American Airlines gave notice to a pilot recruit that it was suspending training through the end of the year. What’s really behind the pause?
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American Airlines Suspends Pilot Training
On Thursday, the infamous poster on X, JonNYC, shared a series of emails purportedly between a pilot recruit scheduled to start training with American Airlines this month. Someone from American Airlines was giving the bad news to the recruit that they were suspending pilot training for the rest of 2024.
Seeking full clarification by DM if you have it https://t.co/TSarnGyDLe pic.twitter.com/3LjK5N1Adr
— JonNYC (@xJonNYC) June 20, 2024
JonNYC also noted that in the next 18 months, due to the US mandatory retirement age of 65, will lose approximately 1,300 pilots before the end of 2025.
The industry site, Skift, confirmed the suspensions from American Airlines management.
“American Airlines is pausing pilot hiring as it reevaluates its growth plans for the year. The carrier said it would temporarily pause new pilot hiring in September, October and November.
The decision doesn’t affect current pilots but some pilots who had received conditional offers will not be joining until after the pause is lifted.
“This decision allows us to optimize our capacity and tailor our talent growth plans to best serve the current needs of our airline,” American said in a statement. ” – Skift
It should be noted that while those three months had classes cancelled, December had not yet been scheduled and will not be scheduled now.
The Model Isn’t Working
Prior posts regarding pilot furloughs, pauses, or cancellations were met with a cheap answer: production delays from Boeing and engine deliveries for Airbus A320s. American did not blame the pullback on either of those issues for which they are dealing with both.
Three weeks ago, I wrote that American Airlines was “as messy as it gets.”
I was wrong. This week was worse.
American Airlines management revised Q2 revenue guidance down dramatically.
“American’s TRASM guidance for Q2 is now expected to be down approximately 5% to 6%, compared to its prior forecast of down 1% to 2%. Operating margin was also seen down 1%, in a range of approximately 8.5% to 9.5%.
Shares of American are having their worst day since June 2020, during the throes of the pandemic.” – Yahoo! Finance
The stock has dropped nearly 20% in the last three weeks as of close on Friday.. Pilot training has been suspended because the airline has too many pilots for the demand the airline is seeing. That’s shocking since we are at peak travel, given that the TSA just processed the most passengers (2.95MM) in a single day this week.
Is there a case to be made for anything but ineptitude or gross incompetence?
Are Heavy Travelers Booking Away From American Due To Strike Potential?
One possible answer could be that because American Airlines can’t afford to pay flight attendants more and also cannot afford to not meet their demands, and as such a flight attendant strike is almost certain to take place. In some frequent flyer groups I have seen high frequency business travelers booking away from the brand concerned that labor action will put their trips at risk of completion.
But is the flight attendant struggle mainstream enough to affect revenue drops the likes of 3-5% above guidance? Possibly. But that would have to reach $406-676MM based on the last two months and that seems far too great. And as the strike has not yet occurred, the revenue drop couldn’t be blamed on action taken.
Conclusion
Let me postulate the concept that American Airlines management is simply not up to the task. Vasu’s concepts were not good nor was his department’s execution. But Vasu wasn’t responsible for the prior five years of underperformance compared to peers, he wasn’t responsible for straddling unreasonable debt to the carrier, and it wasn’t Vasu that was responsible for doing nothing to address flight attendant contracts over the same period. It’s not the failure to deliver aircraft from Boeing, it’s not engine delivery issues for the A320, and it’s not even the recent racial issue which sent CEO Isom apologizing to the public.
Incompetence. Disinterest. Take your pick.
What do you think? What’s the real reason American Airlines is pausing pilot training?
“ The stock dropped nearly 20% on Friday”
Actually it dropped 4 cents. But yes, it’s been a rough year for it.
That deserves an edit. I meant to say “the stock has dropped nearly 20% in the last three weeks as of close on Friday.”
Kyle,
AA’s problems started well before Robert Isom. Doug Parker brought on the America West management on day one. Nothing personal but they were not up to the task. AA was 500 million short compared to Delta and United even before the pilots new contract. They had begun the low cost initiative back in 14’. At that time the aircraft and crews were not yet integrated. But the flying was beginning to look more and more like AW and US West. Low value flying to low income cities where yields were low. This continues to date. Most of AA’s high value customers left. Then this management who just can’t grasp how a large airline works consistently under performed. They essentially rigged their on time departures to give management large bonuses by just rescheduling the flight. By the end of the day things were a mess. Today AA flies passengers more and more in indirect flights. This plan increases costs because it hides the fact that while flights are full many passengers are taking two legs when there isn’t enough direct flights. Example, LAX-LAS-DFW. Passengers who were ending in MIA had to book flights from LAX to LAS then on to DFW to get to MIA. The few LAX to MIA flights are full so instead of increasing frequency to MIA they route them to two destinations just to get to MIA. This was how US West Operated. Very inefficient! Worst yet was the institution of what they called banking. Instead of staggering flights they had large banks coming in all at once. This created an absolute disaster every time there was weather. ATC is way over burdened on good days. But add in weather and it’s terrible. Hundreds of flights would be impacted along with other hubs because the diverted planes couldn’t make their next departure. While AA’s dispatch knew it wasn’t working AA management insisted it did. On one occasion every single international flight was forced to divert. Each crew went illegal stranding passengers. Yet each time this occurs management does nothing except wait for it to unravel which causes delays and cancellations for days. This is pretty much why US West couldn’t make a dime. While those who love mergers cheered Doug Parker the fact is only management and some share holders made money. Parker gave our stock by backs to the tune of 14 billion dollars. Essentially every dime AA made after the Bankruptcy went to buying stock. AA could have paid off all its new planes along with its infrastructures improvements. Instead Doug Parker became one of the most wealth airline CEO’s ever to grace this industry. With the stock in the toilet the BOD had better look long and hard before this management drags the airline into bankruptcy.
