Good day ladies and gentlemen, and welcome to the Q2 2017 Allegiant Travel Company Earnings Conference Call. As a reminder, this conference may be recorded. Now, it's my pleasure to hand the conference over to Mr. Chris Allen, Investor Relations. Sir, you may begin.

Thanks. Welcome to Allegiant Travel Company's second quarter 2017 earnings call. On the call with me today are Maury Gallagher, the company's Chairman and Chief Executive Officer; John Redmond, the company's President; Scott Sheldon, our Chief Financial Officer, Interim COO; Lukas Johnson, our SVP of Commercial and a handful of others to help answer any questions that you have. John and Lukas will have some brief commentary and then we'll immediately move into questions. Before we begin, I have to remind listeners that the company's comments today will contain forward-looking statements and they are only predictions and involve risks and uncertainties. Forward-looking statements made today may include, among others, references to future performance and any other comments about our strategic plan. There are many risk factors that could prevent us from achieving our goals and causing the underlying assumptions of these forward-looking statements and our actual results to differ materially from those expressed or implied by our forward-looking statements. These risk factors and others are more fully disclosed in our filings with the Securities and Exchange Commission. Any forward-looking statements are based on information available to us today and we are undertaking no obligation to update publicly any forward-looking statements whether as a result of future events, new information or otherwise. The company cautions users of this presentation not to place undue reliance on forward-looking statements, which may be based on assumptions and events that do not materialize. This earnings release as well as the rebroadcast of the call are available on the company's Investor Relations site at ir.allegiantair.com. With that, I'd like to turn it over to, Maury.

Chris, thank you very much. Good afternoon, everyone, and welcome to our second quarter call. We've had a very good quarter, very bullish on where we're at. We're making good progress with our transition. It's obviously a multi-year effort. There is a number of areas, as Chris mentioned, where we're going to have some preliminary comments on and answer some of your questions. And to that end, I'm going to turn the microphone over to Mr. Redmond and after that the show with Johnson and we'll try and get your questions and follow-on questions answered. Thank you very much. And John?

Thanks, Maury, and good afternoon, everyone. The release, of course, is quite detailed; has a lot of good transparency and clarity and dealing with a lot of issues. So I'll just try to keep my comments brief and touch base on some issues that I know you're going to have some questions on and that's not in the release. Dealing with the first and most obviously question, I'm sure you would have, have to do with a chief operating officer and where we stand. In that regard, we do have a chief operating officer. I think I made this comment before, but Scott Sheldon is functioning in that role. He is doing it full-time and has done a fabulous job to-date. When you look at our operations in the quarter, in Q2, we did not meet our expectations at all and surely not those of our customers. So Scott and others have taken this opportunity to take a real deep dive and examine our policies, procedures, various processes we use, as well as our personnel in or the early part of June. And as a result, we've instituted a number of changes around areas like personnel, parts and tooling, better support of our bases, a dedicated effort around AOG, and a much faster recovery with AOS aircraft. I've made the comment in the past, we have great depth and talent in the organization. We just need to direct and did direct more efforts to better managing this talent and to holding people accountable and instilling a higher degree of sense of urgency, if you will. So when you look at the month of July, realizing that the reaction time has been relatively short and quick, the performance does reflect this focus and the various changes that we have made, which…

Thanks, John. I'd like to give a bit of color to our year-over-year unit revenue for the second quarter results and our third quarter guide. And before I start, I'd just like to highlight that we recently had our largest route announcement ever. And since our last earnings call, we've announced 31 new markets, 4 new cities, most of which will start service in the fourth quarter. Our growth plan remains very comfortable and we feel very good about these markets. The initial bookings are very excellent for these markets and we feel good about that. So, we were rather pleased with our second quarter revenue results and finished towards the higher side of our initially guided range. Couple reasons for that, we beat our co-brand credit card projections and are extremely pleased with the way the program is spooling up. Another factor in our improved numbers is the maturation of some of the pricing initiatives we started in the beginning of the year. As you may remember, our year-over-year load factor took a hit in the first quarter as we started raising yields. Very encouraged that for the second quarter that strategy of better controlling our own pricing power has resulted in both improved yields and closing in that year-over-year load factor gap. And just a reminder, the Easter shift contributed to 150 basis points of that increased TRASM for the second quarter. Turning to the third quarter, we do project that year-over-year TRASM will be between negative 0.5% and 1.5%. Large increase in spare aircraft year-over-year is a unit revenue headwind as we've been growing departures only on off-peak days for the summer. For the third quarter, we're actually down 2% in peak-day ASMs while growing off-peak ASMs by over 26%, and that will result in a roughly 100 basis point headwind for our third quarter TRASM result. And although we only have about 10% of our bookings so far for the fourth quarter, we're very excited about what we're seeing so far. And one last note for me, our new revenue management system is performing well with roughly 30% of our ASMs for the second and third quarter, which are on the new system, and while it's still learning and gathering data, we're kind of encouraged by the results. And as previously stated, we should be close to 100% of our ASMs on the new system by the end of the year. And with that, I guess, we'll take questions.

