Allegiant Air looks to spread its wings, acquire hotel property

Allegiant Air is interested in acquiring hotel property.

The Las Vegas-based low-cost airline’s jump into a new revenue stream came up during a quarterly earnings call Tuesday for its publicly traded parent company, Allegiant Travel Co., which reported its 57th consecutive profitable quarter.

Company executives had scarce details to offer on the plans but pointed to a history of partnering with other hotels. The company will announce more specific plans by the end of the year, Allegiant President John Redmond said.

“It would be a mistake to articulate something until all the ideas are fleshed out,” Redmond said.

Redmond joined as president in September after eight years as an Allegiant board member and 30 years in hospitality. He is a former CEO of MGM Grand Resorts, served on the board of Tropicana Las Vegas and held senior executive positions at Caesars World Inc.

Plans for international travel also came up during the call, but executives said 2018 was a more likely time to see that become reality.

“We intend to be international at some point,” Allegiant Chief Operating Officer Jude Bricker said.

The company continues to retire its fleet of McDonnell Douglas MD-80 planes, which hold 166 seats.

Allegiant will go from 47 of those plane in the first quarter of 2017 to 38 by year’s end. Those 38 aircraft will be available only in Sanford, Florida, and Las Vegas.

Allegiant will replace the MD-80s with more Airbus-made planes: the 156-seater A319 and the A320, which has 177 to 186 seats. Allegiant will bring its total aircraft count from 85 in the first quarter to 89 by year’s end.

“Ideally, we will move through this as quickly as we can,” CEO Maury Gallagher said.

The company expects to add 23 routes in the second quarter of 2017, including Lexington, Kentucky, to its available cities. As of March 31, the company operates 358 routes, compared with 298 at that time last year.

Allegiant continues to see an effect on its costs from a pilot contract agreement reached in the summer as well as a company decision in January to cut credit card surcharges.

The company returned $14.2 million to shareholders through a recurring dividend paid in March and open market share repurchased during the first quarter. Shareholders of record as of May 19 will receive 70 cents a share on June 2.

Allegiant executives believe total revenue per available seat mile will grow at least 1.5 percent year over year during the second quarter because of Easter falling in April. The company believes the amount could grow as much as 3.5 percent.

Contact Wade Tyler Millward at wmillward@reviewjournal.com or 702-383-4602. Follow @wademillward on Twitter.

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