After forging through a “rocky summer” and cutting back on flights in the fall, American Airlines CEO Robert Isom says the carrier has the ability “to be much bigger.”
But the Fort Worth-based airline is still missing key pieces, namely enough pilots, even though demand from travelers remains high, Isom said at the Cowen Global Transportation & Sustainable Mobility Conference Wednesday.
“We actually have the assets in place to fly a much larger airline,” said Isom, who took over as CEO in March from longtime leader Doug Parker.
After being criticized by its own pilots union for flying a schedule that is bigger than it can handle, American will fly about 18% fewer flights this year than it did in 2019, the last year before the COVID-19 pandemic.
And as the COVID crisis and travel receded, new challenges emerged. There is an industrywide shortage of pilots that is forcing airlines such as American to cut regional flying, flights that feed into mainline operations.
“We’d like to get the regional fleet back up as much as we can,” Isom said. “We talked about having about 150 planes on the ground in the second quarter, and our goal is to get those flying as soon as we can.”
American and other airlines are struggling with exactly how fast they can rebuild their networks after severe job cuts, furloughs and expense-tightening in 2020 and early 2021. Meanwhile, ticket prices have soared past 2019 levels and airlines are pocketing record revenues despite operating fewer flights.
Add $36 billion in debt to the equation, and American simply needs to put more planes in the air to cash in on that traveler demand.
“There’s a lot of demand,” said American chief financial officer Derek Kerr. “It’s the supply that we would like to increase.”
The airline industry has suffered at times this year when it has tried to schedule more flights. There have been periods of heavy cancellations during key travel periods, such as June. Airlines have blamed weather and air traffic control constraints, but politicians and union leaders have pointed the blame back at the carriers. Transportation Secretary Pete Buttigieg has threatened to push for new regulations if airlines don’t cut back on cancellations and delays and take better care of customers.
American Airlines canceled 3.88% of its flights during the first half of the year, the most of any of its major competitors and a higher rate than in 2019.
At the same time, American is in the midst of tense contract negotiations with pilots, who are demanding salary increases of 20% and changes to scheduling practices that aviators say are ruining their quality of life.
Isom said pilots should be happy with plans to increase flying because there are more opportunities for advancement to captain or to bigger, higher-paying jets. The Allied Pilots Association disagrees, saying that overscheduling leads to delays and cancellations, leaving their members overworked, stressed and often stranded.
“The company is still serving up crisis after crisis whenever there’s any weather disruption,” said union spokesman Andy Gomez during a pilot protest at American headquarters last week. “They simply don’t have the staffing to fulfill the aggressive schedule they made.”
American has hired about 20,000 employees over the last year, Isom said, including 12,000 additional positions. It has taken time to train those workers and get them up to full proficiency, which should help the airline run more smoothly as the new hires gain experience. The airline still has about 5,000 fewer workers than it did at this point in 2019, according to the Bureau of Transportation Statistics.
“Whether it’s pilots and flight attendants and the training that’s required, you can’t flip a switch and have people come back,” Isom said.
There are also struggles with staffing at airports and with contractors, he said.
“They went out and found other jobs when things went south for a couple of years,” Isom said.
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