraft and eight unencumbered spare engines
• | In April 2020, signed payroll support agreement with U.S. Department of Treasury (the "Treasury") in the amount of $171.9 million comprised of $150.3 million in direct grants and a $21.6 million low-interest, unsecured 10-year loan
– | Received first installment of $86.0 million in April, with remainder expected over the next three months
– | The Company will issue warrants to the U.S. Department of the Treasury to purchase 25,898 shares at a strike price of $83.33 per share
• | Expect to receive federal income tax refunds in 2020 and 2021 of up to $194.0 million related to 2018, 2019, and 2020 net operating loss carrybacks due to the change in loss carryback period under the CARES Act
• | Submitted application under the Loan Program under CARES Act with the option to access up to $276.0 million secured loan by the end of September 2020
Given the above actions and the Company's assumptions about the future impact of COVID-19 on travel demand, which could be materially different due to the inherent uncertainties of the current operating environment, the Company expects to meet its cash obligations as well as remain in compliance with the debt covenants in its existing financing agreements for the next 12 months based on its current level of unrestricted cash and short-term investments, its anticipated access to liquidity as discussed above, and projected cash flows from operations. Special Charges The effects of COVID-19 triggered an impairment review as of March 31, 2020, and due to the uncertainty of our non-airline activity moving forward a non-cash impairment charge was recognized during the first quarter (see Note 12 for additional detail). The Company also identified expenses that were unique and specific to COVID-19. This includes salary expense, additional aircraft cleaning expense, and other various expenses. See below for a summary of charges by segment:
(in thousands) |  | Airline |  | Sunseeker Resort |  | Other non-airline |  | Total
COVID-19 related expenses |  | $ | 9,540 |  |  | $ | — |  |  | $ | — |  |  | $ | 9,540 |
Impairment of assets (non-cash) |  | — |  |  | 136,793 |  |  | 26,567 |  |  | 163,360 |
Total special charges |  | $ | 9,540 |  |  | $ | 136,793 |  |  | $ | 26,567 |  |  | $ | 172,900 |

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- Definition The entire disclosure for an event or transaction that is unusual in nature or infrequent in occurrence, or both. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 220 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=114868817 + Details
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