When recalling what many days felt like at the start of the coronavirus pandemic last year, Allegiant Air’s chief financial officer described a stomach-turning sensation.
“It was like being punched in the gut every morning,” said Greg Anderson, who has been with the Las Vegas-based airline for about a dozen years.
At one point, the company reported burning through $2 million in cash daily as air travel came to essentially a standstill with stay-at-home orders.
It’s a different story this spring, as passenger metrics are starting to creep back to pre-pandemic levels. That, officials say, is the result of many factors — especially the company’s planning.
In February, according to the airline’s monthly traffic report, just under 680,000 passengers boarded Allegiant flights, up close to 130,000 from January’s total.
February’s figure was still a far cry from the February 2020 total of over 1.2 million passengers, but it’s a much more attractive number than what was recorded last April, when just 36,000 customers were serviced by Allegiant.
“Every airline had to dig a bit of a hole and go into debt during the pandemic, but I think we have the smallest hole. We’re well-positioned for the future,” Anderson said.
The future included expanding service to more cities, as Allegiant will have added 55 routes by the fall to serve 130 cities.
Part of the company’s growth strategy revolves around what it expects to be strong demand for leisure travel, its specialty. They added stops to places such as Jackson Hole, Wyo., and Key West, Fla.
“People are talking a lot about pent-up leisure travel demand,” Anderson said. “U.S. economists are saying that Americans have about $1.6 trillion more in savings than when the pandemic started. Yes, international travel will probably be down, maybe for years, but we’re 100% domestic and 100% leisure.”
According to consumer survey data, Anderson said about 70% of Allegiant customers are saying they want to book a flight sometime in the next six months.
Close to 60% of responding customers, Anderson said, indicated they have received at least one COVID-19 vaccination shot and that they’re primed to travel again.
“As the fog of the pandemic lifts, we think there are a thousand routes available to us for future growth,” said Drew Wells, the airline’s vice president of revenue and planning. “As we get to that other side, there are going to be opportunities for us.”
He also knows how important federal stimulus dollars have been for the company, especially the $170 million in federal emergency relief funds — a mix of loans and grant monies — the company was promised last April.
Allegiant also received paycheck protection funds, which Anderson said were instrumental in helping the airline keep its employee base intact.
“Early on, the [paycheck protection program] was needed or we would have seen a lot of airlines struggle to make it through,” Anderson said. “We’re appreciative of it. That first stimulus package was the most needed. $150 million of what we received was a direct grant. We received $90 million in payroll support, and that saved jobs.”
Another $90 million in payroll support is expected to arrive in the coming months.
Despite the rosy outlook, the company is still firmly in recovery mode.
To illustrate, Allegiant, a publicly traded company, recorded just over $990 million in total revenues last year, a decrease of 46% from 2019.
There were, however, opportunities that popped up during the pandemic.
Normally a buyer of used aircraft, Allegiant took advantage of a depressed marketplace during the pandemic, Anderson said.
What had been a tight market loosened considerably, he said. In 2020, Allegiant spent just over $200 million in aircraft and engine purchases.
During the fourth quarter of 2020 alone, the airline spent $94 million on the purchase of three airplanes.
According to its most-recent quarterly earnings report, as of Dec. 31, Allegiant was holding about $685 million in cash and investments.
“We have arguably a stronger balance sheet now than when the pandemic started,” Anderson said. “I think that’s largely a product of the sheer grit of our team members. The entire organization has been rowing in the same direction.”