All Continental Planes to Be Inspected by U.S. : Fleet of 351 Aircraft to Undergo Safety Checks; Airline Faces Possible Fine Up to $1 Million

In another blow to Texas Air Corp., the nation’s largest airline system, the federal government served notice Sunday that it will make safety checks on all of Continental Airlines’ 351 planes starting today and may fine the company up to $1 million.

The 30-day inquiry will be similar to the unprecedented investigation of Eastern Airlines’ 267 planes that began last week, and has already resulted in the temporary grounding of 19 aircraft, said U.S. Transportation Secretary James H. Burnley IV.

“We have had Continental under very intense scrutiny for a number of months now,” Burnley said in a televised interview. He added that a review of Federal Aviation Administration files has revealed that “we’ve got almost $1 million in proposed (safety) penalties” against the airline.

Another Setback

Burnley’s disclosure was another setback for Texas Air, which owns Eastern and Continental and controls more than 20% of the nation’s airline business. The parent company, already reeling from an $823,000 fine levied against Eastern last week, has come under fire from Congress and Eastern Airlines’ pilots and machinists for allegedly endangering passenger safety in a bid to slash operating costs.

Anthony Hatch, an airline analyst with Argus Research in New York, said Sunday’s announcement “is a real blow to Texas Air. This puts (them) back into the news where they don’t want to be. A lot of people are choosing other airlines in anticipation of the results of the Eastern inquiry. Now, Continental’s reputation will suffer as well, even before an investigation is completed.”

Airline Welcomes Inquiry

Texas Air officials said Sunday that they welcomed the latest investigation, predicting that both airlines would be vindicated. Bruce Hicks, a Continental spokesman, said his firm was “totally confident in the outcome” of the investigation, adding: “It is about time we remove this nonsense from the air once and for all.”

Burnley, in an appearance on NBC-TV’s “Meet the Press,” said Continental officials have brought many of the identified safety problems to the attention of federal regulators. He added that the company has been notified of virtually all of the proposed fines, and was considering whether to pay them voluntarily.

During the investigation, Burnley said, federal regulators will be taking an in-depth look at the fleet, with officials “walking around the planes and through them, and talking to the maintenance personnel and the folks in the cockpit and making sure that anything that can be readily identified is corrected.”

All the while, the FAA will be continuing a separate inquiry launched last week into Texas Air’s overall fitness to operate airlines, he added.

Frank Lorenzo, the chairman of Texas Air, said in the same broadcast that the two airlines had exemplary safety standards and blamed the situation on “political” attacks by airline pilots and machinists who he said are trying to “bring down” the firm.

Lorenzo’s Texas International Airlines merged with Continental in 1983 to form Texas Air Corp., at which time he filed for bankruptcy and cut the pay of workers. The airline’s pilots went on strike and were eventually replaced by non-union employees. Texas Air purchased Eastern Airlines 16 months ago, and has fought bitterly with workers over pay and benefits ever since.

‘More Beneath Surface’

“What you don’t hear in all this rhetoric is a lot of the positive things that are going on. . . . There’s much more beneath the surface than a few of these little comments that are just made by people who have a motive and are just trying to tear the airline down,” Lorenzo said. He added that Eastern pilots and machinists are “fifth columns,” or subversive elements, within his company. Lorenzo also denied that he has endangered passenger safety on Eastern Airlines by trying to sell off some of its more profitable assets, such as the shuttle service linking Washington with New York and Boston. He noted that Eastern had lost $900 million in operations since the airlines were deregulated and insisted that Texas Air has been trying to return the company to profitability.

Some members of Congress, however, have taken a dim view of Lorenzo’s actions, especially his battles with labor unions representing Eastern Airlines pilots and machinists. Rep. Norman Y. Mineta (D-San Jose), who chairs the aviation subcommittee of the House Public Works and Transportation Committee, said Lorenzo has given the airline industry a “bad rap” and that the Texas Air controversy has raised serious questions about passenger safety.

‘Profitable Operations’

“I see very profitable operations of Eastern Airlines being transferred away and put into Texas Air’s coffers,” he said. “That reduces the revenues to Eastern Airlines. . . . If that is reflected in their safety record, then that is what I want the FAA to come down on.”

Burnley has said his investigations of Eastern, and now Continental, are independent and not motivated by political pressures. But one knowledgeable industry observer said the issue “has been forced on (Burnley) by Congress. More than 166 members of the Congress have signed a petition which calls for an investigation of the practices of Texas Air. And Mineta is spearheading this, so that gets pretty powerful.”

The Continental investigation has also been supported by Eastern’s unions, which have been concerned that the parent company might try to shuffle spare parts and resources from Continental to Eastern to “plug the holes” during the federal inquiry.

However, Burnley criticized unions for attempting to turn the issue into a “political football.” He noted, for example, that the FAA has been deluged with about 1,300 postcards from pilots citing complaints about Eastern, but only six of the allegations were found to be valid.

Times staff writers Robert E. Dallos in New York and Eric Lichtblau in Washington contributed to this story.