American Airlines Canceled Hundreds of Flights Thanks to Staff Shortage

American Airlines Canceled Hundreds of Flights Thanks to Staff Shortage

Airlines 2021-07-10
It was reported at the end of June that American Airlines canceled more than three hundred flights due to lack of staff and other issues caused by high demand for air travel.

According to FlightAware, which tracks private and commercial flights worldwide, the airline canceled 4 percent of its flights on June 19th and 6 percent, or 180 flights, on the 20th. About every other flight was canceled due to a workforce shortage.

American Airlines reported it would cut flights by 1 percent through mid-July:

"Bad weather, workforce shortages, and incredibly rapid growth in consumer demand are forcing us to correct our schedule".

Dennis Thayer from the Pilots Association, which represents 15,000 employees, said the airline should offer more overtime pay to motivate the remaining pilots.

American Airlines is trying to bring back and train all the pilots that were previously fired or furloughed during the pandemic. An airline spokesman said pilots would finish training by the end of June. The company also promised to increase overtime pay for employees.

In early June, another air carrier, United Airlines, told its employees that they will not face any layoffs soon:

"Considering the growth in consumer demand and our outlook, we are pleased to report that we will not be laying off flight attendants this autumn".

Airport employees, storekeepers, and others got a similar message.

The U.S. has one of the highest vaccination rates. Consumer demand in many industries is recovering quickly but remains below the pre-pandemic level. American Airlines expects its passenger traffic in the second quarter to be 20-25% lower than in 2019. United Airlines and Delta Air Lines are expecting the passenger traffic to drop for about 46% and 32% accordingly. On the other side, Southwest Airlines predicts July's passenger traffic will drop only 3% from 2019.

Rising passenger traffic is helping airlines cut significant losses caused by quarantine restrictions. Most companies' operating margins and profits have a negative impact because of the flight cancellations and increased overtime pay. If American Airlines solves its staffing problems soon, the additional costs will be much smaller. Otherwise, the company could move additional costs to the end-user and raise ticket prices. Many air carriers were talking about this back in April.

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The airline industry is not the only one that was short on staff during the pandemic. For example, the American restaurant chain Chipotle Mexican Grill said it would raise employee salaries to bring people back from home to work. The company put their increased costs to the customer's check, which raised the price by 4%.

Since the beginning of the year, American Airlines stock has significantly outperformed the S&P 500 index and the U.S. Global Jets. The shares are trading at $22.3 - 15 percent below the annual maximum and 62 percent below the early 2018 maximum. The tech analysis for the stock is $18.9 over the next 12 months.