Welcome to Allegiant Travel Company's Third Quarter 2007Financial Results Conference Call. We have on the call today Mauri Gallagher,the Company's President CEO and Chairman, Andrew Levy, CFO and ManagingDirector of Planning for the Company and Ponder Harrison, the Company’s ManagingDirector of Marketing and Sales. Today's comments will begin with Mauri Gallagher, followedby Ponder Harrison, then Andrew Levy. After the presentation, we will hold ashort question-and-answer session. We wish to remind listeners to this webcastthat the Company’s comments today will contain forward-looking statements thatinterest only predictions and involve risks and uncertainties. Forward-looking statements made today may include amongothers references to future performance, and any comments about our strategicplan, there are many risk factors that could prevent us from achieving ourgoals and cause the underlying assumptions of these forward-looking statementsand our actual results to differ materially from those expressed in or impliedby our forward-looking statements. These Risk Factors and others are more fully discussed inour filings with the Securities and Exchange Commission. Any forward-lookingstatements are based on information available to us today and we undertake noobligation to update publicly any forward-looking statements whether as aresult of future events, new information or otherwise. The Company Cautions users of this presentation not to placeundue reliance on forward-looking statements, which may be based on assumptionsand anticipated events that do not materialize. The earnings release as well asrebroadcast of this call are available at the Company's Investor Relations siteat ir.allegiantair.Com. And at this time I'd like to turn the call over to MauriGallagher for opening remarks.

Thank you, Michael. And good morning to everyone, thank youfor taking the time to be with us. It's a pleasure to talk to you this morning.I'll give a brief overview, Ponder will comment on our revenue results, andAndrew will wrap up with comments on our aircraft plans, network activity,expenses and Balance Sheet. We're pleased with the results for the third quarter. Ouroperating income increased 230% to $9.5 million from $2.9 million in the thirdquarter of last year. This comes on the heals of 191% increase in operatingmargin s in our Second Quarter. We were able to generate double-digit margins 11% from whatis historically our softest quarter. As we indicated to you almost a year ago,one of our key objectives was operating margins of 12-15% within one to twoyears. We're pleased to report to you that our year-to-dateoperating margin through September 30 was just short of 15% and our pre-taxmargin is approaching 17%. Our increase in margins in the third quarter wasaccomplished while we grew the business substantially as well. Andrew willprovide you with more detail in just a moment on our growth metrics. On the revenue side we expanded nicely during quarter up 42%year to year to $86 million from $61 previous year. Scheduled service RASM wasup just short of 10% year-over-year while the ancillary RASM increased 37%.Ponder will more fully detail these revenue results in just a moment. We also ran an excellent operation. Everyone I'm sure isaware of the airline industries operational problems this past summer. Industryon time was a dismal travel, has become a crapshoot at best. In recent outingswith friends and acquaintances they have been commenting to me over and overabout the horrors they experienced in their travels during the past six months. In contrast our schedule of operation has been extremelygood. The third quarter we…

Thanks, Mauri. As Mauri mentioned the third quarter ishistorically challenging, but despite the usual season of September demanddownturn in our Florida markets we were able to post strong numbers across allrevenue categories. Just to recap for the quarter, total revenue wasapproximately $86 million, up 42% with scheduled service revenues rising 41% tojust North of $62 million. The year-over-year improvement in our land O Sanfordwas particularly impressive. Our new destinations of fort Lauderdale andPhoenix Mesa are doing quite well as Mauri launched with the launch of PhoenixMesa and it appears at least right now that Phoenix Mesa is slightly ahead offort Lauderdale in terms of its booking pattern. Overall, we’d also like to characterize our future bookingsas pretty good with no signs that we can see weakness at this point. Weproduced another quarter of solid revenue results by appropriately tailoringour scheduled service capacity with individual market demand in order tomaintain strong passenger loads while generating very acceptable average fairlevels. In Florida particularly, we significantly cut capacity inour Orlando Sanford and Tampa St. Pete destinations during late August and forthe entire month of September. In both destinations when comparing the lastmonth of the quarter against the first, ASM's were reduced by 54% throughplanned scheduled adjustments and seasonal flight reductions. In fact, on 15routes, we suspended service all together during parts of the third quarter. Reductions of this magnitude are uncommon in the industrybut the MD 80 and our efficient cost structure provide the flexibility tofacilitate such dramatic scheduling adjustments. Despite these capacityreductions, schedule service passengers for the quarter increased 57%year-over-year while ASM's were up 35% from the previous year. Departures also rose 46%, as did RPM's. Based on thesestatistics, we once again provided or produced one of the industries highestschedule system load factor levels, cresting 86% for the quarter. Thisrepresents an increase…

