American Airlines Looks Toward Pilot Contract After ‘Solid’ Labor Day Weekend

Upbeat American Airlines CEO Robert Isom took a victory lap Wednesday, telling an investment conference that the carrier performed well over Labor Day, contract talks with pilots are moving ahead and lagging corporate business travel will probably come back.

Following the call, pilot spokesman Dennis Tajer cautioned, “We’ll know how well talks have gone when membership approves a tentative agreement. Until then, it’s all just words.” He said the Allied Pilots Association board of directors is considering its response to the airline’s most recent proposal.

As for Labor Day weekend, Isom told a Cowen investment conference on Wednesday, “We started the summer with a really solid Memorial Day performance, and we closed it out with a really solid Labor Day well. In between, there were some rocky patches with a lot of weather and other really difficult operating conditions.

“It’s been a really busy summer, even with capacity limited,” Isom said. “It’s been hard on the team. But we’ve been focused –we’ve delivered.”

Over the four-day Labor Day weekend from Friday Sept. 2 through Monday, American operated about 20,500 flights and carried 2.1 million passengers, slightly more than it carried during the same period in 2019. “Despite some challenging weather in the system, our completion factor held strong and outperformed both 2021 and 2019 — meaning we had fewer cancellations this year,” David Seymour, chief operating officer, wrote in a letter to employees.

Regarding pilot contract talks with the APA, which represents American’s 14,600 pilots, Isom said, “Our pilots — I know because I’ve talked to them – I know they are really interested in helping us grow and helping us bring on more pilots.

“Negotiations are always something where you’ve got to find a win-win,” he said. “I’m confident that they want to find a deal and we do too … Our APA is trying real hard.”

Tajer said pilots, who have said they are seeking a 20% pay increase over three years, “know the money is going to come. But our pilots want their work life balance restored.” Pilots are seeking a 20% pay raise over three years, with retroactive pay. The existing contract became amendable in January 2020.

Scheduling remains a key issue in the talks, Tajer said. Over Labor Day weekend, he said, some pilots were scheduled for four days and ended up flying six days. “We’re not going to fight over money,” he said. “We know it’s coming. What we are going to fight for is more reliable scheduling.”

Pilot training is also a key issue. On the call, Isom cited bottlenecks in pilot training as a barrier to profitability: “The greatest opportunity we have is really using our assets better,” Isom said. “We’ve had issues with aircraft delivery and with BoeingBA
.” As Boeing ramps up its stalled 787 delivery, he said,” We’ll be able to use our pilots better. (But) we’ve not been able to train as well as we like. For me, that’s the biggest key to maximizing profitability.”

Tajer said “His epic point of failure right now is not being able to train enough pilots to fly airplanes that are delivered. They are in a pilot training chokehold.” He said instructors, who are APA members, also need higher pay and more reliable scheduling. But American, he said, “wants to make a new class of instructors.”

Isom said demand remains strong, except that corporate business demand is only 75% recovered.

He said domestic business revenue is at 105% of its 2019 level, but “that has really been pushed by small and medium sized businesses. That has really outperformed.” As for corporate travel by large investment banking, consulting, audit and some entertainment firms, “that’s lagged,” he said.

At the same time, he said, “People are traveling differently: A lot of what we would have called corporate travel is showing up as blended travel,” as some travelers “go to the office once or twice a week and are living someplace else. It’s a little bit of a murky picture, the split between corporate and small and medium sized businesses and leisure travel.”