Southwest responds to FAA allegations

Southwest CEO Gary Kelly answers questions about the $10.2 million civil penalty the FAA is seeking on CNN's 'American Morning' Friday.

NEW YORK (CNNMoney.com) -- Southwest Airlines CEO Gary Kelly defended the airline on CNN's "American Morning" on Friday, a day after the Federal Aviation Administration announced that they are charging Southwest with operating 46 airplanes without performing mandatory inspections for fatigue cracking.

The FAA is looking to collect a $10.2 million civil penalty from Southwest Airlines (LUV, Fortune 500) "for a failing to follow rules that are designed to protect passengers and crew," said FAA Associate Administrator for Aviation Safety Nicholas A. Sabatini in a report.

Kelly acknowledged, "there were 46 aircraft that needed to be re-inspected," but he said that Southwest acted responsibly and transparently. "Because the problem was found, it was voluntarily disclosed, the fix was agreed upon with the FAA, and it was executed properly."

Kelly said that Southwest was taken aback. "We were surprised yesterday to get that notification by the FAA, as well. The Wall Street Journal yesterday reported as late as last month the FAA said that it had no safety issues with Southwest Airlines," he said on CNN's "American Morning" Friday.

The FAA alleges that from June 18, 2006 to March 14, 2007, Southwest operated 46 Boeing 737 airplanes on 59,791 flights that did not comply with the FAA Airworthiness Directive (AD) that requires repetitive inspections of certain areas of the planes to detect fatigue cracking.

Kelly said that Southwest's understanding was that it was in proper compliance with those FAA regulations. "Our interpretation of the guidance that we got from the FAA at the time was that we were in compliance with all laws and regulations. I think the FAA has a different view of that today; that's something that we're investigating as well."

FAA disagrees that Southwest believed it was in compliance. In their statement Thursday, the FAA said "that after Southwest Airlines discovered that it had failed to accomplish the required repetitive inspections, between March 15, 2007 and March 23, 2007, it continued to operate those same 46 airplanes on an additional 1,451 flights."

Southwest asked the Boeing Company (BA, Fortune 500) to review the safety of the fleet under investigation. Boeing said yesterday, "Based on a thorough review of many factors, including fleet history and test data, as well as other inspections and maintenance previously incorporated, Boeing concluded the 10-day compliance plan was technically valid. In Boeing's opinion, the safety of the Southwest fleet was not compromised."

Kelly said on Friday on CNN's "American Morning," "these aircraft are inspected inch-by-inch. In this particular incident, over 99% of the inspections were completed according to the documentation. When we discovered the error, we went back and re-inspected those aircraft, and we did that in a matter of 10 days."