Allegiant update from today:
Keep in mind that Allegiant has been quicker at adding back capacity than anyone else. Apparently up to 85% pre-COVID capacity recently.https://www.marketwatch.com/story/alleg ... 2020-06-09
Anyhow, items of updates
- cut capacity by 53% for May
- Carried 71% fewer passengers. So 47% capacity and 29% passengers. LF 62% of what it was before approximately.
- $2 million gross booking per day (this is pretty huge considering G4 size)
- This is $1.25 million more than estimates from earnings call when they did the cash burn estimates.
- Cash burn is only down $350k per day for the quarter since variable costs increased
- Still expecting to burn $1 million/day in Q3 based on $2 million daily revenue.
Keep in mind, their Q4 revenue was around $5 million a day. So they are saying if they do let's say around 85% of pre-COVID flying with 40% of pre-COVID revenue, they are still expecting to run about 33% negative margins. Keep in mind, G4 had the best margin of any airline.
Is G4 keeping middle seats open unless from a single household?
The bookings are impressive.
Mostly I quoted as the reduced load factor indicates spacing which leads into the following discussion:
I think G4 is done with the A319, so Lightsaber is correct in saying that the only 319s that go to Allegiant will likely be for parts. That being said, I know Allegiant is only targeting newer built A320s, one that can be converted to the 186 seat configuration. Part of the reason they are scrapping some the older A320s is because those cannon be converted to the 186 seat configuration. I wouldn’t be surprised to see Allegiant becoming an all 320 airline in the near future.
I see them only buying the newer avionics as Allegiant fully embraced predictive maintenance and is benefitting from their software deal with Airbus.
Allegiant doesn't do any think fast or rash. While the cost benefit of flying the A319 per flight vs. the A320 has dropped, it isn't zero. So for planes that are far from pricey maintenance with newer avionics, I see a future. The reason the cost difference dropped is the A319 engines used to go 20,000 cycles between overhauls vs. 16,000 for the A320 and 12,000 for the A321 (I'm going from memory). After Pips, the A321 beats 16,000 cycles and the A320 matches the A319. (Yes, I realize engines undergo partial rebuilds, but the ~$1.6 million per engine for an A320 is spread over 20k instead of 16k cycles. Sharklets and engine PiPs reduced (but did mot eliminate) the fuel burn difference.
I just do not see Grand Junction CO to LAS or many other city pairs ready for the A320, yet. Even 2x/week. Eventually G4 will probably be all 186 seat A320, but that will be a very slow process.
I could see them only buying aircraft with the predictive maintenance and 186 seat capacity. However, "new" is relative. I would quantify it as 5 to 12 year old aircraft as Allegiant still needs a good value. I sincerely doubt the youngest A320CEO will be discounted enough to interest them as values have dropped 15%, not into a seething pit.
But it seems likely Allegiant could be more picky for years to come. In fact, I speculate that A320NEO production is so much more than market demand for the next 3 years that the A320CEO resale price will fall distressingly quick for the next 2.5 to 3 years. So today's 2018 build is too pricey, but not if bought in 2023...
I know for a fact that Pre Covid 19, the A319s were firmly on the chopping block to be retired. While things might have changed some, I believe they will still be drawn down rather quickly. The 319s offer a number of logistical challenges in the day to day operations of the airline. Often times the only operational spare in base is an A319, and if a 320 goes tech, especially a 186 seat 320, that’s a lots of passengers that need to be rebooked, and often times that’s days later with Allegiant’s flight schedule. In order to smooth out the daily operations and IROPS, I think Allegiant sees the benefit to being an all 186 seat, A320 operator. I can see them flying 3/4 full flights to the places that might not warrant them, rather then keeping a small sub fleet of 319s
The idea of standardizing on a 186 seat fleet is long term wise. As I read the above quoted post, I realized, excluding selling 3 seats to one household, customers want space. So that makes 'filing' a 186 aircraft easy when you can only fill 124 seats + families filling a row.
If the A319s have green time and that time isn't more valuable as engines (and other parts) for 186 seat A320s, the probably will fly until the next HMV. A319s are only worth scrap and scrap value is declining rapidly.
As I posted before, A319s bought will be now for engines and other parts (but mostly engines)
I agree with only newer (186 seat) A320CEO purchases now.
This rapid return is facinating. Allegiant has an odd strategy, less than daily, leisure focused. As people go out, they are well positioned.
ps (late edit):
I wonder when G4 will purchase more aircraft? Pricing isn't the best yet and I believe G4 must cash flow +ve prior to buying.
This spike makes me glad I pre-reserved rental cars in July and August.
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