Will Las Vegas be back in business by July 4? Hometown carrier Allegiant says it’s possible

May 13, 2020

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Independence Day on the Las Vegas Strip? It may happen, at least as outlined in a potential reopening timeline presented by executives of budget carrier Allegiant Air on Tuesday.

Allegiant has a lot riding on hotels on the Strip reopening. The carrier’s business is built around offering travelers cheap, no frill flights between smaller cities like Fargo, North Dakota (FAR), and Hagerstown, Maryland (HGR) and popular leisure destinations in places such as Las Vegas, Phoenix and Florida.

Maury Gallagher, CEO of the Las Vegas-based airline, told Wall Street analysts Tuesday that he would be surprised if “hotels here in Vegas are open within the next 30 to 45 days.” Beyond that — or after June 27 — however, is a definite possibility.

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And based on the carrier’s own surveys of its passengers, as many has half are eager to travel again as concerns of the coronavirus pandemic abate.

Like nearly every airline around the world, Allegiant has been hit hard by the coronavirus crisis. The company, which includes both the airline as well as other travel-related businesses, reported a $33 million net loss during the three months ending in March. However, the airline alone eked out a nearly $39 million pre-tax profit for the period.

Allegiant has halted work on its Sunseeker Resort in Florida and stopped nearly all other planned investments for 2020. It delayed plans to open new bases in Concord, North Carolina (USA), near Charlotte, and in Des Moines (DSM). It also suspended plans to add Boston Logan (BOS) and Houston Hobby (HOU) to its route map.

Related: Allegiant picks secondary Charlotte airport for newest base

In addition, the carrier may permanently remove around 25 of its Airbus A320 family jets — more than a quarter of its fleet — as a result of the crisis.

Allegiant flew just less than 13% of its schedule in April, and continues to make comparable reductions on a week-by-week basis this month. But bookings appeared to hit the bottom in mid-April and have been trending up in the weeks since, Allegiant chief marketing officer Scott DeAngelo said on Tuesday.

The uptick in bookings are focused on beach communities in Florida, specifically on the state’s west coast and panhandle, he said. Florida began lifting its “safer at home” order at the end of April.

Allegiant has several major bases in those parts of Florida, including Destin/Fort Walton Beach (VPS), Punta Gorda (PGD) near Fort Myers, and St. Petersburg/Clearwater (PIE).

Related: Which US airlines are blocking middle seats, requiring masks?

Florida appears to be leading the recovery in air travel following the pandemic. JetBlue Airways and Spirit Airlines, which also have large bases in the state, have reported their own upticks in passenger numbers to the Sunshine State.

Airline executives and Wall Street analysts expect leisure travel, whether for a holiday or to visit friends and relatives, will lead the industry’s recovery. That’s an advantage for an airline like Allegiant, whose customers are almost exclusively holiday travelers.

“While we do not expect a faster demand recovery of any one particular region (within the U.S.), Allegiant’s network and leisure customer base fit well with our expectation of domestic/leisure recovering faster than international/business,” Raymond James analyst Savanthi Syth wrote in a report Wednesday. As such, she upgraded the bank’s recommendation of Allegiant stock to investors.

Related: Travelers starting to ‘want to move’ again, say Spirit, JetBlue execs

Featured image by DANIEL SLIM/AFP via Getty Images.

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