Aug 14, 2008

American Airlines Fined for Safety Violations

The FAA has proposed a fine against American Airlines (NYSE: AMR) up to $7.1 million for deferring much necessary safety and maintenance actions on two of its planes. The fine also covers some other violations relating to substance abuse, etc

WASHINGTON (Reuters) - American Airlines, a unit of AMR Corp (NYSE:AMR - News), knowingly flew planes that needed safety repairs, the U.S. government charged on Thursday in a letter that proposed a $7.1 million fine against the carrier.
The Federal Aviation Administration (FAA) said the fine, one of the biggest ever, also covered accusations of deficiencies in American's drug and alcohol testing programs and alleged violations of inspection procedures for aircraft exit lighting. Earlier this year FAA had fined Southwest (LUV) about $10 million.
Click Here for More (takes you to an external site).

This action did not seem to have much of an impact on the stock price however because oil prices have been on a downtrend lately. In somewhat unrelated news, but in a bid to bolster public relations, American Airlines announced that it is waiving the third bag fee which was imposed on active duty military members. Although the fee was reimbursable, the effort the military members had to spend to recoup the charges were recognized as substantial by AA and hence they are removing the fee as a goodwill gesture. You can read about it here in a St. Louis newspaper.
American is a member of the Oneworld Airline Alliance.


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