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CHICAGO, Nov 4 (Reuters) – A wave of high-profile flight cancellations has highlighted the shortage of workers at US airlines, prompting warnings of further delays during the tailor-made holiday period that airlines are looking for staff.
It’s a dramatic change for an industry struggling with a surplus of labor when the coronavirus hit air travel just a year ago, and is the latest testament to a growing labor crisis.
As demand in the United States roars again, carriers struggle to keep up. The challenge is especially pronounced in American Airlines (AAL.O) and Southwest Airlines (LUV.N), which have been among the most active in adding seats to meet demand.
American canceled hundreds of flights last weekend, citing time and staff. During the summer he faced a similar agitation. Read more
Southwest suffered an operational crisis last month that caused some 2,000 cancellations and cost $ 75 million. Similar factors in August forced Spirit Airlines Inc (SAVE.N) to cancel 2,800 flights. Read more
Days before the late November Thanksgiving travel fever, airlines are struggling to prevent a recurrence.
Meanwhile, they are facing an increase in holiday bookings amid declining COVID-19 cases and rising vaccinations. Southwest said ticket sales in November and December were in line with pre-crisis levels in 2019.
Rising demand and labor shortages have made airlines more vulnerable to bad weather, which often pollutes year-end holiday travel. Analysts say this could mean more travel disruptions.
“If there’s any weather, you can expect flight cancellations,” Cowen and Co analyst Helane Becker said.
STRUGGLE FOR WORKERS
In a staff note last week, American said it expects to have 4,000 new employees during the current quarter. It also recalls about 1,800 flight attendants from a long-term low.
Southwest aims to hire 5,000 employees by the end of the year.
The rush to hire in a tight labor market runs the risk of rising costs at a time when rising aircraft fuel prices are reducing profits.
Southwest offers bonuses for hiring referrals to employees and has increased their minimum wage to $ 15 an hour. Still, he says applicant rates are below pre-pandemic levels.
“The competition for talent and really good talent is even stronger,” said Greg Muccio, Southwest’s talent acquisition director. “A lot of people … are looking for a lot of flexibility.”
Meanwhile, both Southwest and Spirit have cut back on flights to avoid further disruptions.
The unions blame the airlines for poor planning, which they say caused fatigue and frustration and made airlines susceptible to such disruptions.
The U.S. pilots’ union said last month it planned to hold center pickets to protest job rotations, fatigue and poor housing.
“We are very concerned that management will fill the holiday turkey with uncertainty for the upcoming holiday travel period,” said Dennis Tajer, a spokesman for the Allied Pilots Association, which represents American pilots.
Of course, not all airlines feel the same pressures. United Airlines (UAL.O) and Delta Air Lines (DAL.N) have so far largely avoided some of the turmoil.
They both want fewer flights than their rivals. United also reached an agreement to keep all its pilots flying last year in exchange for reduced working hours and lower wages.
United and Delta restored just over 70% of 2019 capacity during the quarter to September. In comparison, Southwest increased its capacity to more than 98% from 2019 levels and American flew 80% of its capacity before the pandemic.
Industry experts say United and Delta have been partially isolated from labor pressure by networks more focused on international markets, where demand remains relatively weak.
THE SHORT IN SPITE OF RESCUES
But recent congestion has raised broader questions about some airlines ’decisions to reduce the number of employees despite receiving $ 54 billion in federal aid to help cover payroll expenses.
Democrat Sen. Maria Cantwell sent letters in July to the heads of six airlines, including American, Delta, Southwest and JetBlue Airways (JBLU.O) to demand explanations for the shortage of workers after billions of pandemic rescues . Cantwell said that at best, each airline “mismanaged” the situation and, at worst, defrauded taxpayers.
While their responses to the letters have not yet been made public, airlines have said rescues saved thousands of jobs, prevented bankruptcy and put them in a position to support the recovery of the economy of the pandemic.
Industry experts say federal aid helped carriers retain workers, but problems began when the payroll program ran out of funds. With no clarity on funding and still weak travel demand, airlines asked workers to take unpaid free time or retire early.
“If they had retained 100% of their workers, they would have required more cash,” Cower Becker said.
Airlines resumed hiring and returning pilots this spring, as COVID-19 cases brought passengers back.
Air transportation employment in the United States in September was more than 12% below its peak before the pandemic. By contrast, occupancy in restaurants and bars, hit just as hard by pandemic blockades, is only 7.6% below its maximum before the outbreak of COVID-19.
Executives acknowledge that a coronavirus-ravaged airline industry is naturally more risk-averse, causing some airlines to shrink when recovery began. Southwest, for example, did not move with its hiring plans until July.
“We arrived a little late for the game,” Muccio of Southwest said.
Report by Rajesh Kumar Singh, edited by Tim Hepher, Anna Driver and Steve Orlofsky
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