Allegiant Air has delayed creation of a base at the Des Moines International Airport as part of measures the company announced today to reduce costs as travel demand drops because of the COVID-19 pandemic.
The Des Moines base, announced late last year, was a $50 million project that would create 66 jobs and carry the potential for new flight destinations.
“The outbreak of coronavirus is having an impact the likes of which we’ve never seen in the travel industry,” Allegiant Chairman and CEO Maurice Gallagher Jr., said in a news release announcing the cost-cutting moves. “With the situation changing daily, we are taking proactive steps to ensure operations continue, protect the livelihoods of our team members, and put us in the best possible position to serve our customers when demand for travel returns.”
The company said it anticipates revenue for March 2020 to be 40% to 45% lower than the previous year.
According to information from the Des Moines Airport Authority board, as of today, Allegiant has only competed three flights from Des Moines in April.
Allegiant anticipates reducing its airline capacity by as much as 90% between April and May, with more reductions possible this summer, the company said in the release.
Among the cost-saving measures being taken is the delay in construction of the base in Des Moines, and another at the Concord-Padgett International Airport in North Carolina.
The Des Moines base would include two aircraft being based here, along with related equipment, payroll and other expenses. Minor changes would be made to the Des Moines terminal to accommodate the new operation.
Members of Allegiant’s Des Moines crew would return to Des Moines each day, limiting them to flights within a certain radius of the city.
The base was expected to be in place this spring.
Allegiant announced last month a plan to reduce expenses by as much as $320 million, including the suspension of non-airline projects, such as resorts and country clubs, as well as family entertainment centers in Michigan and Utah.
Stock buyback and dividend activity also was suspended.
Gallagher and President John Redmond do not draw salaries. Other company officers have taken a 50% cut in salary. Members of Allegiant’s board will forgo cash compensation for 2020, and nearly 700 employees, or about 15% of its workforce, have taken voluntary, 60-day leave at half pay with full benefits.
In a statement late Tuesday, airport officials expressed disappointment with the delay.
“We have been in close communication with Allegiant’s Airport Affairs team and have anticipated today’s news regarding the delay of their crew base at Des Moines International,” the statement read. “While we are disappointed, we completely understand and are grateful for the relationship we have built with Allegiant. We look forward to the opportunity to open the crew base later this year.”
Editor’s note: The headline and first sentence of this story have been updated to reflect that Allegiant Air has delayed creation of a base at the Des Moines International Airport.