Construction of the Sunseeker resort will halt immediately, Allegiant Travel Co. announced Wednesday, along with renovation of the Kingsway Country Club.
The move comes one year after construction began triumphantly on three nine-story towers along Charlotte Harbor at the Peace River Bridge. Allegiant’s decision is part of an emergency response to the global coronavirus health and financial crisis. Ending non-airline projects is aimed at “preservation of liquidity” and meeting national guidelines for social distancing, the airline announced in a press release.
“Allegiant has also placed an immediate moratorium on all non-essential capital expenditures and discretionary spending across the company and instituted an immediate hiring freeze on all non-essential personnel,” Allegiant stated.
Some workers will remain on site to wind down the $420 million project, Allegiant spokeswoman Hilarie Grey told the Sun^p.
“We do not know how long the suspension of construction might last, and will likely not know for awhile,” Grey said. “At this time, we would also not be able to estimate an impact on the project opening.”
Opening was planned for June 2021.
Preserving liquidity means maintaining access to cash to pay employees, buy airplane fuel and run other operations, Grey confirmed.
Other financial protections include suspending stock buybacks and dividend activity. Four of the company’s six officers are taking a 50% salary cut. Allegiant Chairman Maurice Gallagher and President John Redmond are not included in that, because they already take no salary.
The Las Vegas-based company was anticipating up to 800 workers on site during the final stages of construction of phase one with 680 rooms and suites along with a half-mile public harbor walk. Only a few weeks ago, Redmond was promising a topping off party this summer when the buildings were to be sealed.
Chief Financial Officer Greg Anderson said in the press release of the drastic measures, “This set of initiatives could defer as much as $300 million in planned cash outlay for 2020.”
For flight reductions, the airline said it already cut 15% of its capacity during April and May, which could grow to a 30-35% reduction.
The airline uses flexible scheduling for seasonal peaks, and this allows the airline to decrease capacity quickly and inexpensively, the statement asserts.
Allegiant initially escaped some of the worst consequences of the coronavirus, which began in China and moved to Europe. That’s because it has no international flights and no connections to international flights. As a point-to-point airline, it has no connecting flights at all.
With the nationwide cancellation of large events and resorts such as Disney, however, customers have been clogging the phone lines seeking to change or cancel reservations. Most of Allegiant’s travel is for leisure, which industry analysts have warned could fall off more quickly than domestic business travel.
The announcement of a halt to construction comes exactly one year after Allegiant announced financial backing from a major investment firm, TPG Sixth Street Partners. Also known as TSSP, the company loaned Allegiant $175 million for phase 1 of the 680-room and suite resort on 22-acres on U.S. 41 at the Peace River bridge. Phase 1 was expected to cost $420 million. TSSP and Allegiant had a financial partnership for up to $1 billion on the full future development.
TSSP has NOT withdrawn support for the project, Grey said.
Allegiant does not directly employ the construction workers, but said contractors have been notified, Grey said.