April 16, 2018 / 7:09 PM / 2 years ago

Shares of Allegiant Air drop following CBS report on safety issues

NEW YORK, April 16 (Reuters) - Shares of Allegiant Travel Co , the parent company of Allegiant Air, fell sharply in Monday afternoon trading, following a segment on CBS’ “60 Minutes” that alleged the airline suffered a high number of mechanical problems.

Allegiant shares dropped 2.95 percent to $146.60 on the Sunday CBS piece, which found more than 100 “serious mechanical incidents” on the ultra-low-cost carrier between January 2016 and October 2017. The report was based on a review of data from the Federal Aviation Administration (FAA) and interviews with industry experts.

In a statement on Monday, Allegiant dismissed the claims in the CBS story as a “false narrative” and called any suggestions of intentional regulatory violations “offensive and defamatory.”

“CBS produced a one-sided narrative by cherry-picking interviews and ignoring publicly available facts,” Allegiant Vice President of Operations Eric Gust said in a statement.

“Allegiant complies with all FAA requirements and participates in numerous voluntary safety programs to ensure we operate to the highest standards.”

The CBS story is just the latest examination of the carrier in recent years that has found significantly higher safety problems aboard Allegiant flights as compared to its rivals.

Some 300 pages of FAA records obtained in 2016 by Alternative Research Services owner Robert MacArthur found that the airline was plagued by emergency landings, failed takeoffs, engine troubles and other issues.

A Washington Post analysis of FAA documents at the time found that Las Vegas-based Allegiant had about nine times as many “serious incidents” from January 2015 through March 2016 as Delta Air Lines, the second-largest U.S. carrier, despite Delta having flown about three times as many comparable planes in the period.

In response to inquiries, the FAA provided a copy of a letter it sent to “60 Minutes” producers Michael Karzis and Vanessa Fica on April 11.

“The FAA has conducted ongoing evaluations of Allegiant’s safety compliance, as it does with all carriers, and has not identified any significant or systemic problems with the carrier’s current operation,” FAA Associate Administrator Ali Bahrami wrote.

“Had we identified such problems, the FAA would have taken immediate action.”

The agency said that Allegiant’s reported incidents rate has trended downward in recent years, including diversions and emergency landings, with Allegiant having reported 0.0029 events per 1,000 departures in 2017.

Reporting by Alana Wise; Editing by Cynthia Osterman

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