ANALYSIS: Allegiant's extra A320s in line with fleet strategy

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Las Vegas-based Allegiant Air's acquisition of additional Airbus A320 family aircraft announced today is a testament to the carrier's strategic approach in expanding its fleet when the right opportunity arises.

The airline has all along made clear that it is in the market for additional A320 family jets, since it began its first A319 revenue service in March 2013. Allegiant's president Andrew Levy said in April that the airline is "particularly focused" on bringing on aircraft from 2016 to 2018.

Today's announcement is in line with that focus. Allegiant will purchase 12 A319s now leased to an European carrier until 2018, and will transition those aircraft into its fleet as the leases on each airframe expires.

The carrier will also purchase one A319 and one A320 in 2015 and 2016 "upon delivery", it says. An Allegiant spokesperson declines to specify where these aircraft are being purchased from.

"We are always in the market and will not pass up deals that make sense to the company," she tells Flightglobal.

Allegiant Air treasurer Jude Bricker said in March that the airline was willing to wait before acquiring additional A320 family aircraft as it waits for what it deems to be the appropriate value for the type. Noting that values of used A319s and A320s have recovered from when Allegiant acquired their first of the type, Bricker said that "pockets of availability" of aircraft do exist and that the airline has the cash to jump on these when they emerge.

The deal announced today is proof of that. "They are being opportunistic," says George Dimitroff, head of valuations at Flightglobal's Ascend Online.

Dimitroff notes that while there have been no significant improvements in values for used A320 family aircraft of late, lease rates for the type are starting to go up, particularly on the A320 variant. "Once lease rates go up, you will usually see the value following in six to 12 months," he says. "When Allegiant got their first A319s, that was considered the bottom of the market."

Allegiant plans to close the deal on the 12 A319s by end-June, and says it expects $30 million in annual lease revenue starting in June 2014 through 2018 as it leases the aircraft to the European carrier. Allegiant's spokesperson declines to name the airline leasing the A319s.

Besides announcing the acquisition of the 14 A320 family aircraft today, Allegiant disclosed that it will purchase six A319s under a previously announced lease agreement that will be delivered in late 2014 through 2015. It will also purchase two A319s in its fleet that it now leases, and plans to close this deal by July.

These eight A319s come out of a 2012 deal that Allegiant agreed to with GECAS, for the lease of nine A319s with deliveries expected through the third quarter of 2015. Asked to account for the remaining A319, Allegiant's spokesperson explains that the lone A319 "got washed out of the deal and will not be part of the Allegiant fleet at all".

"It was an option in the original agreement and the two parties agreed not to exercise it," she adds.

In 2013, Allegiant had announced the separate purchase of one A319 which is already in its fleet. The carrier now operates three A319s and has said it will add a fourth - from the GECAS deal - by end-2014.

The carrier will own all 32 A320 family aircraft - 22 A319s and 10 A320s - in its fleet by end-2018. This will shift the carrier to having an entirely owned fleet. Allegiant also operates Boeing MD-80s and Boeing 757s, and owns all 53 MD-80s and all six 757s as of the end of the first quarter.

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