After the American Airlines first quarter earnings call on Thursday, employees and executives – led by CEO Robert Isom – gathered for aa discussion of the ‘State of the Airline’. A recording of this event was reviewed by View From The Wing. Here are 7 things that I learned, apart from items that I’ve reported on separately.
- The airline hasn’t gotten the memo on moving beyond strict D0. During the earnings call CEO Robert Isom said the airline needed to move beyond a strict focus on exact on-time departures to run a great operation. While ‘departing on time is the most controllable thing they can do to arrive on time’ delaying two minutes to make sure customers make the plan or flights are properly catered isn’t the major driver of delays.
As Isom explained, it’s most important to start the day with crew and aircraft ready to fly and to be ready to turn planes around quickly at their connections. They need to do the work to be ready to depart on ttime not just yell at employees when they don’t depart on time.
However Chief Operating Officer David Seymour hasn’t gotten this memo, telling employees
In terms of metrics, it’s the same metrics, we’re back to fundamentals…in our earnings call someone asked why we’re focused on D0…obviously it’s important hat we arrive on time but we have to have focus on departing on time and that D0 is what we want everyone geared towards.
- American is revising its profit-sharing plan. Since they lost $1.5 billion in the first quarter, American is changing the profit sharing period to run for 12 months starting with the second quarter (so substituting 1Q2023 for 1Q2022) as a “one-time special only” according to Isom.
- They’ll still have the most debt in the industry but their plan is to pay down $15 billion in debt by 2025.
- They’ve been hiring at an amazing clip. 20,000 new hires over the last year at American Airlines. 12,000 of those are “net new over and above any attrition we had” but that’s not true relative to a pre-pandemic baseline, only compared to shedding jobs during the pandemic.
- Reservations, gate, and ticket agents are being held to a tougher standard of attendance than other groups. American Airlines assigns ‘attendance points’ that can lead to discipline or dismissal based on missed shifts, and arriving late for shifts, and even for taking sick time during critical periods for the airline. American wiped the attendance points for some groups, giving employees a fresh start, but they didn’t do this for any workers represented by the Communications Workers of America (CWA) which includes ticket agents, gate agents, and reservations agents.
These agents, especially reservations agents, have been subject to mandatory overtime as well. And despite this mandatory overtime, call center hold times remain long even for top tier elite customers. Many of these agents have been unhappy with the conditions they’ve been working under.
However Isom says, “a lot of the leniency that we were able to offer was done with a mindset that we were in a pandemic” but that now it has to be a priority for people to show up. Cedric Rockamore from HR offered that when someone doesn’t show up, someone else has a heavier burden. That fails to acknowledge that’s only because the company is running reservations at maximum capacity with zero slack. Leisure travelers, booking direct, require more time from the company to service compared to business travelers.
- Better gate assignment. American is working to better assign gates based on where planes will land, to reduce the amount of taxi time, and also to assign gates in ways that increase the amount of time a gate is open between flights – so there’s less congestion in alleyways and less time with planes waiting for gates when an aircraft arrives early or a departing plane winds up late.
- They’re back to regular cadence firming up schedules. At one point in the pandemic American was changing schedules two weeks prior to travel. They’ve returned to closer to their standard of 90 days and are now working on their fall schedule. In contrast others may be tinkering with schedules just seven weeks out. That means customers buying tickets see their flights changed or cancelled (most customers don’t buy more than 90 days out). According to Vice President Brian Znotins, “We are leading the industry right now in our schedule publication.”
With a new leadership team in place it seems to me they’re still trying to figure out exactly what’s going to be different at the airline. Much has changed with the pandemic, and the specific people in charge are different, but they were also a part of the recent earlier era at the carrier. I’ve heard from CIO Maya Leibman more, during the earnings call and during this meeting, than in similar events in an entire year. That’s a good thing. And while there still seem to be blind spots in terms of focus on product, there have been moves there as well. I’ll keep listening and watching for hopeful signs, which are likely to come from all quarters except for the airline’s COO.
Look, I’m block-quoting, just like DCS!
Painful as it may be to admit HR is right in this case — all for-profit companies run with zero slack because slack costs money and cuts into profit. The sick day policy is questionable, but people need to show up for work.
That being said, why isn’t American investing more in automated boarding and tech to reduce the need for humans on the ground?
AA has been a complete dumpster fire.
Wow. Can’t believe they’re doing mandatory OT. That sounds counter productive. Guess it depends on how captive your work force is.
Until the pilot shortage is fixed, routes will not have fully returned to normal.
As for gate assignments, start with DFW. Never had a flight that didn’t have at least two gate changes.
Currently a six hour callback time on the Executive Platinum line. Imagine what it would be without mandatory overtime!
Just tell me which part of AA does work!
