Leisure travel specialist Allegiant Travel Company has signed a forward purchase agreement to acquire six Boeing 757-200s now in service with an unnamed European airline, for operation by subsidiary Allegiant Air on new routes to Hawaii.
For Allegiant Air, the deal has all the more significance because it marks the carrier’s move from operating a single aircraft type (the McDonnell Douglas MD-80, in its MD-82 and MD-83 variants) to two unrelated aircraft types.
The company plans to take delivery of two of the 757s within the next two months and (after refitting the aircraft to its own cabin specifications) to place them into service in the fourth quarter of 2010. Another 757 will be delivered to Allegiant Air in November 2010 and a fourth in January 2011, the company intending to place these aircraft into service in the first half of 2011. The remaining two aircraft will be delivered in the fourth quarter of 2011, with Allegiant planning to put them into service in the first half of 2012.
Allegiant says the six 757 aircraft are sister-ships and have been in service with the one European operator since original delivery from Boeing. The 757s come equipped for extended twin-engine operations (ETOPS), as required for long overwater flights, says Allegiant. While Allegiant hasn’t named the European airline from which it is acquiring the 757s, potential sources of fleets of six ETOPS-equipped 757s include British Airways and Finnair, as well as several charter operators such as Condor Flugdienst and Thomas Cook Airlines.
The company expects to spend between $75 and $90 million through 2012 acquiring and preparing this fleet for service. Allegiant says that while it is able to acquire and prepare the aircraft for cash, it expects to finance a portion of the purchase.
The Boeing 757, of which 1,050 were built, is regarded within the airline industry as one of the most versatile jet airliner types ever built because of its capacity, long range and its ability to operate long sectors from short runways. Most 757s were built as 757-200s, but Boeing also produced a relatively small number of stretched-fuselage, high-seat-capacity 757-300s
Allegiant says it is acquiring the fleet of 757s with the express purpose of serving Hawaii, a major leisure destination that it cannot serve with its existing MD-80 fleet. Allegiant Air expects to launch service to Hawaii once appropriate regulatory requirements have been met.
“Hawaii is the most prominent U.S. leisure destination currently un-served by Allegiant and our small city customers have been requesting this service,” says Maurice Gallagher Jr., Allegiant’s CEO & chairman. “We are very optimistic about our ability to exploit the large third party ancillary revenue opportunity we believe exists in Hawaii. We expect the sale of hotels, rental cars, and many attraction and activities popular with Hawaii visitors will provide a very meaningful contribution to the success of the service.”
“The 757 is a new aircraft type for Allegiant but we otherwise see this program as consistent with our existing business model,” stated Andrew C. Levy, Allegiant’s president and chief financial officer. “This transaction will enable Allegiant to extend to Hawaii its strategy of serving large leisure destinations from smaller cities with no existing nonstop service.”
Allegiant Air currently operates 46 MD-80 aircraft and says the 757 program will not affect its MD-80 growth plans. Allegiant expects to have 52 MD-80s and two 757s in service by the end of 2010.
Although Boeing ended production of the 757 on November 28, 2005 with the delivery of the 1,050th 757 (to Shanghai Airlines), the type is famously versatile and became sought-after by operators during the economic downturn that began in 2008. As airlines started downizing their transatlantic operations, they realized the 757 offered the right capacity for many secondary transatlantic routes and even for major transatlantic routes (such as New York-London Heathrow and New York-Paris) on which operators wanted to preserve service frequency but reduce seat capacity overall.
Airlines such as American, Continental and Delta are now operating large fleets of 757s on transatlantic flights, transcontinental flights across the USA and medium-to-long-haul routes from North America to South America. Major US carriers also use 757s widely for services between the continental USA and Hawaii.
Boeing offered two engine choices for the 757: the Pratt & Whitney PW2037 family and the Rolls-Royce RB.211-535 family. While Delta, Northwest, United and several other operators chose PW2037s for their fleets of 757s, the RB.211-535E4 became the more widely chosen engine and serves in large numbers on the 757 fleets of American, Continental and various other passenger and cargo carriers throughout the world.
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