Archive for the 'Allegiant' Category

Allegiant and 757s: More Questions than Answers

Published
by
Dan Webb
on March 8, 2010
in Allegiant
. 5 Comments

The Hawaii market has been fun to watch for the past few months, but it just got more interesting for those who observe the industry. It’s been rumored for awhile that Allegiant wants to go to Hawaii, and they’re finally doing it. The airline announced Friday that it will be acquiring six 757s from an unnamed European carrier, and they’ll be arriving over the next couple of years. The first two are slated to arrive within the next two months, and will be placed into service in the fourth quarter of this year.

Other than that, we don’t know much more. So let’s get into the analysis/speculation, shall we? To make it easier to read I’ve divided the rest of this post into shorter sections.

A Change in Strategy?

Do I see this as a big change in strategy for Allegiant? No. Allegiant’s current system has been kind of simple – big leisure market on one end of the route, small market on the other end, with MD-80s flying the route a few times a week. President and CFO Andrew Levy said in a press release that “this transaction will enable Allegiant to extend to Hawaii its strategy of serving large leisure destinations from smaller cities with no existing nonstop service,” so that doesn’t seem like there will be any big changes here.

Yes, adding a new fleet type is a big change for Allegiant, but I wouldn’t classify it as a major shift. The airline’s current strategy has been to buy cheap MD-80s that are in good shape, and basically they’ve extended that to another type.

So Where Are the Aircraft Coming From, Anyway?

The answer to that question will help clarify Allegiant’s strategy here, at least a bit. For example, there are two exit configurations for the 757 – three doors and two overwing exits, and four doors. The former can hold no more than 224 passengers in a one-class configuration, while the latter can seat up to 239 passengers.

Another big factor is the engines – 757s come with either Pratt & Whitney PW2000 series or Rolls Royce RB211 series engines. There are a couple of different versions of each type, but it can make a difference. For example, if Allegiant wanted to fly out of Bellingham, Washington to Hawaii with a PW2037-powered 757s, some weight restrictions might be in order, but might not if powered with RB211-535E4 engines. (According an investor presentation released today, the company reports that the aircraft are RB211-535E4 powered.)

So where are these coming from? All Allegiant says is, “The six 757 aircraft are sister-ships and have been in service with a single European operator since original delivery from Boeing. The aircraft come equipped for extended twin-engine operations (ETOPS), as required for long overwater flights.” In a SEC filing from today, the company also reports that the aircraft have RR21-535E4 engines, have an average age of seventeen years, and an average cycle count of 19,000.

Here are my best guesses, from what I think is the most likely to least likely:

  1. Thomson Airways. The initial rumors about Allegiant and Hawaii involved Thomson 757s.
  2. British Airways. Yeah, they announced in 2008 that the whole fleet was sold off to be converted into freighters, but, they conveniently have six in storage right now. (Though it appears one of them was with a couple of airlines.)
  3. Finnair. The carrier is dumping its fleet of seven leisure 757s, conveniently from 2010 to 2012. (Finnair’s have Pratt engines.)
  4. Thomas Cook.
  5. Icelandair.

Continue reading ‘Allegiant and 757s: More Questions than Answers’

AirTran Continues Battle With Allegiant

Published
by
Dan Webb
on January 29, 2010
in AirTran and Allegiant
. 4 Comments

I’ve written here before about how AirTran has really beefed up its competition with Allegiant of late, and that’s one of the biggest reasons for Allegiant moving some operations from Orlando Sanford to Orlando International. Well, AirTran isn’t stopping and announced yesterday that it would enter Grand Rapids with service to Baltimore (two daily flights) and Orlando (one daily flight).

Grand Rapids is one of the markets that will have its Allegiant service moved from Sanford to MCO, though it’s not because of AirTran – Delta has a daily Compass E-175 flying on the route. To be honest, I’m not entirely sure how long that service will last now with that extra capacity. I would imagine that Delta’s nonstop to DCA (only a few times a week on a Pinnacle CRJ) might be a bit at risk as well.

It’s certainly been interesting to watch these two carriers duke it out. As always, we’ll just have to watch…

Allegiant to Grow Fleet with Purchase of 18 SAS MD-80s

Published
by
Dan Webb
on January 4, 2010
in Allegiant and SAS
. 0 Comments

Allegiant already operates 11 MD-80 aircraft that formerly operated for Scandinavian Airlines System (SAS), with two more on the way this quarter. Today, the airline announced that it has ordered 18 additional aircraft to be delivered this year. Allegiant President and CFO said that “once this transaction is complete, we do not expect to need further aircraft purchases to fund growth currently planned through the end of 2011.” The aircraft are between 19 and 25 years old.

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Photo credit: Adrian Pingstone.

