FAA proposes record $10 mln fine for Southwest Air

WASHINGTON Thu Mar 6, 2008 5:19pm EST

WASHINGTON (Reuters) - U.S. aviation regulators on Thursday proposed a $10.2 million fine against Southwest Airlines Co (LUV.N), the largest safety penalty ever, for allegedly failing to inspect planes for structural cracks.

The Federal Aviation Administration (FAA) said Southwest continued to fly uninspected aircraft even after the carrier notified the agency that it had missed a mandatory deadline to complete fuselage inspections on older aircraft.

Southwest flies only Boeing Co (BA.N) 737 planes and the inspection program was part of an FAA initiative to more closely examine structural fatigue in older planes.

The FAA said Southwest operated 46 planes on nearly 60,000 flights while "failing to comply" with a requirement for repeat inspections.

It continued to operate the same planes on more than 1,400 additional flights after discovering in March 2007 that it missed the inspection deadline, the FAA said. This deliberate breach, the FAA said, prompted the stiff fine.

The House of Representatives Transportation Committee is investigating the missed inspections and the FAA response. A hearing is planned for April.

Southwest can appeal the proposed fine, which would be the largest ever against an airline if enforced. The largest to date is a $9.5 million penalty against Eastern Airlines in the 1980s.

Officials at Southwest, which has an excellent overall safety record, were not immediately available for comment. The airline has 30 days to respond to the FAA.

Southwest shares fell 49 cents, or 3.7 percent, to $12.50 on the New York Stock Exchange, but gained 7 cents after hours.

(Reporting by John Crawley; editing by Leslie Gevirtz and Braden Reddall)