Thank you, sir. Our first question will come from the line of Duane Pfennigwerth with Evercore ISI. Please proceed.

Hi, thanks. I wonder if you'd expand a little bit on the comments about a COO. It feels new that that's not an area you want to recruit for. And maybe you can just expand on why it doesn't make sense to sort of search for one now.

Hi, Duane. This is John Redmond. When we started looking into our operations, we weren't happy with how May went and as we started to move into June, how June was going. And as I'm sure you can appreciate, a lot of the results that you see are a reflection of decisions made sometime well before that. We do a lot of work trying to prepare for the busy times of the year. So, there is a total realization on our part that whatever decisions were made going into the year were not something that were resulting in the expectations that we would expect as a company or our customers. So that's why we started to take a real deep dive. We wanted to understand the problem as much as we could, realizing that, that could be beneficial even in trying to hire a COO to the extent we needed to try to describe not only our operations, but why we were having problems. So, there's a lot of time and effort that has gone into that to-date as you could imagine. We wanted, again, to make sure that it was something that from point A to point B of our operations, mostly around the area of maintenance, that we had a much better grasp on of what we were doing. After getting a lot more visibility in that area, in some cases we had none in the past, just by virtue of our various roles, we realized that there was a significant number of changes that need to be made, that collectively would result in what we felt would be significantly better results. When you looked at what happened in July, our thoughts came true, realizing that some of these have long lead times to them, but we were…

Okay and then a question for Scott if he' on the line. With respect to your cost outlook, in the third quarter which I guess implies a mid-single digit growth rate in the fourth quarter, can you commit to CASM-ex being down in 2018 at this point.

At this point that's a pretty good assumption. From this year as we get in – as we get into the process of making sure planes deliver on time and tarmacs go as scheduled, the pilot training pipeline isn't interrupted. I think you're going to start to see hopefully some session fees getting back into the organization. We're operating five split bases now, that will be down to two MD-80 bases only at the end of the year. So you start to see some of these efficiencies that we think will bear fruit, again start to show up in 2018, so that's I think that's an okay assumption at this point. Obviously, we'll guide formally for the back half of the year but yeah, that's what's – that's what it's trending to.

Thank you.

Thank you. Our next question will come from the line of Helane Becker with Cowen & Company. Please proceed. Conor Cunningham - Cowen & Co. LLC: Hey, guys. This is actually Conor on for Helane. So just a little bit of more on the cost side. So you said it's a two point headwind from the regular ops during the quarter. Should we assume that there is going to be an additional headwind in the third quarter or is the underlying spare increase cessation enough to like to support any potential problems there?

Yeah, I wouldn't use that as a go forward percentage. We were really impacted by June, particularly in the second quarter. June was very bad year-over-year and that's strictly due to the aircraft availability. And if you recall, we put and brought forth one retirement of an MD-80. That was supposed to be back half of 2017 into April. In addition, we had a number of tails that we hadn't planned to be unavailable. Some were out of our control, some were in our control. So basically, it was as faring count grows throughout June, peaking at call it low-double digits into July. We just – we didn't meet that sparing ratio. And so we are kind of playing catch-up throughout June. And so, going into the third quarter, don't expect nearly the impact considering July is almost in the books and it's substantially better what we've seen and prior quarters, both sequentially and year-over-year. So I wouldn't use that as a run rate into the third quarter. Hopefully, a lot of this is behind us. Conor Cunningham - Cowen & Co. LLC: Okay. And then in terms of off-peak flying, so that now represents about 25% of your flying. Should we expect that to be kind of the rate going forward into 2018-2019 or should that decline as your spare count kind of rationalizes going forward? Thanks.

Hey, Connor, I would say that the off-peak percentage won't accelerate as fast as it did this summer based on the spare count but it'll remain fairly high as we go throughout the transition plan. Conor Cunningham - Cowen & Co. LLC: Great. Thank you.

Thank you. Our next question will come the line of Joseph DeNardi with Stifel. Please proceed. Joseph DeNardi - Stifel, Nicolaus & Co., Inc.: Yeah. Thanks very much. So I get the timing and the buyback is a little bit interesting just given the hotel announcement coming in the fall, seems like the market is little bit concerned about what's coming there. So should we read the buyback as maybe that the hotel strategy won't be as capital intensive as expected. And then when do you expect to deploy the additional $100 million buy once the authorization for?