Thanks, Ponder. We're pleased with our third quarterfinancial performance, our 19th consecutive quarter of economic profits. Our11.1% operating margin was 6.4 percentage points higher than the same period ayear ago. In our year-to-date, 14.6% operating margin is 6.2 percentage pointshigher than the same period in 2006, and is approaching our corporate goal of15%. However, year-over-year comparison will start to gettougher. The fourth quarter 2006 operating margin was 11.7% with fuel at only$1.94 per gallon, current fuel prices are far higher. Let me highlight a coupleof items on the cost side of the income statement. In general we continue to do a good job managing our costs.On a year-over-year basis third quarter 2007 costs per ASM increased 1% to$8.41 from $8.33 mostly due to higher fuel expense, while costs per ASM excludingfuel declined by 2% to $4.4 from $4.49 despite a $3.6 reduction in averagestage length. Compared with the second quarter 2007, our cost per ASMincreased 4% from $8.06 again largely due to higher fuel expense, but costs perASM excluding fuel increased 4% from $4.24 mostly due to higher salary andbenefits expense. A large part of the increase in salary and benefits expenseis due to the hiring of employees required to execute our fourth quarter growthplans. Our low cost structures a fundamental importance to our business and ourfuture. We will continue to focus on our cost structure with this fact verymuch in mind. In addition to our cost structure, our balance sheet is oneof our core strengths. We ended the quarter with 173 million in cash, andshort-term investments, and debt of only 69 million, leaving us with negativenet debt of 104 million. Our interest income exceeded our interest expense by almost$1.2 million in the third quarter. Our debt is entirely aircraft related, hasfixed interest rates averaging about 8%, and will be…

Yeah. Good afternoon. I guess I have two questions. First,let's see, I'm sorry, I'm just collecting my thoughts. Oh, on the quarternormally, you would make all of your money in July and August and Septemberhistorically has been a month where at best maybe it would be breakeven and Irealize that in the past you usually don't break out the monthly P & L butgiven your margin and how strong it was for what seasonally is one of yourweakest quarters, were you actually able to make money in the month ofSeptember?

Michael. Reveal all of our inner secrets. At the end of theday, let's just say that it was an okay month. September is going to be toughto make money in any environment. We had a very strong summer though.

Okay, well then, maybe just in terms of qualifiers, it wasan okay month relative to other months, how was it versus other Septembers?

Better.

Okay.

I think one of the things Andrew has touched on, Ponder andwe all did is this capacity Management and our understanding and sophisticationnow in our cities now particularly in Florida we've been there gosh for goingon to years in Sanford, plus we, there aren't many people that will take amarket down totally for 60 days and just not show up and show back up inOctober right about now. We figured out how to do that stuff and the variable costnature of our network is such that we really see the benefit s of doing thattype of thing and minimizing the revenue impacts at that point as well becausewe're just not flying empty airplanes around.

Okay. Good and then that's helpful and my second question,Mauri and to Ponder and Andrew as well, for the team, we had a slow a fareincreases occur over the last four or five months, I want to say maybe it'sfour or five, maybe it's half a dozen. Number one, have you participated in those fare increasesand number two, this is a three part question, what is your highest walk upfare now in your system and then the third piece, as Ponder said, you're aleisure carrier, highly discretionary and yet you do offer a product that Idon't think in most of your markets there is no competition and arguably maybeit's even better product because you're not connecting over congested big cityairport. So, are you seeing a leisure passenger who maybe has a moreinelastic demand profile and I guess, I would have you compare your leisurepassenger versus the leisure passengers that you carried at airlines that allof you have worked in the past. Is it a more inelastic demand curve, I'mcurious now that you have a couple years of data?

