Allegiant Travel Company
- Company Name
- Allegiant Travel Company
- Stock Symbol
- Class Period
- June 8, 2015 to April 13, 2018
- Motion Deadline
- June 23, 2018
- Central District of California
The complaint charges Allegiant and certain of its officers with violations of the Securities Exchange Act of 1934. Allegiant focuses on the provision of travel services and products to residents of underserved cities in the United States. The Company offers scheduled air transportation on limited frequency non-stop flights between underserved cities and leisure destinations.
The complaint alleges that, throughout the Class Period, defendants made false and misleading statements and/or failed to disclose adverse information regarding Allegiant’s business and operations, including that Allegiant lacked adequate systems to ensure its aircraft were being properly maintained and, consequently, Allegiant was not operating responsibly and ethically to provide safe working conditions for its employees. As a result of defendants’ false statements and/or omissions during the Class Period, the price of Allegiant shares was artificially inflated to more than $233 per share.
Then on April 13, 2018, CBS News announced it would be airing a 60 Minutes segment criticizing Allegiant’s safety and maintenance record. On this news, the price of Allegiant shares fell $14.20 per share, or nearly 9%, to close at $151.05 per share on April 13, 2018.
Subsequently, on April 15, 2018, the 60 Minutes segment aired, revealing that Allegiant aircraft had experienced a high number of serious mechanical incidents during the period from mid-2015 through October 2017, that Allegiant lacked the infrastructure and personnel to adequately maintain its aircraft, and that the Company had discouraged pilots from reporting safety and maintenance issues. According to 60 Minutes, “[p]ublic documents show an alarming number of aborted takeoffs, cabin pressure loss, emergency descents, and unscheduled landing. Yet for the most part, Allegiant’s difficulties have managed to stay under the radar of the flying public.” Experts interviewed during the segment stated they believe “Allegiant’s problems c[a]me from the confluence of its aggressive business model and a safety culture they find lagging,” including “the lack of infrastructure.” But even more disturbing were “allegations from the ranks of Allegiant’s own pilots . . . that Allegiant [wa]s trying to gain a competitive advantage by softening safety standards adhered to by the major airlines . . . [a]nd that Allegiant’s maintenance department tries to talk pilots out of reporting problems with their aircraft to avoid delays and keep the planes moving.” On this news, the price of Allegiant shares fell another $4.65 per share, or more than 3%, to close at $146.40 per share on April 16, 2018.