Alaska Air Group
tumbled Friday after U.S. federal regulators proposed suspending
authority to conduct major repair work after finding the carrier's maintenance procedures failed to meet federal standards.
Federal Aviation Administration
carried out a rigorous safety inspection of the airline after the January crash of an MD-80 belonging to the carrier off the coast of California. All 88 people on board were killed.
The FAA said in a statement that the inspection uncovered serious lapses in record keeping and quality assurance.
"It also found that maintenance personnel are not following FAA-approved procedures contained in the airline's manuals,'' the FAA said.
Alaska Airlines shares fell 3 1/16, or 10%, to 28 7/8 in afternoon trading Friday. (Alaska Airlines finished down 1 3/16, or 4%, at 30 3/4.)
Alaska Airlines has seven days to reply to the FAA's proposed suspension.
Since late 1998 the U.S attorney for Northern California has been probing the airline's Oakland, Calif., maintenance base for irregularities.
Alaska Airlines has also been conducting an internal audit of its own operations. The company said in May that while it had turned up minor problems, the airline was ratcheting up some maintenance procedures.