While exact details remain to be seen, it sounds like American Airlines is planning some significant layoffs for both management and support staff, including some stationed at airports.
In this post:
American reportedly planning thousands of layoffs
The always knowledge JonNYC reports that American is planning layoffs for management and support staff. The exact details remain to be seen, but it seems that some layoffs have already started.
To state the obvious, I feel bad for anyone losing their job. The airline industry is one of passion, and it’s probably not a great time to be looking for a job at another airline.
Is this logical, or is American being short sighted?
It’s obviously a strange time for American. The carrier is greatly lagging both Delta and United financially. American spent years pursuing a failed strategy of trying to cut costs and focus less on corporate travel, and that has all backfired. It’s hard to cost cut your way into better margins when you have American’s labor costs and debt.
Now the airline is going in the other direction, and wants to be “premium,” all of a sudden. The challenge is, even if American can come up with a vision, Delta and United are also both going full steam ahead with their strategies, so there’s a lot of catching up to do.
Now, does laying off employees once again focus on the wrong thing, emphasizing cutting costs over increasing revenue? I wouldn’t necessarily assume so:
- There’s no denying that there has been huge bloat post-coronavirus in terms of the workforces at airlines, where the airlines proportionally have more employees compared to passengers
- Just having a lot of people doesn’t necessarily mean that more will get done, especially if you’re American 😉
- Really American would just be following United’s lead here (once again), as United’s management headcount is down 4% compared to the previous year, and it plans another 4% reduction over the next year, thanks partly to AI-driven processes being expanded; however, that largely didn’t come in the form of layoffs, but instead, natural attrition
So yeah, while I feel bad for those losing their jobs, it’s not necessarily an unreasonable direction to take. That being said, American’s biggest issue continues to be its lack of a strategy. I’m happy to see American making some improvements, but I’m not sure this piecemeal approach to becoming more premium will really project to employees what the vision is that they should get behind, and that’s a key part to improving.
Personally, I can think of one area where American could save $15.6 million per year, and it could have a significant positive impact on American’s bottom line. 😉
Bottom line
American Airlines is reportedly planning layoffs for management and support staff positions, as the airline looks to become more efficient post-pandemic. While I think American should primarily be focused on revenue over costs, there’s no denying that AI will make some jobs a bit redundant, and similarly, we’ve seen a reduction in headcount at United.
What do you make of American’s planned layoffs?
Good. Hopefully DL follows suit. There is a LOT of bloat and mission creep all over the system. Countless people on “special assignment,” etc.
I am one of them. My position was eliminated yesterday along with one of my Sr Analysts. Covid bloat is just an excuse. They are growing in areas to try to correct the bad decisions made late 2023 and early 2024. They are having a difficult time winning back those that they drove away. They are investing in technology and offshoring a lot of work. They were still running lean post Covid. They Covid bloat is just a convenient excuse for their layoff strategy.
@Jack
Sorry to hear that you have lost your job, Jack. Hope you land on your feet. I wish you the best.
Agreed, sorry to hear.
The era of airline culture being different from standard corporate culture is gone. Now, the airlines are being especially ruthless in their decision-making, and the employees are worse for the wear. I feel sorry for all the employees whose jobs are headed to India. If you're an American airline, you need to be an American airline, period. Creating a behemoth with too many layers of management is also a no-no. You promise people jobs and...
The era of airline culture being different from standard corporate culture is gone. Now, the airlines are being especially ruthless in their decision-making, and the employees are worse for the wear. I feel sorry for all the employees whose jobs are headed to India. If you're an American airline, you need to be an American airline, period. Creating a behemoth with too many layers of management is also a no-no. You promise people jobs and then realize you made a mistake. Not a good look.
AA is minimally profitable and awarded large pay increases to its pilots and FAs. If you raise the wage of your union workers and dont have the capacity to increase prices, the cuts have to come from somewhere.
I agree with the other flight attendants regarding the manager issue. I have been flying 37 years. Never have I had 3 managers to oversee my performance and attendance. I'm unclear on why I have 3 different people overseeing this.
I sometimes have 4 different managers to report too for the same issues. But rarely ever get any response or follow-ups. Not sure if this is a USAir thing just saying.
It’s definitely not a US air thing. We didn’t have management watch our every step.
Why still nothing about the AA devaluation?
What devaluation?
Look at point prices for transcon (LAX-JFK) over the next 11 months. J and F prices. The calendar will just show you the lowest price on a given date. Look at individual dates. Many/most flights are about 250k for F (one way). Compared to 145k previously.
@Jack,
I have noticed the recent sharp cash price increases. On my recent business trip to LA, the upgrade offered for the nonstop from LAX to DCA ranged from $684 to $1,127. As if I would ever consider paying even $684 for what is nothing more than an economy flight - despite the ridiculous first class nomenclature.
I used to fly to Barbados for Christmas for <$1,500 in business. Now, economy is $1,800 - $2,000...
@Jack,
I have noticed the recent sharp cash price increases. On my recent business trip to LA, the upgrade offered for the nonstop from LAX to DCA ranged from $684 to $1,127. As if I would ever consider paying even $684 for what is nothing more than an economy flight - despite the ridiculous first class nomenclature.
I used to fly to Barbados for Christmas for <$1,500 in business. Now, economy is $1,800 - $2,000 and business is $3,000- $5,000+ I don't understand who are buying at these prices.
AA isnt going to discount a reward ticket months out. They well-adjusted the points cost closer in to match supply with demand. You can fly JFK-SNA this Saturday in J for 25000 points.
Can personally confirm. There were significant "reconfiguring" terminations in Charlotte and Chicago yesterday k11/3) also.
The excuse of reduction of extra COVID staffing was used. Which is ironic, because they didn't hire extra people during the pandemic, they laid people off then also that actually ran the pax-facing operation.
They are making some nonsensical cuts in the wrong places. They complained about a "horrible third quarter" but boasted about adding champagne to flights;...
Can personally confirm. There were significant "reconfiguring" terminations in Charlotte and Chicago yesterday k11/3) also.
The excuse of reduction of extra COVID staffing was used. Which is ironic, because they didn't hire extra people during the pandemic, they laid people off then also that actually ran the pax-facing operation.
They are making some nonsensical cuts in the wrong places. They complained about a "horrible third quarter" but boasted about adding champagne to flights; multimillion dollar upgrades for things like a grab-n-go food area at the CLT lounge; retro fitting aging aircraft (rather retiring them as they should be for safety), etc.
There were also moves to remove necessary analog communication services, claiming redundancies. But you can't call out when the power goes out on a digital line.
AA is an 800lb gorilla and we often exposed blind spending and poor systems that allowed leakage since the US Airways days. Without actual eyes with institutional knowledge looking at these things and questioning these expenses and operations they will continue to have these problems. So rather than cutting the spending, they cut the people watching and raising these concerns.
The blindness and bloat is at the top not the managers and admins running these already bare-boned stations directly supporting active airport operations - yes, the gate agents, the ramp agents, etc.
I’d much rather see greater investment in the workers and equipment than management.
CEO Isom made $31,400,000 in 2023. The average salary for a flight attendant was a mere $47K. Astounding.
Where’d all the money go? Stock buybacks. Executive compensation. What a farce.
Hire, train, support, and pay more for pilotsc flight attendants, dispatchers, cleaning crews, ground staff, technicians, baggage handlers, call center support; you know, all the people that actually make the airline...
I’d much rather see greater investment in the workers and equipment than management.
CEO Isom made $31,400,000 in 2023. The average salary for a flight attendant was a mere $47K. Astounding.
Where’d all the money go? Stock buybacks. Executive compensation. What a farce.
Hire, train, support, and pay more for pilotsc flight attendants, dispatchers, cleaning crews, ground staff, technicians, baggage handlers, call center support; you know, all the people that actually make the airline run well.
Contrary to another reader's comment, Mr. Isom's total compensation includes $5 million to $10 million in cash. Another portion is straight equity. The remainder is option-based.
@Jack
Stock compensation both incentivizes buybacks (it makes the CEO's stock worth more, which they can then borrow more against) and in conjunction with buybacks also increases a CEO's control over a company if they remain with it for a long period of time. Stock buybacks shouldn't be a thing, and prior to Reagan they were literally considered illegal market manipulation. Remove stock buybacks and you also remove one of the incentives for these...
@Jack
Stock compensation both incentivizes buybacks (it makes the CEO's stock worth more, which they can then borrow more against) and in conjunction with buybacks also increases a CEO's control over a company if they remain with it for a long period of time. Stock buybacks shouldn't be a thing, and prior to Reagan they were literally considered illegal market manipulation. Remove stock buybacks and you also remove one of the incentives for these insane CEO compensation packages.
Well said, Dusty!
Call center support is going to India. A terrible loss for the carrier.
Wall Street is fleeing to DFW. GS , JPMORGAN , WF , BofA , and Charles Schwab are opening offices there. Robert Isom will receive a huge bonus in 2028.
D3SWI33, oh, you misunderstand, completely. The big shots, the money, the decision-makers, the power, that's all still NYC, Bay Area, Los Angeles, and wherever their ski chalets, mega yachts and private jets go. None of those folks wanna be in Texas. You think Jamie Dimon built that new tower on Park Ave because he's relocating to Irving? Get real.
What the big banks are actually doing is opening up 'satellite' offices, mainly for lower-paying 'grunt...
D3SWI33, oh, you misunderstand, completely. The big shots, the money, the decision-makers, the power, that's all still NYC, Bay Area, Los Angeles, and wherever their ski chalets, mega yachts and private jets go. None of those folks wanna be in Texas. You think Jamie Dimon built that new tower on Park Ave because he's relocating to Irving? Get real.
What the big banks are actually doing is opening up 'satellite' offices, mainly for lower-paying 'grunt work' domestic jobs that can't be shipped India. And, these offices are not in the 'nice' or 'fun' parts, no, not Miami Beach, think... South Jacksonville, North Orlando, East Tampa....
There hasnt been significant stock buyback at AA for 5 years. You are ignoring the added cost that AA had to pay for its new pilot contract and FAs. Coming out of Covid, these labor groups secured record setting raises. You seem to ignored that fact in order to fit your political narrative.