I think I'll try just bullet points. I think you shouldn't read into anything, whenever we're looking at buybacks, they're obviously, this was a very opportunistic time to buy. We look at this longer termed and obviously some shareholders must look at, so that's why we jumped in in a very significant way. And the – I'm sorry the second part of the question you're asking? Joseph DeNardi - Stifel, Nicolaus & Co., Inc.: Just on the – I think the $100 million authorization you mentioned, what's the timeframe for that being deployed?

Again, no timeframe at all, we follow a similar approach. We think it's an opportunistic timeframe and balanced against other cash flow requirements that we have over periods of time, we make decisions accordingly. So, no commitment regarding when we would jump back in the market. Joseph DeNardi - Stifel, Nicolaus & Co., Inc.: Okay. And then Lukas, just on your load factors, just kind a high level, obviously there's some ULCCs in Europe line Ryanair's mid-90 loads, you guys are well below that. Can you just talk about like, on your peak flying, are the load factors in general kind of in that mid-90s range and then off peak brings down the average or is that an opportunity kind of going forward?

Yeah, there's couple of factors there. You have peak data significantly higher load factors than the off peak days. And also we're pretty unique in such a high percentage of our flying is twice a week markets. And really we were running kind of peak day-only load factors say five years ago close to the 90% range. As you've gone through and we've evaluated was that optimal or not, we have taken yields up. And I think it's a positive thing in that sense and you're getting total revenue up higher even on this twice-a-week peak day market. So those 90% markets are in sort of the 88%, 89% range. The other thing is off-peak flying and realistically when we're flying our routes that are four, five, six times a week, those routes tend to have higher load factors with – these are balance of schedule, when you find twice a week that one-off peak leg. we found it dilutive to be offering a $10 price point, because what we're doing was really lowering the revenue on the other three legs of the week, and we've decided to take up yields in general which is kind of what I was talking to in my initial comments that we've raised passenger yields in general. It takes a while to adjust to that, but long-term it's the right strategy, you have the right kind of price point in the customers' mind and make sure that the new reference price for the customer is one that's controlled by us. Joseph DeNardi - Stifel, Nicolaus & Co., Inc.: Okay. Thanks, Lukas.

Thank you. Our next question will come from Hunter Keay with Wolfe Research. Please proceed.

Hey, Lukas. Could you tell us, I'm sorry if you talked about this at your Analyst Day, these are like – it is probably a refresh. Can you just remind us the new RM system, what changed and how has it improved than over the old one?

Sure. It's a long – long answer, so I'll kind of give a very high level. It's completely new system at its core. It groups individual flights together versus taking flights from a region to a destination and saying that's the historical basis. So the system does have to organize and – to machine learning system, so it's got to learn from its own groupings. And so we were fairly cautious early on. We wanted to make sure, one, I can go out and throw 100% of our flights on because you need to see how the system will perform. So it performed well so far. We want to make sure, we're very confident in the results, so we can actually start sharing with you about, is it leading to increased load factors, leading to increased yield, how is it changing the booking curve, and is it strong or weak in certain periods. Right now there's certainly some differences. We want to make sure it's improving in all aspects. But right now, it's improving. We're seeing large improvements in kind of the peak day pricing and the peak period pricing. We want to make sure we're understanding the entire system.

And when are you going to be sort of fully spooled-up and then running on this?

Yeah. So by the end of the year, we'll be close to 100%, probably just shy but 80%, 90%, 100% of our flights will be or ASMs will be priced on the new system, and we're about 30% right now. So it's going to be a big jump up. And I think in our Investor Day last year, we talked about a minimal impact towards the second half of this year. We're seeing some good things in the fourth quarter, but we're 10% bookings. So, I don't want to get ahead of ourselves, we're really excited, but we'll see in three to six months how that ended up. And I think most of the benefit for this system will hit into 2018 and then beyond that 2019, 2020 will be again small gains, once this system's already up and running.

Okay. Thanks. Appreciate it. And then Maury, can you talk about – obviously, we've seen some changes in the C-suite here lately, including Scott, COO and everything. So can you tell us how you and the board are thinking about succession planning now and maybe how that conversation has changed over the last, I don't know six months or something like that? How you're thinking about your own future? Thank you.

Well, I'm getting older, that fact continues.

Me too.

