Allegiant's $720 Million Resort Sells For $200 Million, Outlook Bleak

In a move underscoring persistent concerns about Allegiant Travel Company’s (NASDAQ:ALGT) financial health, Bank of America Securities analyst Andrew G. Didora reiterated the Underperform rating on the company, lowering the price forecast from $50 to $45.

Didora notes that Blackstone Real Estate’s $200 million acquisition of ALGT’s Sunseeker Resort, at roughly $255,000 per room, came in lower than the earlier projected $236 million ($300,000 per room).

While the sale had been widely expected, Allegiant shares still underperformed peers on the announcement, falling 8% versus a 1% decline in the group.

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Now that the sale is confirmed, attention shifts back to weak airline sector trends, with Didora expecting Allegiant’s third quarter of fiscal year 2025 and full-year results to miss consensus estimates.

Didora adds that the $200 million in proceeds, well below the resort’s $720 million construction cost, may not fully offset the company’s growing pilot pay obligations.

Allegiant had already booked a $322 million impairment on the resort in the fourth quarter of fiscal year 2024, and the sale proceeds now appear insufficient to cover an expected $240 million pilot pay accrual by year-end 2025. Didora’s updated model reflects this projected cash gap.

Didora sees investor attention shift back to Allegiant’s weakening fundamentals now that the Sunseeker sale is public.

Referencing a prior earnings preview, Didora anticipates a sluggish third quarter, as only July falls within the airline’s peak travel period.

The analyst projects unit revenue declines of 13% in the second quarter of 2025 and 8.5% in the third quarter, which is notably steeper than the Street’s expectation of a 3% drop in the third quarter.

For the fiscal year 2025, Didora estimates Allegiant will earn $2.86 per share, down sharply from nearly $6 in 2024 and $9 in 2023.

The Sunseeker deal is now expected to close in the third quarter of 2025, earlier than the previous year-end forecast. As a result, Didora updates the model by removing the resort from fourth-quarter projections and pulling forward the receipt of sale proceeds.

The expected pilot pay accrual payout remains scheduled for the fourth quarter of 2025. With these revisions, the analyst nudges the 2025 EPS estimate slightly higher to $2.19 from $2.08.

Price Action: ALGT shares are trading higher by 1.1% to $56.02 at last check Tuesday.

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