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Mon, Jun 05, 2023

Pilot Shortage Compels American Airlines to Park 150 Regional Jets

The Out-of-Time Machine

Fort Worth, Texas-based American Airlines—the world’s largest airline by the metrics of fleet size, scheduled passengers carried, and revenue passenger miles—set forth on 31 May 2023 that approximately 150 of its regional aircraft remain parked for want of qualified pilots.

Addressing attendees of the 39th Bernstein Annual Strategic Decisions Conference—an yearly highbrow hootenanny hosted by global asset management firm AllianceBernstein—American Airline CEO Robert Isom stated: “We would deploy properly to markets that aren’t being served. We would do that today. It’s just we don’t have the pilots.”

As if decreed by Murphy himself, the paucity of pilots and plethora of parked planes corresponds with the onset of the busy summer travel season and the immense revenues promised thereby.

Mr. Isom sagely augured the return of his company’s mothballed regional aircraft to service is contingent upon American recruiting and training additional pilots over the coming 18 to 24 months.

“In a fashion, that is going to produce unit revenues that are very favorable,” Isom asserted.

American Airlines recently came to an Agreement In Principle (AIP) with the Allied Pilots Association, the labor union by which the air-carriers more than 15,000 pilots are represented.

On 19 May 2023, following renewed contract talks, the Allied Pilots Association announced its negotiating committee and American Airlines management had reached an agreement in principle on a new collective bargaining agreement.

In a statement to American Airlines pilots, the union set forth: “As required by the APA Policy Manual Section 9.06, we will move forward with completing contractual language for all sections and related letters and for the implementation schedule. Once that requirement is fulfilled, the Negotiating Committee will present the AIP to the APA Board of Directors for consideration as a proposed tentative agreement (TA) at least seven days prior to any meeting convened to consider the TA.”

The agreement proposes both a 2023 pay-raise of approximately 21-percent and back-dated pay-raises extending to 2020.

The road to the AIP was lengthy, tortuous, and characterized by acrimony.

On 01 May 2023, following a protracted stalemate in contract negotiations, the Allied Pilots Association authorized American’s pilots to strike.

The authorizing of a strike is the first in a long and complex succession of prerequisites that must be met prior to American Airlines pilots walking off the job. By making such an authorization in the weeks prior to the onset of the frantic and profitable summer travel season, the union exerted considerable pressure on the air-carrier’s management to assume a more cooperative tenor at the negotiation table.

Of the 96-percent of American Airlines pilots that participated in the strike authorization vote, all but one-percent opted in favor of a walk-out.

Notwithstanding the obduracy with which American fought to deny its pilots a better, richer contract, Isom remarked: “American Airlines was an industry leader in getting regional pilot wages to a level that it can really attract new talent from a broad set of communities in the airline business. We did that, and it’s produced the kind of interest in aviation that we had hoped.”

Isom went on to explain his 18 to 24 months estimation takes into account the imbalance between the number of captains flowing out of the regional airlines to the mainlines. The American CEO stated, also, that the new labor agreement between the air-carrier and its pilots is salted with contractual provisions and incentives conducive to the long-term bolstering of American’s pilot cadre.

Speaking to the subject of the nascent contract’s stipulations, Isom contended: “It’s a matter of economics. It’s a matter of quality of life. I think the kinds of things that have been done both from a regional perspective at American and a mainline perspective with the new agreement in principle, they address those kinds of issues.”

According to Oliver Wyman, the New York City-headquartered American management consulting firm founded in 1984 by former Booz Allen Hamilton partners Alex Oliver and Bill Wyman, the global airline industry currently faces an ongoing shortage of pilots—a dearth likely to worsen to a shortfall of nearly eighty-thousand by 2032.

FMI: www.aa.com


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