Transport Airlines

Federal safety regulators looking to fine American Airlines $162 million

Aug 07, 2012 3:08 pm

Skift Take

The FAA is filing the largest combined penalty ever to be brought against an airline, but the claim may have more to do with the federal agency ensuring they are paid during AMR’s restructuring than the implied safety breaches.

— Samantha Shankman

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Federal safety regulators are seeking up to $162.4 million in fines against American Airlines and its affiliates for alleged violations of U.S. safety standards going back several years. Those sanctions would dwarf any previous penalties against an airline.

Many of the investigations had not been disclosed until the Federal Aviation Administration filed documents describing them to the federal court handling the bankruptcy case of American and parent AMR Corp.

The documents underscore the scope of the FAA’s concern about the maintenance program at American, the nation’s third-largest airline. They come to light just as American tries to fix labor and financial problems and turn itself around after losing more than $10 billion since 2001.

American said Tuesday that it has been working with federal officials for several years to improve training and oversight in its maintenance operations.

“Safety is fundamental to the success of American Airlines, and at no time did American operate an aircraft that was unsafe for flight,” said AMR spokesman Michael Trevino.

AMR will try to reduce any penalties through negotiations, Trevino said. That’s a standard approach when the FAA proposes fines against an airline for alleged violations of federal safety rules.

The FAA filed its claim in U.S. bankruptcy court in New York just before a July 16 deadline, but the move went unnoticed for weeks. It was reported in Tuesday’s editions of The Wall Street Journal.

The FAA said in a statement that it filed the claim to make sure that the government gets paid just like other creditors in the AMR bankruptcy case. It declined further comment, citing ongoing investigations. In some cases, the agency had not yet formally notified American of the proposed fines.

The largest single fine spelled out in court documents is $39.3 million against American for allegedly failing to fix wiring work on its Boeing 757 aircraft in 2009. Federal specifications are designed to prevent electrical arcing and fires. The FAA said that before the jets were inspected and repaired, American used 113 of them to make 1,480 flights carrying passengers.

The FAA is seeking $28.8 million for alleged failure by American to follow the manufacturer’s recommended procedure for overhauling the main landing gear on about 30 Boeing 777 jets. FAA officials in Texas suggested a $1.9 million fine, but officials in Washington increased the amount.

The FAA proposes a $27.6 million fine over work on the engines of Boeing 767 jets. American sought and received permission from Boeing for an alternative fix, but before getting that approval it used four planes on 2,118 flights in 2008, according to court documents.

Any of those three cases would break the record — already held by American — for the largest proposed penalty against any airline. In 2010, the FAA announced it would seek a $24.2 million fine for alleged improper repairs of wiring around the landing gear of American’s MD-80 aircraft. That case has not been settled.

American stressed that the potential fines are not final and sought to downplay the FAA’s claims by noting that AMR faced nearly 8,900 claims totaling $95.1 billion as of the July 16 deadline.

“It is not an admission that money is owed, nor is it an admission that the amount cited is correct,” said Trevino, the AMR spokesman.

AMR, American and the American Eagle regional airline filed for bankruptcy protection Nov. 29. In a deal worked out with its creditors, AMR is currently talking to other airlines about possible mergers. US Airways Group Inc. has pushed for just such a merger.

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