Mike, let me try to answer at least the first two and thenprospectively others we could chime in on the in elasticity or elasticity. Wehave participated in increasing pricing over the last say six to eight weeks inparticular. At one point we were taking our highest fares up by as muchas $10 on a one-way basis. Our fares below that by as much as $5 on a one-waybasis. We've been very cautious as we look at our lowest and introductory andour selling bucket pricing to just be careful how we do that. Those were really our lead rates that we published and advertisedin the market but in general when you look at our price structure, it isdefinitely up in terms of same-store Markets and same-store sales where we'vebeen. Again we're also in the process of launching 25 new routesinto Phoenix Mesa as well as fort Lauderdale, so those have been priced andthose prices have remained static since we launched them, but again we didn'tprice them until August 9th, which is the first date we’ve announcedthat we would be flying there, okay? And just to be clear, we are constantly looking at thepricing movements in the market, even given that we are selling here only aswell as package, we remain very, very focused on our ability to or not toincrease based on the market. And you asked our highest one way fare. I want to say withthe latest $10 increase unless our Director of Pricing has changed that whichhe may have, it was approximately $259.

Okay.

And again, I may be mistaken when I say that but to myknowledge that's it.

Okay, good and then just on views on the elasticity or inelasticity of your passengers?

Thank Michael. This is Mauri. I am understand different – Iwas in Phoenix a couple days ago and the profile of our passenger and this isnot meant derogatory fashion, the blue rinse crowd is older, I'd say they havelots of time on their hands relative to working the 9-5 gigs, and they havemoney. They have discretion, and there is a real movement thatwe're seeing in different ways. You can categorize it into kind of two basicareas. One, it's going on a vacation of your own, a getaway if you go throughLas Vegas, possibly Orlando certainly I think is all different profile in boththose cases one with the kids and the other with, your adult friends. The second movement and you see this in the Tampa, St. Petesand now Phoenix respectively, where you have this kind of two places peoplelive. The fare is right they will move back and fourth and an anecdotal examplein Phoenix was the people talking about getting from the Upper Midwest toPhoenix was very expensive and very difficult. So they're driving their motor home down and they have tokind of drive back and fourth and now they drive their motor home down, park itand player back in fourth. I think that you've seen a lot of that -- the aireffect in Europe were in Spain, other places with second homes where theairfares are so inexpensive you just see this commuting factor going on. And I think we have some of that certainly starting to showup again in the West Coast of nor floor was very popular for the Midwest andnow Phoenix is terrifically popular, Upper Midwest and the California and theupper Northwest. Andrew and Ponder have any thoughts but we don't carry thataverage profile, I don't believe, that you'd see on every day Americans, united--

Okay. Very good, thank you. Good quarter.

Thank you.

We have a question coming from Duane Pfennigwerth withRaymond James.

Hi, thanks. Ponder, wondering if we could explore a littlebit where you think ancillary revenues could grow, understand that the year-to-yeargrowth rate could moderate, but it looks like just thinking about this evensequentially with a full quarters contribution of Trip Flex. And the increases in baggage fees, it seems like those alonecould drive a 10% sequential increase. Could you help us understand goingforward a little bit better?

