American Airlines’ Offer To Pilots

Filed Under: American, Unions

It’s impressive how fast airlines can come up with solutions when they need to.

American Airlines has too many pilots

As you’d expect, at this point American Airlines has way more pilots than they need. They’re down to operating three long haul international routes, and beyond that are also greatly reducing domestic flying.

No one knows how long this reduced demand will last, and whether things will return to normal in weeks, months, and years. There’s the direct issue of coronavirus, and then of course there’s the lasting impacts it has on the economy.

Well, American Airlines has now worked out an agreement with their union to deal with the excess pilots. They’re the second US airline to do this, as United has also come to an agreement with pilots.

Ironically they could work this out in days, while management has been dragging their feet with negotiating an overall new contract with pilots (at the beginning of the year pilots said they were running out of patience, and had enough).

What is American Airlines offering pilots?

American and the Allied Pilots Association (APA), which represents American Airlines pilots, came to an agreement yesterday for pilots to accept a voluntary leave of absence.

As reported by the Dallas Business Journal, this agreement gives American’s roughly 14,000 pilots three options for voluntary leave, including:

  • Voluntary Extended Leave of Absence — pilots can take an unpaid leave of absence that can last up to 12 months; pilots will still accrue length of service and receive benefits, but won’t accrue sick leave or vacation time
  • Voluntary Short-Term Leave of Absence — pilots can take advantage of one month, three month, or six month options, during which they’ll be paid for 55 hours per month of flying; pilots will still accrue sick leave, vacation time, and seniority
  • Voluntary Permanent Leave of Absence — pilots who are 62 or older can choose to essentially retire early, and they’ll be paid for 50 hours of flying per month until the mandatory retirement age of 65

Crunching the numbers on these opportunities

As you can see, for two of the three packages, pilots are still paid for 50-55 hours of flying per month. To give you a sense of how this works, airline pilots can fly up to 1,000 hours per year:

  • That means pilots can work an average of just over 80 hours per month
  • American Airlines guarantees pay for at least 73 hours of flying, even if pilots don’t actually fly that much

With the two paid leave opportunities, pilots would be looking at earning ~60-70% of their normal pay, not factoring in per diems, holiday pay, etc.

For example, at the very top of American’s pay scale, senior 777 and 787 captains earn $342 per hour (that’s according to Airline Pilot Central). With 73-80 block hours, pilots would ordinarily be earning ~$25K-27K for the month.

With these offers:

  • If they were paid based on 50 hours of flying, they’d instead be earning ~$17K for the month
  • If they were paid based on 55 hours of flying, they’d instead be earning ~$19K for the month

Let me once again emphasize that the above pay is only for senior captains, and less senior captains and first officers are earning significantly less.

This is potentially really generous, though I guess it depends on how you look at it:

  • You’re getting 60-70% of your pay while taking time off
  • At the same time, assuming not many pilots take advantage of this, I’d guess that very few pilots will be anywhere close to maxing out hours, and will get minimum pay while flying very little; this assumes American doesn’t introduce any involuntary furloughs

In particular I think the opportunity to retire early is especially generous, since you can 60% of your normal pay by just retiring.  Then again, if you’re senior and Dallas based, two Dallas to Hong Kong trips per month more or less maxes out your hours.

Bottom line

Airlines are needing to reduce their staffing, not just in the short term, but also in the medium term. I think this really shows how dire the situation is. The real question is if enough people take advantage of this, or if they have to start offering involuntary furloughs.

The concept of paying someone for a couple of years when they retire might sound costly, though keep in mind it’s a win-win — if they need pilots, they can replace them with junior pilots on much lower pay scales, since pilots with a lot of seniority are being compensated especially well.

Meanwhile American Airlines isn’t offering any sort of paid leave to flight attendants.

Comments
  1. Lucky can you do this same math equation for a pilot with a medium amount of experience or a smaller plane like the 737. Seeing a pilot make 10k less but still more than $15k a month doesn’t seem like they have many hard choices to make anyway.

