Las Vegas Sun

March 28, 2024

Allegiant cutting flights as virus roils business

Allegiant

David Becker / AP

***DO NOT USE PER ALLEGIANT. THIS MD-80 AIRCRAFT IS NO LONGER PART OF THEIR FLEET*** ORIGINAL CAPTION: Two Allegiant Air jets taxi at McCarran International Airport May 9, 2013.

Allegiant Air, which two weeks ago said it was flying above the coronavirus turbulence, has since taken sharp measures to stay afloat.

The Las Vegas-based domestic carrier, although not impacted in the early stages of the outbreak the way carriers with international service were, is now getting pummeled by event cancellations and destination closures like Disney World.

“This is an unprecedented situation and our team has come together in extraordinary ways to ensure our customers can continue to fly with confidence, while taking steps to ensure the ongoing financial health of the company,” said Maurice J. Gallagher Jr., Allegiant chairman and CEO.

“As a domestic airline with a unique business model serving primarily leisure travelers, we were better positioned than most to withstand the early impact of COVID-19 on travel,” Gallagher said.

But the situation has changed drastically over the last couple weeks, with more than 8,000 coronavirus cases reported in the U.S., 42 of them in Clark County. The airline said it is now focused on taking proactive steps to protect its customers and staff.

The airline will cut about 15% of its flight capacity for April and May, with reductions between 30% and 35% likely in the future, Allegiant spokeswoman Hilarie Grey said.

“Our planning team has endeavored to first consolidate demand by cutting flights where we have other capacity for folks to be re-accommodated easily — for example, routes we fly multiple times per day or week —  but that will not always be possible moving forward,” she said.

Customers with canceled flights will be notified directly and provided other options, she said. Those who wish to change or cancel plans can do so online at www.allegiantair.com/travel-advisory-more-info

Allegiant will also cease all nonairline projects, including suspending its construction of Sunseeker Resort Charlotte Harbor in southwest Florida. Family entertainment centers in Warren, Mich., and Clearfield, Utah, will also close until further notice.

A moratorium has also been put on all nonessential capital expenditures across the company. Stock buyback dividend activity is suspended as well, and avenues for additional borrowing are being explored, the company said. Officers of the company will take a 50% salary reduction, officials said.

“This set of initiatives could defer as much as $300 million in planned cash outlay for 2020,” said Greg Anderson, chief financial officer.

“In addition, meaningful capacity cuts will help to preserve additional liquidity,” Anderson said. “The flexibility of our business model — particularly our low fixed cost structure —  will go a long way to help navigate these uncertain times and put us in a strong position moving forward.”

U.S. airlines, meanwhile, are seeking a massive bailout — $50 billion-plus — in the form of loans, grants and tax relief to help them survive the pandemic. If this is granted, it would be nearly five times the bailout airlines received in 2001 after the 9/11 terrorist attacks.