Allegiant Air Has Repaid Its $24.8 Million CARES Act Loan

Allegiant Air

IATA/ICAO Code:

G4/AAY

Airline Type:

Ultra-Low-Cost Carrier

Year Founded:

1997

CEO:

John Redmond

Country:

United States

Region:

North America

Earlier today, Allegiant Air announced that it has repaid the $24.8 million loan it received from the United States government under the CARES Act (Coronavirus Aid, Relief, and Economic Security).

Paying off its debt

Early in 2020, when the COVID-19 pandemic first began, the United States passed the CARES Act, which provided significant amounts of relief finances for companies throughout the country. The CARES Act included the Payroll Support Program that assisted companies affected by the pandemic.

Airlines received a large portion of the relief, and $24.8 million went to Allegiant Air in April 2020. Just over two years later, Allegiant has repaid the entire loan, which helped support the airline's employee salaries and benefits.

Photo: Vincenzo Pace | Simple Flying.

According to Allegiant, the government relief, paired with "proactive initiatives" from the airline and its staff, positioned it to navigate the chaos of the pandemic. Allegiant has a unique business model, which focuses entirely on leisure travel. This business model benefited the airline and helped it respond to the obstacles faced when the travel demand plummeted worldwide due to the COVID-19 pandemic.

John Redmond, Allegiant's CEO, stated,

"We're so grateful to the federal government and the American people for stepping up and assisting the entire industry when the outlook for the future was so uncertain. This loan helped us save jobs at a time when it wasn't clear how the U.S. would emerge from the pandemic. We're thrilled that demand has increased so much in recent months that we were able to fulfill our obligation much earlier than we originally anticipated."

Allegiant finances

Allegiant Air belongs to a parent company, Allegiant Travel Company, which generated more revenue in Q2 2022 than at the same time in 2019. Allegiant increased revenue by 28%, reporting earnings of $629.8 million in Q2 this year. Despite increasing its revenue by 28%, its net income decreased by more than 93%. In Q2 2019, Allegiant posted a net income of $70.5 million, compared to only $4.4 million during Q2 this year.

Allegiant will continue to be opportunistic with adding used mid-life Airbus aircraft over the next few years. Photo: Getty Images

During an earnings call in early August, John Redmond said,

"The second quarter was not our best, but we are reacting fast to this ever-changing environment."

Redmond added that the figures noted above did not directly reflect the airline's financial status but that lower productivity levels resulted from rising fuel prices and a challenging operating environment.

Allegiant and Viva Aerobus joint venture proposal

In December 2021, Allegiant and Viva Aerobus announced a joint venture plan that was the first between two ultra-low-cost carriers in the world. Since then, both carriers submitted a joint application to the US Department of Transportation (USDOT), but the DOT requested additional information, which led to the two carriers revising the proposal. Now the airlines await approval from the DOT with the hopes that the partnership can begin during the first half of next year.