So, yes, we have to have a plan in place, and I think that the – John has done an exceptional job. And the board, I think, is very pleased with two fundamentals that we're really focused on in the near-term. It's this transition plan, this transition year are we executing, and so far we're executing very nicely. And second thing is operationally are we improving. And as John said, we've made some extremely good improvements in the last 30 to 45 days with a higher degree of focus and a greater attention to detail and holding people accountable. Essentially we're just fixing airplanes better that we weren't doing previously. And so those types of things are really getting a good underpinnings on the carrier. So, that's a longwinded answer that basically says these things come together, I'm comfortable with where I'm at. I'm going to stay involved in the company as a Chairman, I don't need to be CEO of this company forever and ever. So, sometime in the not too distant future, I'll probably kick myself upstairs, recommend to the board that they do that and this depth of management that we've bragged about is showing its skill set and we'll just let these young bucks do their thing and continue down the road that we're trying to outline to all of you.

Okay. Thank you, Maury.

Sure.

Thank you. Our next question will come from the line of Michael Linenberg with Deutsche Bank. Please proceed. And pardon me, Michael, please check your mute button.

Sorry. Sorry about that. I was on mute. Hey, couple questions here. John, you talked about just the share repurchase and being opportunistic. I don't have the press release in front of me. At what price did you buy back the stock? What was that average price?

I think we were around $142.

Yeah.

Okay. Okay. Great. And then, Just on the CASM-ex guide, the 16% to 18%, and I did miss the first part of the call. I mean I sense that, obviously it's pilot training, and transitioning to a new fleet, and I think you talked, I heard Scott talk about some of the split basis, I guess MD-80, A320s or the Airbus narrow bodies, and that's going to obviously be addressed. But can you talk about just because that is a big increase, what are the big headwinds there?

Hey, Michael. So, we tried to give as much flavor as we can in the release, but basically this is kind of low-single digit growth year-over-year. So, it's going to put some automatic pressure on ex-fuel. This, the third quarter is the lapping of our agreement, the CBA when it was instituted in August of last year. We continue to carry very heavy crew levels. So, we're running about anywhere from 55% to 53% productivity within the pilot group, and that's just the nature of going through this sort of transition. So, a lot of labor inefficiencies in a number of areas that could be the same, that could be said the same in the maintenance area, as you are supporting three fleet types. Other areas were obviously quickly depreciating our MD-80 and 757 assets. So there's an acceleration there, with the sunset on the MD-80s still scheduled for call it mid-2019. And then the other line item, which is going to be lumpy, when as you look at training costs, we do in our training pipeline at any given time we still have 30% of our workforce is, is non-bidders. So, these guys are in some sort of training profile at any given time. So those are the kind of the three areas, between wages, D&A and other where you're going to see the most pressure, maintenance in general started to settle down, be very consistent on a go forward basis. Sales and marketing we talk about, we have talked about the surcharge impact, where it was an offset in previous years, now it's up in the revenue line item. And then stations, station is actually on a fully burdened basis is actually down, so that's a good guide. But basically the three areas that we'll continue to see pressure is salaries and wages, D&A and other.

Okay. On the pilot side, just given that the major carriers have really turned up their hiring, are you guys seeing any additional challenges sourcing pilots or is it just you don't see anything on that front?

No, we're still getting lot of activity. We're hiring about 10 or so a month, is the run rate, John?

Yes.

About 10 or so a month right now. The attrition has dropped dramatically from where it was kind of pre-CBA. But I think everybody obviously is concerned in the industry, there's going to be some pressure on the pilot pipeline over the next couple of years and so we'll definitely keep an eye on it, trying to get creative on how do we create additional lines of opportunities for pilots to join the ranks. But right now the trends we're seeing are actually very positive.

Okay, all right. Thanks for that comprehensive answer Scott. Thank you.

Thank you. Our next question will come from the line of Brandon Oglenski with Barclays. Please proceed.

Hi, this is actually Matt Wisniewski on for Brandon. Thanks for taking my question. So I was just looking back at kind of the Investor Day and going through a lot of the slides and one thing that was hit on was a lot of the ancillary revenue opportunities outside of the hotel, know you weren't going to comment too much on that. But I was wondering if you could talk a little bit about the credit card business a little bit more, maybe the loyalty plan and some of the main drivers behind those line items?

Yeah, sure. Hi, Matt. So, the credit card program, as I mentioned previously, is spooling up even better than our expectations. So, I believe we raised guidance last quarter or the quarter before about it and we're certainly on track for that for this year in both sign-ups and sales. And obviously part of that, that every other carrier has that we don't yet have is a non-card loyalty program. And as we're looking at the future of the company, and having the ability to kind of clean slate, clean sheet, what would make most sense for the company going forward, we're designing a program with that in mind. And obviously these things take time, but the credit card is a large revenue driver of everything loyalty related. So, I think we're all very excited about some of the ancillary possibilities with us having a higher percentage of both third-party and regular ancillary options and other carriers. It should only be able to enhance that or supercharge that. So, I think you just ought to stay tuned about what that will be, but it is something we're actively working on.

