Business

American Airlines Cancels 570 Flights On Friday

CEO: Cancellations To Cost American Tens Of Millions

 Travel Resources From CBS11TV.com

DALLAS (AP) ― American Airlines says it will cancel 570 flights on Friday.

That will mark the fourth straight day of large-scale flight cancellations since the nation's largest airline learned that the wiring on 300 planes needed to be re-inspected.

American's chief executive said Thursday that the cancellations will cost the company tens of millions of dollars, but he said American can withstand the losses.

Gerard Arpey said he took full responsibility for the airline's failure to comply with a federal safety rule on electrical wiring in its MD-80 aircraft.

Arpey said neither the airline's mechanics nor the Federal Aviation Administration were to blame for the canceled flights, which company officials said would stretch into Saturday.

Mechanics worked overtime to comply with a federal rule designed to prevent electrical fires in MD-80s. The airline canceled more than 400 flights for the same reason two weeks ago. But the repairs done then didn't meet FAA standards, resulting in this week's debacle.

Arpey repeated the airline's view that the wiring in the MD-80s was not a safety issue and that his mechanics had found no evidence of damaged wires.

"I put my kids on these airplanes all the time," he said.

Arpey said it was too early for the airline to estimate the cost of the cancellations. AMR is running a tab for meals, hotel rooms and $500 travel vouchers for stranded passenger and it lost revenue when it booked people on other airlines. On the other hand, it has saved what it would have spent for fuel on those 2,500 flights.

"I think it will be in the tens of millions of dollars," Arpey said of the final cost. But he said the airline had built up enough cash and paid down debt to deal with the loss. He said the carrier has business-interruption insurance, but he doubted that it would cover the cancellation-related losses.

"We have fought our way through many difficult circumstances over the years," said Arpey, who was promoted to CEO in 2003 as the company teetered on the brink of bankruptcy, "and we will fight our way through this one."

American got some good news on Wall Street. Shares of parent AMR Corp., which fell 11 percent the day before, rose 70 cents, or 7.6 percent, to $9.87 on Thursday.

At Dallas-Fort Worth International Airport, near American's headquarters, passengers were still scrambling to get home or to vacations and business trips. Some had been trying for three days.

"I'm just worn out," said Anne Duzinski, whose flight from Austin to Norfolk, Va., was canceled. She took a Greyhound bus to DFW, where she hoped to catch a flight Thursday night. An American Airlines supervisor gave her a voucher for lunch in the terminal.

"They've done themselves in this time," Duzinski said. "It would have cost them a hell of a lot less to do the wiring right in the first place."

Theresa Williamson, a nurse from Tucson, Ariz., interrupted her trip home from a convention in Florida to visit a friend in Dallas on Monday night. The overnight stay turned into a three-nighter when the cancellations were announced after she got to the airport Tuesday.

Williamson returned Thursday, only to find the replacement flight offered by American had also been canceled.

"Their staff has been friendly and helpful, but there's nothing to compensate for the lost work time," said Williamson, who missed two days of work. "It could make me less likely to fly on American."

"I can't believe this is all about a few wires," said Sandy Cohen, a Dallas businesswoman who was trying to visit friends in Washington -- she'd already missed a birthday party.

The latest round of American Airlines flight cancellations has left tens of thousands of passengers searching for alternative ways to get to their destinations, but airlines are not required to compensate passengers for canceled flights.

The only time airlines legally have to provide compensation is when a passenger is bumped from an overbooked flight, according to the Department of Transportation's Aviation Consumer Protection Division.

However, passengers whose schedules are significantly affected -- such as when the only available alternate flight involves flying on a different day or includes an unplanned stopover -- are eligible for a refund in lieu of a later flight.

"If they'd rather have a refund than reschedule ... they can demand a refund even if their ticket is nonrefundable," said Transportation Department spokesman Bill Mosely.

American was offering travel vouchers to some inconvenienced passengers and putting some travelers in hotels. The Fort Worth, Texas-based carrier said customers who were forced to stay overnight because of cancellations should e-mail the carrier's customer relations department through a form on the company's Web site for details about compensation.


In 2006, after manufacturer Boeing Co. got reports of electrical charges arcing between wires in the wheel wells of MD-80s, the FAA issued an order giving airlines until March of 2008 to properly bundle and secure the wires to prevent them from chafing. Rubbing could cause shorts that might lead to fires or even explosions, the agency said.

On Wednesday, Arpey's top lieutenant suggested that American had fallen victim to a suddenly more aggressive FAA. The agency has been under fire since disclosures last month of its lax enforcement of safety rules at Southwest Airlines Co.

In measured tones, Arpey said Thursday that the FAA "obviously is under their own set of scrutiny and pressure right now," but was only doing its job of "holding airlines to exacting standards."

American plans to hire an outside company to help it comply with FAA safety orders. So far, no employees have been punished or demoted for the cancellations.

The MD-80 is the workhorse of American's fleet, accounting for 300 of the carrier's 655 planes. Arpey said American may step up plans to replace the MD-80s with newer planes, but only to improve the fuel efficiency of its fleet -- he said the wiring problem was not a factor.

(© 2008 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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