Were Allegiant Travel Company (ALGT)’s Results Really That Bad?

New aircraft focus

The whole industry is making a move towards newer and more energy efficient airplanes so the results from Allegiant Travel Company (NASDAQ:ALGT) could be a warning that a transition to a new type of airplane could by an issue.

SkyWest, Inc. (NASDAQ:SKYW) recently made a huge order for new Embraer SA (ADR) (NYSE:ERJ) E175-E2 aircraft that burn at least 16% less fuel per seat. Frontier Airlines in the Republic Airways Holdings Inc. (NASDAQ:RJET) group received its recent A320 with sharklets that will save fuel as well.

With SkyWest, Inc. (NASDAQ:SKYW) not expecting those Embraer planes for years and Republic Airlines already flying Airbus planes, it doesn’t appear that other airlines will face a similar impact of going from an antique like the MD-80 to a modern airplane.

Bottom line

The Allegiant Travel Company (NASDAQ:ALGT) earnings miss appears to be as much an accelerated depreciation charge and additional expenses from moving to a more modern fleet than anything that should impact other airlines. Not to mention, Allegiant had one of the highest multiples in the industry so the 11% stock cut was as much to do with a lofty valuation as anything else.

Mark Holder and Stone Fox Capital Advisors, LLC have no positions in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article Were Allegiant Travel’s Results Really That Bad? originally appeared on Fool.com.

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