American Airlines settles safety claims for $24.9M

2013-05-13 14:54
Dallas — American Airlines has agreed to pay $24.9 million to settle $162 million in potential fines that were proposed by U.S. safety regulators.

American called the payment "a reasonable resolution" to the Federal Aviation Administration's claims that it had violated safety regulations involving electrical wiring on planes and other issues.

The airline's parent company, AMR Corp., disclosed the settlement Thursday in a filing with the federal bankruptcy court in New York.

Airlines frequently negotiate with the FAA to reduce potential penalties. A spokeswoman for American said the airline was pleased with the settlement over a claim that FAA had lodged during AMR's bankruptcy reorganization.

"This settlement recognizes the many changes, including enhancements to our maintenance and engineering processes, increased training, inspections, and audits that have taken place at American over the past several years that address past FAA concerns," the spokeswoman, Andrea Huguely, said in a statement.

American, its American Eagle regional-flying affiliate and two other AMR subsidiaries denied wrongdoing. But, they said, the outcome of litigation with the FAA can be uncertain and the settlement was good business judgment.

The settlement is subject to the bankruptcy court's approval. AMR expects to emerge from bankruptcy protection and merge with US Airways Group Inc. by the end of September.

Among the complaints covered by the settlement was the 2008 grounding of American's fleet of McDonnell Douglas MD-80 aircraft — and the cancellation of thousands of flights — over electrical wiring. The FAA said that American's crews had failed to follow proper procedures in restraining electrical wires on many planes, raising the risk of fires and fuel-tank explosions.

In 2010, the FAA proposed a record penalty of $24.2 million in that case. The airline insisted that passenger safety was never compromised and that the FAA's charges were overblown.

The FAA was investigating American for possible violations of other safety rules when AMR filed for bankruptcy protection in November 2011. Last summer, the agency filed a claim in bankruptcy court for up to $162.4 million. The FAA had not even notified AMR about some of the charges, but the agency rushed to beat a deadline for filing claims and becoming a creditor.

The FAA's biggest claim — $39.3 million — involved allegations that American used Boeing 757 jets on flights before proper inspections and repairs were finished. A claim of $28.8 million involved charges that American didn't follow Boeing's recommended procedures for overhauling the main landing gear on about 30 jets, and a $27.6 million claim involved work on the engines of different Boeing planes.

All were investigated as civil cases. The FAA said in the settlement agreement that it didn't find criminal wrongdoing or evidence strong enough to suspend American's operating certificate.

FAA officials declined to comment Thursday.

The potential penalties covered alleged safety violations from 2007 through 2011. About $156.5 million involved American Airlines, $5.3 million dealt with Eagle, and $647,000 involved two other AMR subsidiaries. Of the settlement, $24 million covers cases at American.

American will be credited for $4.7 million being held by the U.S. Postal Service and the Defense Department.


Follow David Koenig on Twitter at

Join the conversation! encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.

SHARE: publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside Travel


WATCH: Man films himself going down water slide upside down as things go very wrong…

What is at first an exciting tummy-turning adventure stunt, quickly turns into a scarily bad idea caught on camera. Take a look:


You won't want to miss...

WATCH: Conor McGregor: Notorious the trailer
Best date night restaurants in South Africa
WATCH: Ryan Reynolds offers fans a free tattoo in new Deadpool 2 teaser
Should you date your co-worker?

#FindYourEscape with Traveller24

Your insider guide to exploring South Africa and the world...
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.