American Airlines Just Cancelled All New Pilot Training Through End Of Year As Stock Tanks

Following absolutely brutal revenue guidance for the second quarter – two months into the quarter (how could they not have known?) – American Airlines stock is the worst performing in the S&P 500 over the past month, even as broader markets have risen.

United Airlines paused pilot hiring in March, citing delays of new Boeing aircraft. American already reduced its pilot hiring for 2024 by 40% year-over-year, also citing Boeing issues, pausing new hire classes for the summer and potentially for December as well. This was consistent with guidance the airline had provided at its March investor day.

But now has cancelled all of its new-hire pilot training through end of 2024. They aren’t withdrawing conditional job offers – just telling pilots to wait around until next year. It’s unclear how many will do that.

What’s especially striking about American’s deicsion to pull back on bringing on new pilots is that this is not just about reduced growth plans anymore because of a delay in new aircraft deliveries. The airline faces mandatory retirement of more than 1250 pilots over the next year and a half, due to the age 65 cap that pilot unions lobby for as part of limiting supply of available pilots in order to drive up wages.

American Airlines is going to have a lot of work to do not to shrink itself, or run short on pilots as they did coming out of the pandemic – hindering the carrier’s operational reliability which Bureau of Transportation Statistics data shows was already poor during the first quarter of 2024.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

More articles by Gary Leff »

Comments

  1. Sad news. In the last decade of AA’s decline, it was a crapshoot whether the gate agents and cabin crew working your flight were normal people or vindictive A-holes, but you could always count on the pilots to be competent in matters of flight safety.

  2. Have been short the stock since $37. Bankruptcy is inevitable read the 10Q. AA should just approve the FA contract since it will get crammed down in BK anyway

  3. I’ll bet Isom had his communications team waste all day on another slide deck attempting to justify his $30M compensation package…

  4. @Matthew — Do you realize that, after reducing guidance, AA is STILL expected to earn $1.10 per share THIS QUARTER. That’s obviously not going to result in bankruptcy, and at 1/10th the share price, absolutely nuts. Of course, airline investing — like almost all Wall Street investing — has become irrational in the internet age — so your luck may continue. And with the company having to deal with the flight attendants contract this month — there’s obviously potential for further (modest) downside in the near term.

    As far as the pilot hiring goes, I would encourage reading of Jon NYC’s twitter feed for a far more nuanced view of what’s going on than the eye-catching take that Gary is pushing.

  5. I’m not sure about the correlation between the stock price and hiring freeze but we could do without more examples of breathtaking ineptitude from management and the board members who keep supporting it.

  6. AA is getting ready for a flight attendant strike and does not need to waste money. How it turns out for the airline is unknown at this time. Bankruptcy is a real option.

  7. Get out the violins playing AA’s swan song.
    Do you really think they will hit their revised quarterly projection?
    The one time extraordinary write downs will probably get it to zero with more to come that they will disclose (FA contract back pay) the following quarter etc etc.
    (and a retention bonus for Senior Management)

  8. AA stock is the most shorted in the S&P 500 as of the end of May. Lots of people are betting AAL stock will fall and they intend to make money on the stock decline.

    AA is just realizing that their disastrous distribution strategies have cut billions off of its revenue.

    add in the looming chaos with their FAs – for a contract that AA can’t afford – and AAL sees a very gloomy future.

    No reason to drag any more employees into the mess. Let them go to Delta, which is still hiring, unlike most of its big 4 competitors.

  9. Ok, I’m not an airline expert nor did I stay at a Holiday Inn Express last night,

    My take on this is pretty basic. AA has a LOT of cost from the Pilot agreement. The FA Strike is going to cost them revenue, any way it happens.

    AA is cost saving, deleting new pilot classes deletes the acquisition cost of the incoming pilots,
    the FA Strike and flying slowdown may result in early departures for senior pilots. More $$ saved.

    I think they are setting things up to live with the possibility of an unsettled strike into the end of the year. Follow that with a possible Bankruptcy to give them some room and time to rebuild.

    The FA Strike may play right into AA’s ability to restructure and blame it all on the strike. Not actions of the management team over the past few years.

    BTW, I’m not an AA customer. Been 20+ since I’ve been on one of their planes.

  10. wiki says aal carries 22.6% of the pax carried by the 10 us major carriers

    i do not know if the co-branded carriers are buried in those numbers

    but close enough

    take out 20% of US commercial air capacity for more than a week and there will be an effect on the national economy

  11. hagbard,
    most US airlines operate with load factors in the 80s.
    Add in the picket crossers and JSX and the world will get where it needs to be – without American

    The US is tired of being held hostage by “too big to fail” companies.

  12. This is all Doiug’s legacy and a few of his chosen ones. The level of incompetence and disdain for customers, investors and employees is appalling.

  13. Market cap is $7.4 billion. Berkshire Hathaway could buy this with change from their couches, but who wants to own an airline?

  14. The anti-union bias shows in this article like all others.

    “The airline faces mandatory retirement of more than 1250 pilots over the next year and a half, due to the age 65 cap that pilot unions lobby for as part of limiting supply of available pilots in order to drive up wages.“

    I’m sure it has nothing to do with, pilots wanting to actually retire and safety. If it was about driving up wages wouldn’t raising the age increase salary as tenured pilots will continue to earn more and more?

    It is clear this pro-business site wants FA and Pilots working for poverty wages until they die, and will never miss a chance to get a dig in at the union.

