FAA hits American Airlines with biggest fine ever

By Aaron Smith, CNNMoney.com staff writer


NEW YORK (CNNMoney.com) -- Federal aviation regulators slapped American Airlines on Thursday with the largest fine in history, charging that the carrier made thousands of unsafe flights.

The Federal Aviation Administration said it has "proposed" a $24.2 million civil penalty for American Airlines' failure to properly inspect wire bundles in the wheel wells of its MD-80 aircraft. The incident snarled thousands of flights in 2008.

The airline, owned by AMR Corp., (AMR, Fortune 500) did not follow the guidelines in the so-called 2006 Airworthiness Directive, which was intended to prevent wires from shorting, which could cause a loss of power and possibly a fire, the FAA said.

The airline's stock price is down 1.7%.

The FAA inspections resulted in the grounding of about 1,000 American Airlines flights in early April, 2008, after the FAA found that the airline did not properly inspect two of its airplanes.

As part of that inspection, the FAA determined that the airline operated 286 of its MD-80s on a total of 14,278 flights "while the aircraft were not in compliance with federal regulations."

FAA spokesman Lynn Lunsford said the fine is considered a proposal as a legal formality, because the airline has 30 days to respond and has the option of negotiating a smaller fine.

"There was never a flight safety issue," American Airlines spokesman Tim Smith told CNNMoney.com in an email.

"These events happened more than two years ago and we believe this action is unwarranted," he said. "We will challenge any proposed civil penalty. We are confident we have a strong case and the facts will bear this out."

Lunsford said that Southwest Airlines (LUV, Fortune 500) had previously been the recipient of the biggest FAA fine -- of $10.2 million -- which it was able to negotiate down to $7.5 million. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,563.30 -317.06 -1.88%
Nasdaq 4,369.77 -93.13 -2.09%
S&P 500 1,930.67 -39.40 -2.00%
Treasuries 2.56 0.00 0.08%
Data as of 6:14pm ET
Company Price Change % Change
Bank of America Corp... 15.25 -0.33 -2.12%
Micron Technology In... 30.55 -1.98 -6.09%
Apple Inc 95.60 -2.55 -2.60%
Facebook Inc 72.65 -2.03 -2.71%
Pfizer Inc 28.70 -0.56 -1.91%
Data as of 4:04pm ET

Sections

Tesla broke ground for its Gigafactory in Nevada in June, but there's still a chance the plant could be located elsewhere. More

With RadioShack burning through cash, investors and credit rating agencies believe its days are numbered. More

LinkedIn shares surged in after-hours trading Thursday following strong second-quarter earnings, following the likes of Facebook and Twitter. More

Terrell White has had a profit-sharing plan for his employees since 1981, believing that if the staff isn't happy, guests won't be either. More

The Mason family, which has been struggling to pay the $100,000 student loan bill they were left with when their daughter passed away five years ago, is now seeing an outpouring of support. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.