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Allegiant Air - ALGT

Castle Hill and/or others we advise may hold a material investment in the issuer's securities and may trade into or out of these securities at any time. Our Investment Ideas section of our blog are for informational purposes only and do not constitute investment advice.

Allegiant Air is a travel company that operates a low-cost passenger airline using smaller airports where there is little or no competition. I've flown them several times and the most enjoyable part is flying through a small airport where you can show up 30 minutes before boarding and not sweat about missing your flight.

Allegiant continues to add aircraft and upgrade their fleet which I suspect will improve their operating metrics. They generally purchase used planes and they are replacing their very dated MD fleet with the Airbus A319 and A320 (which are nice planes). The room for growth in the air space for Allegiant is high compared to other US carriers.

They have also recently entered the hotel and hospitality business. They have started a project dubbed Sunseeker Resorts which will be a premier resort where travelers can stay in Florida. The thought of packaging air and hotel all for one price is an interesting concept, especially for a traditional airliner. The good news, form what I can tell, is the airline cash flow is funding a lot of this project without the need to take on a ton of additional debt.

Furthermore, I really love the management team here - specifically John Redmond. John is the former CEO of MGM Grand Resorts and was named President of Allegiant by CEO Maurice Gallagher. He has deep knowledge of the hospitality space and also serves on the Board at Vail Resorts (which is another great success story the past decade). John Redmond isn't new to Allegiant either. He was on the board from 2007-2013 and then rejoined the board in 2014. He's very familiar with Allegiant and their operating history. It's a good move by Maurice Gallagher to name Redmond as the President, especially if they are committed to attacking the hotel and stay space.

John Redmond has recently purchased shares of the stock and has a good track record with previous investments, specifically Vail (MTN), so that should be reassuring when making an investment here.

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