  2. Lucky – penny for your thoughts – when do you anticipate seeing cancellations and/or equipment downgrades take effect on domestic routes? I’ve got a few domestic widebody flights in the now thru May 6 period during which AA said it will fly virtually zero domestic widebodies. Hoping that they publish new schedules now rather than on a rolling basis week-by-week. And do you think AA would be more likely to downgrade the flights while keeping them in their current time slots, or eliminate them all together and re-book pax on narrowbody flights earlier/later in day? Thanks!

  3. Why would anyone take the unpaid leave over six months of partially paid leave? Makes no sense.

  4. @Ryan

    Was thinking the same, option 1 is trash. The other options seem like gold mines, I chose the wrong career.

  5. wow, senior pilots make 25K a month????? And they want 50B dollar from ordinary people’s tax money to get paid 60% of their salary NOT TO work??? Sorry but this is not gonna fly…

  6. A benefit of Option 1 is that it’s longer-term and thus more predictable. If things get worse in the near future, those who took Option 2 might get completely shafted with something way worse than Option 1 today.

  7. … or they could just fire them altogether and save the money… then taxpayers won’t habe to bail them out as much. I guess it’s easy to gove out money when they jnow the taxpayers will be the one footing the bill.

  8. @Alex, Huh?

    Explain a scenario where someone who took a 6 month option 2 ends up being worse off than someone who took option 1.

    Show your work.

  9. How can you say this is a “win-win” situation when the airlines will be asking the tax payers for a 50 billion dollar bailout to avoid bankruptcy.

  10. I would take short-term leave, with the 6-month option. Work on some alternate-career skills (or have some fun flying as a bush pilot) as a fallback. If the economy recovers in the Fall, you’re golden and back in the pilot’s seat. If not, and full-blown layoffs at AA occur, should be able to collect unemployment for another 3-6 months.

  11. If you’re in the age range where option 3 is a possibility, is there any stipulation against working for another airline when things return to normal? If not, a 62 year old pilot could potentially double dip for a couple of years.

  12. When things get bad in the near future, anyone who chose Option 2 could get shafted with something much worse than today’s Option 1.

  13. @ AirlinesPhonesNumber,

    Same question I asked Alex above, explain such a scenario.

    Show your work.

  14. History always repeats itself, decade after decade, generation after generation, regardless what party is in the WH. All three major airlines plus Southwest have reaped billions dollars in profits for at least the past five years. They can’t weather the incoming storm after two months it hits the shore? They use taxpayers’ bailout to finance their unsustainable expenses to keep the business afloat. During the last recession twelve years ago, the banks, insurance companies and car manufacturers used the bailout funds for year-end parties and bonuses, executives’ compensations and golden parachutes, etc…It is sure a crime to be the working class in this country. It always pays huge dividend to be too colossal to fall for big corporations. What about other financially responsible small businesses that fend themselves against unexpected long term crisis? They won’t receive any reward or government hand out.

  15. @ AirlinesPhonesNumber — What guarantee is there that pilots who choose Option 1 won’t get laid off at the end of their unpaid year off? With Option 2 (preferably the 6-month option), you’re still earning money to pay most of your bills while you ride things out.

  16. A few minutes of research answers the question that many have asked re Option 1. It has a specific and limited purpose:

    “A third category is a voluntary extended leave of absence for up to 12 months. It enables pilots to maintain their seniority and medical benefits, but does not provide pay or sick leave or vacation. It is intended to appeal, for instance, to pilots currently in the military, who may choose to extend their length of service, and to those who have other businesses but require continued medical benefits.”

    https://www.forbes.com/sites/tedreed/2020/03/16/american-airlines-reaches-innovative-deal-for-pilot-leaves-during-crisis/#49bfa63f4461

  17. The airline industry should not get a bailout ! The small businesses should; the ones whom have to close during the Corona Virus or severely limit their hours. NOT THE AIRLINES WHO HAVE RAKED IN BILLIONS OF PROFITS IN THE LAST MANY YEARS !! Yes they are having a rough time but so is everybody else ! Get over it and you will bounce back when the Corona Virus goes away and you start feeing all your passengers to death again !!

