Allegiant Air has stated it expects 20% growth over the next four to five years, as the carrier continues to expand its services offered (lasvegassun.com, 27-Nov-2009).
Allegiant Air expects 20% growth over the next four to five years
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Allegiant: ULCC braces for higher capex with Airbus order, but new fleet brings long-term cost gains
Similarly to fellow ULCCs and other US airlines, Allegiant Air’s financial foundation remains solid even as investors continue to zero in on an inflection point for industry wide-sagging unit revenues. During the past couple of years Allegiant’s leverage has decreased, the company’s returns have remained steady and shareholder returns have grown.
Airlines operating all types of business models realise the importance of keeping costs in check in order to sustain a strong balance sheet, and Allegiant is no different. After a strong cost performance in 2015, Allegiant has previously guided to possible unit cost inflation in 2016, but its 3Q2016 projections are now more favourable than expected, which should result in an adjustment to expectations for full year 2016.
Allegiant’s transition to an all-Airbus operator by YE2019 fleet should create cost tailwinds for the airline in the future, stemming from lower fuel costs and the efficiencies of operating a single fleet. The company broke precedent earlier in 2016 with an order for new-build Airbus narrowbodies, and is working to adjust its projections for capital expenditures accordingly.
Spirit Airlines: touting solid financial position, but investors stay laser-focused on unit revenue
During the past year investor attention has pivoted away from Spirit’s steady balance sheet and strong cost base to the company’s deteriorating unit revenue – a scenario most US airlines find themselves dealing with as a result of lower fuel costs driving up capacity and eroding pricing traction.
Growing cash balances and sustaining favourable leverage remain crucial elements of Spirit’s business strategy. Keeping a stable cash position allows the airline to fund its higher than average growth, which continues to deliver strong margins according to Spirit's argument.
Its industry-leading cost performance is key to Spirit’s ability to sustain solid margins even as the US revenue environment remains weak. Although it faces some cost inflation in 2016, the airline remains focused on sustaining one of the best cost performances in the US airline business.