Okay. Great. That's it for me.

Thank you. Our next question will come from the line of Kevin Crissey with Citi. Please proceed.

Hi, thanks for the time. Scott, can you discuss the specific operations changes and maybe measurement changes that you made? It was discussed at a kind of a high level, but specifically what did you implement or have your folks implement that maybe wasn't being done before or get rid of things that had been doing – being done that you didn't think made sense?

Yeah, so it's obviously during peak flight period it's really tough to make real substantial changes, but there were some things that we identified in the interim that will allow us to increase certain metrics if you will in the interim. So, some of the things that we kind of got our teeth into immediately as we pulled certain types of training, so basically we stopped the training pipeline to get more relief on the line. We created a kind of a forward recovery base out of Cincinnati that would allow us to better recover outstation AOG events and that – that was actually a very huge help, as you can imagine it's tough to recover in some of these small cities. If you look year-over-year, we have made some pretty substantial management changes in some of the larger bases. Sanford just underwent a major overhaul and that was under Jude's watch. Las Vegas here over the last couple of weeks, we've gone through all of management side and we have new faces and fresh blood there, which is some of these are starting to take effect. But if you look at just kind of the impact we've had on July, it sounds so much that you're really changing the bill your rate or the AOS event per cycle rate is just that we're recovering in a much more quickly fashion. So you start to see the hours per event go down dramatically. So, again, planes are in a much faster way. Some bases in particular have seen some both drops in hours per event in addition events per 100 cycles and so Fort Lauderdale, PGD, IWAs made a nice recovery. So you're starting to see kind of the light switch, the light is starting to flicker. There's obviously some other foundational changes that we'd like to make but we need the schedule to settle down, and that's kind of mid-August and beyond. But I mean, in general, the group has done a fantastic job of kind of rallying around what started out as a very troubling June, some of which was out of our control, and some aircraft availability, but it's been a nice snapback into July. And so, there's a number of other initiatives that we hope to execute on here in the next kind of 30, 45 days.

Okay. Thank you. And when I look in the press release, you talked about the second quarter cost trends and 2 percentage points of the CASM-ex coming from irregular operations in the second quarter. And I understand how irregular operations can add the costs, but you came in within your guidance. I can't remember if you raised guidance during the quarter. Were you running better than your guidance and then this brought you into your guidance range or – because I don't consider irregular operations something you would have planned for when you guided. Thanks.

So we didn't raise the range, what we put out there in April for 2Q. That being said, if you look at the comp last year, we did have some additional expenses in there baked in just because last year was so troubling. And so maybe the floor was artificially high. If you look at April through kind of mid to late May, it was trending positively and then June, we definitely had a 30-day period, where it was really tough. And so, not only did it chew up into that, it actually exceeded just a little bit. And so, we are just a little conservative from a forecasting perspective. And so that's why it didn't bust the range. But I think, obviously, we can't continue to have summers and in specifically 30, 45-day periods like this. It's just, it's not sustainable. We really beat our crews up by doing it. So we took a very conservative approach from a forecasting perspective.

Thanks. And if I could squeak one more in, just your capacity growth, as you look forward in general, I think, if I – in my notes, I had like 5% to 10% through 2019. What are your thoughts on capacity? You talked about CASM-ex next year. What are your thoughts on capacity growth in general?

Yeah. So, this is Lukas. 5% to 10%, I think, is a decent base line. Most of that is going to be driven though by our transition plan. And as you have certain events with MD-80s, timing with new Airbus coming in, we may decide to dial that up or down. There's really – we're going to be first and foremost focus on the operation and getting out of the MD-80 over the next one to two years and what's surplus to that will be used for growth. So I wouldn't say this isn't the kind of typical plan for us, where we're going at. And we've identified X% new markets that we're going to launch for next year. We have more than enough stuff that we want to grow into in the future that we're holding in our back pocket. And we'll certainly be choosing strategically where to add based on what the fleet plan evolves to.

Thank you so much.

Thank you. Our next question will come from the line of Dan McKenzie with Buckingham Research. Please proceed.

Yes. Hi. Good afternoon, guys. A couple of questions here. First, with respect to the non-fuel cost outlook for the third quarter. I'm wondering what kind of benefit it is embedded from some of the operational changes that could drive a better op. In other words, could there be some upside to this non-fuel cost outlook or could that – could non-fuel cost outlook come in a little better if the operations are a little better than expected from a lot of – form these changes?

Yeah, it's fair point and the fact that July as well as down in the books, there might be – there's some upside, I don't think it's terribly material on the second quarter from just an operating perspective and then disclosure perspective when things fall apart, they can fall part in big way. So there is upside but it's not terribly material as it relates to the kind of the 2Q expenses and the guidance that we put out.

