Allegiant Airlines Expansion Plans in Place, Buys 2 A320s

Allegiant Travel Company (ALGT) is forging ahead with its expansion plans and has recently added two A320 carriers to its fleet. At present, the 177 seat-capacity aircraft are being used by Philippine Airlines and will be under service of low-cost carrier Allegiant Air – a unit of Allegiant Travel Company – at the end of 2015.

The deal is in line with its objective of buying 10 A320 aircraft by the end of 2016. Excluding these two, the remaining eight are scheduled to be delivered by the end of next year.

A few days back, Allegiant Travel struck a deal to procure six A319 aircraft. Currently, the aircraft are with Cebu Pacific Air and are scheduled to be delivered anytime between the end of 2015 and 2017.

We believe that Allegiant Travel’s fleet expansion deal came after its huge network layout plan. Following the aircraft addition, the company declared non-stop airline service on 22 routes, inclusive of Savannah / Hilton Head, GA, a new destination in the Allegiant connection. Moreover, to attract more tourists, the company has come up with many promotional holiday offers.

Recently, the company posted a significant rise in air traffic for the month of January, this year. Traffic – measured in revenue passenger miles (RPMs) – came in at 616.5 million, up 5.1% in the comparable month a year ago. Passenger count traveling in the same period also rose 8.1% from the last year period.

On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) inched up 3.2% to 712.7 million. Meanwhile, the load factor or percentage of seats filled by passengers increased to 86.5% from 85% in Jan 2013.

Hence, we believe that the recent fleet expansion at Allegiant will certainly help the company meet the growing demand it is presently witnessing.

Stocks to Consider

Allegiant Travel Company currently sports a Zacks Rank #1 (Strong Buy) while other stocks having the same Zacks Rank are Hawaiian Holdings Inc. (HA), Alaska Air Group, Inc. (ALK) and JetBlue Airways Corp. (JBLU).