Tag Archives: N903NV

Allegiant takes a $43.2 million write-down on the value of its Boeing 757-200 aircraft fleet, likely to be replaced sooner

Allegiant Travel Company (Allegiant Air) (Las Vegas) reported that it is taking a $43.2 million write-down on the value of its Boeing 757-200 aircraft fleet. The write down on the balance sheet came after a review of the value of the six Boeing 757-200s. For now, the company will continue to operate the type, mainly to Hawaii, in the near term. However the type is not expected to be operated through the full life of each aircraft. Allegiant is now likely to find a replacement aircraft (Airbus A321?) for the 757s earlier than what was previously planned. The charge will occur in the fourth quarter of 2014.

The company issued this statement:

“This non-cash impairment charge resulted from a recent review of the value of the Company’s Boeing 757 assets,” stated Maurice J. Gallagher Jr., Chairman and CEO of Allegiant Travel Company. “We evaluate factors such as our ability or intent to operate fleet types through their estimated useful lives, potential changes to fleet residual values based on changes in market conditions for used aircraft, spare engines and parts and potential changes to our scheduled revenue network based on competition trends and operational performance. Based on our review the Company concluded that the estimated future cash flows for its six 757-200 series aircraft, spare engine and parts pool did not support the net book values on our balance sheet. This decision reflects the Company’s view that our 757 fleet will be held for a period less than their current expected useful lives, which is currently seven years or through 2021. In addition, residual values for 757 aircraft will be reduced from $6 million to $3 million based what we believe is a permanent decline in the used 757 market. The Company will continue to operate 757 aircraft on longer-haul routes, including Hawaii, in the near term.”

With this write down, the Company expects fourth quarter CASM ex fuel to increase between 40 and 41 percent versus last year. Prior to the charge, the fourth quarter was trending towards the lower end of the range provided on October 22, 2014.

Copyright Photo: Bruce Drum/AirlinersGallery.com. Formerly operated by Britannia Airways/Thomsonfly/Thomson Airways, Boeing 757-204 N903NV (msn 26966, ex G-BYAH) arrives from Hawaii in Las Vegas. The jetliner was originally delivered on February 5, 1993.

Allegiant aircraft slide show:

Allegiant announces its 46th consecutive profitable quarter

Allegiant Travel Company (Allegiant Air) (Las Vegas) reported net income of $33.5 million for the second quarter 2014, ending on June 30, up 29.8 percent from the previous second quarter net profit of $25.8 million in 2013.

“We are very proud to report our 46th consecutive profitable quarter,” stated Maurice J. Gallagher, Jr., Chairman and CEO of Allegiant Travel Company. “We have been working very hard to mitigate the crew training issues that have impacted us in the past two quarters. Although these issues did contribute to operational inefficiencies and incremental costs during this past quarter we are trending in the right direction and hope these issues have minimal impact in the third quarter. On a much more positive note, in June we completed multiple aircraft transactions to add 14 additional aircraft to our future fleet and raised $300 million of debt in the high yield market with very competitive terms. We could not have done this without the tremendous effort of our Team Members.”

Notable company highlights:

Increased operating margin, EBITDA margin and return on capital employed versus the same time last year

Acquired 12 incremental A319 Airbus aircraft for delivery in 2018. See table below for financial impact of this transaction

Signed agreements to acquire one A320 and one A319 to be in service in 2015 and 2016, respectively

Entered into a letter of intent to purchase eight A319s, previously committed to under operating leases.

Two of these are currently under operating lease to Allegiant, one is expected to be delivered in 2014 and five are expected to be delivered in 2015

In-service Airbus fleet of 10 aircraft accounted for 21.9 percent of total ASM production during the quarter

Prepaid $121.1 million, 5.75 percent term loan facility due 2017

Raised $300 million, 5.50 percent senior unsecured notes due 2019, corporate rating of BB- by Standard & Poor’s and Ba3 by Moody’s

Raised $85.3 million collateralized by 53 MD-80 and six 757 aircraft

Initiated service on 12 new routes in the second quarter

Named Top-Performing Airline in North America by Aviation Week for third consecutive year. The Company also has the best five-year average score of any airline worldwide, 76.9, more than 5 points higher than the second-ranked carrier

Read the full report: CLICK HERE

Fleet Details:

Copyright Photo: The fleet will grow by 10 aircraft (mainly Airbus A319s and A320s) in the next two years while the Boeing 757s remain constant at six aircraft. Boeing 757-204 N903NV (msn 26966) is tugged off the gate at Los Angeles International Airport.

Allegiant: