Allegiant Air buying dozens of Boeing 737 MAX jets

Allegiant Travel Co. on Wednesday announced that it will buy 50 new Boeing 737 MAX jets worth $5.5 billion, Reuters reported.

The company, which owns Allegiant Air, will buy 30 737 MAX 7 aircraft and 20 737 MAX 8-200 aircraft. Allegiant said it factored the MAX’s fuel efficiency and cabin features into the purchase decision.

The company also left open the option of buying 50 more planes, The Wall Street Journal reported.

Allegiant Air had usually relied on used aircraft in the past, according to Reuters.

“Ultra-low-cost” carriers like Allegiant are experiencing growth due to their low fares and optional charges. These airlines are planning to emerge from the pandemic stronger than in the past, the outlet reported.

Allegiant “has experienced one of the strongest recoveries of U.S. airlines” post-pandemic, Jefferies analyst Sheila Kahyaoglu wrote.

Chief Financial Officer Greg Anderson told Reuters that, “With this deal, and these new MAX aircraft, it will provide the ability to grow into 400 more routes.”

Boeing Co. will also benefit from the purchase. Qantas and some affiliates of AirFrance-KLM, two of the company’s major customers, switched from Boeing to Airbus in December.

Boeing created its MAX series partly in competition with Airbus, its European rival.

Delivery of the jets will occur over the course of three years: 10 in 2023, 24 in 2024 and 16 in 2025.