39612780664_979d65529d_k.jpg Nigel Howarth/AWST

Allegiant Says MD-80 Retirements On Track

Business dipped after negative media coverage, but is recovering.

Allegiant Air's ambitious plan to fast-track the retirement of its MD-80 fleet remains on schedule and the carrier's management says a dip in business following the recent CBS 60 Minutes feature has all but recovered.

Allegiant ended the first quarter with 32 MD-80s in its 88-aircraft fleet. It plans to park five this quarter, eight in the third quarter, and the last 19 in the final quarter. It will add 26 Airbus narrowbodies—20 A320s and six A319s—as part of its transition to a single fleet type, leaving it with 82 aircraft at the end of the year, down from 88 on January 1.

"Our second-quarter activity, which has 16 Airbus inductions from six different operators and five MD-80 retirements, is more than we would typically take on and accomplish in an entire year," CFO Scott Sheldon said on an Apr. 25 earnings call.

Allegiant's original plan was to retain some MD-80s through 2019. But mounting reliability problems with the aircraft led management to revise its plan in mid-2017. Issues with the MD-80s were spotlighted in the CBS 60 Minutes report that called the carrier's safety culture into question. Allegiant executives acknowledged "reliability challenges" in 2015 in 2016, but said changes made to address them—including phasing out the MD-80s and personnel changes—have put those issues in the past.

"We have the proud distinction of having the best controllable completion at 99.9% of all U.S. airlines since August 2017," Allegiant President John Redmond said. "We're doing significantly better than prior year on all reliability metrics we and other airlines track."

Allegiant CEO Maury Gallagher said blame for the issues rested squarely in the c-suite. 

Basically, we, in senior management, did not execute as well as we should have," he said. "We did not provide the leadership."

That led to changes starting in mid-2017, including a commitment to park the MD-80s.

The April 14 60 Minutes report led to a jump in cancellations and a drop in bookings, but the airline says both trends are reversing.

"We've experienced cancellations and a reduction in bookings," Sheldon said. "The degree of these cancellations and bookings have reduced each day to a point we were starting to reach normalcy."

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