http://www.businessweek.com/news/2013-09-20/allegiant-to-park-almost-half-of-jet-fleet-to-fix-safety-slides

Bloomberg News

Allegiant Falls as 15% of Flights Dropped to Check Jet Slides

September 20, 2013

Allegiant Travel Co. (ALGT:US) slumped the most since July after the low-cost airline canceled 15 percent of its flights today following the grounding of all its Boeing Co. MD-80s to ensure emergency slides meet safety standards.

The airline will move 16 of today’s 18 canceled flights to tomorrow, when it expects to complete a full schedule, Brian Davis, a spokesman, said on a conference call today. The company hasn’t determined how the parked planes will affect flights this weekend or early next week, its busiest period.

The MD-80s that make up 85 percent of Allegiant’s fleet have an average age of about 23 years, according to company regulatory filings. The Las Vegas-based carrier offers low fares and few amenities on its flights to holiday destinations.

“It was our decision to take the aircraft out of service and remedy the problem,” Davis said in an interview.

Allegiant fell 4.9 percent to $97.91 at the close in New York, for the biggest drop since July 23. The stock has gained 33 percent this year.

Allegiant found the problem after slides were deployed during an emergency evacuation of a plane taxiing for departure from Las Vegas on Sept 16, Davis said on the call.

The Federal Aviation Administration, which learned of the problem while investigating the deployment, directed Allegiant to immediately report the inspection status of all slides installed on its MD-80 fleet, Ian Gregor, an FAA spokesman said in an e-mail.

The airline discovered during those inspections that it hadn’t met more stringent maintenance standards it agreed to previously with the FAA that required it to overhaul slides more than 15 years old each year, Davis said in the interview. The company instead had been doing the work every three years, which met the manufacturer’s required timeline, he said.

Manufacturer’s Guidelines

Fifteen MD-80s were operating today with four compliant slides each, he said. Davis didn’t say how many slides have been found that didn’t meet the overhaul standard. Non-compliant slides must be sent back to the manufacturer for the work, which takes about five business days.

Each plane has four slides, and all of them may have different inspection dates, Davis said. Allegiant is buying new slides that it can find on the market and has added an unspecified number of workers to handle calls to and from passengers.

He couldn’t say how many passengers are affected by the flight cancellations and delays. The airline is compensating passengers with up to a $200 credit toward another Allegiant flight, based on the length of their delay.

Allegiant also operates six Boeing 757s and three Airbus A319s.

To contact the reporter on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net


Best LBO Ever
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus