Although it is planning to retire a dozen aircraft in the short-term, Allegiant Air (G4, Las Vegas McCarran) is actively preparing to buy second-hand aircraft and engines, retired by other carriers, as early as the second half of 2020.
"In my belief, we will begin to see numbers of older A320s and A319-100s and their motors available as part of our opportunities in the not too distant future and prices will begin to react accordingly. Furthermore, we will be one of the few players I believe in the market with the wherewithal to purchase these assets," Chief Executive of parent firm Allegiant Travel, Maury Gallagher, said during a quarterly earnings call.
He added that the leisure airline's strategy was two-pronged and will initially focus on downsizing the fleet to match reduced demand during the ongoing crisis. Allegiant Air will retire between 10 and 15 of its current aircraft, although Gallagher did not provide any further details. Chief Financial Officer Greg Anderson clarified that the airline could choose to park as many as 25 of its existing aircraft, with "up to half of these aircraft permanently retired". The other half can be flexibly retired or reactivated in due time.
In the next stage, however, the increased availability of aircraft retired by other carriers will be an opportunity for Allegiant.
"For the remaining nine months of 2020, gross CapEx is now under USD200 million. This amount includes the potential acquisition of up to seven A320 aircraft and four CFM International engines. We are in ongoing discussions with the respective counterparties of these assets, ..." Anderson added.
Gallagher underlined that the acquisition of second-hand aircraft and engines would allow the airline to reduce its expenses on maintenance and parts in "the coming years". Anderson said that as aircraft requiring heavy maintenance in the short-term will be parked, for the time being, the airline will "optimise spend" and reduce its heavy maintenance expenditures for 2020 and 2021 by around USD60 million to USD75 million.
"The combination of the purchased aircraft I mentioned earlier for the rest of this year and into early 2021, and the return of our parked aircraft to service will give us a fleet for 2021 roughly the size it is today. So we want to go and take advantage of opportunities. We believe there will be a wide variety of reasonably priced aircraft that we can pursue and purchase," Gallagher said.
According to the ch-aviation fleets advanced module, Allegiant Air currently operates thirty-eight A319-100s and sixty-six A320-200s. It owns the bulk of these aircraft except for 13 dry-leased A320s. It does not have any outstanding orders from Airbus as it again follows the strategy of adding second-hand aircraft.
The airline's fleet plan at the end of the first quarter of 2020, before the pandemic created chaos on the market, was to add one more A320-200 by the end of 2020. By the end of 2021, Allegiant Air hoped to grow its fleet to 115 units by adding a further ten A320-200s, with another ten coming in 2022.