Moody's alters Allegiant view to stable

Moody's Investors Service said it altered the outlook to stable from positive and affirmed its ratings of Allegiant Travel Co., including its Ba3 senior secured rating. Moody's also downgraded the speculative grade liquidity rating to SGL-2 from SGL-1.

“The stable outlook reflects Moody's expectations for a slower recovery of free cash flow and credit metrics than anticipated when it changed the outlook to positive in June 2021. Higher oil and jet fuel prices and the industry-wide shortage of pilots, to which Allegiant is not immune, will slow the pace of growth in the company's earnings in upcoming years. Additionally, Moody's projects that the order for 50 Boeing 737 MAX aircraft announced in January 2022, with deliveries scheduled between August 2023 and 2025, will prevent Allegiant from generating positive free cash flow before 2026,” the agency said in a press release.

The SGL-2 rating signifies a good liquidity profile, notwithstanding expectations of recurring negative free cash flow through 2025, Moody’s said.

“Moody's continues to expect cash and short-term investment balances to remain strong, with $900 million being a floor for cash on hand.”

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