Discount carrier Allegiant Air has written down the value of some planes amid a sliding resale market.
The Las Vegas-based airline’s parent, Allegiant Travel Co., said today it’s taking a $43.2 million noncash impairment charge on its Boeing 757 aircraft, which comprise a small portion of its overall fleet.
Allegiant focuses on flying leisure travelers from small, underserved cities to popular vacation spots. It had 81 planes as of Sept. 30, and the majority, at 53, were MD-80s.
It had six 757s, which can hold up to 215 passengers each and are an average 21.6 years old, a regulatory filing shows.
Allegiant Travel Chairman and CEO Maurice “Maury” Gallagher said in today’s news release that the write-down stemmed from a recent review of the aircraft.
He said the company evaluates, among other things, its “ability or intent” to operate planes through their “estimated useful lives,” as well as possible changes to a fleet’s residual values, or how much an asset is worth at the end of its lease or useful life.
The company does not plan to hold the 757s for the rest of their expected useful lives, through 2021, he said. Also, an apparent “permanent decline” in the resale market has slashed residual values for 757 aircraft from $6 million to $3 million, according to Gallagher.
Allegiant will continue flying 757s on longer-haul routes, including to and from Hawaii, in the “near term,” he said.