  18. To clarify, they will only be giving these options to those in a particular status that is overmanned. That involves base, equipment type and seat. It appears that AA is cutting much of its widebody fleet which is where most of the higher seniority resides. Hence the early out of folks 62 and over from the top of the list. The only other alternative would be to displace the senior large aircraft pilots to smaller aircraft which in turn displaces those below them downward and so on. Lots of training is a huge expense. With the exception of the 787 and the newer 777-300 aircraft I believe we will see many of the older widebody aircraft taken out of service permanently to reduce capacity and maintenance costs.

  19. Ben,
    Just a pet peeve from a pilot. Could you please differentiate between “work” and “flying”? Pilots may “fly” 80 hours per month but that can involve 300 to 400 hours “at work”, or something in between for “on duty”. To say pilots only “work” 80 hours per month is simply not true. Hours of prep time for each flight and hours of recurrent training go into each flying hour. And we are paid only when the airplane moves.
    Also, in response to readers, there are very few senior Captains at an airline. Pay is based on size of airplane, seniority, etc.
    Also also, if you fire the pilots, they are not necessarily coming back later. There is a shortage right now and when a normal schedule returns, if they have not done something to retain the ranks, there will be very few left to fly at a later time. We move on. Flying is fun, the job sucks. We can fly elsewhere.

  20. Fascinating that they can afford to pay these huge salaries but cannot afford to refund my ticket for travel to Spain that is no longer accessible due to lockdown. Something is seriously twisted here.

  21. in response to
    mj says:
    wow, senior pilots make 25K a month????? And they want 50B dollar from ordinary people’s tax money to get paid 60% of their salary NOT TO work??? Sorry but this is not gonna fly…

    I agree completely but you know who writes the laws and for whose benefit – the wealthy and corporations. I read the other day that Bill Gates is donating money to fight the virus but guess what – he gets a huge tax deduction for doing so. So in the end the government loses money when he makes his donations and the rest of us pick up the tab.

  22. @Alan, LOL, puh-leaze! Anything Bill Gates does will be 100x more efficient than a typical government agency. You want the same government that can’t run a VA hospital, much less a VA health system to run ALL healthcare? There are many studies about how philanthropy has helped us as a society.

  23. What about the mechanics that keep the planes running? Does AA give a hoot about their contract and compensation?

    Did the company really have to spend so much on new fancy headquarters instead of being more prudent?

  24. The pilot deal is a great deal however the Flight Attendant deal basically gives them the shaft wrapped in barbed wire coated in gasoline and no lube.

    What they want is for none of the FAs to take the deal as it’s cheaper to lay them off instead. Hopefully a bunch of the FAs that are in their 70s will finally get the hint that it’s time to retire instead of continually screwing over the people under them which have their whole life in front of them and a layoff will ruin that. The effect on the seinors is extremely minimal.
    I’m waiting for the day that the FAA puts a mandatory retirement age or physical competency test on FAs. Many times I have been asked are you willing and able to open the door in the case of an emergency. Many times on those senior mamma flights I want to ask them are you able to open this door in the case of an emergency…

  25. What Seth said is true. “The mechanics are getting voluntary leave of absence offer with 0 pay.”
    I got the email today from our union. Thanks Doug.
    If AA does go bankrupt, then so I and my family.

  26. Option 1 might be appealing to those pilots still in the Air Force Reserve / Air National Guard (a fairly significant % at all the major u.s. Airlines) Both of the above are short on pilots so there’s opportunity for an AA pilot to take the long term leave and return temporarily to active duty, while “holding their place in line” back at AA.

  27. Why are the mechanics being treated so unfairly in this situation? Pilots are supposed to continue getting paid 15k/month minimum, while mechanics, who are already probably underpaid, are to get absolutely nothing? Dont they have families and mortgages just like pilots? Are the pilots the only ones who keep the airline going? A safe flight starts with a good mechanic, not the flight crew, nor their good ol’ buddies the flight dispatchers. All their flight planning goes to hell if the aircraft is found to be unserviceable. The people who actually keep all the aircraft in a serviceable condition so that these 25k/month pilots can sit on their asses and do their job safely. Qualified personnel who play a major role in keeping flights on schedule are treated like trash. The injustice towards mechanics is a trend I’ve seen at many airlines and sincerely it’s a sign that they have WEAK unions that cant grab these company representatives by their balls and properly defend the interests of their collective.

