American Airlines’ new CEO vows reliability as massive peak travel season kicks off
An American Airlines Boeing 777-300ER plane takes off from Sydney Airport in Sydney, Australia, October 28, 2020.
Loren Elliott | Reuters
American Airlines‘ new CEO Robert Isom is aiming for one thing this summer: reliability.
The airline grew faster than its large competitors last year and occasionally passengers faced widespread disruptions, the result of routine challenges like weather as well as understaffing. Other carriers such as Southwest Airlines and Spirit Airlines faced similar issues that forced them to trim schedules.
Now Isom, who took the helm of the biggest U.S. carrier on March 31, said his priority is making sure passengers can count on American this summer and beyond.
“People really need to feel like they have control of their itineraries and we give them control by making sure they get to where they want to go on time. I just can’t be any more blunt about it than that,” Isom told pilots during a company town hall last week, which was reviewed by CNBC. “Other airlines are really struggling.”
American’s partner in the Northeast U.S., JetBlue Airways, for example, earlier this month told staff it would cut as much as 10% of summer flying to avoid repeats of mass cancellations and delays, CNBC reported. American’s West Coast code-sharing partner, Alaska Airlines, announced a 2% capacity cut this spring because of a shortage of pilots.
Leisure leads recovery
Air travel has surged and passengers have shown they are willing to pay up for tickets after two years of pandemic, a trend that’s helping carriers cover a jump in fuel costs. The Transportation Security Administration on Friday screened more than 2.3 million people, about 10% fewer than in 2019 but up 57% from a year ago.
Isom said domestic leisure travelers are making up for relatively weaker demand for business and international travel.
March appeared to be American’s best month in its history, he said. That echoed Delta Air Lines‘ CEO Ed Bastian’s comments when the airline reported results last week. American is set to report first-quarter results and provide its second-quarter outlook before the market opens on Thursday.
American’s first-quarter capacity was down close to 11% from the same period of 2019, it said in a filing last week. Delta, for its part, plans to fly 84% of its 2019 capacity in the current quarter, up from 83% in the first quarter.
“The priority is to operate reliably,” Delta’s president Glen Hauenstein said on an earnings call. “If these demand trends continue, we have the opportunity to take another tick up or we could pivot in a different direction if warranted.”
U.S. carriers have scrambled to staff up to handle the travel rebound. The $54 billion in federal payroll support airlines won from Congress prohibited layoffs but carriers urged thousands to take buyouts and extended leaves of absence.
Airlines are facing a shortfall of pilots, particularly for smaller regional carriers that feed into their hubs, which has forced them to cancel flights or limit growth. Pilots from Delta, American and Southwest have picketed or complained about fatigue from grueling schedules in recent months.
Isom said American has adequate staffing of pilots, flight attendants mechanics and customer service agents to handle summer travel.
“We’ve brought the schedule to a level that fits the resources that we have,” Isom told crews.
Other challenges to growth include getting aircraft from manufacturers, including Boeing, which has had its 787 Dreamliner deliveries halted for much of the past year and a half because of production flaws. American has said Boeing’s woes have forced it to reduce some long-haul international flying.
The airline has also been working on ways to avoid cascading delays that have been so costly for the airline and passengers.
American has invested heavily in training and its Integrated Operations Center, a command center at its Fort Worth, Texas, headquarters to help avoid delays.
One solution when bad weather occurs, which is common at its main hub as well as major airports that serve Miami and Charlotte, N.C., is to work with air traffic control to establish ground delay programs that help avoid cancellations later, Steve Olson, head of the IOC said during the town hall.
Olson said accountability is key, and not just measuring how fast the airline bounces back from disruptions but determining what the impact is on the airlines’ crews, who have complained about long hold times with scheduling and hotel services. Flight attendants or pilots that are out of position for assignments during bad weather have added to cancellations and delays.