Advertisement
  1. Business

Shareholder sues Allegiant Air parent company over safety, business practices

A shareholder for Allegiant Air's parent company, Allegiant Travel Co., is suing the company and its executives. Pictured is Allegiant's headquarters in 2016. [JAMES BORCHUCK   |   Times, 2016]
A shareholder for Allegiant Air's parent company, Allegiant Travel Co., is suing the company and its executives. Pictured is Allegiant's headquarters in 2016. [JAMES BORCHUCK | Times, 2016]
Published Dec. 7, 2018

A shareholder is suing Allegiant Air's parent company and its executives over what she says is an "illicit and dangerous business model" that exposed Allegiant and people who hold stock in the airline to significant financial liability.

Filed in Nevada's Clark County court this week, shareholder Charlotte Woolery alleges that Allegiant Travel Co. CEO Maurice Gallagher Jr. pushed a business model he used at now-shuttered budget airline ValuJet. She says it "devalued safety, maintenance and training to increase the company's bottom line."

Those practices ultimately caused the value of the company to fall, she claims.

Allegiant is the predominant carrier at St. Pete-Clearwater International Airport. Spokeswoman Hilarie Gray said the company does not comment on pending litigation.

Among the problems the lawsuit cites are significant mechanical issues with Allegiant flights, as detailed in a Tampa Bay Times investigation in 2016 and a 60 Minutes investigation this year. The Times found that the airline was four times more likely than other commercial airlines to have in-air mechanical issues. CBS's 60 Minutes built on that investigation with updated findings for 2016 to 2017, which showed that Allegiant flights were three-and-a-half times more likely to have in-flight mechanical problems than its peers.

These problems, Woolery said, are a result of contracting out maintenance with "little to no oversight," which led to "chronically understaffed and undertrained" work crews.

Woolery also accuses Gallagher, executive vice president Scott Sheldon, president John Redmond and lead independent director Gary Ellmer of making $50.3 million through insider trading. She claims that between 2015 and 2018, Allegiant wrote in its filings with the Securities and Exchange Commission that it maintained Federal Aviation Administration standards for its training and maintenance though its top executives knew it did not.

"These improper statements have devastated Allegiant's credibility," the lawsuit said, causing its overall stock value to fall by $373.5 million. Its stock price topped out above $230 a share in August 2015 and was down to just more than $125 on Friday.

Combined, Woolery alleges, the practices of Allegiant executives led to a securities class action lawsuit by investors, several lawsuits brought by customers on Allegiant flights and the "wrongful termination" of an Allegiant pilot "fired after following proper safety protocol."

Woolery is asking a judge for the defendants to pay damages for the alleged insider trading and "waste of corporate assets;" for an order directing the company to revise its leadership and adhere to the law, giving shareholders the right to vote on policies such as increasing safety and maintenance protocols; and to require the defendants to give back the money they allegedly earned from insider training. It also seeks other damages and legal fees.

Allegiant directors Montie Brewer, Linda Marvin and Charles Pollard are also named as defendants in the lawsuit.

Contact Malena Carollo at mcarollo@tampabay.com or (727) 892-2249. Follow @malenacarollo.

ALSO IN THIS SECTION

  1. Erica Allums poses for a portrait behind the counter at Banyan Cafe in St. Petersburg while she was still the owner. Now, she's in the process of taking over the MLK spot once again. [Times (2018)] [Tampa Bay Times]
    The Central Avenue location will continue to operate as normal.
  2. A for sale sign is seen in front of a home in the Westchase area of Tampa. CHRIS URSO  |  Times (2013)
    And a spike in cash sales suggests investors were active in the market.
  3. Florida's unemployment rate hit a record low in December. (AP Photo/Lynne Sladky, File) [LYNNE SLADKY  |  AP]
    Nearly every major job sector posted gains from a year earlier.
  4. A proposed bill in the Legislature would set a statewide referendum on whether to amend Florida's constitution to add a year to the period when home buyers can transfer their accumulated benefits under the Save Our Homes cap on property assessments to a new home. Pinellas County Property Appraiser Mike Twitty says going from two years to three would reduce the possibility that construction delays in a booming real estate market would prevent some buyers from meeting the deadline, costing them potentially thousands 
 of dollars in property tax savings. [SUSAN TAYLOR MARTIN | Times (2019)]
    The bill, the idea of Pinellas County Property Appraiser Mike Twitty, would give buyers another year to transfer their tax savings under Florida’s Save Our Homes assessment cap to a home they’ve...
  5. The Tampa Bay Times' headquarters in downtown St. Petersburg. [CHRIS URSO  |  Times]
    No customer information was compromised. The Times is removing the malicious code.
  6. Concentrix has told the state of Florida that it plans to lay off as many as 174 employees from one of the programs it has at the Interstate Corporate Center east of Tampa. This is the same call center hit with 245 layoffs announced in November. (Google street view photo) [Google Street View]
    In November, Concentrix, the California multinational company that runs the center, announced the layoffs of 245 employees.
  7. Loreen Spencer (left) and Sue Watts, the two newest members of HCI Group's board of directors. [HCI Group]
    “I just wish I had thought of this earlier,” the chairman and CEO said.
  8. Tampa-based WellCare Health Plans will become the headquarters for Medicare and pharmacy operations now that it has been acquired in a $17 billion cash and stock deal by Centene Corp., base in St. Louis. (Times files)
    New owner Centene said it “expects to maintain strong operations in Tampa,” which is anticipated to be the headquarters for its Medicare and pharmacy operations.
  9. A Publix chicken tender sub sandwich. Pub Subs are now easier to order through Instacart grocery deliveries. [CHRIS URSO   |   Times]
    New Instacart Meal program to make Pub Sub orders a breeze, according to the grocery delivery app.
  10. Johanna Santiago, 50, of Riverview, hopes to start selling her Joba Sofrito early this year. Santiago developed the product, a savory Puerto Rican cooking sauce, with help from the nonprofit Enterprising Latinas in Wimauma. [MARTHA ASENCIO RHINE  |  Times]
    Selling food and crafts, three women are among the dozens who turned to the organization for training in 2019.
Advertisement
Advertisement
Advertisement