Wednesday, 15 April 2020

Allegiant to cut capacity and delay new bases to help address the continued impact of COVID-19 pandemic

Air Service Capacity Cut for April and May, 
New Bases Delayed

As demand for travel across the United States continues to drop in the wake of the COVID-19 pandemic, Allegiant Travel Company has undertaken additional measures to address the impact of the outbreak, protect health and safety, and ensure a solid foundation for future operations.

"The outbreak of Coronavirus is having an impact the likes of which we've never seen in the travel industry. Even as a domestic carrier, to have zero demand across almost every community we serve is truly unsettling," said Maurice J. Gallagher, Jr., Allegiant chairman and CEO. "With the situation changing daily, we are taking proactive steps to ensure operations continue, protect the livelihoods of our team members, and put us in the best possible position to serve our customers when demand for travel returns."


In the face of the unprecedented downturn in leisure travel, Allegiant is withdrawing its 2020 full-year guidance. As reported in a filing with the Securities and Exchange Commission on April 7, the company anticipates revenue for March 2020 to be 40 to 45 percent lower than the previous year. The company has received and is reviewing term sheets for the federal Payroll Support Grant program and loan assistance under the CARES Act, in addition to exploring other financing alternatives.

Allegiant anticipates reducing airline capacity by 80 to 90 percent during April and May, with additional schedule reductions to come for the summer travel season. Two new aircraft bases scheduled to open in 2020 at Des Moines International Airport (DSM) in Iowa and Concord-Padgett International Airport in North Carolina will be delayed. The airline will also delay its announced start of service from William P. Hobby Airport (HOU) in Houston and Boston-Logan International Airport (BOS).

In addition, to assist customers in accessing information about Allegiant's onboard and in-terminal health and safety measures, the company this week launched an online resource page, Going the Distance for Health and safety , highlighting cleaning and disinfection, air purity, low-touch service initiatives aimed at preventing cross-contamination, and social distancing efforts.

On March 18, the company announced a number of measures designed to limit expenditures, expected to result in up to $320 million in cash outlay reductions. These included immediate suspension of non-airline projects, including Sunseeker Resort Charlotte Harbor –  its planned resort in southwest Florida –  and the related renovation of Kingsway Country Club, as well as Allegiant Nonstop family entertainment centres in Warren, Michigan and Clearfield, Utah.  The company also placed an immediate moratorium on all non-essential capital expenditures and discretionary spending across the company, and instituted an immediate hiring freeze on all non-essential positions. Stock buyback and dividend activity were also suspended.

Allegiant Chairman and CEO Maurice J. Gallagher, Jr. and President John Redmond do not draw salary. Other officers of the company have taken a 50 % salary reduction. Members of the company's Board of Directors will also forego cash compensation for 2020. In addition, nearly 700 Allegiant team members (15 % of the company's workforce) have taken voluntary, 60-day leave at half-pay, with full benefits in force.









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