Allegiant Air shares continue to fall in the aftermath of a news report that is raising serious safety questions about the low-cost carrier.
Allegiant is defending its safety and says the report by CBS News’ “60 Minutes” tells a “false narrative” about the airline. Investors, however, fear that the negative publicity will cause travelers to avoid Allegiant, which has a fleet including many older planes that typically require more maintenance.
“60 Minutes” reported Sunday night that between January 2016 and October 2017, the Las Vegas-based airline experienced more than 100 serious mechanical incidents, including aborted takeoffs, loss of cabin pressure, and emergency landings.
CBS said that detailed reports from the Federal Aviation Administration indicated that Allegiant flights were three-and-a-half times more likely to suffer an in-flight breakdown than flights operated by American, United, Delta, JetBlue or Spirit. The report also aired a long-running accusation by the Teamsters union local representing Allegiant pilots that the airline discourages pilots from reporting mechanical problems with planes.
Allegiant issued a statement by Eric Gust, vice president of operations, charging that the CBS story told a “false narrative” about Allegiant and the FAA. He said the airline complies with all FAA requirements and takes part in many voluntary safety programs and is subject to “rigorous oversight” by the FAA.
“To suggest that Allegiant would engage in the practice of asking team members to violate company and regulatory obligations is offensive and defamatory,” Gust said.
Shares of parent company Allegiant Travel Co. fell $3.45, or 2.3 percent, to $147.60 in midday trading Monday. They dropped 8.6 percent on Friday in anticipation of a damaging news report.
Allegiant buys used planes to keep costs down. As of Feb. 2, Allegiant operated 37 McDonnell-Douglas MD-80 planes and 53 Airbus A320 jets. It is phasing out the MD-80s, which burn far more fuel than new planes. Allegiant’s used planes range between 11 and 32 years old, according to a company regulatory filing.
The CBS report updated reporting by the Tampa Bay Times, which said in 2015 that Allegiant planes were four more times than those of other U.S. airlines to make an unplanned landing because of mechanical problems. None of those incidents led to enforcement action from the FAA.
The FAA on Monday released a letter in which associate administrator of safety Ali Bahrami defended the agency’s performance by pointing to the lack of a fatal crash involving a U.S. airline since 2009. That record has since been broken after the death of a Southwest Airlines passenger yesterday.
The FAA increased its monitoring of Allegiant in 2015 because of labor tension with its pilots. In 2016, the agency moved up a routine review of the airline by two years after a series of aborted takeoffs and other safety incidents. FAA officials took no enforcement action against Allegiant and said they were satisfied that the airline was addressing problems found by inspectors.
Allegiant executives termed the FAA’s 2016 findings “minor” and hailed the report as evidence of the airline’s safety.
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