Report: FAA Set To Hit American With Huge Penalty

A published report says federal officials are ready to hit American Airlines with a record penalty of $25 million or more for maintenance shortcomings that led to thousands of canceled flights in 2008.

The Wall Street Journal said in a story for Friday's editions that the Federal Aviation Administration hasn't made a final decision or informed American, and a decision could be weeks away.

"This is something that happened more than two years ago, and we haven't received any notification by the FAA about any pending action, nor do we believe any action is warranted," American spokesman Tim Smith told The Associated Press on Thursday night.

Smith said American "has always maintained its aircraft to the highest standards, and we continue to do so."

FAA officials did not respond to AP requests for comment.

The proposed fine would stem from improper electrical wiring around the landing gear of many of its planes. American was forced to ground its entire fleet of about 300 McDonnell Douglas MD-80-series jets in April 2008 while mechanics fixed the problem.

FAA officials argued the wiring work could have led to fires and fuel-tank explosions. American said it was a minor matter of improperly spaced clips that held bunches of wires together, and that passenger safety was never jeopardized.

The newspaper said outside experts have told American to expect FAA action.

American, a unit of Fort Worth-based AMR Corp., could challenge the penalty and negotiate with the FAA to reduce it.

The largest penalty imposed by the FAA was $9.5 million against Eastern Airlines in 1987 for violations that included delaying required maintenance work. Eastern went out of business after paying only about $1 million of the penalty, FAA officials have said.

In 2008, the FAA proposed a $10.2 million penalty against Southwest Airlines for operating about 1,400 flights with planes that had not undergone required inspections for structural soundness. Southwest negotiated with FAA to reduce the penalty to $7.5 million.

That penalty, and the crackdown against American, came after the FAA was criticized in Washington for being too cozy with the airlines it is supposed to monitor.

This program aired on August 20, 2010. The audio for this program is not available.