“ That’s shocking since we are at peak travel, given that the TSA just processed the most passengers (2.95MM) in a single day this week.”
No pilot hired today would be in a position to help for Summer 2024. A pilot hired in July MIGHT be available by November to fly revenue trips.
The initial new hire training classes were paused for September, October and November. Those pilots would have been ready to fly the line in the months of January, February and march. Nothing about this affects pilot supply for this current busy summer season. Pilots hired the last few months are currently in training and being ready for line flying to this day and through out the summer.
The most likely explanation for this… the domestic market and Caribbean / Latin America is over saturated, and AA’s portfolio is more heavily dependent on those markets and less on long haul markets than United and delta.
Also, the commercial sales strategy mess up is also hurting its yields. Those two combined are probably the main reasons management has decided to slow growth for the next winter season. Prudent move but they’re the results of poor past decisions.
I’m not sure where their focus has been for the last 10+ years but despite eloquent language, slogans and platitudes it has not been on the customer. Nor has it been on route development. While reliability seemed to improved some in the last couple years, it seems to be slipping of late. They need to relook at their customer service and inflight hiring criteria and stop hiring moody, opinionated, chip on the shoulder DEI types who go from 0 to 60 way too fast in terms of being offended, or feel like they are carrying a torch for their “cause”. They infect the good employees that are still around. The managers from regional to local spend too much time micro managing and discouraging any creative thought not in line with dogma. (I’m not including safety compliance which must be uniformly adhered to).
American desperately needs a new direction (and a new c-suite). The company has essentially sat out the post-pandemic profit surge and remains run like the airline it was before it was forced to merge with USAirways (forced, in the sense that it could not sit on the sidelines post DL/NW and CO/UA). It needed more scale. I fly American a lot and generally find it to be a perfectly fine experience. Planes are clean, modern, and but for the last 2 of my 3 roundtrips, manages to get flights out on time. American doesn’t need to do everything DL and UA do, but it has to do something. The roll out of the new products and clubs is too slow. The airline needs to tackle the perception that it is a very bad airline and getting worse.
You say perception. I say reality.
Not as bad as Eastern the last year it flew. At least not yet.
Much as with the Bonvoy model, AA has decided that pax are the product not the customer.
In the AA model, the customers are the credit card issuers who fund the Aadvantage program.
Pax are an arguably necessary part of fulfilling the need to have an airline with which AA can avoid having the loyalty program points deemed as an unregulated financial instrument.
@Ralph – correct.
I support labor but the strike threat in this industry is a toothless tiger and so your “flight attendant strike is almost certain to take place” statement is just plain false. Anybody with a basic understanding of the airline industry knows that.
It’s a mess they can’t objectively find a way out of. Might they file for Chapter 11 next year?
I vote Team Incompetence. AA’s board couldn’t find their butts with both hands.
Nice analysis.
Not to say I told you so to the AA apologists but this is exactly why I left three years ago to UA as far as any loyalty. Not that it’s necessarily any better service wise…they are all pretty much the same…but because AA seemed to want to focus its attention on credit cards and awarding Mabel in Iowa for charging her feed to her Citi AA rather than focus on being an airline. Sure, it’s easy to get Exec Plat, it’s easy to rack up points. For what? An airline that is a credit card company first and that has failed its employees and customers with a completely dysfunctional plan forward. UA is far from perfect but it’s at least a safer option of awful in the scheme of loyalty.
i think much of today’s weakness is booking away due to the seeming inevitability of a Flight Attendant strike. Planes are full everywhere (except AA) and the passenger does not want be stuck with a center seat in rear coach on an overnight as a result of a labor issue at AA.
All the other stuff is true; but recoverable…..a strike is devastating.
They got rid of Horton when the unions wanted merger with USAirways; now they have US Airways painted as AA for past 10 yrs and see where it gets them.
Any relation to the fact that the airline industry wants to do this: …They are threatened by the private airline JSX and they want to dismantle and close it down…
Flight Attendant negotiations hove ended without a contract. The government must now decide if they will allow “self help” in the coming weeks, FAs could be striking in September.