Issues continue to circle overhead for low-fare Allegiant Air as directors gathered in the profitable company’s Las Vegas headquarters Thursday for a shareholder meeting.
Labor disputes with pilots and flight attendants, equipment problems causing cancelled flights and concerns about the CEO’s spending on pet projects have plagued the small airline owned and operated by Allegiant Travel Co.
A pilot strike was averted by a judge’s ruling earlier this year, but on Thursday, the airline’s flight attendant union picketed in front of the headquarters. A small group of Transport Workers Union of America representatives and at least one Allegiant flight attendant yelled “four years is too long” to protest the length of time the company and the union have been negotiating a contract.
The same day, Allegiant cancelled six flights at St. Pete-Clearwater International Airport in Florida after one of its planes was forced to make an emergency landing there because of pressurization problems.
A week before, a small fuel leak on a flight from Los Angeles to Boise, Idaho, while the plane taxied at the gate led some passengers to open the aircraft’s emergency doors and climb out on a wing. An engine issue caused a flight from Las Vegas to Stockton, California, to return to Vegas that same day.
Investor analysts have also questioned Allegiant’s spending on companies affiliated with its CEO, including an in-flight television game show and sponsorship of his son’s racing team.
A report from Institutional Shareholder Services, which advises investors how to vote in annual meetings, recommended voting against the re-election of the company’s audit committee chair to the board because of the transactions that totaled $9.3 million in the last year. The payments included rent for the company’s Las Vegas headquarters, sponsorship for a NASCAR truck series team GMS Racing LLC, video production for “The Game Plane” show by Alpine Labs LLC and employee training programs. In all four cases, Allegiant CEO Maurice Gallagher partly or fully owns the separate companies that benefited from the contracts, according to the report.
CtW Investment Group, which works with union-sponsored pension funds, also recommended not re-electing three of the company’s board members because of the spending on companies affiliated with Gallagher.
The company has said Allegiant benefits from the marketing reach, and the terms for the deals were not any more favorable than they would have been if the services were bought from another company.
The spending in question has not come at a sacrifice to operations and maintenance, Allegiant spokeswoman Jessica Wheeler said. “A lot of that is outside the operational budget,” she said.
All of the company’s board members were re-elected at the short Thursday meeting, Wheeler said.
As for reports of the airline’s equipment trouble, “everything about our fleet and operation is safe,” she said.
The company tracks all of the safety-related incidents, and to date, neither the company nor the Federal Aviation Administration has identified any trends that would concern them, Wheeler said.
“Things tend to crop up from time to time,” she said, especially in peak summer travel months and in particularly warm destinations.
The lengthy labor negotiations with the airline’s flight attendants aren’t uncommon in the airline industry considering the complexity of the issues and the parties involved in the talks, Wheeler said.
The company last met in April to negotiate with the union, and officials said they were deciding when the next discussions would take place.
Lorraine Mahoney, flight attendant with the company for eight years who picketed outside the company’s headquarters Thursday, said the company has cut commissions for what flight attendants earn for every travel package or on-board drink and snack sold; makes it difficult for employees to take time off; and doesn’t pay anything more if a shift is extended for hours because of lengthy flight delays, a provision the company and the union still can’t come to terms on.
“I want to be treated decently,” she said.
Thom McDaniel, international vice president with the Transport Workers Union, said the company and union are also at an impasse on compensation provision and the contract’s length. “Quality product is your best advertising,” McDaniel said.