Seventeen months of uncertainty ended Wednesday as Allegiant Air President John Redmond announced that the company will resume construction of the stalled Sunseeker resort with a $350 million loan.
He did not mention a construction and investment partner, as he had projected back in May after suspending construction in March 2020.
More details will be released at a press conference at the Charlotte Harbor site on Aug. 3, Redmond said. They will also announce details of the restart of the Kingsway Golf Course, which Allegiant bought in DeSoto County, as an amenity for Sunseeker guests.
There were no cheers on the conference call with a handful of investor analysts on the other end. Redmond told them they could not ask any questions about the project until another shareholder conference call on Aug. 5, dedicated just to Sunseeker questions.
Analysts usually pester Redmond with questions about about how the costly construction was going before Allegiant shut it down, and then, how it was affecting the company’s bottom line during the pandemic.
Chief Executive Officer Maury Gallagher said Allegiant still sees this area of Southwest Florida as a unique vacation site opportunity. Allegiant’s business model has taken the Ultra Low Cost Carrier approach to the limit with profits coming from far more than just airplane tickets.
Allegiant has wanted to tap into the rest of the vacationer’s spend through rental cars and now, a resort hotel.
Redmond attributed the project restart to the company’s improved balance sheet. They already paid off the original lender. Redmond said they will close on the next loan in 30-45 days. The resort will be the collateral, he said.
The resort is required by local zoning to offer public access to a riverwalk. Allegiant has also said it will build riverfront restaurants open to the public.
Gallagher described “cautious optimism” for the airlines return to profitability this year and next.
“It’s been a bit of the Wild West,” Gallagher told investors of the past year, where Allegiant’s model of leisure-only travel has dominated with the failure of business travel. “We continue to lead the industry out of this black hole.”
“Currently, we are planning above-average growth,” Gallagher said.
The second quarter 2021 financial results, published minutes after the closing bell on Wall Street, show that the company is still operating at a loss of total operating revenue of $3.9 million compared to April, May and June in 2019. The year 2019 before the pandemic was a highly successful year for Allegiant.
Net income in 2021 was up for the second quarter compared to 2019 by $34.7 million, unless you remove all of the federal aid that went to airlines in 2020. That adjusted figure for net income, minus federal aid, was a loss of $14.9 million for the second quarter 2021 vs. 2019.
All comparisons to 2020 show this year so far to be dramatically more profitable than last year, when airlines were in free fall, financially.
The decision to build a resort — giant for Charlotte County — was unprecedented in airline history when Allegiant made the announcement in 2018. It was also risky, as Allegiant planned to pay for the project out of ongoing profits. Construction had been underway about nine months and a few of the nine stories of cement poured when the pandemic shut down air travel in 2020.
Speculation on who might take over Sunseeker has been rampant, including unsubstantiated sightings of Tom Cruise and the Church of Scientology.