Understood. Okay. And then Lukas, what's the peak day trajectory as we head into the fourth quarter? I guess, do any of these MD-80s now functioning as reserves go back into service or is there something – and I guess I'm just kind of thinking about the peak holiday travel season. Is there going to be fewer peak travel days during the peak travel holiday season this year versus last year because of the reserve issue?

So we won't be exactly constrained like we were for the summer, we shouldn't have negative peak day ASM growth like we did for June, July, August, which will allow us to focus a little bit around some of those peak days. And obviously there is a couple of tailwinds for the fourth quarter as well. We had large weather events for our other peak period in – around the Columbus Day in October. I believe Christmas is on a little bit better scheduled this year for us. So there are some good guys for the fourth quarter from a revenue front, in addition to us being able to grow a little bit more on the peak day specifically. And I think there is a lot going on there but we're very encouraged by how, some of the markets we launched last fourth quarter, fourth quarter of 2016 are maturing. So, I think we're going to see some positives there as well.

Very good. And then Lukas I guess while I've got you, how much is the new revenue management system contributing to RASM in the markets where you deployed it? So, a 30% of the ASMs, it's improved unit revenues in those markets by 1 percentage point or 2 percentage points, any kind of clarity you can give around what you're – the kind of benefit that you're seeing?

Yeah. So I would say, it's a mixture right now because this system is still learning and being tested. So in some cases, you got markets that will be a little bit ahead in load and in some cases, they'll be a little bit ahead in yield and in some cases it may not even been better when you did make adjustments in the past and that's why we took it a little bit slower. So, if I had to generalize, I would say it's performing better in peak periods, which is unfortunate that we're not growing peak days right now. So when we are able to we're pretty excited about the capabilities of the system. And we're making tweaks throughout to better handle some of the trough periods and say, okay, what should be the baseline and historical for some of these flight histories that it's taking a look at. So I would say, it's certainly positive enough that we're comfortable going full force with almost our entire system by the end of the year. But for the first half of the year, I would say, smallish benefit and the second half, I think the Investor Day estimates of, I think, it was high single-digit millions for revenue is a good estimate going forward. We haven't materially seen something that would deviate from that plan.

Understood. Okay. Yeah, thanks for the time. I'll hop back in the queue.

Thank you. Our next question comes from the line of Andrew Didora with Bank of America. Please proceed.

Hey. Good afternoon, everyone. John, I know, you said you really weren't going to talk about the hotel, but just a bigger sort of strategic question here. In the grand scheme of things, the hotel would likely be small on both CapEx and earnings basis. So I'm just wondering, do you think it's the best use of management's focus right now given all the changes going on in the C-suite? And maybe given this, could a hotel decision potentially get pushed out of 2017 until a new COO is in place?

Well, I guess, the short answers to the two questions are yes for the first and no to the second. So the thing is we have the talent capacity et cetera for us to do multiple things at the same time. And so that doesn't bother us at all, but again we'll put a lot of color to that when we talk about it at greater length. As I said, we're targeting the back half of September. We said that for some time now and that still looks like a viable timeframe.

Okay, fair enough. And then just lastly just a quick housekeeping question for Scott or if Chris is online. Just 2017 CASM outlook, you said in the release, it was – reiterated at 10% to 12%. I know, last quarter you said 9% to 12%, did I miss a little tweak in the guide along the way?

We just brought the floor up 1 point.

Yeah, it was just tightened.

I'm sorry?

Just tightened the range is all we did.

Okay. Thank you.

Thank you. Our next question will come from the line of Steve O'Hara with Sidoti & Company. Please proceed. Steve M. O'Hara - Sidoti & Co. LLC: Yes, hi. Good afternoon. Just quickly on the ancillary revenue front, can you just talk about some of the factors that are leading to the air-related charges being down in the quarter and I assume the third-party is the credit card improvement, is that fair?

Yes, the improvement in third-party is majority driven by the credit card line item and I would say for the ancillary portion, off-peak days, do have a slightly lower ancillary component to them and that's really what you're seeing. They have lower revenue in general and it's a little bit more of a shift of business. Steve M. O'Hara - Sidoti & Co. LLC: Okay. And then maybe I think in the past you had talked about maybe the full run rate from the credit card being – and I want to say $3 a passenger or something like that. Is there any update on maybe the projection there?

