Moody's rates Allegiant loans Ba3

Moody's Investors Service said it assigned Allegiant Travel Co.'s corporate family and probability-of-default ratings of Ba3 and a speculative grade liquidity rating of SGL-2.

Moody's also assigned a Ba3 rating (LGD4, 50) to the planned $125 million first-lien senior secured bank credit facility due 2017.

The outlook is stable.

Proceeds will be used for the repayment of mortgages on some MD-80 aircraft. The remainder will be used for general corporate purposes including for the announced refit to standardize the interiors of the MD 80 fleet and induction costs of the Boeing 757 aircraft that Allegiant is committed to purchase.

"The Ba3 corporate family rating anticipates that Allegiant will sustain the profitability of its differentiated scheduled airline model as it continues to grow," Moody's analyst Jonathan Root said in a statement.

"The company's historical financial results, industry leading unit costs (ex-fuel) and credit metrics that are generally stronger than the Ba rating category provide sufficient cushion for maintaining the Ba credit profile should actual results trail the company's projections," Root continued.

These factors also help mitigate ratings pressure of Allegiant's relatively small size, limited operating history and lower yields as well as the execution risk inherent in the company's current growth plan, the agency noted.

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