FAA Seeks $162 Million In Fines Against AMR, American Airlines

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. The 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 Corporation.

The court documents underscore the scope and depth of FAA's concern about the maintenance program at American, the nation's third-largest airline. They are coming to light just as American seeks 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.

But the pilots' union said some of the FAA's findings raised questions about flight safety, and it accused the company's management of missteps in dealing with safety rules.

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 went unnoticed for weeks. It was first reported by 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 the ongoing investigations. In some cases, the agency had not yet formally notified American of the proposed fines.

8/7/2012 Related Story: American Airlines Employees Cast Final Votes On Union Deal

The largest single proposed 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 up to standard, American used 113 of them to make 1,480 flights carrying passengers.

The FAA is seeking $28.8 million for American allegedly failing 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.

While American defended its safety record, pilots have raised concerns about some of the FAA's findings, according to a union spokesman.

"These are stunning findings. We thought some of the issues raised were safety-of-flight issues," said Gregg Overman of the Allied Pilots Association. He pointed to the issue of wiring procedures on MD-80 jets as an example.

Overman praised the airline's mechanics and said any mistakes were the fault of managers who crafted the company's responses to safety rules called airworthiness directives. "These are management decisions here," he said.

AMR, American and the American Eagle regional airline filed for bankruptcy protection Nov. 29, 2011. 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.

"American Airlines is aware of the pre-petition claims filed with the Bankruptcy Court on behalf of the FAA through the established Bankruptcy claims process.  The claims process is a routine part of any Chapter 11 filing.  It is not an admission that money is owed, nor is it an admission that the amount cited is correct. 

 Statement from Michael Trevino, AA spokesman:

"Over the past several years, American has worked very closely with the FAA to further enhance our quality and compliance processes. Since 2008, we have targeted several key areas for continuous improvement enhancements, including making voluntary investments in more than 70 individual projects. We have collaboratively worked with the FAA to improve the Airworthiness Directive process including enhanced training for our people, increasing our surveillance and oversight departments, revising our manuals and reorganizing our operational groups — with a sharp focus on safety, quality and compliance. We continue to discuss with the FAA our view of the alleged violations and possible ways to resolve this consensually.

"Safety is fundamental to the success of American Airlines, and at no time did American operate an aircraft that was unsafe for flight. Nothing is more important than the safety of our customers, our people and our planes."        -