FAA Eyes Potential USD$162 Mln In AMR Fines

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Published: August 8, 2012

US authorities have notified a court handling the bankruptcy of American Airlines parent AMR that they may seek penalties totalling more than USD$ 162 million against the airline for safety breaches.

The Federal Aviation Administration said on Tuesday it had acted to protect taxpayers’ interests in cases involving both American Airlines and American Eagle, American Airlines’ commuter subsidiary.

Details of investigations into alleged safety violations were not made public because the cases remain open, the FAA said in a statement.

The potential combined total of about USD$ 162.7 million reflected four claims submitted to the US Bankruptcy Court in Manhattan on behalf of the FAA.

The operator of the nation’s air traffic control system, in its statement, said the claims detailed both proposed and potential civil fines. The matter was submitted last month in time to meet the court’s July 16 deadline for claims submissions.

AMR said this was part of some 8,876 claims totalling about USD$ 95.1 billion that had been filed with the court as of the deadline against American and other AMR subsidiaries.

“This FAA filing was to preserve any potential claim that may be the result of FAA investigations and may not reflect at all the eventual outcome,” said Bruce Hicks, a company spokesman.

AMR expects to identify many claims through a resolution process that are unlikely to be paid as filed because they are either duplicative, without merit, overstated or improper for another reason, he said in an emailed statement.

“Safety is fundamental to the success of American Airlines, and at no time did American operate an aircraft that was unsafe for flight,” Hicks added.

AMR declared bankruptcy in November, citing untenable staff costs. AMR and its creditors are focusing on how the airline will emerge from bankruptcy and whether it will merge with competitor US Airways, which is seeking to acquire the airline.

AMR won court approval last month to extend until December 28 its exclusive right to present a plan to emerge from bankruptcy.

Judge Sean Lane granted the request, which was supported by AMR’s creditors’ committee. The current exclusivity period was to have run out in September.

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