Allegiant Air’s first Boeing 737 Max 8 jet entered revenue service earlier this month, but that will be the only 737 to carry passengers on the carrier’s network this year.
Company executives said on Allegiant Travel Company’s 30 October earnings call that the airline, which holds 50 firm orders for 737 Max 8s, does not expect to integrate more of the type into its previously all-Airbus fleet until next year due to Boeing’s myriad of production problems. It had previously expected to take a dozen 737 Max 8s in 2024.
“We have been working together with Boeing on an updated delivery schedule since early in the second quarter,” says chief commercial officer Drew Wells. ”As you might expect, this process has taken longer than expected in light of the ongoing machinists’ strike.”
Boeing’s 737 production rate has slowed to a crawl as its 33,000-member machinists union has been on strike since early September, effectively shutting down work at its plant in Renton, Washington. The US airframer has managed to deliver some 737s despite the strike.
“Boeing and CFM have been very supportive, and we expect to disclose an amendment to our purchase agreement during the fourth quarter,” Wells says.
Allegiant is expecting to take delivery of 11 737 Max 8s and retire 10 older A320s in 2025.
Eight of the A320 retirements will take place in the second half of 2025, providing the carrier with capacity “similar to 2024 numbers” during peak summer air travel season.
”The Boeing strike has obviously created some additional uncertainty to our latest delivery forecast, and we don’t see this being firmed up until the strike has ended,” says Greg Anderson, Allegiant’s chief executive.
The carrier is in the process of retrofitting its fleet with its Allegiant Extra premium seats, and plans to have completed work on about 50 aircraft before Thanksgiving Day at the end of November.
By 31 December, Allegiant expects to operate 122 jets – 87 A320s, 34 A319s and one 737 Max 8.
HIT BY HURRICANES
Hurricanes that cut wide swaths of destruction in Florida and North Carolina caused “significant disruptions” to Allegiant’s leisure-focused operations, suppressing its third-quarter financial performance.
Allegiant reports losing $36.8 million on the third quarter, compared with a $25.1 million loss during the prior-year period, while company executives emphasised that the July-September period is historically the company’s weakest of the year.
Revenues were roughly flat, year-on-year, with Allegiant generating $562 million on the quarter, compared with $565 million last year.
”The hurricanes have led to a temporary decline in demand in certain cities along the West Coast of Florida and in Asheville, North Carolina,” Anderson says. “Approximately 25% of the seats scheduled to be flown in the fourth quarter are to destinations currently facing this short-term demand weakness.”
Allegiant expects demand for travel to hurricane-ravaged areas of the USA will return to normal toward the end of the fourth quarter. However, load factors will likely be suppressed during the period, ”resulting in a four-percentage point decline in our airline-only operating margin”.
Meanwhile, Allegiant’s long-embattled Sunseeker resort in Charlotte Harbor, Florida struggled during the third quarter with a 31% occupancy rate. The property suffered $2 million of damages from Hurricane Helene, while the impact from Hurricane Milton is still being assessed and will be reflected in Allegiant’s fourth-quarter results.
Allegiant lost a total of $40 million from operating Sunseeker through the first nine months of 2024.
