Posted on: 30 June 2008 by Mark Howells
Allegiant Travel Company has signed an agreement to purchase 18 MD-80 aircraft from Scandinavian Airlines System (SAS) in a cash deal.
Allegiant expects to take delivery of the aircraft during the first three quarters of 2010. The 18 purchased aircraft comprise two groups:
• 13 MD-82/3s which the company’s airline subsidiary Allegiant Air expects to place into service by the end of 2011. Along with a previously-announced separate purchase of two MD-82/3 aircraft (also from SAS) for delivery in the first quarter of 2010, this transaction satisfies essentially all of the scheduled carrier’s currently expected aircraft growth through the end of 2011. Allegiant Air expects to operate at least 52 aircraft by the end of 2010 and as many as 60 aircraft by the end of 2011. The airline expects that the all-in cost of placing each such aircraft into service, including an allocable portion of the acquisition price and required maintenance, paint, seats, equipment upgrades and other necessary modifications will be less than $4 million per aircraft.
• Five MD-87 aircraft which Allegiant will not operate but instead plans to use as a source of spare engines and other spare parts.
Allegiant president and CFO Andrew Levy commented, "This transaction re-affirms our commitment to the MD-80 aircraft. Our ability to acquire such highly-reliable aircraft at attractive economics permits Allegiant to closely tailor our capacity to demand, a key element of our leisure-oriented business model. We believe these are clearly the best MD-80 aircraft available, having an unbeatable maintenance pedigree and being sister ships to 11 aircraft already in our fleet, thereby enhancing fleet commonality. This is the fifth aircraft transaction Allegiant has entered with SAS, which has, at all times, been a stellar business partner to Allegiant Travel Company. Once this transaction is complete, we do not expect to need further aircraft purchases to fund growth currently planned through the end of 2011."
Allegiant Air currently operates 46 MD-80s, of which all but four are owned.