FAA proposes $162million fine for AA

[jimntx]

http://overheadbin.nbcnews.com/_news/2012/08/07/13163750-faa-could-fine-american-airlines-162m-for-violations

I'm shocked! Shocked, I tell you. Round up the usual suspects.

 

[eolesen]

I don't think this is new -- it's simply the combined total of all the fines issued over the years that AA hasn't paid yet because they're still in dispute between the FAA and AMR.

 

[CactUSmx]

AA won't be around in 2014 if this keeps up...

 

[WorldTraveler]

I don't think this is new -- it's simply the combined total of all the fines issued over the years that AA hasn't paid yet because they're still in dispute between the FAA and AMR.

The article says some of the fines have not been levied because the investigations are still ongong. The FAA simply put the court on notice that it MAY file fines that amount to more than $150M. Even if the typical "half is forgiven" procedure is used, it still amounts to more than $75M in fine - or about $25M per year in which the incidents were alleged to have occurred.

No airline has been subject to fines that high and over so many years. NONE. These are unprecedented fines for a US airline - magnitudes higher than anything ever filed before.

And, Jim, no one for a minute believes this is due to actions by AA's frontline mechanics. The FAA is talking about multiple maintenance issues that occurred over several years and they all involve aircraft operated hundreds of times out of compliance. The article also indicates that the FAA might be desiring to file even larger than normal fines because of how testy AA was regarding some of the issues the FAA raised, including the M80 wiring issue.

Even at $75M, the cost will be comparable to $1000 for every AA and AE employee.

 

[FWAAA]

Like all other unsecured claims, these potential fines will be settled for pennies on the dollar, and the claimant may have to accept stock.

The $162 million figure is simply the maximum aggregate value of potential fines, which often has no relationship to the actual fines levied or paid.

 

[WorldTraveler]

are you sure that FAA fines are not paid first like other government liens?
Remember also that these fines (or at least some of them) are not pre-petition because the FAA has not finished the investigations and assessed its fines.

And it still doesn't change the fact that these fines represent a massive disregard by AA mgmt for the FAA's processes - and that is why the government seems so intent on making the number so high.

Even if the amount is reduced as part of the BK process, it won't change that the total fine will be multiples higher than any airline has ever paid before. And it might be precisely why the FAA will not use its usual processes to reduce the level of fines; if they have cited hundreds of instances of violations on AA's behalf regarding multiple issues and they cite the aggressiveness of AA mgmt in fighting off the FAA, you can bet they are going to make sure the fine is sufficiently larger.

 

[OldGuy@AA]

In my opinion the FAA is piling on and screwing AA because we do our maint. here and the refuse to go to South America and look at their operation. In our last FAA inspection, the inspector wanted to write us up for not having unservicable parts identified as unservicable. These were parts in transportation boxes with repairs required noted on the lids. I told the inspector that since they had no servicable paperwork attached (8130) they were not servicable. He wanted to argue and I asked him if he had ever installed a part on an aircraft or engine that did not have servicable paperwork with it. This guy got really angry like how dare this peon question my authority. Long story short, he didn't write it up. This is the attitude I saw. If we can't find legitimate write ups, we'll make something up. I say AA should refuse to pay any fines until the FAA does thorough inspections of Aeorman in El Salvdor and also any and all MROs in Asia. Let's even the playing field for once.

 

[WorldTraveler]

Whether you or anyone else likes it, the FAA calls the shots about the way aviation is supposed to work in the US. I am sure your logic makes plenty of sense, but the FAA does not allow airlines to rewrite the rules or alter them based on their logic.

No, the FAA is not piling on AA because they do their work in-house. If that was the case, then DL with the next lowest percentage of maintenance outsourced should get some proportional fine.

While there needs to be better oversight of foreign repair stations, the FAA does inspect planes in the US. As long as those planes come back to the US after being serviced overseas, the FAA can and will find what is at fault - and the operating airline is responsible for ensuring they meet FAA requirements, regardless of whether repairs are done at DFW or on Mars.

 

[1AA]

The article says some of the fines have not been levied because the investigations are still ongong. The FAA simply put the court on notice that it MAY file fines that amount to more than $150M. Even if the typical "half is forgiven" procedure is used, it still amounts to more than $75M in fine - or about $25M per year in which the incidents were alleged to have occurred.

