American CEO on Flight Attendants Sleeping on Airport Floors — “It Comes With the Business” After 9,000 Cancellations

American Airlines held its earnings call on Thursday. After each quarter’s earnings call, the airline’s senior executives have an employee “state of the airline.” They’ve stopped taking employee questions at this, so it’s all one-way.

The event was held in the midst of American’s operational meltdown during winter storm Fern. The airline cancelled over 9,000 flights. As other airlines recovered, American did not. The storm hit their hubs hard – New York, Charlotte, Washington National, Dallas – Fort Worth. But things went from bad to worse as the airline lost track of crews, and even when they were eligible to fly.

• Flight attendants were sleeping in airports, unable to get through to their limo and hotel desk and unable to get rooms.
• When crew did get hotels, it was often after long waits. But that information didn’t get relayed to operations, so planes and pilots were ready to go with passengers – but there weren’t flight attendants who had yet received the legally required rest to work.
• Often, crewmembers couldn’t get hold of scheduling – waiting on hold up to 12 hours (and learning that the phone system automatically disconnects them after a 12-hour hold).

So it was striking to me when reviewing a recording of the event that in his introduction acknowleding the operational challenges the airline had been through, CEO Robert Isom suggest that flight attendants sleeping in airports is what happens in storms.

• “I know throughout the rest of our system, some of our crewmembers didn’t have a place to stay last night.”
• Isom called it “unacceptable” but then he proceeded to accept it:

  I also know it comes with the kind of business we run. This isn’t the only storm that we’ve ever had. It’s not going to be the last storm we’ve had.

Isom blamed his airline’s failure to earn a profit (0.002% margin) on the government shutdown costing them $325 million revenue, on the flight 5342 disaster at the start of the year, and on other airlines flying too much capacity.

Acknowledging that a lack of profits means mediocre profit sharing, he argues that American’s employees are still better off than those at United which has several open contracts and flight attendants who haven’t seen a raise in 5 years (and who have a meager profit sharing formula as a result).

He noted that 73% of unionized employees at American make more than counterparts at United: flight attendants 35%, mechanics 12%, and fleet service 6%. It’s a talking point Isom regularly offers to Wall Street analysts. In the earnings call he said,

Quite frankly, I wouldn’t be out there bragging about profitability in a hub when 80 percent of your team members make a lot less than the market rate.

But it’s a strange point to make. United benefits from lower wages when flight attendants reject a contract its union negotiated that would’ve meant higher wages. And United will be paying more in the short- to medium-term. It also doesn’t make employees happier that an unprofitable American means employees don’t get much profit sharing, while Delta employees are getting the equivalent of 8 weeks of pay. If American was more profitable, employees would be earning more. That’s why the flight attendants union called for Isom’s ouster this past week.

More From View from the Wing