They need to get their share price up, and Wall Street loves force reductions. Those astonishing C-suite salaries aren’t paid in cash, but in shares and options. Leadership is heavily incentivized to focus on the share price and manage quarter to quarter.
Sounds like bad incentives. Wall St doesn’t care about anything but excessive profits and unlimited growth, none of which is sustainable. Maybe Wall St shouldn’t be ‘running’ airlines.
Also, share price can be important, but it isn’t everything; it’s an arbitrary number that does not reflect a company's total worth or fundamental value. Others prefer market cap; AAL ($9b) is far behind DAL ($38b) or UAL ($31b) market cap. Even LUV ($15b) is ‘worth’...
Sounds like bad incentives. Wall St doesn’t care about anything but excessive profits and unlimited growth, none of which is sustainable. Maybe Wall St shouldn’t be ‘running’ airlines.
Also, share price can be important, but it isn’t everything; it’s an arbitrary number that does not reflect a company's total worth or fundamental value. Others prefer market cap; AAL ($9b) is far behind DAL ($38b) or UAL ($31b) market cap. Even LUV ($15b) is ‘worth’ more, technically. Yet, another metric, from a consumer perspective (passengers), I’d much prefer AA’S new Flagship Suite over WN. And, for workers, it’s about who’s getting paid more, has better benefits, and protections. Lot to consider.
This suggestion of rolling layoffs - a few this week, a handful in 2 weeks and several later is awful. Any HR specialist knows that layoffs need to be kept as secret (subject to requirements of WARN statutes) and then swift and complete, providing remaining staff that there is no plan for more.
Morale suffers otherwise.
In a way, AA's situation is like the current CEO of British Airways *saying* he wants to restore the airline to its former self . . . after a decade of Willie Walsh and Alex Cruz. One doubts both the candor of the statement and the likelihood of it occurring. There was a time that I hoped AA would turn things around. But, the determination with which alienation was pursued led me to no longer care and to take another path. And, I'm happy.
"Every aircraft ready to fly at the start of every day" was a nice slogan . . . that we've all forgotten. AA's independent board members have long been remiss in their duty to the company and shareholders. Just don't make waves. Just get along. And, you'll be appointed to yet another board. That's the way the system works.
About time… that’s all I’ll say.
As a flight attendant we have 3 managers to report to.
1. Crew Manager
2. Attendance Manager
3. Performance Manger
Respectfully get rid of Attendance and Performance managers, there is no reason why we can’t report to one person
Cut the fat off the bacon we need to make money
I should have pursued the fleet management roll 2 years ago more aggressively. I would have further delayed delivery of the 787-P and a321xlr in order to deliver a luxury product beyond ‘swanky’ . Now you’re committed to this decent product but 10+ yrs.
Hopefully that includes much of the c-suite. In all seriousness, mass layoffs will exert pressure on morale which is already under pressure, and stronger morale and buy in is crucial to staging a turnaround. Good luck AA. You'll need it.
They could fairly easily achieve a lower head count through attrition rather than the morale damage that always accompanies layoffs.
If they really wanted to cut some underperforming areas then replacing the Board of Directors and all upper management would be a step in the right direction.
I didn't think the airlines had management bloat from COVID. They aggressively laid off white collar / headquarters employees during COVID.
Did they go on a white collar hiring spree afterward? Wouldn't have thought since biz travel is still below pre COVID.
Bloat.......AND a degradation of service. Oh how about them A330's
Employees / seat mile is a good yardstick. AA has been lopsided for quite a while.
Wanna make the front-line employees happier? Get rid of the bloat in middle management. Hopefully with RIF and attrition, AA can get back in a more balanced position.
Look, they have tough decisions. If they have to cut some corporate positions, that is one thing. Engineering should not be cut. How are they going to improve efficiency without good tech?
Airport employees should not be cut. How are they going to improve customer service?
Looks like they are going to keep those that are useless and get ride of those that are needed
Proving once again that the c-suite should be cut. Alas, as always in corporate world they they are the ones doing the cutting and continue to rake it in hand over fist as they ever fail upwards.
The cuts should start from the top. Get rid of all the US Airways/America West/Northwest scum that ruined the AA brand starting with Robert Isom down.
767-223, Vasu Raja, creator of the disastrous campaign that decimated its sales staff and drove corporate travel to competitors, was with AA before the merger.
Scott Kirby, who turned UA around, was with America West.
"Scott Kirby, who turned UA around"
((Laughs, in Oscar Munoz))
Getting rid of Isom would do more for American than any middle management layoff ever could
Isom received $31,400,000 in compensation for 2023. But, but… it’s those greedy cleaning crews and bossy gate agents are the real ‘drain’ on the company... /s
The new pilot contract was a significant addition to AAs cost. Not uncommon for an AA pilot to make $300k when you include health and retirement for total compensation. The cost drivers of any airline are fuel, capital costs, and pilots.
Am I the only only one who feels like the AA C-suite is making one change a m9nth and seeing what happens? It’s like watching snails drag race.