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Business Observer Friday, May 29, 2020 1 month ago

Airline takes $137M hit with area resort project delay

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Airline executives discuss the issues with building a resort amid a pandemic.

The coronavirus pandemic has claimed another victim, at least for the next 18 months: the Sunseeker Resort Charlotte Harbor.

Allegiant Travel Co., the airline behind the Charlotte County project, announced it was suspending construction of the project in March. Company officials offered a deeper explanation of the decision — and the 18-month timeline — in a May earnings conference call. “All non-airline subsidiary spend has been suspended indefinitely,” the company said in its earnings report, adding it will take a $137 million impairment on Sunseeker.

“We have said from the outset the most important component of our model is the airline,” Allegiant President John Redmond says in the call, according to a transcript posted on Seeking Alpha. “We have to do everything we can to preserve the cash register.”

In May contractors took down six cranes that lined the Sunseeker Resort property and removed other construction gear.

The project, even before COVID-19 derailed it, was an ambitious undertaking, to turn 25 waterfront acre into a mid-level cost tourist destination for Allegiant’s cost-conscious customers. Plans included a hotel and nine condo towers, in addition to restaurants, bars and retail stores. Phase I, underway, included some 510 hotel room, 190 extended-stay suite units and meeting and conference space. Allegiant paid $35 million for the land, and in early 2019 it had secured at least $175 million in financing from investment firm TPG Sixth Street.

During the earnings call, a Goldman Sachs analyst asked Allegiant executives about the possibility of  finding a “strategic partner to continue construction” of Sunseeker. Allegiant CEO and Chairman Maury Gallagher, replied “you're like 17 months ahead of us right now…it's shut down and it's not what we're doing. It's an asset, we got to do something eventually. But like I said, that’s moves ahead of us.”

 

 

 

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