Allegiant Travel shares tumble after '60 Minutes' questions airline’s safety practices
- The program "60 Minutes" alleges Allegiant's planes are more likely to have mechanical problems in-flight versus its competitors, citing industry experts and a review of FAA records.
- "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. We'd be surprised if there isn't an impact to bookings in the nearish term," Stifel analyst Joseph DeNardi writes Monday.
A "60 Minutes" report on Allegiant Travel's safety and maintenance issues is hurting the airline's stock price.
The company's shares closed down 3 percent Monday after the segment aired Sunday on the CBS program. Allegiant's stock also fell 8.6 percent Friday as news of the coming negative report circulated.
The report alleged Allegiant's planes are more likely to have mechanical problems in-flight versus its competitors, citing industry experts and a review of FAA records. The segment also covered multiple safety incidents for the airline, including an in-flight engine failure, over the last few years.
One Wall Street analyst expects the report will impact the airline's financial results this year.
"We found little in the way of incrementally negative data points concerning Allegiant's operational challenges over the past few years on last night's 60 Minutes," Stifel analyst Joseph DeNardi wrote in a note to clients Monday. "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. We'd be surprised if there isn't an impact to bookings in the nearish term."
The airline responded to the report, saying many of the issues cited are not applicable today.
"It is unfortunate and disappointing that CBS 60 Minutes has chosen to air a false narrative about Allegiant and the FAA. This unoriginal and outdated story bears no resemblance to Allegiant's operations today, and shows a fundamental misunderstanding of FAA compliance practice and history," Allegiant's vice president of operations, Eric Gust, wrote in a statement. "It focused primarily on events of several years past, prior to the FAA's most recent comprehensive audit of Allegiant Air, which revealed no systemic or regulatory deficiencies … The story features cherry-picked interviews with people involved in the lawsuit, including featured comments from John Goglia, a paid plaintiff's witness presented by CBS as an unbiased industry expert. This one-sided presentation falls far short of responsible journalistic standards expected from reputable outlets, including 60 Minutes."
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