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Allegiant Air Orders 50 Boeing 737 Max Jets, Has Option on 50 More

Allegiant Air, the Las Vegas carrier, ordered 50 Boeing 737 Max Jets. Boeing won the deal against its European rival Airbus.
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Allegiant Air,  (ALGT) -  the Las Vegas carrier, is set to order 50 Boeing  (BA) -  737 Max Jets, and has an option on 50 more, with the Chicago aerospace giant winning a deal against its European rival Airbus,  (EADSY) - .

The deal is Boeing's first with a U.S. ultra-low-cost carrier, .

"Allegiant selected two models – the 737-7 and 737-8-200 – in the 737 Max family, which provide the lowest seat-mile costs for a single-aisle airplane," they said.

 was in the offing. Reuters reported that the deal -- list-priced at $5 billion -- was designed to enable Allegiant to capture more U.S. tourism business as the pandemic eases.

Allegiant previously had relied on purchasing second-hand jets. The carrier operates 122 Airbus planes but bought only 13 of them directly from Airbus, Reuters reported.

"While the heart of our strategy continues to center on previously owned aircraft," said Maurice J. Gallagher Jr., Allegiant's chairman and chief executive, "the infusion of up to 100 direct-from-the-manufacturer 737s will bring numerous benefits for the future."

These, he said, include "flexibility for capacity growth and aircraft retirements, significant environmental benefits, and modern configuration and cabin features our customers will appreciate."

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Boeing previously had lost contests to Airbus to provide planes to KLM  (AFLYY)  of the Netherlands and Qantas  (QABSY)  of Australia, Reuters reported.

The aerospace sector, like so many others, has been hammered during the pandemic as nations locked down and few people traveled for leisure or business.

The 737 Max had been the focus of sharp regulatory assessment after two crashes involving the plane, in 2018 and 2019, killed 346 people.

The plane was grounded for 20 months in the U.S. It resumed commercial flights in the U.S. in December 2020.

On Dec. 1 they had agreed to form a joint venture to expand travelers' options for low-cost leisure travel between the U.S. and Mexico.

Allegiant said it would invest $50 million in Viva Aerobus, which says it's Mexico's ultra-low-cost carrier. 

The companies have applied to the U.S. Department of Transportation for approval of their alliance.

In October, Allegiant Air parent Allegiant Travel reported a third-quarter profit of $2.18 a share, compared with a loss of $1.82 a share in the comparable 2020 quarter and a profit of $2.70 in the 2019 period.