We said it's $2.50 a pax. That was our run rate that we were thinking of long-term and we said that at the time when we announced the card. We haven't changed that estimate yet and we'll relatively probably be a little bit conservative until we get there, but right now we're encouraged. I think right now it's supposed to be three years plus build up for us. It's really early, talking to the bank. It's even on the monthly spend per cardholder, it's still too early to drive too much inside into a program that's less than a year old. In terms of signups, signups were ahead of both of ourselves and the bank's projections when we started the program last year, which is the two major components are how many people are using the card and how much are they spending on it for the most part. So we're encouraged by one sign, but it's still too early to see what that top-end number is. Steve M. O'Hara - Sidoti & Co. LLC: Okay. All right. Thank you very much.

Thank you. Our next question will come from the line of Savi Syth with Raymond James. Please proceed. Savanthi N. Syth - Raymond James & Associates, Inc.: Hey. Good afternoon. Scott, maybe on the core unit cost, it looks like in the first half, it was running about kind of 1%, if you can exclude some of the items that are kind of unique this year. And based on guidance, it looks like 3Q is running 2% to 4%. Is that just a function of total capacity, or timing of maintenance, or how should we look at that kind of forward trend?

It's more capacity driven than anything. Savanthi N. Syth - Raymond James & Associates, Inc.: Okay. So if you think about the kind of the 5% to 10% growth, then the core, excluding year-over-year comp easier, is probably close to 1% on a 10% growth and maybe 2% to 4% on a slower growth. Is that how we should think about just kind of the underlying cost trend at Allegiant?

I think that's fair in the near- . Obviously there's a lot of moving parts here and a lot of moving parts. But I think in general, that's a fair statement. Savanthi N. Syth - Raymond James & Associates, Inc.: Okay. That's helpful. And then maybe Maury or John, in regards to the kind of CMO position, Allegiant is pretty unique and I'm just trying to figure out what are you hoping kind of the new hire will bring to the table and what you're hoping to address with the new hire?

Well, our requirement was not to find someone who just was limited to an airline background. I think we said that from the get-go. At the end of the day, airlines have a large database of names and it's always been our intention to figure out how to unlock the value of that in a much more significant way than may have been traditionally looked at by airlines in the past. So we were looking for a CMO candidate who has expertise in understanding that data and the data analytics that allow you to enhance your ability to transact with, on a more frequent basis, with a customer and add more customers. So the key to this, at the end of the day, as all of I'm sure are aware, is to add more customers and transact with all of those people more frequently. So that's what we need to do and we need to get significantly better at, in order for us to drive more revenue. So that was a criterion really, was people who have that kind of a background, without trying to put the boundaries of an airline against that, because a customer is a customer. Savanthi N. Syth - Raymond James & Associates, Inc.: That's helpful. Thank you. And if I may just ask one last question on, now that you've kind of gone through a summer with this fleet transition, in the past, one of the kind of concerns I've had is when you do have a big transition, the timing of when you kind of get behind it has been somewhat longer. And I don't know, if this is for Scott, like are you to a point where you have kind of enough experience in seeing how the fleet transition has been so far to get comfortable that most of this will be behind us by second half, next year, I mean?

PJ. is right here. Why don't you take that PJ.? (50:32)

Yeah, I mean the fleet transition has gone really well so far this year. We've been able to offset any late deliveries with early deliveries, but through the first half of next year we'll take a larger percentage of used aircraft. Savanthi N. Syth - Raymond James & Associates, Inc.: Okay. And that means?

So, I think we'll be a lot more confident after the first half 2018. Savanthi N. Syth - Raymond James & Associates, Inc.: Okay. I get it. And then, from kind of the air pilot productivity and efficiency, is that going to continuing to improve, so you feel like you've got a handle on the training and the pipeline there?

Yeah, the training pipeline is, it's executing well. We're getting great utilization out of our assets. Obviously, we talked about the number of pilots we continue to add to the pool, the good recruiting efforts by our flight op staff, so that appears to be going quite well right now. Savanthi N. Syth - Raymond James & Associates, Inc.: Okay, great. Thank you.

Thank you. Our next question will come from the line of Joseph DeNardi with Stifel. Please proceed. Joseph DeNardi - Stifel, Nicolaus & Co., Inc.: Yeah, thanks. Lukas, I know you guys don't have a ton of overlap with the kind of the basic economy fares, but sometimes you have interesting insights into pricing environment. So can you just kind of talk about what you're seeing in the market in terms of the impact from the basic economy rollout?

Yeah, Joe, like you said, we don't have a ton of overlap and what I have seen, it tend to be uses a fare increase by most of the legacy carriers and I think that's the appropriate way of kind of fencing in and it's taking less super low fares out of the market that you would have seen maybe a year ago or two years ago. And I think that's a positive for the industry. I think it might have been a little bit overstated about the total impact of the industry 6 to 12 months ago. I think, it's a net positive, but it's not going to fundamentally change the cost that you can provide a seat, the fare that you can really provide on a seat. Joseph DeNardi - Stifel, Nicolaus & Co., Inc.: Okay. And then Scott, just given kind of the importance of improving performance, does it make many any sense, I mean, just on our end how we can kind of gauge how that's going? I mean, can you guys start providing like an on-time performance metric when you report traffic or how should we track how that's going?

