As the air travel recovery continues in the United States, Allegiant Air is priming for the recovery. Reporting a profit of $95 million – higher than its second quarter of 2019 results – the carrier is firmly turning to growth as it comes out of the crisis. The carrier has secured leases for 10 more Airbus A320ceo aircraft for induction through 2022 to support the airline’s growth trajectory.
Allegiant Air secures 10 A320s
Allegiant Air has announced it has entered into an agreement with Air Lease Corporation for long-term leases on ten used Airbus A320-200 aircraft. The jets are scheduled to be delivered to the airline beginning in the fall of 2021 and through summer 2022.
Robert Neal, Allegiant’s Senior Vice President for Corporate Finance and Treasurer, spoke of the following on the acquisition:
“Bringing these ten aircraft into Allegiant’s fleet provides a number of advantages aligned with our unique business model and goals. As young, sharklet-equipped sister ships, they will not only afford efficient induction into our all-Airbus fleet, but will also provide years of utilization beyond the typical life of previously-operated aircraft. This transaction will be a valuable component of our fleet plan for 2022 and beyond.”
The ten A320s will all come in as 186-seat jets, which are the highest capacity aircraft Allegiant flies. This higher capacity comes in at a lower cost, allowing Allegiant to pass on lower fares to customers.
Capitalizing on attractive deals
Speaking on the airline’s second-quarter earnings call, the carrier’s executives discussed their growth plans for the fleet. Gregory Anderson, Executive Vice President, Chief Financial Officer, and Principal Accounting Officer at Allegiant, stated the following on the acquisition:
“Turning to fleet, during the second quarter we placed into service three aircraft bringing our total in service aircraft at June’s end to 103, and we expect to have 108 aircraft in service by year’s end. Since the onset of the pandemic, our fleet team has now signed up 24 A320 series aircraft – 21 of them since the beginning of this year – all at an average price discounted by 30% when compared to pre pandemic levels.”
Aircraft prices have gone down during the pandemic, and many airlines are now starting to take advantage of strategic growth. Allegiant, which prioritizes taking on mid-life, used Airbus A320 jets at a lower cost than acquiring new jets and flying them until the end of their lives.
Many airlines have made aircraft retirements or returned jets off of lease early, which has left lessors with more mid-life used aircraft, which can be a little tougher for lessors to find new homes for. This leads to some attractive pricing for airlines like Allegiant and makes them strategic investments.
Allegiant has not yet outlined its capacity increases for 2022, but it will be sitting on 127 aircraft next year, 19 more than it will have at the end of 2021. This will set the airline up for a fair bit of growth, though it is not immediately clear where Allegiant will distribute those aircraft.
Coming out of the crisis
Exiting the crisis, Allegiant Air has reported a $95 million profit for the second quarter of 2021. This is a stark turnaround from the $93 million loss it posted in the same quarter last year and is higher than the $70.5 million the carrier made in the second quarter of 2019. Of course, the airline also benefited from the $61.2 million it received under the Payroll Support Program (PSP), buoying its financial performance. Nevertheless, Allegiant was still one of the first carriers to report a profit in 2021.
Allegiant Air was the first airline in the US carrier to announce it will be increasing capacity north of 2019 levels in January. Since then, it has aggressively targeted growth opportunities and added more airports and routes to its network.
The added aircraft will certainly do Allegiant a lot of good in growing its fleet. This could be good news for secondary airports in the US looking to gain more nonstop service from an ultra-low-cost carrier (ULCC). Keep an eye on Allegiant, as it is in its time to thrive and is showing no signs of slowing down.
Are you glad to see Allegiant grow its fleet? Let us know in the comments!
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