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Allegiant (ALGT) to Commence United States-Mexico Service
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Considering the improvement in air-travel demand in the United States as more and more people are getting vaccinated, Allegiant Travel Company (ALGT - Free Report) entered into a commercial alliance agreement with Monterrey-based Viva Aerobus. The company intends to offer cheaper non-stop leisure travel between the United States and Mexico from the first quarter of 2023, post regulatory approval. The alliance is not only the first such venture for Las Vegas-based Allegiant and Viva Aerobus, but is also the first-of-its-kind in the airline industry between two ultra-low-cost carriers (ULCCs).
The two ULCCs have submitted a joint application to the US Department of Transportation (DOT) requesting approval of and antitrust immunity for the alliance. The transaction is also subjected to clearance by the Mexican Federal Economic Competition Commission. Allegiant will also make an equity investment of $50 million in Viva Aerobus. Allegiant chairman and chief executive officer Maurice J. Gallagher, Jr. will join the board of Viva Aerobus. While Barclays, Goldman Sachs, and White & Case are acting as financial and legal advisors for Viva Aerobus, WilmerHale and Garofalo Goerlich Hainbach, PC, are advising Allegiant.
Post the approval of the application, the commercial agreement will cover code-sharing, scheduling, marketing, information systems and loyalty programs, providing seamless access and benefits for customers of both airlines.
Since Las Vegas-based Allegiant does not serve Mexico, through this alliance, its primary focus will be to broaden its travel offerings to new vacation destinations such as Cancun, Los Cabos and Puerto Vallarta, Mexico. At the same time, Monterrey-based Viva Aerobus will be able to serve to underserved or untapped markets where Allegiant has a significant presence, such as Las Vegas and several cities in Florida that are popular with Mexican tourists.
This alliance with Viva Aerobus is expected to reduce fares and ultimately link many new transborder cities with non-stop services. As the U.S.-Mexico market is very lucrative, the partnership, on commencement, is likely to attract significant traffic, thereby boosting Allegiant’s top line.
Some better-ranked stocks in the broader Zacks Transportation sector are Knight-Swift Transportation Holdings Inc. (KNX - Free Report) , Landstar System, Inc. (LSTR - Free Report) and C.H. Robinson Worldwide, Inc. (CHRW - Free Report) .
The long-term expected earnings per share (three to five years) growth rate for Knight-Swift is pegged at 15%. KNX is benefitting from an improvement in the adjusted operating ratio. Notably, the adjusted operating ratio improved to 82.8% in the first nine months of 2021 compared with 86.6% reported in the first nine months of 2020. In third-quarter 2021, the metric improved to 81.3% from 83.9% a year ago.
This uptick in adjusted operating ratios is primarily driven by higher revenues in the Trucking, Logistics and Intermodal segments. Lower the value of the metric, the better. KNX has surged 36.8% in the past year. Knight-Swift sports a Zacks Rank #1.
The long-term expected earnings per share (three to five years) growth rate for Landstar is pegged at 12%. LSTR is benefitting from a gradual recovery in the economy and freight market conditions in the United States.
LSTR’s top and the bottom line increased substantially in each quarter from the third quarter of 2020, owing to robust revenues in the primary segment — truck transportation. LSTR has surged 25.7% in the past year. Landstar carries a Zacks Rank #2 (Buy).
The long-term expected earnings per share (three to five years) growth rate for C.H. Robinson is pegged at 9%. CHRW benefits from higher pricing and volumes across most of its service lines. Total revenues jumped 42.4% year over year in the first nine months of 2021, with higher revenues across all the segments.
CHRW’s measures to reward its shareholders are encouraging. Driven by the tailwinds, the stock has moved up 1.4% in the past year. C.H. Robinson sport a Zacks Rank #1.
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Allegiant (ALGT) to Commence United States-Mexico Service
Considering the improvement in air-travel demand in the United States as more and more people are getting vaccinated, Allegiant Travel Company (ALGT - Free Report) entered into a commercial alliance agreement with Monterrey-based Viva Aerobus. The company intends to offer cheaper non-stop leisure travel between the United States and Mexico from the first quarter of 2023, post regulatory approval. The alliance is not only the first such venture for Las Vegas-based Allegiant and Viva Aerobus, but is also the first-of-its-kind in the airline industry between two ultra-low-cost carriers (ULCCs).
The two ULCCs have submitted a joint application to the US Department of Transportation (DOT) requesting approval of and antitrust immunity for the alliance. The transaction is also subjected to clearance by the Mexican Federal Economic Competition Commission. Allegiant will also make an equity investment of $50 million in Viva Aerobus. Allegiant chairman and chief executive officer Maurice J. Gallagher, Jr. will join the board of Viva Aerobus. While Barclays, Goldman Sachs, and White & Case are acting as financial and legal advisors for Viva Aerobus, WilmerHale and Garofalo Goerlich Hainbach, PC, are advising Allegiant.
Post the approval of the application, the commercial agreement will cover code-sharing, scheduling, marketing, information systems and loyalty programs, providing seamless access and benefits for customers of both airlines.
Since Las Vegas-based Allegiant does not serve Mexico, through this alliance, its primary focus will be to broaden its travel offerings to new vacation destinations such as Cancun, Los Cabos and Puerto Vallarta, Mexico. At the same time, Monterrey-based Viva Aerobus will be able to serve to underserved or untapped markets where Allegiant has a significant presence, such as Las Vegas and several cities in Florida that are popular with Mexican tourists.
This alliance with Viva Aerobus is expected to reduce fares and ultimately link many new transborder cities with non-stop services. As the U.S.-Mexico market is very lucrative, the partnership, on commencement, is likely to attract significant traffic, thereby boosting Allegiant’s top line.
Zacks Rank & Stocks to Consider
Allegiant currently carries a Zacks Rank #5 (Strong Sell). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Some better-ranked stocks in the broader Zacks Transportation sector are Knight-Swift Transportation Holdings Inc. (KNX - Free Report) , Landstar System, Inc. (LSTR - Free Report) and C.H. Robinson Worldwide, Inc. (CHRW - Free Report) .
The long-term expected earnings per share (three to five years) growth rate for Knight-Swift is pegged at 15%. KNX is benefitting from an improvement in the adjusted operating ratio. Notably, the adjusted operating ratio improved to 82.8% in the first nine months of 2021 compared with 86.6% reported in the first nine months of 2020. In third-quarter 2021, the metric improved to 81.3% from 83.9% a year ago.
This uptick in adjusted operating ratios is primarily driven by higher revenues in the Trucking, Logistics and Intermodal segments. Lower the value of the metric, the better. KNX has surged 36.8% in the past year. Knight-Swift sports a Zacks Rank #1.
The long-term expected earnings per share (three to five years) growth rate for Landstar is pegged at 12%. LSTR is benefitting from a gradual recovery in the economy and freight market conditions in the United States.
LSTR’s top and the bottom line increased substantially in each quarter from the third quarter of 2020, owing to robust revenues in the primary segment — truck transportation. LSTR has surged 25.7% in the past year. Landstar carries a Zacks Rank #2 (Buy).
The long-term expected earnings per share (three to five years) growth rate for C.H. Robinson is pegged at 9%. CHRW benefits from higher pricing and volumes across most of its service lines. Total revenues jumped 42.4% year over year in the first nine months of 2021, with higher revenues across all the segments.
CHRW’s measures to reward its shareholders are encouraging. Driven by the tailwinds, the stock has moved up 1.4% in the past year. C.H. Robinson sport a Zacks Rank #1.