Allegiant Air Plans to Buy Up to 19 Airbus A319s

Date : 07/30/2012 @ 12:20PM
Source : Dow Jones News
Stock : General Electric Company (GE)
Quote : 29.26  -0.19 (-0.65%) @ 6:50PM

Allegiant Air Plans to Buy Up to 19 Airbus A319s

Allegiant Travel Company (MM) (NASDAQ:ALGT)
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By Ben Kesling

Allegiant Travel Co. (ALGT) said Monday it will acquire up to 19 Airbus A319s, a big expansion for the U.S. airline that also poses a challenge to its low-cost status by adding a third aircraft type.

Las Vegas's Allegiant proposed by offering ultra-cheap fares between secondary U.S. cities and big leisure destinations like Las Vegas with a fleet of older MD-80 planes that it picked up cheap, but two years ago acquired larger Boeing Co. (BA) 757s to start flights to Hawaii and elsewhere.

The move into 757s was accompanied by a delay into launching Hawaii flights while the carrier waited for FAA approval for extended-range operations certification and obtaining flag-carrier status.

Allegiant said adding the A319s, which are smaller than its existing planes, wouldn't change its business model and reflected how cheap the plane had become.

"A319 asset values have significantly declined and now mirror the environment we saw when we first began buying MD-80s," said Allegiant President Andrew Levy in a statement.

Allegiant plans to rent nine A319s from the leasing unit of General Electric Co. (GE) and "eventually" acquire another 10 from Cebu Pacific Air of the Philippines. The first two planes are due to enter service in the second quarter of 2013.

The U.S. carrier operates 58 MD-80s and four 757s, and owns another two 757s.

Allegiant shares were recently down 0.3% at $69.71.

Write to Ben Kesling at: Benjamin.kesling@dowjones.com

 
 

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