Southwest Airlines Lawsuit Settled for $3.5M over Safety Problems

Southwest Airlines has reached a $3.5 million settlement with investors who filed a lawsuit against the company’s top officers for breaching their fiduciary duties by allowing the airline to fail to meet FAA safety standards.

Southwest will pay investors, including Carbon County, Pennsylvania, and Employee Retirement System, $3.5 million to drop a lawsuit pending in Texas state court. The lawsuit was filed in August 2008 following an FAA determination that the company had failed to properly inspect some older planes in its fleet.

A hearing is scheduled for December 9 before state District Judge Carlos Cortez for approval of the settlement.

The FAA leveled a $10.2 million fine against Southwest in March 2008 for not properly inspecting its Boeing 737s for fuselage cracks. Southwest eventually settled with the FAA for $7.5 million in fines, agreeing to upgrade its inspection and maintenance procedures.

Southwest temporarily grounded 44 Boeing 737s temporarily while inspections were carried out in early 2008. The FAA and Boeing found fatigue cracks in six of the inspected vehicles. Southwest has a fleet of 520 aircraft, all of which are 737s.

In the recent settlement with investors, Southwest again pledged to make changes to its maintenance procedures as part of the settlement. However, the company denied any allegations of wrongdoing or misconduct in documents filed with the settlement.

Photo courtesy of austrini via Flickr for use under Creative Commons