American Faces Escalating Dispute With FAA
By Andy Pasztor
Bloomberg News
9/4/2009

A probe has stirred concerns about American's willingness to properly
disclose potential safety flaws. Above, MD-80 jets at Dallas-Fort Worth
last year.

The probe, which began several months ago, has raised red flags at the FAA
about the Fort Worth, Texas-based carrier's willingness to properly
disclose potential safety problems, these people said. It follows a string
of clashes between the FAA and American, a unit of AMR Corp., over
maintenance issues ranging from faulty emergency slides to engine parts
with the wrong coatings. Those enforcement cases are continuing.

The latest case is viewed as particularly serious because some FAA
inspectors think the circumstances under which the airline suddenly chose
to mothball one plane show the move was part of an effort to hide the
extent of suspected defects. The plane was ferried to the New Mexico desert
in March for storage, according to people familiar with the probe and
company documents, which were reviewed by The Wall Street Journal.

About three weeks earlier, American's engineering paperwork showed the
plane was slated for repairs to return it to service. But American didn't
explicitly tell the FAA of its change in plans, these people said, and FAA
officials didn't learn of it until after the fact. Carriers aren't obliged
to promptly report plane retirements, but inspectors felt in this case they
should have been informed.

FAA press officials confirmed that the investigation into the repairs is
continuing, but declined to provide details. The probe could result in
millions of dollars in proposed fines or penalties.

American spokesman Tim Wagner said "the FAA has provided American the
opportunity to respond to its investigation, and we are in the process of
doing so." He declined to elaborate, adding "we believe conversations
outside of that process are inconsistent with FAA regulations."

Without commenting on specifics of the retired plane, Mr. Wagner said
allegations of impropriety "misrepresent the facts," adding that the FAA
"has complete access to retired airplanes -- and it exercises that access
frequently." According to Mr. Wagner, "all airlines have the authority to
make decisions regarding the retirement of individual aircraft based on
economic and competitive factors."

The FAA's probe focuses on allegations that incorrect fasteners, improperly
drilled holes, related poor workmanship and other maintenance lapses
afflict a portion of American's aging fleet of MD-80 series jets, which the
carrier is gradually replacing with more fuel-efficient planes.

According to preliminary findings of FAA inspectors, at least 16 of the
twin-engine planes were operated for months, and sometimes years, with
potentially substandard repairs to cracks around rear pressure bulkheads,
key structural parts that can cause rapid cabin decompression if they
rupture. American is in the process of responding to a formal FAA "letter
of investigation" spelling out the allegations.

American's situation recalls Southwest Airlines Co.'s in the spring of
2008, when lawmakers revealed that a year earlier Southwest knowingly
continued to carry passengers on 46 aircraft without performing essential
safety inspections. Southwest subsequently said it got approval to do so
from local FAA officials.

In American's case, the carrier pulled the 16 planes from service once it
realized repairs were needed. But some FAA officials fault it for waiting
too long and then hurriedly retiring a plane already under FAA scrutiny.

After flying the affected planes in early February into its Dallas and
Tulsa, Okla., maintenance facilities, American told the FAA that it planned
to retire a handful of them. The airline then listed 11 remaining MD-80s
slated for permanent repairs in Tulsa, spelling out the instructions on an
internal work order dated Feb. 12. The plane identified as #279 was on that
list.

But by the time FAA inspectors were on hand to assess the planes' condition
and review repair plans, #279 had dropped off the repair list, said people
familiar with the details. Engineering orders on Feb. 28 and March 2 laid
out the work to be done on the rest of the jets, but didn't mention #279.

After the FAA learned of the fate of aircraft #279, an inspector went to
Roswell, N.M., to take photos of the fuselage and sections around the rear
bulkhead, said people familiar with the matter. Several other FAA
inspectors have made trips in recent month to examine different parts of
American's retired MD-80 planes.