Allegiant Air is looking closely at Japanese operating lease with call option (JOLCO) financing options for its final two new Airbus A320 deliveries.

The Las Vegas-based carrier is considering JOLCOs, which allow an airline to finance all of the capital costs of an aircraft, as well as commercial bank loans for the aircraft due later this year, says a source familiar with the financing considerations.

Allegiant financed the 10 new A320s that it took in 2017 with commercial bank loans, part of the $442 million it borrowed in the bank market during the year.

JOLCOs are growing in popularity for US carriers. American Airlines closed two in 2017 – one for an Airbus A321 (MSN 7525) and one for an Embraer 175 – while Hawaiian Airlines is understood to be looking very closely at the market to finance some of its A321neo deliveries this year.

US carriers have previously shied away from the JOLCO market due to tax concerns.

Allegiant plans to add 28 A320 family aircraft to its fleet in 2018. This includes 10 used Airbus A319s, the two new A320s and 18 used A320s.

The used aircraft come from a variety of sources, including 13 on finance leases from Kuwaiti lessor ALAFCO as well as ones purchased from Alitalia, Cebu Pacific, EasyJet and Vueling.

Allegiant plans to remove its last Boeing MD-80s by the end of the year, closing out 2018 with a fleet of 32 A319s and 50 A320s, its latest fleet plan shows.

Source: Cirium Dashboard