American Airlines CEO Doug Parker participated in a question and answer session with employees this week, a recording of which was reviewed by View From The Wing.
During the session he explained what size he sees the airline in the fall, when CARES Act restrictions come off and American is able to furlough workers. And he explained what size he sees the airline growing back to – under a best-case scenario – by next summer.
The airline will likely have to lay off flight attendants based on the smaller airline in the fall, and bring more employees back as the airline grows. While they won’t lay off as many pilots, expecting growth, given the time and expense of training pilots once they’ve left.
Parker explained,
- “Assume a world where there’s a vaccine and everybody’s flying again and no one even remembers what coronavirus means next summer, we’re still gong to have something on the order of 10-20% less flying next summer” because of retirements of Boeing 757s, 767s, Embraer E-190s, and parking the Airbus A330s.
- “We’re at 40% of our schedule right now in July. October I don’t know where we’re going to be. .. what we shared with all our union leadership last week, looking at October 1st assuming condition is what we think it’s going to be which is pretty similar to today, we think we would have on that date something on the order of 20% – 30% more people than we need to fly that airline through the fall and winter months.”
- “These cuts that I’m talking about are much bigger internationally than domestic…if I’m telling you 20% total it’s a much bigger cut international and lower cut domestic.”
- “If we look at October 1st, 20% – 30% looks like that’s what we would have in terms of more people than we would need. Out to July [2021] that number falls to more like, that number was 10% – 20% and those numbers vary by work group too.”
- “The reason that second number is important, cause in some groups it makes a lot less groups to go get the workforce properly sized in October if you know you’re going to need them in July. Pilots are the easiest example. Pilots require so much training..flight attendants can move across different aircraft, but there’s still a training requirement…It makes zero sense to furlough a pilot in October if you’re going to need that pilot again in July.”
Parker still hopes not to furlough employees, but says that “it’s more of a stretch than I thought when I was saying that two months ago because revenue is not coming back as fast as we’d like.”
American “got a huge number of leaves” so far, employees taking off time voluntarily. They’ll offer leaves, early retirements, and hopefully more creative options in consultation with their unions in order to minimize involuntary furloughs.
Senior Vice President of Inflight Jill Surdek added that questions about flight attendant bases, line averages, and other implications will be shared with employees “in the next couple weeks.”
Doug is about as credible as Trump. If he thinks they are 10%-20% fat it’s probably more like 40%. Funny that all the other airlines paint a worst picture but AA with the worst financials has a rosy outlook. Reminds of the violin players on the titanic.
No one – no one – knows what the post-summer season will look like with regards to Covid-19, i.e. whether it will have decreased, become stable or increased. And then the unknown is where will these three statuses be throughout the world. If Europe and America has decreased to the point of lifting of travel bans then that takes care of one huge part of the market. However, if Latin America continues to be bad then forget that market. Then consider the interlocking connectivity of the airline business. If the Middle East is still bad and travel bans exists, then that reduces numbers of passengers who might have flown American Airlines to Frankfurt from the U.S. and connected to another airline to the Middle East. Again, in June 2020 no one – no one – can forecast the Autumn season with a great deal of certainty. Covid-19 is a virulent virus pandemic – not a weather event as some goofballs early on in the media and so-called experts tried to explain away. A disease spread by a virus. Not too difficult to figure out the problems associated with this.
Reading Parker’s remarks left me optimistic that whoever winds up owning the AA mess will have to get someone else to run it. And whoever that is will likely do a much better job.
American has a lot of employees who would not be happy no what the circumstances were.
The best part of all this AA hate is that you’ll get what you wish for, a smaller AA and airline industry in general. Then, when flying comes back, guess what haters? Ticket fares will rise dramatically! And you’ll be happy about that too I’m sure. AA’s only chance in this is do what they’re doing, they cannot cut their way to prosperity with the debt load from new aircraft. Hopefully we can get on to getting folks back out and flying or everyone in this country will see the effects.