Southwest gets black eye

The Federal Aviation Administration could fine Southwest Airlines, thetop in-country carrier, as much as $3 million or more for failure to inspect its planes for a variety of possible structural cracks, an FAA requirement for older planes.

Per its regulations, the FAA could seek a penalty of $25,000 per violation, or $3 million to $36 million, although any fine is likely to be at the lower end of the range.

Southwest plans to fight any fines and the FAA assessment, claiming it has complied with regulators’ requests:

A spokeswoman for Southwest, Beth Harbin, said the airline brought the issue to the FAA's attention and believed it had handled the matter to the agency’s satisfaction. Harbin said the airline believed the case was closed last year.

“We brought in 46 airplanes to take another look at them,” Harbin said. “These are preventive inspections. On six of the 46 we found the start of some very small cracking. That’s the intent of the inspection schedule — to find something before it becomes a problem. These are safe planes.”

Whether Southwest beats the rap or not, this is a black eye. Combined with most of its fuel hedges having expired, and so it having lost most of its price advantage edge, this could be a challenging year for Southwest to maintain its profitability streak.