Fitch moves Allegiant view to negative

Fitch Ratings said it revised Allegiant Travel Co.'s outlook to negative from stable and affirmed the company's long-term issuer default rating at B-. The agency also affirmed the company's senior secured notes and revolvers at BB+/RR2.

“The negative outlook reflects Fitch's expectation for gross EBITDAR leverage to be above 5x through 2025, driven by weaker-than-expected profit margins and material near-term financing needs for upcoming aircraft deliveries. Fitch believes Allegiant's elevated leverage may be temporary, driven by its heavy capital expenditure cycle.

“However, the company faces execution risk towards its goals to restore margin performance, which could keep leverage elevated for longer and pressure the rating,” the agency said in a press release.

Fitch said it forecasts the company's gross EBITDAR leverage to temporarily reach 5.3x in 2024 and stay elevated around 5x until 2025, outside its 4.5x negative sensitivity.

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