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Allegiant (ALGT) Trims Summer Schedule Amid Coronavirus Crisis


With multiple countries on lockdown due to the coronavirus pandemic, air-travel demand has been dealt a body blow. To combat this unprecedented low-demand scenario, airlines across the globe are cutting capacity.

Akin to other carriers across the globe, namely United Airlines UAL, Gol Linhas GOL and Ryanair Holdings RYAAY, Allegiant Travel Company ALGT) also reduced its schedule for the usually busy summer season. Notably, the companyoperates a low-cost passenger airlinethrough its subsidiary Allegiant Air.With cancellations exceeding booking by some distance, the company’s top line gets stressed. In fact, March revenues are likely to have been affected year over year by 40-45%.

Due to dwindling demand, the company trimmed its March capacity as well, down 12.2% on a year-over-year basis. With demand continuing to disappear as the pandemic shows little signs of subsiding, the companies even plan deeper capacity cuts for April and May. Allegiant expects capacity for April and May to plummet in the 80-90% range year over year.

Thanks to this unparalleled crisis, Allegiant’s daily cash burn is estimated between $2 and $2.5 million. As a result, this Zacks Rank # 5 (Strong Sell) is seeking government assistance and trying out other financing alternatives to shore up its balancesheet.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Beleaguered by this pandemic, majority ofthe stocks have been displaying a downtrend on the bourse. Shares of Allegiant have lost 54.3% compared with the industry’s 56.2% decline since the beginning of March.

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