American Airlines Could Face $25 Million in Fines

Washington, DCAccording to a 8/19/10 report in the Wall Street Journal, the Federal Aviation Administration (FAA) could hit American Airlines with fines of as much as $25 million for issues with the maintenance of its MD-80 jets that put the planes at risk of crashing. The FAA has not yet sent an official letter announcing the fine, but it is reportedly set to hand American Airlines the largest fine ever given to a US airline.

The issue involves electrical wiring around landing gear in American Airline's 290 MD-80 jets. According to reports, the wires were loosely fastened, causing damage that could have resulted in an electrical discharge and a fire threat. American Airlines and its mechanics union maintain that the MD-80s have never experienced that electrical discharge and that there was no compromise to safety. They further maintain that the FAA overreacted to the situation.

In April 2008, the FAA ordered American Airlines to ground the MD-80s for safety inspections. During those inspections, the FAA determined that the majority of the jets were not in strict compliance with FAA safety mandates.

The Wall Street Journal, citing people familiar with the issue between American Airlines and the FAA, noted American Airlines made an effort to prevent this penalty by enhancing its maintenance procedures. The $25 million fine is much less than the $100 million penalty reportedly considered by some FAA managers but rejected by senior FAA officials. Even with a $25 million fine, American Airlines could negotiate a smaller payment.

According to the Wall Street Journal, at one point managers for American Airlines ordered an FAA inspector off American Airline's property because of tension between the airline and the FAA. Issues concerning American Airlines maintenance reportedly include improperly overhauled parts and defective pressure bulkheads.

Previously, the largest fine handed out to a US airline was a $10.2 million penalty proposed against Southwest Airlines. Allegedly, Southwest knowingly operated Boeing 737s on 1,400 flights without carrying out mandatory structural inspections. After negotiations, Southwest paid $7.5 million.