(Bloomberg) -- Allegiant Travel Co.’s chief executive has stepped down and will be replaced by founder Maury Gallagher, one of the discount carrier’s top shareholders.
John Redmond resigned as CEO and director effective immediately, the parent company of Allegiant Airlines said in a statement Thursday. Redmond left for personal reasons and not because of any disagreement with the board or on company strategy, President Greg Anderson said in an interview. He declined further comment on what personal reasons were involved, citing company policies.
Redmond, 65 and a former chief executive at MGM Grand Resorts LLC, spearheaded a Florida real estate development project that has faced repeated delays and criticism from some analysts for the cost as well as its departure from the core airline business.
His resignation after a little over one year in the job was not linked to issues involving the Sunseeker Resort, Anderson said. The decision “was more sudden than I would have expected,” he said, though he didn’t have all the details behind it.
Helane Becker, a TD Cowen analyst, had her doubts. “We believe the change is the result of the continued delays at Sunseeker, and the stock price has been under pressure as the domestic travel market slowed,” she said.
Allegiant shares gained 3.7% to $78.25 in New York on Thursday. The stock is up 15% this year.
Savanthi Syth, an analyst at Raymond James, credited Redmond in a note with “strengthening the leadership structure at Allegiant,” so his departure shouldn’t have “any negative implications to the day-to-day operations of the airline or resort segments.”
Gallagher, 74, gave up the CEO’s job in June 2022 but has remained chairman of the Las Vegas-based company. Anderson, who will stay in his current role, said he’s worked closely with Gallagher over the past 18 months and that his return “is a good move” but doesn’t signal much change at the airline.
The low-fare carrier mainly flies between small- to medium-sized cities and leisure destinations. But it has bet big on Sunseeker, which is being built in Port Charlotte, Florida, and is scheduled to open in the fourth quarter.
Lingering damage from Hurricane Ian and a shortage of construction workers has delayed progress, Allegiant said on Aug. 17. The resort initially was scheduled to open in early 2020, but Allegiant had to stop work temporarily later that year.
Leisure travel demand remains strong and above 2019 levels, Anderson said, although the carrier cut capacity by more than 40% in September from the busy summer months. Allegiant historically has reduced or added flying to match shifts in demand.
Passenger traffic in Las Vegas, a primary market for the airline, fell year over year in both July and August, Cowen’s Becker said.
“Obviously the trend is concerning, and it’s apparent they aren’t paying enough attention to the airline,” she said. Gallagher may feel “he needs to get a better handle on what is going on at the company before he can trust someone else.”
(Updates with analyst comments, share moves from sixth paragraph.)
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