Bloomberg News

AMR’s American to Close Pilot Base as Retirements Thin Ranks

October 13, 2011

(Updates with union comment in ninth paragraph.)

Oct. 13 (Bloomberg) -- American Airlines will close a crew base in San Francisco after unusually large numbers of pilot retirements left staffing levels “critically short.”

American said three days ago it would cut fourth-quarter seating capacity by 3 percent, in part because of the pilot shortage. In September and October combined, 240 pilots retired, more than 10 times the normal average in each month.

The retirements are putting new pressure on American, the third-biggest U.S. carrier, to conclude negotiations with pilots on a new contract. The Allied Pilots Association has said it won’t waive scheduling rules to help ease the staffing shortage without a new labor agreement.

“The recent surge in retirements has left our manning levels to be critically short to the detriment of our schedule reliability,” John Hale, vice president for flight for AMR Corp.’s American, said in an e-mail to pilots about the base closing. The decision “was not made lightly and comes with much regret and only after intensive discussion and strategic analysis.”

The pilots union disputed that the closing was tied to insufficient staffing because American is contractually required to give six months notice and the number of retirements should have slowed by that time, Scott Shankland, union treasurer, said in an interview.

American hasn’t set a date for shutting down the base, and is seeking an agreement to shorten the notice requirement, said Missy Cousino, a spokeswoman for the Fort Worth, Texas-based company. About 270 of American’s 8,700 pilots are based in San Francisco, Cousino said. The union set the number at more than 300, including pilots on leave.

‘Aggressive Steps’

The closing is among “aggressive steps” the airline is taking to improve its financial performance, Cousino said. It “will save us a significant amount of money and will help streamline our pilot operation,” she said.

AMR rose 5.3 percent to $2.96 at 4:15 p.m. in New York trading, the second-biggest gain among the 10 companies in the Bloomberg U.S. Airlines Index. The shares have tumbled 62 percent this year.

American and pilot union negotiators are meeting this week at an undisclosed Texas location in an effort to reach a contract agreement, union President Dave Bates told pilots late yesterday. Bargaining will continue through the weekend, he said.

Course Change

“This airline desperately needs to change course,” Shankland said. “The pilots aren’t happy with the airline’s performance, our passengers aren’t happy, our shareholders aren’t happy and neither is management. We now have a situation where both sides are equally motivated to reach a deal on a new contract. We’re trying to take advantage of that opportunity.”

American said Oct. 10 it would cut seating and ground as many as 11 jets in 2012 because of the retirements, higher fuel costs and a weak economy. The reductions will increase the airline’s cost to fly each seat a mile beyond earlier forecasts, the company said.

Talks between the airline and Allied Pilots Association began in September 2006. American also is in contract negotiations with unions for its flight attendants, mechanics and baggage handlers.

--Editors: James Langford, Cecile Daurat

To contact the reporter on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net


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