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Unusual or Infrequently Occurring Items

12 Months Ended

Dec. 31, 2020

Unusual or Infrequent Items, or Both [Abstract]

Unusual or Infrequent Items, or Both, Disclosure

Impact of the COVID-19 Pandemic

The rapid spread of COVID-19 and the related government restrictions, social distancing measures, and consumer fears have impacted flight loads, resulted in unprecedented cancellations of bookings and substantially reduced demand for new bookings throughout the airline industry. Starting in March 2020, the Company experienced a severe reduction in air travel, which continued through the remainder of 2020. Demand in the foreseeable future will continue to be affected by fluctuations in COVID-19 cases, hospitalizations, deaths, treatment efficacy and the effectiveness and availability of vaccines. The Company is continuously reevaluating flight schedules and adjusting capacity 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.

On April 20, 2020, the Company through its airline operating subsidiary Allegiant Air, LLC entered into a Payroll Support Program Agreement (the “PSPA”) with the U.S. Department of the Treasury ("Treasury") for an award Allegiant Air would receive under the CARES Act. Allegiant Air received a total of $176.9 million under the PSPA during 2020. The proceeds of the award were used exclusively for wages, salaries and benefits during the second and third quarters of 2020, in accordance with the agreement.

The $176.9 million received under the PSPA during the second and third quarters of 2020 includes direct grants of $153.8 million, a $23.1 million loan, and warrants to purchase 27,681 shares of the Company's common stock with a fair value of $1.4 million, as further discussed below.

In consideration for the grant, Allegiant Air issued to Treasury a low-interest rate, senior unsecured term promissory note (the “PSP Note”) which will mature 10 years after issuance. The principal amount of the PSP Note is $23.1 million. The PSP Note is guaranteed by the Company and is prepayable at any time at par (see Note 7).

Also in consideration for the grant, the Company issued warrants (the “PSP Warrants”) to Treasury to purchase 27,681 shares of common stock of the Company at a price of $83.33 per share (based on the closing price of the Company’s common stock on The Nasdaq Global Select Market on April 9, 2020). The PSP Warrants expire five years after issuance, and will be exercisable either through net share settlement or cash, at the Company’s option. The PSP Warrants include customary anti-dilution provisions, do not have any voting rights and are freely transferable, with registration rights.

As indicated above, the Company made significant progress on strengthening its liquidity through efforts including suspending all stock buybacks and dividends; temporarily reducing executives salaries by 50 percent and temporarily foregoing cash compensation of Board members; enacting a hiring freeze and offering voluntary leave; eliminating cash bonuses; suspending all non-essential capital expenditures including, but not limited to, Sunseeker Resorts, Teesnap and Allegiant Nonstop family entertainment centers; and extending payment terms and renegotiating contracts with vendors.

On December 27, 2020, the Consolidated Appropriations Act, 2021 (the "Payroll Support Program Extension") was signed into law. This Payroll Support Program Extension provides an additional $15.0 billion in support to the airline industry. See Note 18 - Subsequent Events.

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, and projected cash flows from operations.

Special Charges

The effects of COVID-19 triggered an impairment review, and non-cash impairment charges were recognized during the year ended December 31, 2020 (see Note 17 - Impairment for additional detail). The Company also identified expenses that were unique and specific to COVID-19. The impairment charges and other expenses that resulted from the effects of COVID-19 are recorded as special charges within both operating and non-operating expenses during the twelve months ended December 31, 2020. See the table below for a summary of operating and non-operating special charges recorded by segment during the year ended December 31, 2020.


(in thousands)	Airline		Sunseeker Resort		Other non-airline		Total




Year Ended December 31, 2020
Operating	$	141,713	$	137,994	$	26,592	$	306,299
Non-operating	—		26,632		—		26,632
Total special charges	$	141,713	$	164,626	$	26,592	$	332,931

Additional detail for the $332.9 million total special charges (operating and non-operating) for the year ended December 31, 2020 appears below:

Operating

–$161.6 million in impairment charges

–Includes Airline - $5.0 million; Sunseeker Resort - $128.9 million; Kingsway - $1.1 million; Other non-airline $26.6 million

–$98.0 million adjustment resulting from the accelerated retirements of eight airframes and five engines, loss on sale leaseback transactions of eight aircraft, and write-offs of other aircraft related assets

–$35.1 million adjustment for additional salary and benefits expense in relation to the elimination of positions as well as other non-recurring compensation expense associated with the acceleration of certain existing stock awards

–Includes Airline - $32.1 million; Sunseeker Resort - $2.9 million

–$5.0 million related to suspension of construction at Sunseeker Resort

–$6.6 million write-down on various non-aircraft assets and other various expenses

Non-operating

–$26.6 million which includes termination fees and debt issuance costs related to the termination of the loan agreement with Sixth Street Partners (formerly TSSP).

Restructuring and Related Activities Disclosure