Obviously DOT reporting will kick in for us 1/1 of next year. Up until then we probably aren't going to be total – real transparent on kind of what the internal targets are. Obviously we want to be aggressive and really push folks to try to really pull this thing up in the next kind of six months and so we're required to report. And so I think, in general, those KPIs and how we look at operationally what a success is defined as, I don't – it's going to be moving target over the next six months. Joseph DeNardi - Stifel, Nicolaus & Co., Inc.: All right. Thanks. I'm going to sign up for your credit card by the way. Thank you.

Thank you. Our next question will come from the line of Duane Pfennigwerth with Evercore ISI. Please proceed.

Thanks for taking the follow-up. What happened to Ponder's equity grant, isn't getting that back a cost tailwind and when did that refund hit the cost structure?

This is Greg Anderson. So with Ponder's departure, his equity grant was fully terminated and so that was – that's being reflected now going forward as a reduction in cost or forecasted equity cost going forward, stock comp.

So that was in the June quarter or that's baked into this 16% growth in the third quarter?

Yeah that would be reflected in the June quarter.

Okay. Thank you. And then my second question is for Maury. I wanted to push back a little bit on the concept that investors are being short term oriented. I mean, it's great that the board here is so patient you have obviously a very longtime horizon but even your very long-term investors have to explain why they own Allegiant versus alternatives in airlines over the last one, two or three years. And many of your peers have worked, right, your stock has not worked but many of your peers have. So can you just comment on the board's awareness of what Allegiant's relative performance has been, are they aware of it, one? Two, is it a concern at all, or does everybody have a path here until 2019 when your fleet transition is done?

Well, certainly the board's aware of Allegiant's – what we're doing internally. The transition is going to take longer perhaps than we originally thought once upon a time. More importantly, we're trying to do it as quick as we can, which means we're not being as mindful of the cost structure that we might do if we've taken times that normally perhaps others might have taken. And as a result, the board has bought into this, but I appreciate other people are long-term and what they're doing, Duane, and so are we. But the company has performed pretty well over the last many years and we had an I think a pretty quarter relatively to the industry, but we just have work to do and there are cost structures that are going to go with this work are one time. The revenue side not so much under pressure as the cost side is. But we're just carrying a lot of overheads. Spirit went through this candidly 10 years ago, when they were moved out their MD-80s, there's just no way around this to do it is easy. So we are interested in investors and returns to investors, but we just have to make a way though this stuff.

Appreciate the comment, Maury. Thank you.

Thank you.

Thank you. Our next question will come from the line of Dan McKenzie with Buckingham Research. Please proceed.

Hi, yeah. Hey, thanks for the follow-up. One of my follow-up questions was actually already just – was already asked. But Scott, I'm just wondering, can you just remind me what is the non-fuel cost benefit provided by the A320s versus the MD-80 because you've got some new, some that are used. I'm just kind of wondering what the average cost benefit is? And then just separately tied to this, what percent of the ASMs are being flown today by A320s versus the MD-80s? And then, what does that look like next year – that actually might – the follow-up question actually might be for Lukas.

Yeah. I'll take that really quickly. I'll get it off hand. But for the second quarter, 55% will be Airbus or was Airbus that accelerates to 63% in the third quarter. So really, the last couple quarters, we haven't grown Airbus percentage of flying as quickly and the third quarter will be 63%, fourth quarter will be 70%. So you can see we've taken a pretty high gear in terms this Airbus transition after we get through the this summer.

Yeah and in terms of...

And then for 2018?

What was the last part?

Sorry. What's that?

I was just going to say then for 2018, what does that mix become ASMs flown by the Airbus?

I don't have the exact number, but it'll be little bit around 80%, low-80s, I think.

Got it. Okay. And then just an average benefit from the A320 versus MD-80, how much does it non-fuel cost improve?

Yeah. This is term quarter, the non-fuel costs on A320s is roughly about 5% better than the MD-80s as we sit right now.

5% better than the MD-80s. Okay. Thanks, guys.

Thank you. Ladies and gentlemen, this concludes our question-and-answer session for today. So now, I'll turn the conference back over to Maury Gallagher, Chief Executive Officer, for some closing comments or remarks. Sir?

Thank you all for your time and I appreciate you joining the call. We'll talk to you again in next 90 days. Thank you.

Ladies and gentlemen, thank you for participating on today's conference. This does conclude the program and you may all disconnect. Everybody have a wonderful day.