We’ve reached the part of the program where some airline CEOs are finding it is better to use honey than vinegar to encourage their employees to get vaccinated against COVID-19. American Airlines is following the lead of Southwest Airlines and softening its language as deadlines loom and business disruptions are on the horizon. American CEO Doug Parker says that for those employees who do not get vaccinated or claim a medical or religious exemption, the airline will “continue to work with” them.
There is no doubt there is a laser focus on the bottom line with the airline CEOs. Air travel is picking up at a good clip right now, certainly for tourism and personal travel if not a full recovery in business travel yet, and the airlines don’t want to disrupt their financial windfall after a devastating worldwide pandemic. They are scrambling to staff up to meet ticket sale demands after being caught flat-footed, unprepared to staff the increased number of daily flights. The last thing they need is a loss of current employees over a federal mandate on vaccinations. Doug Parker is attempting to ease fears of job loss. Almost all American Airlines employees are already vaccinated. He appeared with CNBC’s Phil LeBeau on ‘Squawk Box’ Thursday morning.
Parker, speaking from American Airlines headquarters in Fort Worth, said that the vast majority of employees are already vaccinated for COVID-19 and that he doesn’t expect many employees to be left unvaccinated or without a religious or medical exemption when its deadline hit on Nov. 24.
“We don’t want to see anybody leaving American, no one,” Parker said. “No one’s going to leave American because of this.”
“What I fully suspect is that as we will get to the 24th and have not very many people still left unvaccinated,” Parker said. “Those that aren’t are almost certainly will be on some sort of religious or medical exemption, and those that aren’t we’ll continue to work with.”
Parker said that the company has seen the number of vaccinated employees increase every day since it announced earlier this month that it would comply with the White House mandate, which requires federal contractors to have all employees vaccinated by Dec. 8.
The airline is balancing how to manage following Biden’s vaccine mandate – as of yet not written and distributed by OSHA to employers – and the objections from its employees who don’t want to be vaccinated. The airline is hearing from employees, unions, political activists, and customers. American will not put employees waiting on medical or religious exemptions to be processed on unpaid leave as was once considered. They will be expected to continue to wear masks, social distance, and do regular COVID-19 testing.
American is touting the start of an increase in business travel as well as third-quarter results better than estimates.
American Airlines Group Inc. (AAL) said it flew 48 million passengers during the third-quarter, more than any other U.S. airline. Excluding special items, the company recorded its smallest loss since pandemic began. The company noted that its recovery took a pause in the third quarter due to the delta variant of COVID-19. However, total revenue increased 20% sequentially on 12% increase in capacity.
Looking forward, the company said it will continue to match forward capacity with observed bookings trends. Based on current trends, American Airlines expects fourth-quarter capacity to be down approximately 11% to 13% compared to the fourth quarter of 2019. Fourth-quarter total revenue is projected to be down approximately 20% compared to the fourth quarter of 2019.
The news came as American Airlines posted a $169 million profit for the first quarter on Thursday, but only after receiving $1.04 billion from the latest round of government payroll support. The company’s $9 billion in revenue was 20% better than the second quarter.
Southwest Airlines is softening its approach and reports a loss of revenue due to flight disruptions. Flight cancellations cost the airline $75M. Southwest will decrease flights in December to avoid a similar situation and will plan “more conservative” staffing assumptions for its 2022 schedule.
United Airlines, however, is going full speed ahead and asking that its competitors stop backtracking.
“I hope that every airline will stop backtracking and will embark to get everyone vaccinated like United Airlines has done,” United CEO Scott Kirby said Wednesday in a call with investors. “And so that it will not be a competitive advantage for us because it is, without question the right thing to do.”
You can also expect to pay more for airline tickets due to rising jet fuel costs, according to Kirby, and crowded planes during holiday travel.
“Higher jet-fuel prices lead to higher ticket prices,” Kirby said in an interview on CNBC. “Airfares are going to come back from the really, really low levels they got to during the pandemic, but air travel is going to remain a great bargain.”
Airline passengers can expect full planes ahead of holiday season travel, Kirby said. United, which is planning on December being its busiest month, has scheduled over 3,500 flights daily domestic departures for holiday travel. December will be United’s largest domestic schedule since 2019, Insider reported.