American Airlines grounded by service issues
Passenger numbers fell by 4% last month as delays and cancellations soared.
Would you fly a bankrupt airline with labor problems and a penchant for delays and cancellations? If that airline is American (AAMRQ), the answer is increasingly no.
A dispute with its pilots, a string of mechanical problems, the resulting downtick in on-time performance and the negative response to all of the above by the flying public is sending American's popularity into a nosedive. Overall, the number of passengers flying American fell 4% in September to 8.3 million, the airline said Monday. The airline was also forced to cut domestic flights by almost 6%.
That's not exactly a shock this year, as nearly all the major airlines have reported fewer passengers shuffling through their jetways. Delta's (DAL) passenger count fell 1.9% last month, United's (UAL) headcount dropped 2% and Southwest (LUV) saw a whopping 2.6% fewer flyers than it did last September. Only US Airways (LCC) and Alaska Airlines (ALK) reported increases, with 1% more passengers flying Alaska and 1.4% more passengers on U.S. Airways planes over the same period last year.
None of those airlines have had American's string of misfortune, though. The airline filed for bankruptcy protection in November and a bankruptcy court allowed it to throw out its pilots' existing labor deal back in early September. Since then, the airline says it's been dealing with more canceled flights and delays resulting from pilot maintenance complaints and sickouts. While the Allied Pilots Union picketed on Monday, the group says there's no effort to stall service and that its maintenance complaints are legit. American did a good job of backing up that defense in late September and early October, when passenger seats came loose on three flights and forced the airline to ground 47 planes for inspection.
That didn't do great things for American's on-time arrival rate, which fell to a dismal 59% last month, according to FlightStats.com. If you flew American in September, your itinerary was almost literally a toss-up. That may seem like status quo to disgruntled frequent flyers, but it's downright disheartening when compared to on-time arrival rates at United (81%), JetBlue (JBLU) (83%), Southwest (86%), U.S. Airways (87%), Delta (89%) and Alaska Airlines (89%).
Nightmare stories about American's hellish month spread through terminals quicker than a flight cancellation announcement. The New York Times dedicated op-ed space to the tale of one particularly horrific trans-Atlantic American flight. Slate piled on with a cautionary tale from a flight from Tulsa, Okla., to Dallas. Both concluded that no passenger in his or her right mind should fly American in its current, sad state.
American Airlines counters that its revenue per available seat grew 4% in September, which it said was better than United, US Airways and Delta. Their spokesman also believes most of the airline's problems and lost revenue are old news and that renewed talks between the airline and the pilots' union should address any remaining issues.
That's great, but American is dithering with pilots on a deal that will likely be moot in a rumored merger with US Airways. The two airlines started reviewing each other's financial information in August, and though a non-disclosure agreement prevents either from discussing a merger, American employees and customers alike are still waiting for the results. Meanwhile, United is shaking off the effects of its merger with Continental and has improved on-time performance from 64% in July. At the same time, Delta just opened up its own oil refinery in Pennsylvania and has buddied up with Alaska Airlines to expand service to China and Japan.
Though American was among several airlines whose business didn't take off in September, its slumping service and stuck-at-the-gate growth don't give passengers much confidence when comparison shopping against American's soaring competitors.
Fire the pilots and Attendants, and then give them an application and tell them to reapply if they
really want to work for the airline. Change the pay scale and go non union.
The unions have caused more job losses in America than anything else.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
As geopolitical tensions threaten to spin out of control, investors are wondering how best to position their portfolios for the global turmoil.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.