American to fight record $24.2M FAA fine

American to fight record $24.2M FAA fine

12:00 AM CDT on Friday, August 27, 2010

By ERIC TORBENSON and TERRY MAXON / The Dallas Morning News

Hit Thursday with the largest fine ever levied by the Federal Aviation Administration, American Airlines Inc. executives said they would fight the penalty and work to smooth a fractured relationship with the safety regulator.

clikEnlarge.gifFILE/Staff photo

FILE/Staff photo
American Airlines MD-80s sat parked on a runway at Dallas/Fort Worth International Airport in April 2008. The airline grounded MD-80s after inspections revealed flawed fixes on wiring harnesses. Thousands of flights were canceled.

The $24.2 million whopper – more than double the previous biggest penalty – slams the carrier for how it failed to properly repair wiring harnesses on its 300 McDonnell-Douglas MD-80 jets.

“These events happened more than two years ago, and we believe this action is unwarranted,” American said in a prepared statement. “We plan to follow the FAA’s process and will challenge any proposed civil penalty. We are confident we have a strong case and the facts will bear this out.”

The FAA said there are no shortcuts to safety.

“From our standpoint, the enforcement letter speaks for itself,” FAA spokesman Lynn Lunsford said.

“We expect operators to perform inspections and conduct regular and required maintenance in order to prevent safety issues,” U.S. Transportation Secretary Ray LaHood said in a written statement. “There can be no compromises when it comes to safety.”

The FAA detailed the airline’s mistakes in a 58-page enforcement letter addressed to newly minted American president Tom Horton that, despite its length, doesn’t address a series of other suspected maintenance problems that remain under investigation and subject to further fines.

American grounded its fleet of MD-80s in April 2008 after inspections revealed flawed fixes on the planes. The move forced thousands of flight cancellations and launched exhaustive FAA audits into how American maintains its planes as well as how its own inspectors policed the airline.

FAA whistle-blowers prompted congressional hearings that concluded the regulator’s relationship with airlines was too chummy. The American investigations faulted both the carrier’s procedures and FAA regional staff’s lax enforcement.

Cooperative approach

What’s different today between the FAA and the airline may seem remarkably simple in nature, said American’s new head of maintenance.

“We just get everybody in a room and talk things through,” Jim Ream, who ran ExpressJet Airlines before returning to American last December, said Wednesday. Before these meetings, problems were often bogged down in paperwork and formal procedures.

In its announcement Thursday, the FAA noted that it has seen improvement in American’s maintenance culture.

Ream wants to bring American’s engineers together with Boeing and FAA representatives to identify issues and craft repair processes that make sense for all parties.

A significant change comes with how orders from the FAA are written and presented to carriers since 2008, he said. Airworthiness directives – the formal instructions airlines must follow – are now easier to understand and implement, he said.

“I don’t want to understate that it’s a big fine,” Ream said Wednesday, before knowing the actual amount, but “that’s the cycle every carrier gets to go through when they go through these situations.”

Coverage of the looming penalty in recent weeks hadn’t affected the mood at American maintenance shops and hangars, Ream said.

“We’ve got 50 other things making us tense,” he said.

Own maintenance

American stands out from its competitors in that it does nearly all its own heavy maintenance on a fleet of 600 jets; American says the work gets done faster and with much higher quality than if it outsourced as other carriers do. Ream said nothing about this episode has made the carrier reconsider that strategy.

American continues to replace MD-80s, its oldest average aircraft by fleet type, with new Boeing 737s that initially will require less maintenance.

It was a 2006 rule related to MD-80 wiring harnesses that weren’t properly fastened that started American’s troubles.

The FAA said American needed to complete inspections of the wiring harness in the MD-80 wheel wells by March 5, 2008, with repairs as needed. However, the FAA found the work had not been done when it inspected two airplanes on March 25, 2008.

“On March 26, after American performed additional maintenance on its MD-80 fleet, the FAA inspected eight aircraft at American’s Tulsa maintenance base and found that seven did not comply with the airworthiness directive,” the FAA said.

“On April 7, the FAA inspected another nine MD-80 aircraft at Dallas/Fort Worth International Airport and found that eight of them still did not comply with the AD. A tenth aircraft inspected by American mechanics also did not comply,” the FAA added.

In some cases, the April 2008 groundings, which involved more than 3,000 flights and a third of a million passengers, had American mechanics redoing modifications on aircraft that had been grounded and repaired just weeks earlier.

Dallas-based Southwest Airlines Co. had the previous distinction of the largest proposed fine at $10.2 million for failing to properly inspect its Boeing 737 jets; it paid $7.5 million in 2009 to settle those claims and several other maintenance issues.

Possible penalties

American could still draw more penalties from the FAA over the airline’s problems with replacement parts on its Boeing 777s, problems with MD-80 bulkheads and several operational mishaps involving clipped wingtips on landings and other incidents that have kept American’s safety record in the news the past two years.

In its statement, American said its planned appeal will give it a chance “to present the facts, which will support our actions taken back in early 2008. American Airlines has always maintained its aircraft to the highest standards, and we continue to do so. We assure our customers there was never a safety of flight issue surrounding these circumstances more than two years ago.”

The $24.2 million fine represents just over a 10th of 1 percent of parent company AMR Corp.’s 2009 revenue. In theory, the civil penalty could have been much worse: the 14,278 flights that American flew with aircraft not in compliance could have earned the top fine of $25,000 per violation, or nearly $357 million.

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