Allegiant to buy six 757s to enable Hawaii services

Allegiant Travel Company has signed a forward purchase agreement to acquire six Boeing 757-200s to enable the company to expand its leisure travel strategy into Hawaii with flights to be operated by its low-fare airline subsidiary Allegiant Air.

Allegiant plans to take two aircraft within the next two months which will go into service in the fourth quarter of 2010. The next aircraft will arrive in November 2010 and another in January 2011 for entry into service in the first half of 2011. Finally, two aircraft will be delivered in the fourth quarter of 2011 with planned in-service dates in the first half of 2012.

The six aircraft are sister-ships and have been in service with a single European operator since original delivery from Boeing. The aircraft are equipped for extended twin-engine operations (ETOPS), as required for long overwater flights.

Allegiant says it expects to spend between $75 to 90 million between now and 2012 acquiring and preparing the six 757s for service. The company say that though it is able to acquire and prepare the aircraft for cash, it believes it will finance some portion of the purchase.

Allegiant CEO and chairman Maurice Gallagher commented, "Hawaii is the most prominent US leisure destination currently unserved by Allegiant and our small city customers have been requesting this service. We are very optimistic about our ability to exploit the large third party ancillary revenue opportunity we believe exists in Hawaii. We expect the sale of hotels, rental cars, and many attraction and activities popular with Hawaii visitors will provide a very meaningful contribution to the success of the service."

"The 757 is a new aircraft type for Allegiant but we otherwise see this programme as consistent with our existing business model," explained Allegiant president and CFO, Andrew Levy. "This transaction will enable Allegiant to extend to Hawaii its strategy of serving large leisure destinations from smaller cities with no existing nonstop service."

Allegiant Air currently operates 46 MD-80s and says the 757 programme will not affect its MD-80 growth plans. Allegiant expects to have 54 aircraft in service by the end of 2010 – 52 MD-80s and two 757s.