Allegiant Travel Company has closed financing commitments for seven Airbus A320 and four Boeing 737 MAX aircraft from BNP Paribas and Jackson Square Aviation (JSA).
The $412 million deal combines banking and lessor capital to secure Allegiant's aircraft financing needs into the second quarter 2024, while providing the airline with “healthy liquidity at an attractive cost in today's market”.
The loans, which are secured by a perfected first priority security interest in the aircraft, will amortise on a quarterly basis with a balloon payment due on the maturity of each loan, while the interest rate will either be fixed or floating at the company’s option prior to the drawdown.
"We are delighted with BNP Paribas and Jackson Square's creativity in providing what we believe is an efficient framework that affords us robust liquidity to support foundational investments in our fleet. This transaction taps into young A320 CEO aircraft and will also serve as the inaugural financing for our Boeing 737 MAX equipment," said Robert Neal, Allegiant's senior vice president and chief financial officer.
Allegiant has drawn down $196 million on September 29, and the remainder will be drawn commensurate with its initial 737 MAX deliveries.
"Our relationship with BNP Paribas, spanning more than a decade, has been instrumental in our growth as an ultra-low-cost leader. We are thrilled to welcome Jackson Square Aviation as a new partner as we make air travel more affordable and accessible to leisure travelers," added Neal.
"We are delighted to provide Allegiant, a long-standing client of the bank, an innovative and first-of-its-kind financing solution which combines bank and lessor capital into one transaction. This transaction allows the airline to maximize value while having more structural flexibility to manage its aircraft fleet versus the more traditional aircraft financing alternatives," said Ankush Chowdhury, managing director & head of transportation banking and capital markets at BNP Paribas. "BNP Paribas is honored to partner with Jackson Square Aviation as we continue to innovate in the world of aviation finance with the goal of providing efficient and thoughtful financing solutions to our aviation clients," added Chowdhury.
"It's a great pleasure to have Allegiant as a new airline customer for Jackson Square Aviation and we're pleased to be working together with a long-standing banking partner, BNP Paribas," said Chris Dailey, president & chief commercial officer of JSA. "Combining the strengths of JSA and BNP Paribas, we're able to provide an efficient financing solution for Allegiant's fleet of in-service Airbus A320s and next generation Boeing 737-8-200s, which we're also excited to introduce as a first into our portfolio," said Dailey.
In addition, on September 29, 2023, Allegiant Air, agreed with Boeing to amend its December 2021 agreement to acquire 50 newly manufactured Boeing 737 MAX aircraft. Under the amended agreements, the mix of 737 MAX-8200 and 737MAX-7 aircraft has been altered so that there will be more 737 MAX-8200 aircraft and fewer 737 MAX-7 aircraft.
The amended agreements reflect a revised delivery schedule with the first delivery due under the amendment in late 2023 and the delivery schedule for the initial 50 aircraft to now extend through late 2025. In addition, the amended agreement now provides for revised terms to acquire as many as 80 (in total) additional 737 MAX aircraft, subject to the terms of the agreement.