American Mechanic Problems Eased, Longer Max Groundings Expected

The Max and mechanics bedeviled American Airlines in 2019, but the carrier overcame both problems to increase earnings per share 8%, year over year, noted CEO Doug Parker in the airline’s fourth-quarter earnings call.

Most pleasing was that the continued negotiations with mechanics union, which had prompted some work actions and schedule problems earlier in the year, did not cause any maintenance difficulties in the fourth quarter.

Indeed, Parker said his airline achieved the highest operational reliability in its history in the fourth quarter, as a result of an ongoing program to improve reliability and an absence of disruptions by mechanics. 

Parker said the airline wants to bring its mechanics’ wages up to the levels paid at its peer airlines, and he hopes to reach a settlement in 2020 along those lines. There have been disagreements about outsourcing limits in the past, although American outsources less than other U.S. airlines.

Airline-union negotiations are now being supervised by the National Mediation Board, and both management and labor have agreed not to talk about them. 

American has reached an agreement with Boeing on compensation for the Max groundings in 2019. The airlines will press the airframe OEM for additional compensation for groundings in 2020, which Parker expects will cost roughly the same as in 2020. “Our priority is adequate compensation,” Parker said. “We will continue to hold Boeing accountable.”

American president Robert Isom noted that American had pushed the expected Max return to service out to early June, 2020, but the airline will have to reassess that date based on the latest information.

The airline is working closely with FAA and, “we know that Max simulation will be required,” even though FAA has not formally announced this requirement yet. The airline is thus stretching out scenarios for the Max return to service and ensuring it has enough simulation devices and staff to accommodate the required training. 

AA shops are also busy on other fronts. As part of a fleet simplification program, American is reconfiguring its narrowbodies, aligning seat counts, lighting, storage bins and satellite WiFi connections. Most of the carrier’s 737s have been reconfigured, and American is now starting on its Airbus A320-family jets.