Allegiant Air’s parent is burning through at least $2 million in cash per day and hundreds of workers are taking two-month leave at half pay as the carrier grapples with the fallout from the coronavirus pandemic.
Las Vegas-based Allegiant Travel Co. said in a filing with the Securities and Exchange Commission on Tuesday that it has been hit with “unprecedented cancellations,” and last month’s revenue will be around 40 percent to 45 percent lower than it was in March 2019.
The deep-discount carrier also said that nearly 700 employees “have volunteered” for 60-day leave at half pay, its current daily cash burn is an estimated $2 million to $2.5 million, and it applied to the U.S. Treasury Department for payroll support funds.
Moreover, management expects flying capacity for April and May to drop 80 percent to 90 percent from the same period last year and is “continuously” re-evaluating its flight schedule “in light of low demand for future bookings.”
Overall, the airline might now save as much as $320 million in cash spending, Chief Financial Officer Greg Anderson said in the filing, up from a $300 million spending reduction projected last month.
The update follows Allegiant’s announcement last month that it was suspending construction of its $470 million Florida resort project, Sunseeker Resort Charlotte Harbor, and slashing other costs to cope with the virus’ devastating effect on the economy.
Among other cost-savings, the company froze hiring for nonessential positions, suspended stock buybacks and dividends and announced a 50 percent salary cut for corporate officers.
The travel industry — the backbone of Las Vegas’ tourism-dependent economy — is getting hit especially hard by the fallout from the new coronavirus, which has upended daily life across the U.S. with sweeping business closures and stay-at-home orders.
Declining travel could wipe out 5.9 million jobs by the end of April, and the expected loss of $910 billion in travel-related economic output this year would be seven times the impact of the Sept. 11, 2001, terror attacks, according to a March 24 news release from the U.S. Travel Association.
Allegiant, led by Chairman and CEO Maurice “Maury” Gallagher, is known for flying from small, underserved cities to warm-weather vacation spots, usually without competition on its routes.