Allegiant Air is buying 50 new aircraft with options for 50 more
Nevada-based Allegiant Air has said it will buy 50 new Boeing 737 MAX jets as the ultra-low-cost airline, which mainly relies on used Airbus aircraft, aims to switch supplier and strategy amid a post-pandemic travel rebound.
The jets are worth $5.5 billion and will be delivered in several steps. The airline will take delivery of an initial batch of planes next year, while the remaining deliveries are scheduled throughout 2024 and 2025, Chief Financial Officer Greg Anderson told Reuters on Wednesday.
According to Anderson, the new jets are expected to add seating capacity and 20% fuel savings compared to Allegiant’s older Airbus aircraft.
The carrier reportedly agreed to purchase 30 737 MAX 7 aircraft and 20 737 MAX 8-200 aircraft, making it the launch customer for that larger variant in the US.
The company “has experienced one of the strongest recoveries of US airlines,” Jefferies analyst Sheila Kahyaoglu said, as quoted by the agency, adding that the latest order is evidence of post-pandemic confidence in leisure travel “vastly outperforming corporate travel.”
“With this deal, and these new MAX aircraft, it will provide the ability to grow into 400 more routes,” Anderson said.
For Boeing, the deal is a much-needed boost after two of its key medium-haul customers, Qantas and several affiliates of Air France-KLM, switched to Airbus in December. Shares of the aerospace giant surged 1.3% on the news, while the stock of airline parent Allegiant Travel dropped around 8%.
The 737 MAX was universally banned from taking to the skies after two deadly accidents in late 2018 and early 2019, which claimed 346 lives.
In October 2018, Lion Air Flight 610 crashed into the Java Sea 13 minutes after takeoff, killing 189 people. In March 2019, Ethiopian Airlines Flight 302 crashed near the town of Bishoftu just six minutes after takeoff, killing all 157 people on board.
It took Boeing several years to get the troubled aircraft back in the sky by addressing security concerns and obtaining vital approvals from aviation regulators across the world.
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