US’ Allegiant Air furlough pilots despite improved liquidity

US low-cost airline Allegiant Air (G4, Las Vegas McCarran) has furloughed 100 pilots despite improved liquidity from the sale of bonds and steady improvements in bookings. The cut represents 10% of its pilot workforce. It comes as other major US airlines this month start furloughing thousands of workers as support from the US government’s Coronavirus Aid, Relief, and Economic Security (CARES) Act expired on September 30, 2020. The airline’s parent, Allegiant Travel, had previously applied for a USD276 million loan under CARES, but recently announced it had decided not to pursue any further loans from the US Treasury. Instead, the company on October 7, 2020, improved its liquidity by selling USD150 million in senior secured notes to investors in a private offering. Allegiant Travel said it would use the net proceeds from the sale for general corporate purposes. “As we enter the final quarter of the year, we meaningfully increased our liquidity position to over USD850 million, primarily driven by the USD84 million in senior secured debt backed by two A320-200 aircraft and eight CFM engines, along with the sale of USD150 million of senior secured notes, which is backed by collateral pledged to our existing Term Loan. We believe this improved liquidity, coupled with our industry-best cash burn rate, not only bolsters liquidity further but provides enhanced flexibility to best respond to the fluid environment,” Gregory Anderson, Executive Vice President and Chief Financial Officer of Allegiant Travel said in a statement. He said Allegiant Air burned through an average USD1.3 million daily in 3Q2020. Gross bookings for the quarter averaged more than USD2 million per day, which was better than previous booking levels, due primarily to steady improvements in bookings throughout September. He said during 3Q2020, Allegiant Travel paid about USD15 million to Sixth Street Partners to terminate a construction loan agreement of the Sunseeker Florida resort, which drove up cash burn. “As previously stated, our cash burn figure includes debt payments. We continue to expect fourth-quarter daily cash burn to be well below USD1 million based on the assumption of average daily gross bookings of more than USD2 million, which is inclusive of the remaining USD5 million payment to Sixth Street Partners,” he said.