Allegiant Air defends safety after CBS report; shares fall

Two Allegiant Air jets taxi at McCarran International Airport in Las Vegas in this 2013 file photo. Shares of Allegiant Air’s parent company dropped 3.08 percent Monday after a 60 Minutes segment that raised serious safety questions about the airline.
Two Allegiant Air jets taxi at McCarran International Airport in Las Vegas in this 2013 file photo. Shares of Allegiant Air’s parent company dropped 3.08 percent Monday after a 60 Minutes segment that raised serious safety questions about the airline.

LAS VEGAS -- Allegiant Air shares fell Monday 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 3 1/2 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.

The segment included interviews with shaken passengers and prominently featured a former member of the National Transportation Safety Board, John Goglia, who said he discourages family and friends from flying the carrier.

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 $4.65, or 3.08 percent, to $146.40 on Monday. They dropped 8.6 percent on Friday.

"We found little in the way of incrementally negative data points concerning Allegiant's operational challenges over the past few years," Joseph Denardi, an analyst at Stifel Nicolaus & Co., wrote in a note to investors. "The bottom line is that, true or false, that was 30 minutes of horrible publicity for Allegiant with sound bites that will extend the story."

Allegiant Air has had a presence at Bill and Hillary Clinton National Airport/Adams Field since 2013 when it began offering twice-a-week service to and from Orlando-Sanford International Airport in Orlando, Fla. It has since added seasonal flights between Clinton National and Los Angeles International Airport. Those flights, also twice a week, resume in June, according to the airline's website.

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 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.

The FAA increased its monitoring of Allegiant in 2015 because of labor tension with its pilots.

Information for this article was contributed by Noel Oman of the Arkansas Democrat-Gazette, by staff members of The Associated Press and by Tony Robinson and Mary Schlangenstein of Bloomberg News.

Business on 04/17/2018

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