Allegiant Air to get almost $172M in federal stimulus funds

With the travel industry devastated by the coronavirus pandemic, Allegiant Air expects to receive more than $170 million in payroll support funds from the federal government.

The Las Vegas-based carrier’s parent, Allegiant Travel Co., announced Tuesday it reached an agreement to receive $171.9 million through the payroll support program established by the CARES Act.

The funding would cover about 76 percent of budgeted payroll and benefit costs through September, Allegiant said, noting it has a 4,500-person workforce.

The funding includes a $21 million loan. As part of the financing package, the airline said in a regulatory filing, it will issue warrants to the U.S. Treasury Department to buy nearly 25,900 shares of company stock for $83.33 apiece, or for about $2.2 million total.

Allegiant also applied for a $276 million loan under the CARES Act, it said in the filing with the Securities and Exchange Commission.

President Donald Trump signed the $2 trillion-plus CARES Act relief measure last month as the pandemic sparked sweeping business closures and stay-at-home orders across the U.S., shutting down much of the economy.

Several other airlines sought payroll support funds amid the turmoil, including Southwest Airlines, by far the busiest carrier at McCarran International Airport.

Dallas-based Southwest announced Monday it will receive more than $3.2 billion through the program, saying the funds support “job protection” for more than 60,000 Southwest employees through September.

Allegiant, a deep-discount airline known for flying from small, underserved cities to warm-weather vacation spots, usually without competition on its routes, has been hit hard by the fallout from the outbreak.

It has seen “unprecedented cancellations,” and last month’s revenue will be around 40 percent to 45 percent lower than it was in March 2019, the company previously announced.

It has also said nearly 700 employees had volunteered for 60-day leave at half pay, its cash burn is an estimated $2 million to $2.5 million per day, and it expects flying capacity for April and May to drop 80 percent to 90 percent from the same period last year.

Moreover, it suspended construction of its $470 million Florida resort project, Sunseeker Resort Charlotte Harbor; suspended stock buybacks and dividends; and announced a 50 percent salary cut for corporate officers.

Overall, the coronavirus’ impact on the travel industry is nine times worse than the aftermath of the Sept. 11, 2001, terror attacks, according to the U.S. Travel Association.

Contact Eli Segall at esegall@reviewjournal.com or 702-383-0342. Follow @eli_segall on Twitter.