Fitch alters Allegiant outlook to stable

Fitch Ratings said it revised Allegiant Travel Co.'s outlook to stable from positive and affirmed its long-term issuer default rating at BB-. Fitch also affirmed the company's first-lien instruments at BB+/RR2.

“The ratings and outlook revision are driven by higher than expected leverage, driven by slower near-term growth, inflationary wage pressures, and fuel increases. Additionally, Allegiant's updated fleet strategy represents a material increase in cash spend throughout the rating horizon, which will pressure free cash flow. Nonetheless, Fitch expects profitability to continue to improve as yields rise and costs stabilize,” the agency said in a press release.

Fitch said it forecasts adjusted leverage (total adjusted debt/EBITDAR) to be in the mid 5x for 2022, higher than its previous forecast due to updated fleet planning and inflationary cost pressures.

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