Transport Airlines

Allegiant looks to profit from used planes shed in American-US Air merger

Feb 13, 2013 12:16 am

Skift Take

America’s largest airline would be quick to boot outdated MD-80s and Boeing 757s, which is great news for budget carriers that fly all used jets and rely on a supply of cheap old parts to keep costs low.

— Samantha Shankman

Free Report: The Changing Business of Extended-Stay Hotels

Andrew Seiber  / Flickr

Allegiant flies an MD-87 in this photo from 2010. Andrew Seiber / Flickr


A planned merger between American Airlines and US Airways is likely to add to a growing supply of used aircraft on the market, helping airlines who operate those jets find spare parts, budget carrier Allegiant Air said Tuesday.

US Airways and American’s parent AMR Corp are nearing an $11 billion merger and could announce a deal within a week, people familiar with the matter said on Saturday.

Jude Bricker, vice president of corporate finance and treasurer at Las Vegas-based Allegiant Travel Co , said the merger to create the world’s biggest airline likely will prompt American and US Air to offload some of their MD-80 and Boeing 757 jets.

“Airplanes will become available,” he said in the sidelines of the Pacific Northwest Aerospace Alliance annual conference near Seattle.

American has the largest remaining block of MD-80s in the world, or 210 jets, as well as 124 757s.

US Airways has 24 757s and no MD-80s.

Bricker said he did not think that sales of older planes would be a goldmine for Allegiant, which only buys used planes. It owns 58 MD-80s and six 757s.

“I don’t think MD-80s can get cheaper,” Bricker said, noting they cost about $600,000 now, and if the price fell to $400,000 it wouldn’t make much difference.

“What’s important is that they’re available to buy.”

A healthy supply of used planes parked and not in use by other airlines makes it easier to get parts, including engines, at low cost, which is crucial to Allegiant.

That means the airline can avoid the cost of holding spare planes in its own inventory.

American has said it will take delivery of nearly 60 new aircraft this year as part of a historic fleet order placed with Boeing and Airbus in July, 2011, just months before it filed for bankruptcy. Last month it confirmed hundreds of orders.

The airline said it already has been retiring MD-80s as it acquires new 737-800s and also has retired several 757s.

Editing by Edwina Gibbs.

Tags: , ,

Next Up

More on Skift

Daily Travel Startup Watch: Tripstr, TravelCat and More
Hertz Shows the Future of GPS Navigation With its New Tour App
CheapOair’s TV Ad Pitchman Inspired by the Trivago Guy
4 Strategies to Better Engage the Millennial Traveler