American Airlines Record Turnover Dampened by Net Loss: Pilots’ Salary Increase and Financial Implications

2023-10-19 12:25:24

Despite a record quarterly turnover, the American giant suffered a net loss of $545 million. And it’s not finished.

To retain its pilots in a context of strong recovery in air traffic and shortage, American Airlines had to agree to sign a very large check. Under pressure from the very powerful ALPA union (Air Lines Pilots Association), the company agreed to a historic salary increase of more than 46% spread over 4 years (with +21% immediately) for its 15,000 pilots as well as new social benefits such as the payment of a bonus in the event of an unsolicited flight change.

Enough to weigh down the accounts of the American giant despite record turnover in the third quarter. American Airlines in fact suffered a net loss of $545 million due to an exceptional charge of $983 million resulting from these increases.

Without this charge, the company would have generated a net profit of $263 million for a turnover of $13.48 billion. A record for the period, American Airlines said in a press release, explaining that it had benefited from resilient demand and record revenues generated by its loyalty program.

The next quarters should also be weighed down since in total, the cost of these increases and new benefits is estimated by the company at $9 billion. Especially since the company’s cabin crew (hostesses and stewards), feeling aggrieved, are now demanding a 50% increase over four years and are threatening to strike in the event of refusal. American Airlines offers them +11% straight away and 2% for the next four years.

This delicate financial situation may well concern other large American companies such as Delta Airlines which had to make the same efforts to prevent its pilots from going on strike and/or leaving to see if the grass is not greener elsewhere. .

Last July, the management of United Airlines accepted an almost similar increase (also up to +40% over four years) for its pilots. A measure which will cost the American airline $10 billion.

Olivier Chicheportiche with AFP

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