American Airlines’ MD-80 Problem


This is the third consecutive day of cancellations of American Airlines (AMR) flights using MD-80 series planes, accounting for nearly half of the airline’s fleet of full size passenger jets. Over 100,000 passengers have been stranded and separated from their luggage. American expects all of the planes to return to service by Saturday night. Passengers with reservations on MD-80s on Alaska (ALK), Delta (DAL), and Midwest Airlines have also been affected.

The FAA issued an Airworthiness Directive in July 2006, giving airlines 18 months from September 5, 2006 to perform “a one-time inspection for chafing or signs of arcing of the wire bundle for the auxiliary hydraulic pump, and other specified and corrective actions, as applicable. This AD also requires that, for certain airplanes, installation of additional protective sleeving on the upper portion of the auxiliary hydraulic pump wire assembly.” The Directive was the result of two Boeing alerts on the planes from 2004 and 2005, and was “intended to reduce the potential of an ignition source adjacent to the fuel tanks, which, in combination with flammable fuel vapors, could result in a fuel tank explosion and consequent loss of the airplane.”

The FAA Directive estimated the cost to US airlines would be up to $1,304 per airplane, excluding lost revenue for planes taken out of service for inspection and repair. At the time of the directive, American and other US airlines were flying high on Wall Street. Their stocks kept soaring as analysts such as JPMorgan’s Jamie Baker and Calyon Securities Ray Niedl kept promoting how well the legacy carriers were increasing profitability by squeezing costs. Every time the airline stocks would start to drop, M&A talk would push them right back up again. As passengers paid more for less, the shareholders and airline executives got more. AMR’s stock peaked at around $41.00 in January 2007.

It now appears airlines did more than cut cleanliness and other amenities from their service. In their haste to turn planes around as quickly as possible, maintenance may have gotten squeezed too. The FAA’s Directive could have easily been carried out at the time the plane underwent normal inspection and maintenance. Additional time for repair could have been scheduled on a plane by plane basis during slower periods in the airline’s schedule, minimizing passenger and profit disruptions.

Instead, American waited until March 26 to cancel over 300 flights to inspect and fix the MD-80s. Following increased pressure from Congress after Southwest Airlines (LUV) was found to have been flying planes that had not been properly inspected, the FAA began a second round of audits on March 30 to insure airlines are complying with directives. (More airlines could be grounded as these audits will continue through June 30, 2008.) On Monday, FAA inspectors found multiple violations related the 2006 directive on 15 of 19 planes American says it already repaired, forcing the grounding of all 300 of its MD-80s. Obviously, it is a lot more expensive to shut the whole MD-80 fleet down now then it would have cost to repair a few planes at a time.

Despite AMR now trading under $10 a share, Wall Street is not making a big deal about the cancellations. The attitude seems to be the passenger doesn’t have many flying choices. What they’re not factoring in is the cycle of Saturn in Virgo until July 2010. Saturn is the planetary energy of structure and governmental rules and regulations. Virgo deals with details and maintenance/repairs as this critical sign seeks perfection. As Rep. James Oberstar, the Chairman of the House Committee on Transportation and Infrastructure told The New York Times: “We have to get them (the FAA) back on course, to being the gold standard in the world for aviation safety oversight and maintenance, and to re-establish a safety mind-set and culture with the agency, instead of this coddling of the industry.”

The MD-80 received FAA certification on August 26, 1980, the last time Saturn was in Virgo. Transiting Saturn conjoined the MD-80 certification Sun and Mercury in Virgo last month and will exactly again in mid-June. This reflects the governmental limitations imposed on the planes not being correctly repaired. Saturn rules old age, requiring that these planes be properly maintained or retired.

Hopefully this current episode of airplane groundings will prompt the airlines to take the initiative to ensure the safety of their aircraft. After all, it was the airlines themselves who requested that the government pass the Air Commerce Act of May 20, 1926 to ensure airline safety via federal regulation.

Saturn in Virgo will form a series of oppositions to Uranus, the planetary energy representing air travel, from November 2008 to July 2010, impacting the Air Commerce Act chart. Uranus will return to its 1926 position during this period. Uranus rules electricity (and electrical wiring) and Pisces rules fuel and chemicals. In its worst manifestation, we could be entering a cycle of airline disruptions and accidents. It is essential that Congress ensures that the FAA and the airlines are proactive in taking airline safety seriously.

In an upcoming post, I will describe how current and future planetary cycles will potentially affect air travel in general, particularly in the US.

3 comments:

David Donar said...

If American cancels any more flights, they'll have to change their name to American't
http://politicalgrafitti.blogspot.com/2008/04/americant-airlines.html

Anonymous said...

Doe's this mean that also "ALLEGIANT AIR" aircraft have the same problems since they are also MD-89,88,83, and 82 jet planes?

WALL STREET WEATHER said...

Anonymous,

I have no idea.

Deborah