Allegiant Buys 18 MD-80s from SAS to Grow its Fleet

Allegiant Travel Company reveals it signed an agreement on December 30 to purchase 18 McDonnell Douglas MD-80s from Scandinavian Airlines System (SAS) for its subsidiary airline Allegiant Air ― whose fleet consists entirely of MD-80s ― and says it will pay for the aircraft with cash.

SAS Group says the completion dates of the 18 aircraft date from 1985 to 1991.

The purchase increases Allegiant’s MD-80s buys from SAS Group to a total of 31 aircraft, according to the Scandinavian company. SAS adds that the repeat buys by Allegiant show that SAS aircraft and its maintenance program have “a strong quality reputation in the market”.

Allegiant expects to take delivery of these aircraft during the first three quarters of 2010. The 18 purchased aircraft comprise two groups:

● A group of 13 MD-82s and MD-83s, which Allegiant Air expects to put into service by the end of 2011. Along with a previously announced separate purchase of two MD-82s/83s for delivery in the first quarter of 2010 (also from SAS), Allegiant says this deal satisfies essentially all of Allegiant Air’s planned aircraft growth through the end of 2011. Allegiant expects to operate at least 52 aircraft by the end of 2010 and as many as 60 aircraft by the end of 2011. Allegiant says the all-in cost of placing each the 13 aircraft into service, including an allocable portion of the acquisition price, maintenance, paint, seats, equipment upgrades and other necessary modifications, will be less than $4 million per aircraft; and

● Five MD-87s, which Allegiant will not operate, but will use for spare engines and other spare parts.

This is a McDonnell Douglas MD-83 of Allegiant Airlines, which is a subsidiary of Las Vegas-based Allegiant Travel Company. Allegiant operates an all-MD-80 fleet and is now one of the largest operators of the type in the world. By the end of 2009 Allegiant was operating 46 MD-80s and, after contracting to buy 18 more from SAS on December 30, 2009, by the end of 2011 it will have at least 60 MD-80s in service

“This transaction re-affirms our commitment to the MD-80 aircraft. Our ability to acquire such highly-reliable aircraft at attractive economics permits Allegiant to closely tailor our capacity to demand, a key element of our leisure-oriented business model,” says Andrew Levy, Allegiant’s president and chief financial officer. “We believe these are clearly the best MD-80 aircraft available, having an unbeatable maintenance pedigree and being sister ships to 11 aircraft already in our fleet, thereby enhancing fleet commonality.”

Adds Levy: “This is the fifth aircraft transaction Allegiant has entered with SAS, which has, at all times, been a stellar business partner to Allegiant Travel Company. Once this transaction is complete, we do not expect to need further aircraft purchases to fund growth currently planned through the end of 2011.”

Allegiant Air currently operates 46 MD-80s, of which Allegiant owns all but four.

SAS Group says that the latest 18-aircraft sale will leave it with 24 MD-80s in operation, out of a total of 191 aircraft in its fleet. The company says it intends to keep the remaining 24 MD-80s as inexpensive, reliable aircraft for short-haul work and as spare aircraft to allow it to manage seasonal traffic fluctuations in the Nordic region.

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