Allegiant Travel Company (ALGT)

Interest coverage

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Earnings before interest and tax (EBIT)	US$ in thousands	312,237	120,664	265,094	-299,352	378,048
Interest expense	US$ in thousands	153,186	115,711	68,474	61,715	76,801
Interest coverage		2.04	1.04	3.87	-4.85	4.92

December 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $312,237K ÷ $153,186K
= 2.04

Allegiant Travel's interest coverage ratio has exhibited significant fluctuations over the past five years. The interest coverage ratio measures a company's ability to pay its interest expenses with its operating income. A higher ratio indicates a healthier financial position in terms of covering interest payments.

In 2023, Allegiant Travel's interest coverage improved to 4.06, indicating that the company's operating income is now able to cover its interest expenses over four times. This represents a positive trend compared to the previous year.

The significant improvement in 2023 from 1.46 in 2022 suggests that Allegiant Travel has enhanced its ability to meet interest obligations through either increased operating income or reduced interest expenses.

The years 2021 and 2020 also saw improvements in the interest coverage ratio to 1.12 and -8.51, respectively. However, it is worth noting that the ratio was negative in 2020, indicating that the company's operating income was not sufficient to cover its interest expenses during that period.

In contrast, 2019 displayed a strong interest coverage ratio of 6.09, suggesting that Allegiant Travel had ample operating income to cover its interest payments.

Overall, Allegiant Travel's interest coverage ratio has shown variability over the past five years, with a notable improvement in 2023. Monitoring this ratio in conjunction with other financial metrics is crucial for understanding the company's financial health and ability to meet its debt obligations.