Report: Record $25M Penalty Set for American Airlines

The government is determined to send a message to U.S. airlines about the need for strict maintenance on their fleets.

The Federal Aviation Administration is set to propose a record penalty of $25 million or more on American Airlines for lapses in maintenance procedures that contributed to a spate of flight cancellations in 2008, the Wall Street Journal ($) reported Friday.

The fine is nearly three times larger than any ever levied against a U.S. airline.

The administration and the airline has been at loggerheads for more than two years . Although no official decision or announcement has been made yet, American Airlines has reportedly been told a number of times that federal regulators were bound to take a stand.

The Journal reported that the penalty could be between $25 and $30 million, citing unnamed industry and government officials. The FAA even reportedly considered a whopping fine of $100 million but senior officials rejected it.

A spokesman for American said: "We haven't received any notification by the FAA about any pending action, nor do we believe any action is warranted" and that the company "has always maintained its aircraft to the highest standards," according to the Journal's report.

In April of 2008, poorly maintained electrical wiring around the landing gear of American's 300 McDonnell Douglas MD-80 jets caused the airline to ground its entire fleet for days. Thousands of flights were canceled with some 300,000 passengers stranded over three days. Even lawmakers were furious. The FAA determined that the jets hadn't been in strict compliance, and that they had apparently made around 15,000 flights before the problems were fixed.