Allegiant looking at bank debt for A320s

San Diego
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Allegiant Air plans to finance two Airbus A320s that it will add to its fleet in 2014 with bank debt, says treasurer Jude Bricker.

Any deal will ultimately depend on the rates offered by lenders but the Las Vegas-based low-cost carrier’s expectation is to finance the aircraft with bank debt, he says on the sidelines of the International Society of Transport Aircraft Trading (ISTAT) Americas conference in San Diego.

“The bank market is very strong right now,” says Bricker.

Allegiant has relationships with Wells Fargo and DVB, both of whom have financed aircraft for it in the past.

Asked why Allegiant is not considering the debt capital markets, Bricker says that the airline simply lacks the scale.

The carrier had 70 aircraft, including three Airbus A319s, seven A320s, six Boeing 757-200s and 54 Boeing MD-80s, in its fleet at the end of 2013. All of the aircraft were acquired used.

Allegiant anticipates $60 million to $80 million in gross capital expenditures in 2014, with the majority attributable to aircraft.

The airline hopes to take ownership of the two A320s in time for the Christmas 2014 travel season, says Bricker. Transitioning the aircraft from Iberia has been slow, he adds.

The airline added seven used A320s from Iberia to its fleet in 2013. Allegiant and the Spanish carrier signed a deal for nine in December 2012.

The first seven A320s, one Airbus A319 and Allegiant’s new headquarters building secure $106 million in debt that the carrier raised in 2013, according to a recent stock exchange filing.

Allegiant will also add one A319 leased from GECAS to its fleet in 2014. It plans to add another six leased A319s in 2015.