FAA proposes $162million fine for AA

[eolesen]

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.

Even if they're post-petition, the way fines work with the FAA, they will still be mitigated down to pennies on the dollar.

I used to get involved with fines where an inspector noticed overhead bins open after the door was closed. Technically, it's a violation of AA's OpSpec, so we were dinged $5-10K per violation. Most of those got written off entirely, others were brought down to pennies on the dollar when we showed an action plan for avoiding future discrepancies.

It's no different with fines for maintenance. Both sides sit down with lawyers, and work out a deal.

 

[WorldTraveler]

you don't "do deals" to follow the law... you either do or you don't.

The amount of the fine is rather immaterial in the scope of the matter, really. The FAA is more interested in forcing change in an organization that has disregarded safety. That is why the fines add up every time an airplane takes off that is wrong - even though it is the same problem.

Attempting to argue that the fines will be reduced to pennies on the dollar misses the point that the FAA finds an enormous amount wrong w/ AA's maintenance operations and they will make it clear that those things will change.

But in all reality, this issue just moved a whole lot down the list of AA mgmt priorities after today's vote results - both of them.

It probably does mean that the FAA will be looking at AA even closer in the months ahead.

 

[WorldTraveler]

note the compound effect of the fines even though the same issue existed for years. The actual cost per fleet is not terribly high - added up over hundreds or in this case thousands of flights, the price tag soars.

U.S. regulators are seeking a $1 million fine against Alaska Air Group Inc. (ALK)’s Horizon Air for making more than 186,000 flights on aircraft with rivets that can damage other equipment.
Horizon made the flights from Dec. 1, 2007, to June 1, 2011, before replacing the rivets on Bombardier Inc. (BBD/B) DHC-8-402 turboprop planes, the Federal Aviation Administration said today in an e-mailed statement.

“We expect airlines to comply with all of our safety regulations and to correct safety defects promptly,” U.S. Transportation Secretary Ray LaHood said in the release.

Horizon made 22 flights with one of the planes after being told it didn’t comply with regulations, according to the agency statement.