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Allegiant Air bullish on its foray operating the 737 MAX

Premium Analysis

Allegiant Air’s strategy of flying from small to mid-sized cities using lower cost, used aircraft has served the airline well for more than a decade. That business model has curried favour with investors, reflected in Allegiant’s stock trading at a premium to those of other airlines operating under more traditional business schemes. 

Now that the airline has opted to order new Boeing 737 MAX narrowbodies, Allegiant’s management is stressing that the move is not a deviation from its proven blueprint but is more an opportunistic evolution to support its growth. Simply put, obtaining used aircraft to Allegiant’s planned scale is not a viable option going forward. 

Nevertheless, markets are not reacting positively to the news, so it could take Allegiant some time to convince investors that this opportunistic purchase is a logical fit for the airline.

However, Allegiant remains bullish about the prospects for the MAX. 

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