  15. Until shareholders wake up and demand change with their vote to oust the current ineffective board and leadership, there really isn’t much hope for change. Apathetic and ill informed shareholders are to blame for allowing this current “team” to continue with their folly.
    AA shareholders recently had their opportunity to vote. I have yet to see any replacements of board members, let alone the Chairman of the Board.

  16. Tim Dunn, I’m not so sure that Delta would really want AA flight attendants. They are heavily union and would drag Delta into the union mentality of “that’s not what my contract/job says that I must do”. If you recall during the merger, there were split flights with all NW or all DL flight attendants. One could easily tell the difference because of their attitude. Eventually, most of the NW flight attendants realized that they had a better deal when everything was added up and compared to their union wages and benefits. The AFA would LOVE to screw up Delta just like they’ve done at AA. Gate agents at AA seem to be union supporters too. Pilots, while being unionize, seem to be more customer oriented. I sure as hell would hate to see any of them at Delta.

  17. AA could be using the FA strike as a convenient excuse to immediately file Chapter 22 (Chapter 11 declared twice). This give the C-Suite the excuse to modify debt, keep the cash it has, issue worthless stock, do sale lease back deals to raise capital, convert AAdvantage dollars to pesos, and provide bonuses for the senior leadership.
    The down side is union contracts have a “last hired, first fired” clause. That means senior mechanics, clerks, pilots, FA, etc, stay around while the lower seniority (and lower pay) fall off the payroll register during bankruptcy. Not much savings. Passengers, especially business PAX who bring in the premium revenue, could just give up on American. UA, DL, B6, WN, etc would throw out frequent flyer conversion programs to garner these PAX. Also, its credit rating would go down the toilet triggering covenants in its loans, bonds, leasing agreements, etc.

    As for the pilots in waiting, I hear one or two of the regional airlines are hiring.

  18. The very first thing that should have happened when a cash crunch has arrived is the senior mgmt. and the Board should have very significant voluntary income reductions. Nothing has happened in this area. Then either through bankruptcy or direct negotiations, a significant reduction across the board incl. pilots, all union and non union groups, and regional carrier ops. If one of the larger unions wants to strike, the carrier would then have to file and everyone would be negatively affected. This has to happen one way or another.
    If all routes are producing a bottom line then the answer is an across the board cost reduction not shrinking the carrier, putting a hold on any expansion, and looking at recapitalization/new mgmt. None of this is good news for employees, except the part where their jobs are saved. And yes AA may have to operate not matching DL salary/benefit levels.

  19. AA’s drop in stock is directly a result of VERY poor administrative decisions. As a flying customer, I generally buy the cheapest flight of the big three, but I would choose to spend a little more on AA over Delta and United. That changed this past March when a “storm” in Miami caused many canceled flights. Oddly enough, there were 23 canceled flights that evening, 22 of which were AA flights (the other one being a United flight). Other airlines with similar destinations and times did not cancel. On top of that, the rebooking counters had only a single employee helping to reschedule the 100s and maybe 1000s of delayed passengers. We personally stood in line at rebooking from 10pm until 8am the following morning, just to have an opportunity to talk to a rebooking agent. No hotel or food vouchers were issued since it was an “Act of God” cancelation that no other airline had an issue with. When you mistreat your customers and use a loophole to avoid reparations to them for poor management decisions, then they will go somewhere else. I know I will, as I have booked my last flight with American Airlines.

  20. It has ZERO to do with aircraft and everything to do with no pilots. Let the shrinkage begin. ALPA just screwed everyone.

  21. Scott B –

    “It is clear this pro-business site wants FA and Pilots working for poverty wages until they die, and will never miss a chance to get a dig in at the union.”

    Yes, and don’t forget, on Obamacare and any other government subsidized program necessary as well. Laundry 2x/month only and only TV dinners (not the healthier selections, Stouffers, Marie Callenders, those kind. .), and a modest stipend for HBAs, too.

    Good grief – unhinged much? Business, not unions make the world go round. Business is productivity. Unions step on toes, intimidate and threaten which is not at all productive.

    The truly sad part is that every single FA knew what they were walking into when they completed training and gained their wings. No one forced them into accepting positions that pay so low. THEY made that choice for themselves, whether pre- or post inflation. I think far too many FAs are disillusioned by the attraction of travel and completely miss the forest for the trees (the details of the position). Eventually, that long yearned for trip to Europe proves to be fun, but still a complete nightmare of long flights and long hours in a pressurized metal tube at 35,000feet and no way out.

  22. BJ –

    I can understand your position. What an awful scenario to be in!

    Years ago I worked in reservations for AA. It was frequently mentioned how often times, AA would cancel flights when other airlines chose to continue (in poor weather conditions, for example). Bad weather can be where you are, en route, at your destination, or even all along the way. Sometimes, there is bad weather on your routing but not on the routing of other flights. I can’t speak to the customer service response in your case – it certainly doesn’t sound very good, but when it comes to weather, airlines have to really weigh safety vs trip delays and inconvenience. Sometimes inconvenience is better. Disregarding st least one particular flight from DFW to LIT (I believe, it was to Arkansas anyways, maybe it was TXK), AA has generally been very sensitive to potentially very bad weather situations.

    That’s just my take from having been inside in years past. Again, not commenting on CS delivery.

  23. AA is just realizing that their disastrous distribution strategies have cut billions off of its revenue.

    Please give a few examples of AA distribution strategies. Just curious.

Leave a Reply

Your email address will not be published. Required fields are marked *