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Allegiant Air Switches to Boeing With Surprise 100 737 Max Order

Edward Russell
January 5th, 2022 at 10:00 AM EST

Allegiant Air has made a big strategic shift: Instead of the all-Airbus narrowbody fleet that it only achieved in 2018, the discounter has unveiled a commitment for up to 100 Boeing 737 Maxes with plans to operate a mixed fleet going forward.

The deal includes 50 firm orders plus options for 50 more, and includes 30 737-7s and 20 737-8200s Max variants. Deliveries are set to begin in 2023 and will continue through 2025. In addition, Allegiant said it plans to retain its fleet of 108 A320 family narrowbodies, and will continue to source additional used A320s.

“The infusion of up to 100 direct-from-the-manufacturer 737s will bring numerous benefits for the future — including flexibility for capacity growth and aircraft retirements, significant environmental benefits, and modern configuration and cabin features our customers will appreciate,” said Maurice Gallagher, CEO of Las Vegas-based Allegiant, in a statement Tuesday. He described the order as “opportunistic.”

The order for so many new aircraft is in itself notable for Allegiant, which has long sourced its fleet on the used market. The airline only placed its first-ever order for new planes in 2016 — a deal for 12 A320s — and Airbus data show that it has acquired just 13 aircraft new from the airframer.

The deal is also a shot in the arm for Boeing. The Chicago-based planemaker lost marquee fleet renewal orders for some 300 aircraft from long-standing customers KLM and Qantas in December. Both airlines flipped to Airbus for their narrowbody fleet needs.

The Boeing deal is just the latest out-of-the-box news for Allegiant. In December, the airline unveiled plans to form an immunized joint venture with Mexican discounter Viva Aerobus, covering U.S.-Mexico flights. The proposal is highly unusual for budget carriers due to the typically higher implementation costs of such pacts. However, Allegiant and Viva Aerobus argued that the potential expansion opportunities outweighed any added costs. Allegiant will also invest $50 million in Viva Aerobus as part of the agreement.

In a report Tuesday released before the Max deal was unveiled, Raymond James analyst Savanthi Syth said the then-unannounced order as “another added layer of uncertainty that could also cause near term headwinds” for Allegiant. Other headwinds include an open pilot contract, elevated flight cancellation numbers across its system, and likely cost overruns at its Sunseeker Resort project in Florida. However, Syth also described the proposed Viva Aerobus partnership as a potential “earnings upside” from 2023.

Edward Russell
January 5th, 2022 at 10:00 AM EST

Photo credit: Allegiant Air has committed to up to 100 Boeing 737 Max jets. Boeing

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