McLean, VA (written by Nancy Trejos/USA Today) -- American Airlines is cutting the number of flights through next month as contract negotiations with pilots stall and talks with US Airways about a possible merger continue.
The carrier, whose parent company, AMR, declared bankruptcy in November, says it will scale back the rest of its September and October schedule by about 1% to 2% because of an increase in pilots calling in sick and in maintenance reports filed by flight crews.
"We are constantly evaluating our schedule based on operational and staffing resources, as well as seasonal demand, making adjustments when necessary," American spokeswoman Andrea Huguely says.
She says the schedule changes will have a minimal effect on customers' travel plans.
American, which has lost more than $10 billion in the last decade, has been trying to cut annual labor costs by about $1.1 billion. To do so, it has negotiated new contracts with unions representing flight attendants and mechanics. But the Allied Pilots Association, the pilots' union, rejected the airline's last offer, and relations between the two parties have soured.
American had said that if the pilots rejected its offer, it would impose its own work rules. Last week, it lived up to the promise and announced such cost-cutting measures as partnering with more regional carriers, which could result in the loss of pilot jobs. The airline also cut one of the pilots' pension plans.
"The pilots of American Airlines are angry," APA President Keith Wilson wrote in a letter to members on Tuesday.
So angry that they are conducting a strike authorization vote although they aren't legally allowed to strike unless they get government approval.
Nonetheless, Tom Hoban, spokesman for the pilots union, says it has "neither condoned nor supported any kind of sickout."
Nor has the union noticed any significant increase in the number of pilots calling in sick, he says.
According to website FlightAware, which tracks flights, American and regional arm American Eagle on Sunday canceled 92, or 2.7%, of its flights. On Monday, there were 73 cancellations, or 2.1% of flights. Other major carriers canceled 0.9% of flights on Sunday and 0.4% on Monday.
American has cited high labor costs as a main reason it's lost so much money over the years.
This week, the airline notified 11,800 workers that they are eligible for layoffs. Originally, the airline had estimated it would cut 14,000 positions.
Bruce Hicks, an American spokesman, says the company expects to let go of only about one-third of its original estimate. "Expect the ultimate impact on jobs will be far less than the number of those notified," he says.
The pilots say the best outcome for American, its employees and customers would be a marriage with US Airways. And though they agreed to a new contract with American, the flight attendants and mechanics agree.
All three groups have tentative agreements with US Airways in the event of a merger.
"We do still favor a merger with US Airways because we were able to reach agreements with US Airways that would save more jobs," says Jamie Horwitz, a spokesman for the Transport Workers Union, which represents mechanics and other ground workers.
American and US Airways have entered into a non-disclosure agreement to conduct merger talks. Also in the mix is British Airways, which is considering taking a stake in a restructured American.
American Airlines CEO Tom Horton has said that he wants his airline to come out of bankruptcy as an independent company. He has pointed to an increase in revenue to show his restructuring plan is moving in the right direction.
In August, AMR had an industry-leading 4.1% year-over-year growth in unit revenue, which is passenger revenue divided by available seat miles.
Horton has no choice but to entertain US Airways' overtures, says Ray Neidl, an airline analyst at the Maxim Group.
"The unsecured creditors want the best deal possible, and management has to prove that they're looking out for their best interests," he says.
US Airways CEO Doug Parker has argued that uniting the two companies would create a more powerful airline to rival United, which merged with Continental, and Delta, which joined with Northwest.
Helane Becker, a director and airline analyst at Dahlman Rose and Co., expects a merger to happen, though not until next year.
But, she says, a contract with the pilots union is critical. Both American and its unsecured creditors have said they have to emerge from bankruptcy with an agreement in place, she says.
"There's a lot of pressure to get an agreement done," she says.
"Emotions are running very high right now, but it's typical of the airline industry."