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ALLEGIANT TRAVEL COMPANY

(ALGT)
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American-U.S. Air merger to help budget carrier Allegiant get jets

02/12/2013 | 09:45pm EDT

SEATTLE (Reuters) - A planned merger between American Airlines and US Airways is likely to add to a growing supply of used aircraft on the market, helping airlines who operate those jets find spare parts, budget carrier Allegiant Air said Tuesday.

US Airways (>> US Airways Group, Inc.) and American's parent AMR Corp (>> AMR Corporation) are nearing an $11 billion merger and could announce a deal within a week, people familiar with the matter said on Saturday.

Jude Bricker, vice president of corporate finance and treasurer at Las Vegas-based Allegiant Travel Co (>> Allegiant Travel Company), said the merger to create the world's biggest airline likely will prompt American and US Air to offload some of their MD-80 and Boeing 757 jets.

"Airplanes will become available," he said in the sidelines of the Pacific Northwest Aerospace Alliance annual conference near Seattle.

American has the largest remaining block of MD-80s in the world, or 210 jets, as well as 124 757s.

US Airways has 24 757s and no MD-80s.

Bricker said he did not think that sales of older planes would be a goldmine for Allegiant, which only buys used planes. It owns 58 MD-80s and six 757s.

"I don't think MD-80s can get cheaper," Bricker said, noting they cost about $600,000 now, and if the price fell to $400,000 it wouldn't make much difference.

"What's important is that they're available to buy."

A healthy supply of used planes parked and not in use by other airlines makes it easier to get parts, including engines, at low cost, which is crucial to Allegiant.

That means the airline can avoid the cost of holding spare planes in its own inventory.

American has said it will take delivery of nearly 60 new aircraft this year as part of a historic fleet order placed with Boeing and Airbus in July, 2011, just months before it filed for bankruptcy. Last month it confirmed hundreds of orders.

The airline said it already has been retiring MD-80s as it acquires new 737-800s and also has retired several 757s.

(Editing by Edwina Gibbs)

By Alwyn Scott


© Reuters 2013
Stocks mentioned in the article
ChangeLast1st jan.
AIRBUS SE -1.44% 109.78 Real-time Quote.22.28%
ALLEGIANT TRAVEL COMPANY -1.68% 183.93 Delayed Quote.-2.81%
THE BOEING COMPANY -0.64% 212.97 Delayed Quote.0.13%
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Financials (USD)
Sales 2021 1 681 M - -
Net income 2021 140 M - -
Net Debt 2021 830 M - -
P/E ratio 2021 22,4x
Yield 2021 -
Capitalization 3 270 M 3 270 M -
EV / Sales 2021 2,44x
EV / Sales 2022 1,75x
Nbr of Employees 4 104
Free-Float 61,6%
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Number of Analysts 13
Last Close Price 183,93 $
Average target price 265,08 $
Spread / Average Target 44,1%
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Managers and Directors
Maurice J. Gallagher Chairman & Chief Executive Officer
John T. Redmond President & Director
Gregory Clark Anderson Chief Financial Officer & Treasurer
Robert P. Wilson Chief Information Officer & Executive VP
D. Scott Sheldon Chief Operating Officer & Executive Vice President