American Airlines’ Gerard Arpey apologizes for cancellations, explains FAA nitty-gritty at press tele-conference

by Teresa Gubbins

Gerard J. Arpey, President and CEO of AMR/American Airlines, held a tele-press-conference on Thursday afternoon to offer an operational update on the status of the fleet, as follows (this part on top with the bullet points is right off the press release):

And on to the tele-con

Gerard Arpey, AMR Chairman, President, and CEO, and Bob Reding, AMR Executive VP of Operations, presided over a press conference on Thursday afternoon to offer apologies details on the three-consecutive-days of flight cancellations resulting from the FAA’s inspection of its MD-80 planes.

We join them now:

Arpey: I take personal responsibility, it’s not the fault of the mechanics. The thing you need to understand is that Airworthiness Directives (ADs) are not black & white. This is 38 pages long, it’s extremely complex. The aircraft it applies to are configured at different times, so the configuration in the wheel wells is different. [We observe] a process of taking the FAA’s airworthiness directive, putting it through the engineering staff, translating it for the mechanics, and implementing it. In this latest review, looking at previous requirements, we found we weren’t in precise compliance.

We’ve reached out to an independent 3rd party firm to help us review our process of complying with these airworthiness directives, to see where there were failures along the way and take action related to those failures. We had completed a service bulletin before this became a directive. We had developed this with Boeing. Then the FAA created the Airworthiness Directive and gave the airline industry 18 months to comply. We did the original inspection a couple of weeks ago, when we went out to look at issues FAA asked us to look at. What is issue? It’s chafing of the wires. Every airplane, the mechanics looked to see if there’s any chafing of wires. In no case did we find chafing of the wires. Service bulletin 18 had accomplished objective.

If an airplane is not in compliance, you cannot fly it. That’s the situation we were in. There are alternate means of compliance in these situations. You can apply for alternate means to take more time to go in and meet the standard. But we were not successful in getting that alternate means. In any situation, you can go to the FAA, to Boeing, and work with them. If there’s not a safety-of-flight issue, you can, instead of grounding the airplanes, take a certain period of time. That often happens in airline industry -- you get a period of time to do what the FAA is asking.

We found no chafing on the wires. I’m in no way being critical of the FAA. In many cases, you seek an alternative and you don’t get it.

WSJ: The latest inspections, were they to address spacing, direction of ties, and direction of clip face?

GA: There were a variety of issues with the way this structure is positioned in the wheel well and the wires are protected. We had 38 pages of Airworthiness Directive interpreted by our engineering staff and implemented by our mechanics.

WSJ: How long do the inspections and repairs take?

GA: It’s a range, depending on the aircraft.

WSJ: A spokesman earlier said it was 2-6 hours. (Well then, why'd ya ask?) Were repairs required for most of the planes?

GA: We had to make adjustments on a number – most - of our aircraft to come in precise compliance with FAA’s interpretation of their own airworthiness directive.

Airline Business: Will this hasten a decision on replacement of the planes? One of biggest criticisms was a breakdown in communications to customers, that they didn’t get warning of cancellation and AA’s front-line folks didn’t have information.

GA: We acknowledge it’s been a dynamic process. I left for Los Angeles on Tuesday for another issue, and when I arrived in L.A. discovered we were going to have to re-inspect all the airplanes. The dynamics on how to manage through that have not been perfect. I acknowledge we have significantly inconvenienced thousands of people. We are offering them whole refunds, putting them on other American Airlines flights. We are profoundly sorry we’ve gotten ourselves into this situation.

The MD80 has been a terrific airplane for AA this will have no impact on our longterm fleet plan. The bigger issue related to MD80 will be oil prices. It’s, what, $110 a barrel today? We’re looking at accelerating the number of 737s and 800s.

TheStreet.com: During past month, has the approach of the FAA has changed?

GA: I think the FAA has always held carriers to exacting standards. … With the hearings last week and hearings today, the FAA is obviously under their own set of pressures. But they’re continuing to hold to the high standards they always have.

