Bloomberg News

Boeing Fined $13.6 Million by U.S. for Tank Guidance Delays

July 13, 2012

The U.S. Federal Aviation Administration proposed to fine Boeing Co. (BA:US) $13.6 million, its second-largest penalty ever, for delays in telling airlines how to prevent fuel-tank explosions on 383 aircraft.

Boeing was given a Dec. 27, 2010, deadline to submit instructions on how to add explosion-prevention devices in its U.S.-registered 747 jumbo jets and 757 single-aisle planes, according an e-mailed statement today by the Federal Aviation Administration. The Chicago-based company missed the deadline for 747s by 301 days, and was 406 days late for 757s, according to the FAA release.

“We are committed to ensuring the safety of the flying public,” U.S. Transportation Secretary Ray LaHood said in the statement. “Manufacturers must provide the necessary instructions so the airlines can comply with this important safety regulation.”

The fine is the largest proposed by the FAA since it sought $24.2 million from AMR Corp. (AAMRQ:US)’s American Airlines in 2010 for maintenance lapses that grounded its fleet of Boeing MD-80s in 2008. Firms typically negotiate lower payments with the FAA.

The agency’s action stems from a regulation that requires airlines to install devices that blanket center fuel tanks with non-flammable nitrogen gas. The rule resulted from the explosion in a Trans World Airlines 747 off New York on July 17, 1996, that killed all 230 aboard.

Airbus Complies

The U.S. National Transportation Safety Board ruled that a spark triggered an explosion in the tank, tearing the jetliner apart. Tanks located in the fuselage between the wings are heated by nearby equipment and are explosive for a majority of time on flights, the safety board found.

Boeing is reviewing the FAA’s action and will respond to the agency, according to a statement e-mailed by Miles Kotay, a spokesman for the company.

The aircraft models in the FAA action are no longer in production, according to the Boeing statement. The company said it has installed the fuel-tank system on 1,805 planes around the world.

“Boeing has made pioneering efforts in the complex process of developing and certifying the fuel-tank inerting systems at issue, and is committed to continuing those efforts,” the company said in its statement.

Airbus SAS, Boeing’s main competitor for civilian aircraft, met the deadline, according to the FAA statement.

The fuel-tank rule requires that airlines install the devices on half their fleets by 2014 and complete the effort by 2017.

Delays Rejected

“The FAA expects that most, if not all, operators will meet both the 2014 and 2017 deadlines, even if they received service instructions later than anticipated,” the agency said.

Airlines sought a delay in installing the devices in a March 28 letter sent by the Washington-based trade group Airlines for America. The group represents large carriers such as Southwest Airlines Co. (LUV:US) and Delta Air Lines Inc. (DAL:US)

Approvals for how to install the fuel-tank devices were so far behind schedule that it would be impossible for airlines to meet the FAA’s deadlines, the group said in the letter.

The agency told the trade group in a letter today that it wouldn’t extend the final deadline. It said would accept applications for extensions from individual carriers.

Granting Leeway

While the final deadline won’t be altered, the agency may grant airlines leeway on the 2014 standard, Peggy Gilligan, FAA’s associate administrator for aviation safety, said in the letter.

The FAA, in the years after the TWA accident, balked at recommendations by the NTSB to require anti-explosion devices as too expensive.

The agency reversed itself in 2002 after research showed it would be easier and cheaper than previously thought to use nitrogen gas to prevent explosions. Boeing participated in the research and endorsed the agency’s rule.

The FAA has also ordered dozens of improvements to tanks and wiring on airliners since the TWA accident to reduce the risks of fires and explosions.

To contact the reporter on this story: Alan Levin in Washington at alevin24@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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