The U.S. budget airline Allegiant has signed the first of many future deals on finance that will see it turn away from Airbus and towards Boeing 737 MAX jets.
The airline announced this week financing commitments for seven Airbus A320 and four Boeing 737 MAX aircraft had been agreed from BNP Paribas and Jackson Square Aviation (JSA), a leading global commercial aircraft lessor.
The $412 million deal combines banking and lessor capital to secure Allegiant's aircraft financing needs into the second quarter of 2024, while providing the airline with extra liquidity at an attractive cost and keeping it flying in the competitive U.S. budget carrier market.
Robert Neal, Allegiant's senior vice president and chief financial officer said: "We are delighted with BNP Paribas and Jackson Square's creativity in providing what we believe is an efficient framework that affords us robust liquidity to support foundational investments in our fleet. This transaction taps into young A320 CEO aircraft and will also serve as the inaugural financing for our Boeing 737 MAX equipment"
Allegiant has drawn down $196 million on September 29, and the remainder will be drawn commensurate with its initial 737 MAX deliveries. "Our relationship with BNP Paribas, spanning more than a decade, has been instrumental in our growth as an ultra-low-cost leader. We are thrilled to welcome Jackson Square Aviation as a new partner as we make air travel more affordable and accessible to leisure travellers," added Neal.
Ankush Chowdhury, managing director & head of transportation banking and capital markets at BNP Paribas commented "We are delighted to provide Allegiant, a long-standing client of the bank, an innovative and first-of-its-kind financing solution which combines bank and lessor capital into one transaction. This transaction allows the airline to maximize value while having more structural flexibility to manage its aircraft fleet versus the more traditional aircraft financing alternatives. BNP Paribas is honoured to partner with Jackson Square Aviation as we continue to innovate in the world of aviation finance with the goal of providing efficient and thoughtful financing solutions to our aviation clients,"
Allegiant currently operates an all-Airbus fleet comprised of 127 Airbus A319s and A320s and now also has purchase agreements for 130 Boeing 737 MAX jets in a multi-year deal with Boeing for less than half the MAX list price.