The Federal Aviation Administration is ready to slap a record $25 million or more penalty against American Airlines for maintenance lapses involving wiring in the MD-80 jet that caused flight cancellations in 2008, according to the Wall Street Journal.
The official fine letter isn't expected to be sent for a week or more, and that the precise amount could change. It is expected to be the largest fine ever levied against a U.S. airline by the FAA.
The move would cap months of internal government debate and efforts by American to head off such a penalty by enhancing its maintenance procedures and taking other steps. FAA officials seemed determined to levy a civil penalty that could be nearly three times as largest as the record against a U.S. airline, according to the WSJ.
A penalty of as much as $100 million was considered, but that was rejected by senior FAA officials, the report says. American is likely to appeal any penalty in an effort to get the amount owed reduced.
American was forced to temporarily ground its entire fleet of 300 McDonnell Douglas MD-80 jets for several days in early April 2008, until it satisfied FAA safety mandates, following the discovery of improperly fixed electrical wiring around landing gear.
Introduction to Value Investing
Are you the next Warren Buffett?View Course »