Allegiant Air, Sun Country Airlines: matching capacity with demand

Talking at the CAPA Live on 13-Oct-2021, Allegiant CFO Greg Anderson and Sun Country CFO Dave Davis spoke with Anup Mysoor. Some of the key highlights can be found below.

Allegiant:

Really adept at serving matching capacity with demand, with high variable cost structure, low fixed costs. We've seen a lot of positive signs as of late. I think peak to peak, I would see a lot of demand in leisure travel here in the States

Before the pandemic airline had about USD500 million in cash. Right now the have about USD1.2 billion. Net debt went from a billion pre pandemic down to now USD200 million

With or without government support airline would've been able to get through this. Allegiant didn't need all of it, but they appreciated it and happy that the industry's going to come through this and be in a good spot to help overall the US economy recover

The vast majority of aircraft, 85%, are owned with some bank debt on those. 35% of aircraft are unencumbered. So the strategy is more around the owning aeroplanes rather than leasing. Airline has USD1.5 billion in total debt. Around half of that's corporate debt, the other half's aircraft debt.

Sun Country:

Fly when demand is there. They don't fly when it's not there. Significant charter operation, which is military, sports teams, casino traffic. Starting in 2020, airline had a significant cargo operation flying 12 freighter aircraft for Amazon.

All 737-800 on scheduled services, charter and the cargo side. So pilots are fully cross utilised, all overhead operations, maintenance are cross utilised across all three segments.

Sun Country actually lowered gross debt load during the pandemic. With no additional debt. They have a significant cash balance, given the IPO that they did in the positive cash flow generation