TheStreet.com: Has the FAA gotten tougher in last month? (Dude, that's the same question.)

GA: I’m not sure I would characterize it that way. The fact of the matter is, they have ordered record inspections across our fleet and the rest of the airline industry. I think it would be fair to characterize this as the FAA stepping up and prevailing. There’s been impact on American but also several other airlines have had their aircraft on the ground.

TheStreet.com: Were they not tough enough before or being too tough now? (LET IT GO.)

GA: I come back to, I think (American) airlines saw this potential chafing of wires in wheel well. We told the FAA, we told Boeing. We want to make sure we continue to operate in that open way. When airlines see issues with their aircraft, they immediately make FAA, Boeing, and other operators aware of the issues and not wait for FAA to issue airworthiness directives.

Q: Will there be a review of processes?

GA: We’re going to hire a 3rd party to come in and look at process. It often starts with a service bulletin. In many cases, you often have implemented the service bulletin. Sometime the AD says you have to do several other things. We take that and rely on our mechanics who are licensed by FAA to interpret change orders and implement them. It is not black & white. There’s a great deal of judgment on the part of Boeing, the FAA, the airlines’ engineering staff, mechanics, the quality assurance inspectors, and ultimately the FAA inspectors, who come along and say whether that is in compliance. Across all that spectrum of individuals, people working in good faith can reach different conclusions about a process to accomplish goals. In this case, we failed to get it right. But we are working hard to get it right.

Q: The planes not in compliance: Were they safe?

GA: Yes, as I indicated earlier when we did the first round of inspections for the purpose of this airworthiness directive, the airlines had 18 months. When we did first round of inspections, that’s the first thing we looked for. We did not find any chafing of wires on the aircraft. We believe the aircraft were always operated safely. We relied on the good judgment and expertise of our licensed mechanics to come back and tell us there was no chafing. But from FAA standpoint, we were not in technical compliance with the directive and that is our failure. That is how airplanes ended up in this situation on the ground.

Q: Should customers be ready for more mass cancellations?

GA: I hope not. I hope that we can avoid this going forward. A smaller airline that operates MD80s has cancelled some flights today. Hope we don’t get in this situation again.

Miles O'Brien, CNN (His name should be "Frequent-Flyer Miles." Haha.): The Airworthiness Directive, I can see how there was some ambiguousness. When you realized -- when the FAA made you aware of the error of your ways – and you took planes out of service to make it right, why didn’t you get a clear sense of what the marching orders were from FAA before executing repairs?

GA: We focused on the areas of concern the FAA raised, as opposed to entire AD. That would be an obvious thing in retrospect, to look at the entire AD.

Q: Modifications: What were misinterpreted yet again?

GA: The direction of the clips, the material that held together the material that protected the wires, there were a number of issues like that that are being addressed. No one would put a plane into service that wasn’t 100% safe.

WashPost: Somewhat-annoying detail-oriented question about open records and how his understanding of the AD is that it’s only 5 or 6 pages versus the 38 pages that GA is mentioning, and can we-the-media get access to the 38-page document that GA keeps quoting.

GA: I may have misspoke about the 38 pages; our translation across our fleet ended up turning into a complicated document. I was in the wheel wells with one of our mechanics looking at this wire bundle. The difference across our fleet, as the airplanes were delivered to American, is that the manufacturer continues to evolve the aircraft. A lot of the plumbing, you find in the wheel well, are in different locations. Fact that each airplane can be different makes it more complicated.

John Crawley Reuters: When will planes be back to normal?

GA: I’m not going to give you a precise date because we are working in partnership with the government. We have 123 aircraft in service when I came in today, and 10 awaiting FAA inspection. All the others are being worked on around the clock. It’s going to take several more days to get us back to full fleet. We’ll try to stay ahead and make plans for our customers to accommodate them in the event that the aircraft come back slower than we hope.

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