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Allegiant Air shores up liquidity as new aircraft deliveries cause a spike in 2017 capex

The US ULCC Allegiant Air takes a significant step in its evolution to an all Airbus fleet in 2017 when Airbus A320 family narrowbodies will make up more than 50% of its fleet composition. By the beginning of 2019 the company has set a course to shed its MD-80s, which were the backbone of its fleet during Allegiant’s rise as a unique niche ultra low cost player.

Allegiant also begins taking delivery of new build A320s in 2017, which is helping to drive a marked uptick in capital expenditures for the company this year. Allegiant is working to bolster its liquidity to support the increase in capex for 2017, and believes the new aircraft should be cash accretive upon delivery. The primary source of financing for Allegiant’s new aircraft is secured debt market backed by its existing fleet of used A320s.

Operationally, except for two of its bases, Allegiant expects to have transitioned all of its bases to Airbus operations by the end of 2017, which will help the airline drive higher levels of efficiency in its network.

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