US FAA fines Southwest $10.2 million for missing fleet inspections

Southwest Airlines grounded nearly 7% of its Boeing 737 fleet in mid-March after the FAA proposed a record $10.2 million fine for missed fleet inspections and after a congressman charged that the carrier's "cosy" relationships with FAA on-site ­inspectors had endangered safety.

For an airline that wins award after award as an admired company, and as the US carrier that carried the most domestic passengers in 2007 - 101.9 million - the possible erosion of its reputation presents a serious challenge. Southwest chief executive Gary Kelly immediately went on a public relations push to portray the carrier, which has never suffered a passenger fatality, as a safe one. He flew to Washington on the same day that Southwest grounded some of its Boeing 737-300s and -500s for inspections, making the rounds at FAA headquarters and on Capitol Hill and actively courting the media.

"During Southwest's 37-year proud history, we have safely transported the population of the United States - every man, woman and child - four and a half times," Kelly says. "This is a fact. We have been a safe company."

Southwest voluntarily disclosed to the FAA in March 2007 that it had not complied with airworthiness directives on 737 fuselage inspections for 46 aircraft, flying them for nine months on nearly 60,000 flights after they should have been checked. The FAA says 1,451 of these flights were completed after Southwest discovered it had failed to comply with the required inspections.

Republican Jim Oberstar, the House Transportation committee chairman, says Southwest's "cosy" relationship with its local FAA inspectors allowed this "most serious lapse of safety I have seen at FAA in 23 years". Oberstar says the FAA had ignored whistle-blowers who warned of this problem. His committee's investigation continues.

After word of the fine and the probe emerged, Southwest reviewed its practices, suspended three of its employees, brought in an outside consultant as a safety watchdog, and then found it had failed to inspect another 38 of its aircraft for another possible flaw. It grounded them, briefly ­disrupting schedules.

Lehman Brothers analyst Gary Chase expects a minimal effect on Southwest's revenue and share prices. The airline says it has not seen any major effect on forward bookings. But the longer-term effect of the crisis cannot be desirable.

"We have safely transported the population of the United States four and a half times"

Gary Kelly

Chief executive,Southwest Airlines

Source: Airline Business