Yeah, I don't know how much I'm really going to able to helpyou with that, Dwayne, kind of we spoken for the record. I mean, Trip Flex, weare having it really only participate partially in the quarter, having it justbeen implemented in August. We would like to see the full effect of it going forward.We've seen what we believe to be pretty good take rates and it appears to bevery sustainable too. I mean, we would caution you as well to note that TripFlex is a replacement product as well. I mean historically, we've had cancellation and change feetype activities that we also include in our ancillary revenue calculation, andas such, we will see fewer of those as we move to Trip Flex as a replacementproduct, albeit at a higher absolute price point and at higher unit rate. Baggage really remains kind of as a crapshoot, I guess touse Mauri's term. I mean, we continue to try to price it to see where theultimate ceiling is or isn't and we also have to bear in mind that it needs toconform with the other products and services we're trying to sell. At a point, can you unbundle the airline too much and that'sthe last thing we want to do you have that the become to agree just forcustomer to their, but at this point, the $5 price point is a brand new pricepoint. We've always believed that baggage is somewhat of a price in elasticactivity for many people at a certain price level, and again, we remainencouraged that we're in and around the right price points for those twoproduct groups.

Dwayne, let me comment, this is Mauri. Be careful as wellwith adding new markets, the new destinations, we're not sure what the takerate will be on our ancillary revenues, and that mix change, well be, it's nota huge percentage of what we will be doing, it still could be a damper if wedon't have the throughput in those areas. So we just want to don't leave people with the belief thatit's just going to continue to go up. I might also make another comment, it waspretty interesting Shawn Mackey and his comments on the call with Frontierhaving come from Canadian environments and all of the activities up there witha lot of ancillary revenues, made some comments that their automation justdoesn't set up for doing anything like what he is used to in that part of theworld, here in the states. And we really want to continue to recognize that ourautomation really does give us a unique kind of ability to engineer our ownenvironment and change and adjust and add product that we think we haven'tfound anybody else in the domestic environment even close to having thatcapabilities.

Thanks for that color. And then I don't know if it's Ponderor Andrew, could you remind us what the historical margin profile is on yourfixed fee business, and how that's going to change with this latest expansion.And thanks for taking the questions.

Yeah, this is Andrew I'll handle that. Dwayne, I would saythat we're not going to see a change and I think that as far as the margin, Ithink that it's pretty much in line with our overall corporate margins thatwe've been producing. One of the nice things about fixed fee find in general isthat we do not bear the risk of fuel and obviously, as fuel prices keepmarching up that makes that line of business particularly attractive because itis very consistent.

Great. And historically, how much have you flown or how muchrevenue have you generated relative to the guaranteed minimums?

Well, in Nevada, where we've been flying since 2002, we havefar exceeded the contractual minimums, and in this new region with heroes,which it's scheduled by a completely different part of the company so we reallydon't yet know what to expect, we certainly hope that we'll do more than whatthe minimums are in the contract and we actually believe that we will, but wehave no ability at this point to forecast what that would be so we've providedyou what the contractual minimum states in the agreement.

Great. Thanks a lot.

Thanks.

Our next question will come from Frank Boroch with BearStearns.

Hello, guys.

Hello, Frank.

I was hoping now maybe you could give us an update. You'vegot almost a year history now of the three world-class destinations in Florida.Are you seeing any signs of any cannibalization as you connect the dots amongthose?

Frank, this is Andrew. I think the short answer is no, wereally haven't seen that, even adding in these new destinations in some caseswe’re now are flying to five different destinations from some of our MidwestMarkets, and no, that's something that we haven't seen and we're certainlyvigilant of it, and but no, we haven't seen anything that suggests that.

Frank, when you go into these markets particularly a lot inthe Southeast for Florida with a very short haul of the main reasons ouroverall stage length has declined in the last year is the Florida short haulexpansion that we did throughout the Southeast, throwing 59-$69 airfare outthere is terribly stimulation. And I think rather than thinking about cannibalization,which assumes a zero sum market, there's just a lot of untapped demand outthere that if you get the price point down, people will go to see theirrelatives, friends, back and fourth there's a lot of reverse commuting out ofFlorida in the summer going up North into vacation spots. We've had people at one of your competitors go up and be inone of our cities suggesting we have to open a city so they can get to theirsummer homes, that's the kind of stuff you see that's very positive andadditive to the whole thing.

And Andrew, I guess I appreciate the thoughts there, on thecost side, when we look at the fourth quarter '07 relative to last year, Ithink you had some large increases in maintenance as an example in the fourthquarter 06. So, how should we think about the year-over-year non-fuel costs aswe go forward?

