The pilot did a walkaround before the United Airlines flight
Leslie Josephs/CNBC
US passenger airlines are adding nearly 194,000 jobs from 2021 as companies gain employment after spending months in a pandemic crisis, according to the US Department of Transportation. Now the industry is cooling its hiring.
Airlines are close to meeting their labor needs, but it’s taking time because there are so many challenges.
A glut of flights in the US has pushed down fares and eaten into airline profits. Demand growth has moderated. The plane arrived late Boeing and Airbus, causing the airline to rethink its expansion. Machines are in short supply. Some carriers are delaying the delivery of their entire aircraft. And labor costs are rising after groups like pilots and mechanics signed new contracts with big raises, the first in years.
Annual salaries for three-year first officers in midsized equipment at U.S. airlines averaged $170,586 in March, up from $135,896 in 2019, according to Kit Darby, an aviation consultant who specializes in pilot salaries.
Starting in 2019, the costs in the US carriers increased by a double percentage. Stripping out fuel and net interest expenses, they will rise about 20% American Airlines this year and around 28% higher in both United Airlines and Delta Air Lines of 2019, according to Raymond James airline analyst Savanthi Syth.
It is more pronounced in low-cost airlines. Southwest Airlines‘ costs will rise by 32%, JetBlue Airways‘ up nearly 35% and Spirit Airlines will see an increase of almost 39% in the same period, according to Syth, whose data is adjusted for the length of the flight.
Rent easing
The US jobs report on Friday showed air transport employment in August was roughly in line with July.
But there are pullbacks. In the most severe case, Spirit Airlines is laying off 186 pilots this month, the union said on Sunday, as the carrier’s losses deepen due to the failed acquisition of JetBlue Airways, a Pratt & Whitney engine recall and the US market is oversupplied. Last year, even before the merger was dissolved, he offered to buy out the staff.
Other airlines are cutting fares or looking for other ways to cut costs.
Frontier Airlines still hiring pilots but said it will offer voluntary leaves of absence in September and October, when demand generally dips after the summer holidays but before Thanksgiving and winter break. A spokesman for the carrier said it offers the leaves “periodically” for “when staffing levels exceed the planned flight schedule.”
Southwest Airlines expects to end the year with 2,000 fewer employees compared to 2023 and earlier this year said it would stop hiring classes for job groups including pilots and flight attendants. CFO Tammy Romo said in an earnings call in July that the company’s headcount will likely decrease again in 2025 because the attrition rate exceeds the Dallas-based operator’s “controlled hiring rate.”
United Airlineswhich stopped hiring pilots in May and June, citing the late arrival of Boeing planes, said it plans to add 10,000 people this year, down from 15,000 in each of 2022 and 2023. Plans to hire 1,600 pilots, down from more than 2,300 last time. year.
This is a departure from previous years when airlines were unable to hire employees quickly enough. US airlines typically add pilots continuously because they are required to retire at age 65 under federal law.
Airlines are laying off tens of thousands of workers in 2020 to try to stave off record losses. A taxpayer aid package of more than $50 billion was provided to get the industry through its worst crisis that has banned layoffs, but many employees took the operator on buyout offers and voluntary leaves.
Then, travel demand increased faster than expected, peaking in 2022 and leaving airlines without experienced employees like customer service agents. It also resulted in the worst pilot shortage in recent memory.
In response, companies – especially regional operators – are offering large bonuses to attract pilots.
But times have changed. Even the air cargo giants were competing for pilots in the new year but the demand has decreased as FedEx and UPS appear to reduce costs.
American Airlines CEO Robert Isom said in an investor presentation in March that the carrier added about 2,300 pilots last year and expects to hire about 1,300 this year.
“We will be hiring for the foreseeable future at that level,” he said at the time.
Despite the lower target, students continue to fill classrooms and cockpits to train and build hours to become pilots, said Ken Byrnes, chairman of the aviation department at Embry-Riddle Aeronautical University.
“The demand for travel is still there,” he said. “I don’t see a long-term slowdown.”