Allegiant Travel Company (ALGT)

Return on total capital

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	-152,007	312,237	120,664	265,094	-299,352
Long-term debt	US$ in thousands	1,611,740	1,819,720	1,944,080	1,612,490	1,441,780
Total stockholders’ equity	US$ in thousands	1,089,390	1,328,560	1,220,700	1,223,550	699,363
Return on total capital		-5.63%	9.92%	3.81%	9.35%	-13.98%

December 31, 2024 calculation

Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $-152,007K ÷ ($1,611,740K + $1,089,390K)
= -5.63%

Allegiant Travel Company's return on total capital has shown fluctuating performance over the past five years. As of December 31, 2020, the company reported a negative return on total capital of -13.98%, indicating that the company was not effectively generating returns on the capital invested.

However, there was a notable improvement in performance by the end of December 31, 2021, with a return on total capital of 9.35%, signifying a positive turnaround for the company. This improvement continued into December 31, 2022, although at a slightly lower rate of 3.81%.

By December 31, 2023, Allegiant Travel Company's return on total capital increased to 9.92%, demonstrating a further enhancement in the company's ability to utilize its capital efficiently. However, there was a decline in performance by December 31, 2024, as the return on total capital dropped to -5.63%, indicating a setback in the company's capital utilization efficiency.

In conclusion, Allegiant Travel Company's return on total capital has exhibited both positive and negative trends over the past five years, suggesting varying levels of effectiveness in generating returns on the capital employed. It is crucial for the company to analyze the underlying factors contributing to these fluctuations and implement strategic measures to sustain and improve its return on total capital in the future.