Allegiant’s news release says that all aircraft will be delivered by the end of the third quarter, while SAS reports that that all will be transfered to Allegiant by the end of the second quarter, for what it’s worth.

The biggest part of the purchase is 13 MD-82/83 aircraft that will all be placed into passenger service by the end of 2011. Five MD-87 aircraft have also been purchased, but will only be used for spare parts to support the existing fleet. Allegiant’s MD-87s are the smallest in its fleet with seating for 130 passengers – the MD-82/83/87s seat 150.

Because of the deal, Allegiant now plans to be operating “at least 52 aircraft by the end of 2010 and as many as 60 aircraft by the end of 2011.”

Where are these aircraft coming from? Well, SAS has been working to reduce its capacity, and as part of that plan 21 aircraft were being removed from service. So, instead of having those aircraft sit and do nothing, SAS found a new home for them quickly, and gets to clean up its balance sheet as the deal reduces net debt by about $28.4 million.

After the aircraft move to Allegiant, SAS will have 24 MD-80s remaining in service “as inexpensive reliable aircraft, as well as aircraft to manage the seasonality effect in the Nordic region,” according to a SAS news release.

A good move for Allegiant – as usual, they get the aircraft for dirt cheap and get to boost their network further. The airline has hinted at adding an additional fleet type in the past, so we’ll have to see what happens there.

Allegiant Moving Some Flights from SFB to MCO

Published
by
Dan Webb
on December 2, 2009
in Allegiant
. 3 Comments

For its Orlando service, Allegiant has been using Orlando Sanford (SFB) as its base, but yesterday the carrier announced it would base five MD-80 aircraft at Orlando International (MCO), and move service to ten cities from the former to the latter airport. Why? Allegiant VP of Planning Robert Ashcroft said that “it improves our position relative to competitors with service to Orlando International.” Bingo – one disadvantage of Sanford is that it’s less convenient than Orlando International, so that might make a passenger choose to fly a competitor instead of Allegiant.

And in most cases, the competitor is AirTran. Here’s a list. If there’s no direct competitor on the route, I found the closest airport with a nonstop to Orlando:

dec21

Many of these AirTran markets are coming soon or are recent additions, so it seems clear that this move is a response from Allegiant. This will be fun to watch, for sure. Of course, it will be interesting to see what happens to Sanford, though Allegiant is maintaining service to 21 cities there.

A Very Interesting Presentation from Allegiant

Published
by
Dan Webb
on October 28, 2009
in Allegiant
. 2 Comments

An SEC filing from Allegiant that came out today had a slideshow with some very interesting information. The slides speak for themselves:

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oct28_6

I found the second slide I posted particularly interesting. Allegiant has benefited by operating only MD-80s, and it seems that they’re willing to deviate from that strategy. One benefit of MD-80s is that the airline can get them dirt cheap. Is Allegiant still only looking at used aircraft? And if so, what kind?

You can see the entire presentation here.

Some More Traffic Reports

Published
by
Dan Webb
on May 5, 2009
in AirTran, Alaska, Allegiant and United
. 0 Comments

First, let me apologize for this week’s short and hurried posts, as I am in the midst of final exams. Fortunately, I’ll be all done on Monday next week!

AirTran’s results were pretty good – a 0.3% increase in RPMs paired with a 7.9% capacity cut (in terms of ASMs) increased the carrier’s load factor by 6.5 points.

Meanwhile, Allegiant continues to outperform the industry with a 34% increase in RPMs and a 29.8% increase in ASMs. The airline’s April load factor went up 2.8 points to 90.3 percent. Wow.

United’s results weren’t as great. The only portion of its flying to see an increase in RPMs was its regional flying, which makes sense as the airline will have to rely more and more on its regional flying as it cuts down the 737 fleet. The carrier’s load factor in North America, however, went up 1.4 points due to a 12.9% reduction in ASMs.

Finally, Alaska also saw a load factor increase – 2.0 points, as the carrier’s decrease in ASMs was greater than the decrease in RPMs.

Unlike Continental, these traffic reports don’t provide any clues about RASM.

It Would Be Nice If Other Carriers Followed Allegiant

Published
by
Dan Webb
on April 28, 2009
in Allegiant
. 1 Comment

Yes, it would be nice if all the airlines had the financial performance of Allegiant, but in this case I’m talking about how the carrier formats its income statment.

Take a look at the revenues section:

And compare that, for example, to AirTran:

Allegiant records ancillary revenue as its own independent section, while other carriers just put that into the “other” category, and we’re left guessing exactly how much of that “other” revenue is from fee intiatives.

It would just make the lives of insignificant bloggers like myself easier if other carriers did what Allegiant did. :D