BofA Bullish On Allegiant, Southwest, Says Leisure Travel Recovering

Although systemwide net flight bookings in the U.S. declined in the week ending June 14, it was a meaningful improvement from the prior week’s decline, driven by both domestic and international bookings, according to BofA Securities.

The sell-side firm sees continues strength in the leisure segment. 

The Allegiant, Southwest Analyst

Andrew Didora maintained Buy ratings on Allegiant Travel Company ALGT and Southwest Airlines Co LUV, with unchanged price targets of $140 and $44, respectively.

Takeaways On Allegiant, Southwest 

Recent conference calls with Allegiant Travel and Southwest Airlines management support the data showing a recovery in leisure demand and highlighted the strengths of both carriers in managing through the pandemic, Didora said in a Monday note. (See his track record here.)

Both companies have solid liquidity positions, the analyst said.

Even without additional government loans, Allegiant Travel has enough liquidity through 2022 and Southwest Airlines through mid-2023 at their present cash burn rates, he said. 

"ALGT’s strategy of keeping its schedule open and pulling back flights close-in has allowed it to take advantage of this bounce in demand, while LUV has actually begun adding back flights to its schedule in late May and into June."

Neither carrier reported a demand impact from rising coronavirus cases, despite their exposure to Florida, according to BofA. 

ALGT, LUV Price Action

Allegiant Travel shares were up 2.82% at $112.42 at the time of publication, while Southwest shares were higher by 0.12% at $34.59. 

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