MW American Airlines to pay $50 million penalty for mistreatment of disabled fliers
By Tomi Kilgore
U.S. Department of Transportation said airline committed 'numerous serious' violations of laws protecting disabled passengers between 2019 and 2023
Shares of American Airlines Group Inc. were headed lower Wednesday, after the air carrier said it reached a settlement with the U.S. Department of Transportation, which called out "numerous serious violations" of laws protecting passengers with violations.
As part of the settlement, American will pay a $50 million penalty.
The stock $(AAL)$ shed 0.7% in premarket trading. It was now headed for a third-straight loss since it closed at a five-month high of $13.09 on Oct. 18.
The settlement was announced was announced a day before American was scheduled to release its third-quarter earnings report. The carrier beat second-quarter profit expectations after reporting wider-than-expected losses in the previous two quarters, while sales expectations were missed the past two quarters.
The DOT said its investigation had found cases of "unsafe" assistance of disabled passengers that resulted in some injuries and "undignified treatment" of wheelchair users from 2019 to 2023, including failures to provide timely assistance. If was also found that thousands of wheelchairs were mishandled, causing damage and delaying their return.
"The era of tolerating poor treatment of airline passengers with disabilities is over," said U.S. Transportation Secretary Pete Buttigieg. "With this penalty, we are setting a new standard of accountability for airlines that violate the civil rights of passengers with disabilities."
That penalty includes a $25 million fine paid to the U.S. Treasury, and American will be credited $25 million toward the penalty for investments in equipment to reduce wheelchair damage and other measures to provide prompt wheelchair assistance.
If those investments aren't made, American will pay the additional $25 million as a fine to the U.S. Treasury.
American said "in recognition of the special challenges passengers with disabilities face," it has already invested more than $175 million in 2024 in services, infrastructure, training and new technology to help ease those challenges.
"Today's agreement reaffirms American's commitment to taking care of all of our customers," said Julie Rath, senior vice president of airport operations, reservations and service recovery.
American's stock has lost 5.7% year to date through Tuesday, while the U.S. Global Jets ETF JETS has rallied 18.4% and the S&P 500 index SPX has advanced 22.7%.
-Tomi Kilgore
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(END) Dow Jones Newswires
October 23, 2024 06:57 ET (10:57 GMT)
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