Allegiant Secures $412M Financing for Acquisition of Airbus and Boeing Aircraft

On Tuesday, Allegiant Travel Company announced a financing commitment of $412 million from BNP Paribas and Jackson Square Aviation for the acquisition of seven Airbus A320 and four Boeing 737 MAX aircraft. The Las Vegas-based ultra-low-cost airline currently has an all-Airbus fleet, but this new deal will incorporate Boeing 737 MAX models into its operations.

Robert Neal, Allegiant’s senior vice president and chief financial officer, expressed his satisfaction with the innovative financing arrangement, which blends banking and leasing capital. He emphasized that the deal enhances the airline’s liquidity for core investments in its fleet. This transaction involves contemporary A320 CEO aircraft and marks the first financing for Boeing 737 MAX equipment.

Recent financial data indicates that Allegiant has a market capitalization of approximately $1.33 billion, with an adjusted price-to-earnings ratio of 8.41 for the second quarter of 2023. The company generated revenues of about $2.51 billion during the same period, reflecting a year-over-year growth of 20.09%. These statistics illustrate Allegiant’s solid financial foundation, further reinforced by the new financing arrangement.

On September 29, Allegiant accessed $196 million from this financing package, with additional funds to be drawn as they receive their initial 737 MAX deliveries. This agreement secures the company’s aircraft financing needs through the second quarter of 2024, providing a strong liquidity position at competitive market rates.

Despite facing a significant debt load and rapid cash burn, Allegiant’s net income is projected to increase this year, with analysts anticipating profitability. This suggests that the airline’s financial future remains optimistic despite existing challenges.

Neal also acknowledged the crucial partnership with BNP Paribas, which has supported Allegiant’s growth over the last decade. He expressed enthusiasm about the collaboration with Jackson Square Aviation, which aims to make air travel more affordable and accessible to leisure travelers.

BNP Paribas characterized the financing solution as groundbreaking, enabling Allegiant to maximize value while offering increased structural flexibility in managing its aircraft fleet.

Allegiant has committed to purchasing up to 130 Boeing 737-7 and 737-8-200 models over several years, marking the first agreement of its kind between Boeing and an ultra-low-cost carrier in the United States. The new 737 MAX aircraft will provide Allegiant with operational flexibility, environmental advantages, and enhanced customer features.

Currently, the airline operates a fleet of 127 Airbus A319s and A320s, with plans to expand to over 200 aircraft within the next five years. Although there has been a slight delay in the delivery of the first two MAX jets, Allegiant’s capacity plans for 2023 remain on track, expecting the arrival of its first MAX aircraft by the end of this year and initiating operations early next year.