Every recent call I’ve made into EP desk has resulted in a recorded message offering a call back with an average of 1 1/2 hours. The agents have been great once on the line, but these delays used to occur only when there were weather issues causing delays nationwide. Seems to be the standard nowadays. I do appreciate the call back feature rather than holding, but have to change my plans for the day to make sure I’m available which is not cool.
Sounds like they should get some advice from an AI.
Have an AI run the airline for a while with whatever victory conditions they consider important. Give it a couple days to run a billion simulations and see what it did.
AI will find strategies that human specialists wouldn’t consider.
It’s obvious by now that EXECPLAT is not the exclusive rank it used to be. Proliferation of bull market enabled wealth in the last decade, plus a generation of consumers that is eco friendly yet loves to travel (a generation of hypocrites basically), means that the number of frequent flyers is sky high. Thus, service levels must drop.
@ Ayenus
Maybe you are off the mark on some stuff, mate.
It’s become customary for airline management to blame their staff for incompetent management. Here in Oz, the CEO of QF even had the temerity to blame the customers for the airline’s on ground (lack of) performance, in between his various continual public denigrations of his own staff.
This is after installing automated check ins and totally removing attended desks. So, those strategies may be obvious, but they don’t fix the problem of an understaffed and undertrained operation. And taking the government hand outs (not loans) during COVID to protect jobs, only to fire 100s anyway when the tax payer handouts ended.
I put it to you that there needs to be “slack” in the system. Running an organisation on obligated overtime is not a sustainable solution. Staff get resentful (understandably) and fatigue and stress will increase, thereby exacerbating the problem. Vicious circle. More staff absenteeism and more blame by managers onto staff, when it’s dumb management that’s fuelling the issue. So no, not an attribute of a sustainably profitable organisation and recipe for escalating distrust and frustration.
I also would suggest that once you arrive at a situation wherein customers can’t communicate without hours’ long call hold and call backs, you have completely lost the plot. It’s about sales and customers and providing even basic service levels.
Same problem her with QF. The CEO sacked 100s of call centre workers some years before COVID. Now blames his problems on COVID. No, Alan, you messed up – your AUS25 million annual bonus would have paid the salaries of all of those 100s of call centre staff which you sacked. Many exceptional in terms of knowledge and experience – a cumulative wisdom and human capital not easily replaced without years of rebuild.
I guess you might agree with some of my points.But it’s curious that you then blame the customer. It’s more curious that you equate increased travel with a generation, which you denigrate because you don’t seem to think people with an interest in environmental matters should be flying. And it’s even more curious that you think that an operation shouldn’t be scaled to meet customer demand, rather an organisation should retain the scope of its operation and burst at the seems rather than seize the opportunity to expand its business.
You may be able to block quote, but you’ll need some cogent reasoning to get some of those ideas through an intelligence filter. FWIW I don’t have a lot of time for CEOs who blame their staff for their own failings or for people that make superficial and dumb comments on environmental matters – they are usually very “hypocritical” with regard to their abject lack of education and knowledge on such matters.
“shouldn’t be flying” not should be flying
@Alex77W. I’m told that the Security Team is world class at closing Aadvantage accounts
The mandatory OT for the CWA members is par for the course when using unionized employees. Unions require that OT be equalized (to prevent management playing favorites in granting OT), and it’s far more cost effective to pay 4 employees 2 hours of time and a half vs hiring a new employee with all of the additional benefit costs. It’s just basic math and economics for short duration (3 months or so) events.
But there comes a time when staff needs to be added, and this makes me wonder when is the new CWA contract due – at which point new contract and wages could be set for adding work at home agents and even guidelines for including a part time agent corps in the union. While it’s easy to just blame AA, in a unionized employee group the contract is final word, and neither side likes to allow temporary changes or make off-cycle changes.
I work for AA and my department (not mentioned) is entering our 15th month of mandatory overtime. We are exhausted. Beyond exhausted. Anyone who thinks my ability to help customers is diminished at this point is living in an fantasy. It makes no sense how AA leadership doesn’t understand the laws of diminishing returns. I simply am unable to work as effectively as I could prior to neverending mandatory overtime and so it is a vicious cycle. I call out more often than I used to – to preserve my mental and physical health. Believe me, I WANT to do better than this, but I am doing the best that I can in these conditions. Our customers deserve better. I deserve better. AA Leadership is failing us all.
I feel for you AA employee, and appreciate your post. And I hope that your situation improves soon.
That said, this piece reports that AA is hiring aggressively AND requiring overtime across the board. That sounds like most of what it can do to prevent industry-wide staff shortages and surging travel demand from causing even more problems. Those moves look shrewd in hindsight.
Compare how crippled Alaska has been in recent weeks–including a looming strike threat.
Thanks for reporting on these, Gary.