Originally Posted by
dawgdriver
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.
You say AAY is no less volnerable yet they, along with WN were the only airlines to make a profit throughout the complete last recession which speaks for itself. They have a few competitive advantages to help with that while you could argue WN only weathered the storm in the black because they hedged their fuel. I've never seen a small airline in history have 80% of their routes with zero competition and the highest profit margins for any airline. There isn't much else in common with historic airlines other than the size of the airline and previous maintenance issues.