According to sources familiar with the matter at hand, Allegiant Air is set to place an order for 50 Boeing 737 MAX jets worth $5 billion at list prices, as the air carrier seeks to ride on the boom of a post-pandemic U.S. tourism.
The deal is in contrast to airline’s previous strategy of picking up second-hand jets at bargain prices, which had helped it accumulate over 100 Airbus jets.
Such “flips” are rare due to the cost of retraining pilots, but reflect fierce competition for new business as the aerospace industry seeks to recover from its worst-ever recession.
The potential deal is the latest sign of an accelerated growth among “ultra-low-cost” carriers that combine rock-bottom fares with optional charges.
Carriers like Allegiant Air are expected to emerge in a position of relative strength from the Coronavirus-induced COVID-19 pandemic.
“The leisure market is coming back in droves relative to the business market,” said a source familiar with Allegiant’s plans.
The new order is expected to help Allegiant’s growth strategy as it replaces aging aircraft over the coming years.
Allegiant Air will continue to be an Airbus operator.
The placement of the potential orders come in the wake of a contest waged at least partially between the 737 MAX 7 and the Airbus A220, said two sources.
“This is huge. Allegiant was in line to order the A220,” said Scott Hamilton, an analyst at Leeham Co while adding that the potential deal suggests that Allegiant may have received a “screaming deal” from Boeing as well as the promise to provide deliveries faster.
The deal, which is likely to be counted in December’s orders for Boeing, caps a tight annual order race with Airbus.
Airbus and Boeing are scheduled to publish 2021 order data next week.