U.S. proposes $9.2 million in fines against UAL, USAir

WASHINGTON (Reuters) - U.S. regulators proposed on Wednesday $9.2 million in combined safety-related fines against US Airways Group and UAL Corp's United Airlines, which was cited for leaving towels inside a jet engine for several months.

The Federal Aviation Administration (FAA) proposed a $5.4 million penalty against US Airways for operating eight planes while out of compliance with certain safety directives or its own maintenance programs.

The FAA proposed to fine United $3.8 million for allegedly violating airworthiness rules when it flew a Boeing 737 on more than 200 flights. The agency alleged United violated its own maintenance procedures on engine work.

Fines can be reduced in settlement talks, an option available to both airlines.

The agency has stepped up enforcement against major carriers over the past year after congressional and other scrutiny uncovered lapses in oversight.

Airline shares ended broadly higher on improved finances ahead of quarterly results next week. US Airways shares gained nearly 1 percent to close at $4.48 on the New York Stock Exchange and UAL shares rose 7.4 percent to end at $7.82 on the Nasdaq.

In United's case, the FAA said airline mechanics found two towels, instead of protective caps, covering openings in an oil sump inside one of the 737's two engines.

The towels apparently had been in place since the previous December. Their discovery was prompted by low oil pressure readings that forced pilots to shut down the engine after takeoff from Denver on April 28, 2008, and return to the airport.

United said it immediately reported the incident to the FAA and is "fully confident" it has taken the right steps to address the matter.

In the US Airways case, the FAA said it flew eight aircraft on 1,647 flights between October 2008 and January 2009 that were not in compliance with required safety inspections. Two of the directives required inspections of Airbus A320s for cracks on a landing gear part. Lapses also involved Boeing aircraft.

US Airways said in a statement it would work with the FAA to "achieve a negotiated resolution" of the agency's proposed penalty. The incidents cited by the FAA occurred during the carrier's integration of maintenance systems in 2007 after its merger with America West.

US Airways said it has completed a full review of its maintenance programs, and is working with the FAA to correct any problems.

The fines announced on Wednesday were the largest since the FAA sought $7.1 million in civil penalties against American Airlines, a unit of AMR Corp, in August 2008 for allegedly deferring maintenance on two planes.

Southwest Airlines agreed in March to pay $7.5 million to settle FAA allegations it flew planes without performing required safety inspections in 2006-07.

(Reporting by John Crawley; Editing by Maureen Bavdek, Steve Orlofsky and Matthew Lewis)