No airline has been subject to fines that high and over so many years. NONE. These are unprecedented fines for a US airline - magnitudes higher than anything ever filed before.

And, Jim, no one for a minute believes this is due to actions by AA's frontline mechanics. The FAA is talking about multiple maintenance issues that occurred over several years and they all involve aircraft operated hundreds of times out of compliance. The article also indicates that the FAA might be desiring to file even larger than normal fines because of how testy AA was regarding some of the issues the FAA raised, including the M80 wiring issue.

Even at $75M, the cost will be comparable to $1000 for every AA and AE employee.

See what happens when you do not have Airline people running an airline.

 

[OldGuy@AA]

Whether you or anyone else likes it, the FAA calls the shots about the way aviation is supposed to work in the US. I am sure your logic makes plenty of sense, but the FAA does not allow airlines to rewrite the rules or alter them based on their logic.

No, the FAA is not piling on AA because they do their work in-house. If that was the case, then DL with the next lowest percentage of maintenance outsourced should get some proportional fine.

While there needs to be better oversight of foreign repair stations, the FAA does inspect planes in the US. As long as those planes come back to the US after being serviced overseas, the FAA can and will find what is at fault - and the operating airline is responsible for ensuring they meet FAA requirements, regardless of whether repairs are done at DFW or on Mars.

Yeah, they weren't really concerned about the SW airplanes with cracked crown skins until AA complained that they were being run through the ringer for wiring ties (not a safety problem) being less than 1/10 of an inch off in some places on MD80s. Maybe they have friends at Delta too. Do you really think that AA is the only airline with descrepancies? I am saying they aren't even looking at anyone else like they do us.

 

[OldGuy@AA]

Also some of the MD80s were being inspected by the FAA in DFW and deemed in compliance and then later on the same jets were being written up by other FAA inspectors at other line stations. This looks like someone is not playing fair.

 

[FWAAA]

are you sure that FAA fines are not paid first like other government liens?
Remember also that these fines (or at least some of them) are not pre-petition because the FAA has not finished the investigations and assessed its fines.

I don't see anything in 11 USC § 507 that entitles FAA civil fines to priority over other unsecured claims.

They're all pre-petition. If the conduct out of which they arise occurred pre-petition, then they're pre-petition claims. If they weren't pre-petition, the FAA would not have perfected their claim by filing proofs of claim before the claims deadline.

 

[AV1]

I don't see anything in 11 USC § 507 that entitles FAA civil fines to priority over other unsecured claims.

They're all pre-petition. If the conduct out of which they arise occurred pre-petition, then they're pre-petition claims. If they weren't pre-petition, the FAA would not have perfected their claim by filing proofs of claim before the claims deadline.

How about the SW jet caught with UNAUTHORIZED parts installed. Didn't hear of a fine on that one either.

 

[will fix for food]

Even at $75M, the cost will be comparable to $1000 for every AA and AE employee.

No problem, they have me giving back way more than that.

 

[WorldTraveler]

FWA,

I have a feeling we might find that your interpretation of the law is not what the courts will find.

But the mindset that you seem to have is that AA is free to violate the law, walk into court and have their debts reduced to pennies on the dollar, and then walk out w/o having changed a thing about the way they run their maintenance operation.

That is precisely the reason why the FAA will do what it takes to make sure the fine is large enough to hurt - and ensure that real change does occur.

It is precisely the cavalier attitude that you seem to think is acceptable is the number one reason why AA is in the position they are in with the FAA.

OldGuy,
No one thinks the FAA is perfect - but is the same FAA that other airlines have to work with.... to somehow think that AA is being picked on because that fines might be as high as 8X more than any other airline is childish.
AA is being fined at the levels they are because they have been brazen in doing what they want to do - unlike fines that other airlines have incurred but which they later admitted guilt and then fixed the problem.
AA's culture has been confrontational with the FAA for years and now they are going to pay the price for it.

I am absolutely dumbfounded that there are hundreds if not thousands of pages written on this forum about how confrontational AA is with its own employees and yet somehow the defense all lines up when someone else outside of AA accuses them of doing the same thing AA does w/ its own employees.