Regulators to levy record penalty on AA

Regulators are set to propose a record penalty of around $25 million on American Airlines for maintenance lapses which led to a large number of flight cancellations in 2008, a media report said.

Attributing to people familiar with the matter, the Wall Street Journal said, "Federal regulators are ready to propose a record penalty of $25 million or more against American Airlines for the maintenance lapses that prompted widespread flight cancellations in the spring of 2008."

This has been a contentious issue between the airline and regulators for the past two years.

The fine would put an end to months of internal government debate and extensive efforts by the airline to enhance its maintenance procedures and take other steps to head off such a penalty, the WSJ said.

The report quoted the people close to the matter as saying that, "High-level Federal Aviation Administration officials seem determined to seek a civil penalty against American Airlines that could be nearly three times as large as any ever levied against a US airline."

The penalty is intended to underline the FAA's insistence on strict maintenance compliance by airlines.

However, no final decision has been made and American Airlines has not been officially informed about a punishment and last-minute changes could alter the amount, the WSJ said.

The report quoted an industry official close to the talks as saying that, "FAA lawyers and headquarters officials definitely are focused on numbers in the ballpark of $25 million and up," adding that an announcement was likely in the next few weeks.

Other government and industry officials have said the total could be closer to $30 million.