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Allegiant Partners TPG for Sunseeker Resorts Development

Zacks Equity Research
Issues related to Boeing 737 MAX jets hurt first-quarter 2019 earnings of the likes of American Airlines (AAL), which has multiple such planes in its fleet.

Allegiant Travel Company ALGT has entered into a strategic long-term partnership with TPG Sixth Street Partners for financing the development of Sunseeker Resorts Charlotte Harbor. The resort, planned by Allegiant Air, is expected to be the largest and most unique resort in the Punta Gorda area in southwest Florida.

Per the terms of the agreement, the initial commitment from TPG is $175 million for developing this waterfront resort. In fact, total investment under the partnership might increase up to $1 billion. The initial phase of this resort is expected to include around 510 hotel rooms, 189 extended-stay suite units, meeting and conference space apart from multiple restaurants, bars and retail outlets.

Notably, the huge investment intended for this project is in line with Allegiant’s strategy to attract leisure travelers. Allegiant is responsible for transporting nearly 8 million leisure travelers in and out of Florida every year. 

The partnership apart, Allegiant was recently in news pertaining to the ‘agreement in principle’ inked with International Brotherhood of Teamsters — the union representing its 34 flight dispatchers. This provisional deal will now be voted upon. The ratification procedure is expected to take place by Apr 30, 2019. Southwest Airlines LUV too recently signed an agreement in principle with its aircraft mechanics.

In fact, labor deals have been in vogue in the airline space for quite some time. Though positive on such deals, they tend to push up labor costs, thereby limiting bottom-line growth. Carriers like Alaska Air Group ALK and American Airlines AAL have seen an increase in labor costs due to deals with various labor groups.

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American Airlines Group Inc. (AAL) : Free Stock Analysis Report
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