Frank, I'm not prepared to give any specific guidance onthat at the moment other than certainly, maintenance is the one area that canbe a bit lumpy due to our accounting using the direct expense method and sincewe do not have any power by the hour agreements we actually have to take theexpense when we do the work. I don't expect the fourth quarter to be an unusually heavyquarter, certainly there's a number of seat checks that we're going to have,but as our fleet continues to grow, I think that will become in some ways moreconsistent that we'll see that kind of activity throughout the year. There's no engine activity that we anticipate in the fourthquarter, nothing scheduled, and so I think that the maintenance expense in thefourth quarter will probably resemble fairly closely to what we've seen in thethird quarter. But I don't have all of the data at my fingertips so I wouldn'twant to be too certain about that.

Okay. And as some of the new markets come on line and Iguess how are you looking at stage length changes next year, if we can thinkabout it versus '07?

Well, we are -- as I think a number of that have mentioned,the shorting the stages is really important we think. That last hour of flyingyou still burn an hour of fuel, but you don't get the equivalent on the fareside. At least it's a lot tougher to get that because the yieldcurve does fall away from you as you get further and further out and so wedefinitely have a bias toward adding more short haul flights. We've done verywell with that and particularly with oil where it is now, I think it's evenmore important that we, if we're going to grow, that we grow by adding shorterstage lengths flights as possible. So that being said, Phoenix to the Midwest is generallypretty decent stage length, slightly higher than the average, and to date, theFort Lauderdale Markets are all slightly longer than the average markets inFlorida or then average stages into Florida just by the nature of the geographyof it. So, we have a bit of a balancing act there, but we'll tryand keep our stage length around where it is and if there is opportunities tofurther reduce it, we think that will make sense.

Great. Thanks, guys.

(Operator Instructions) And we'll go to Avondale Partners,Bob McDale (ph).

Hi, guys. In prior meetings or some kind of presentation,you once made the comment that starting up Tampa, having already been inOrlando for as many years as you were. Starting up Tampa, it kind of came up to breakeven or maybeeven modestly profitable in 60 or 90 days if I remember right you saidsomething like that. And the question is, was that, do I remember that rightand are we seeing same kind of results or potential results in Phoenix andLauderdale going into this Winter that within 60-90 days it should be making acontribution?

Your recollection is correct, Bob, as far as Tampa, St.Pete. As, I said in my comments, we're cautiously optimistic that we'll repeatthose results with the two new markets. Clearly, initial bookings start offvery quickly, kind of slow up frankly as we get near between the initial buzzof announcing service and then the follow on really hits the books well when westart to service, start flying, so that's going into existing Markets, smallcities, creating new routes by connecting dots has worked extremely well likewe said in Tampa and we hopefully will see the same thing in this environment.Ponder, do you have anything else?

No, Mauri, I think that sums it up.

Could you refresh my memory as to kind of how many marketsyou're starting up and I know you said you just started some of the Phoenixstuff. What are the start dates on the rest of the markets that you're openingup for the rest of these new city fares?

Bob, let me take a stab at that. We have one airplane inPhoenix is up and running I think seven markets are on that airplane and thesecond one will be up and running around November 15th.

Okay.

The first airplane in Fort Lauderdale will be up and runningagain right around November 15th, and the second airplane will be up andrunning in the early to mid December time frame. So by the middle of December,all the 25 new routes associated with these two new world class leisuredestinations will be up and running.

So it's a total of four airplanes?

Yes, that's right.

All right. Okay. Thanks.

Thanks.

That does conclude the question and answer session. Mr.Gallagher I will turn the call back over to you.

Thank you, all very much for your time today. If you haveany follow on questions or want additional information, please contact myself,Andrew, Ponder or Robert Ashcroft at our offices and we'll look forward totalking to you in another 90 days. Thanks very much, have a good day.

Once again, thank you all very much for joining us today.That does conclude the presentation. Have a great afternoon.