Most U.S. airlines have lousy reputations, and that's mostly deserved. Long known for surly service, the airlines' more recent skinflint policies of nickel-and-diming travelers for the modest conveniences have pushed consumers to look for alternatives wherever possible.
For some, that alternative was Southwest Airlines (LUV). The quirky Dallas-based carrier developed a loyal following for its down-home service and affable employees. But in this tough economic climate, even dear ol' Southwest's reputation is taking a hit, as questions arise about the maintenance of its aging fleet.
A Federal Aviation Administration inspector working Friday at a maintenance shop used by Southwest questioned whether some hinge fittings -- used to divert hot engine exhaust from aircraft wings -- installed on two versions of Boeing 737 jets were authorized for use. After hasty consultations with the FAA and Chicago-based Boeing (BA), Southwest grounded 46 planes Saturday, delaying about a third of its flights by as much as four hours.
It's too soon to know how the parts made their way onto the planes, or whether their use may result in action against the airlines, the FAA noted. For now, regulators and Southwest have agreed to a plan to replace the suspect parts within two weeks, although that timeline may be extended. The progress is being closely monitored by the FAA, an agency official said.
It isn't known how the revelation may affect a settlement Southwest reached with the FAA in March, in which the airline would pay $7.5 million in penalties for operating 46 planes, on nearly 60,000 flights, without performing adequate maintenance. A provision of that settlement calls for fines to double, should Southwest "not accomplish specific safety improvements" outlined in the agreement.
Last month, a Southwest flight from Nashville to Baltimore had a forced landing in West Virginia, after a football-sized hole developed in its fuselage. No injuries were reported among the 131 aboard, but the incident led to immediate inspections of the entire fleet of 737-300 aircraft.
Further eroding Southwest's image, at least among investors, is its failed bid for Denver-based Frontier Airlines, which filed for bankruptcy last year. Southwest CEO Gary Kelly said the airline is considering other acquisitions, although one observer commented that Southwest's wish-list is too narrow to conjure up any other airline.
Investors are also fretting over Southwest's falling revenues, which dropped nearly 8 percent, to a tick under $5 billion, in the first six months of the year, and whether the company can remain profitable for the year.
Why do investors make the decisions that they do?View Course »