Originally Posted by
9easy
The 12 new allegiant planes were a one-off deal from airbus, because they were the end of the line and came with extremely attractive financing and pricing. In the last earnings call, it was mentioned that the purchase and lease-back deal actually contributed to earnings due the amazing deal.
Not to disparage WN, which has always been amazingly managed. But in your previously deleted statement, saying they pay for the planes is similar to someone saying they bought a house with 20% down.. and they own their house. They still need to make the payments, and there is still a financial duty to provide a good return on capital.
Glad they got a smokin' deal financing their new planes, the point is that AAY is no less leveraged--or vulnerable, than others in an economic downturn or spike in oil. They own/finance/lease aircraft, pay for maintenance, fuel and payroll like any other airline. Like others, their costs are rising but Allegiant has a great business model.
The link provided shows WN owning 80% of their fleet. Like AAY, how much WN or UAL pays down vs. borrow or lease on whatever aircraft changes daily and is somewhat irrelevant given today's cheap money. Sometimes it's wiser to borrow. Whatever the case, a strong debt/asset ratio ensures ownership factors will not determine whether an airline survives a downturn. Solid business plans/practices, strong balance sheets, cost structures and risk mitigation are what determine an airline's fate, not whether they own planes or not. There is a race to the bottom and the big guys aren't sitting on the sidelines.
If, as you say, history repeats itself, AAY might be in trouble. Looking at the track record of small airlines, most have been absorbed or driven under by the big ones. I hope that doesn't happen. Again, best of luck to you guys.