  28. If you take option 1,2 or 3 .. if the airline files chapter 13 you get nothing….if you stay you’re still employed until after bankruptcy , then you can retire. Correct?

  29. Airlines have had a period of complete and total control and turned everything except the loo into a profit center. They sell you a coach seat with 6 inches more of leg room for $200 more each way and then charge you $100 for a checked bag and then charges you $10 bucks to use the useless and incredibly weak. TO HELL WITH THEM AND LET THEM BAIL THEMSELVES OUT!!! 7 million miles I have flown over 35 years and it gets worse everyday, every year.

  30. Pilots bring value to the industry. Everytime they get on a plane not only there is a potential risk to their own lives but also they have to safely deliver the lives of hundreds of others on the plane. Plus odd hours of working, jet lag, airline food, etc. etc. In my view a surgeon saves one life at a time, a pilot has to save hundreds of lives! 300K per year for senior pilots is actually not much considering hundreds of us place our lives on them!

  31. While they offer this prime deal to the pilots, they insult all of their flight attendants with an offer that is worse than nothing at all.

  32. This all goes back to letting 8 airlines merge to 4 “too big to fail”airlines. I would say this if you want our help then 1) 10 years of no stock by backs, 2) reign in executive compensation 3) Spin off some operations to increase competition/ or break them up to 8-10 airlines 4) being back heavy maintenance to the states 5) reign in the outrageous pilot pay 6) give up control of slots and reap no financial benefit from selling them. I can go on and on. We need more real competition. Competition means that hungry airlines will waive checked bag and seat fees. The rest of the obnoxious fees will disappear.

  33. All you that complain about tax payers paying for well paid pilots are idiots. Do you not realize that they could hypothetically hire all new pilots and pay them nothing and the airline’s would still get millions in bailouts but instead of that going towards 1000s of employees, it’ll just go into executive pockets. Use your brains. Getting rid of pilots and good salaries does NOT stop greedy airline executives or prevent bailouts!

  34. I have one thing to say, don’t blame the pilots. Blame your UNION!!! Hold your union accountable, that why you pay dues.

  35. Mr Chris Robinson I must agree with you about the “MECHS” it all start with them. A pilot isn’t going to turn one wrench, a pilot isn’t going to change one tire, a pilot isn’t going troubleshoot one circuit. Being an automotive tech for USPS keeping these out of date mail trucks up and running is a daily task, as of right now we are still working. It would be good for the techs there to recieve something, because when this is over AA will be looking for them to return a d pick up where they left off.

  36. When you talk about airline bailouts please excuse the the hundreds of thousands of ramp and gate agents that are not seeing these bail outs or offers of paid leave. The options we were given were non paid leave. We are working still in the high risk area of airports.

  37. What some don’t understand is when an airline furloughs a pilot, it has to retrain said pilot when they return to work. This is a very costly and time-consuming option. The airlines are limited on simulator time and it can take over 5 weeks or more to get a pilot back up to speed to legally fly the aircraft. Also, in this time of pilot shortage, the airlines are running at full tilt trying to get new pilots trained, and when I say new I don’t mean new pilots, I am talking about highly trained pilots that they are pulling from regionals, military and civilian. Nothing against the mechanics, they do a great job, but they can essentially go right back to work without having this time consuming training. Flight attendants only require ground training and this can be done in big groups and accomplished within a few days to a couple of weeks. That is why the bailouts are more tilted toward the pilots rather than the other groups. I know this does not seem fair, but you also have to look at how much more training a pilot has to have to get to the position that they are in. I know a lot of people try and look at the pilots large salaries, but what does not mentioned here is the many years it takes to get to that level. Not long ago, before the pilot shortage, starting regional pay for pilots was only $21,000 a year and it took many years to get much above that.

  38. Why should AA give these pilots anything since they are one of the most highly paid work groups? They released yesterday a plan for the rest of the work force and they get nothing!!! Am sick of pilots thinking they are better than everyone else!

  39. Better than who my friend? Very little considerations for the cockpit bozos wearing diapers. We know your job very well. No bail out.

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