Southwest Airlines Co was hopeful on Monday the government would not force it to ground planes over a maintenance issue, and shares lost nearly 4 percent.
The Federal Aviation Administration was due on Tuesday to decide what steps Southwest should take to address the use of parts not approved by the government on more than 80 Boeing Co 737s, the agency said.
The FAA last week permitted Southwest to fly planes with the unauthorized components for 10 days while the carrier came up with a plan for replacing them.
It was not clear whether the FAA would grant an extension or force Southwest to ground some aircraft, although both the company and regulators have said the parts in question did not pose an immediate safety hazard.
Southwest has asked for more time, and we're reviewing it, said FAA spokesman Lynn Lunsford.
Beth Harbin, a spokeswoman for the airline, said late on Monday the company was optimistic the FAA would not order it to ground any planes.
Southwest shares closed down 3.8 percent to $8.18 on the New York Exchange on Monday, its lowest daily closing price in August. Southwest ended July at $7.85.
FAA inspectors discovered during routine maintenance checks that a component used for keeping engine exhaust off wing flaps had not been approved by the agency.
The parts were installed by outside contractors, government and airline officials said.
Southwest initially grounded 46 older Boeing 737s to assess the problem. Since, the number of planes equipped with suspect parts has nearly doubled to 82, or roughly 20 percent of its all-737 fleet, the FAA said.
Some of the planes have been flying with those parts for up to three years, the FAA said.
Harbin said Southwest had replaced parts on more than 30 aircraft but added the rest of the work could only be accomplished as parts become available.
The discovery of unauthorized parts came after Southwest agreed in March to pay a $7.5 million fine to settle government allegations that it flew planes without performing required safety inspections.
(Reporting by John Crawley and Deepa Seetharaman; editing by Carol Bishopric )