With more than 2,200 flight attendants opting to take a buyout and leave American Airlines, the bankrupt carrier made an unusual announcement Wednesday: It needs to hire 1,500 flight attendants.
The hiring plan is in stark contrast to the Fort Worth-based airline's months-long effort to cut costs as it restructures in Bankruptcy Court.
American expects thousands of flight attendants, mechanics and ground crew workers to leave through early-out offers or layoffs in the coming months as new contract terms take effect.
But American must have enough workers to fly its routes, and its business is showing improvement. Severance costs related to the buyouts contributed to a $238 million third-quarter loss at parent AMR Corp., the company said Wednesday. But revenue grew 0.8 percent to $6.4 billion, and absent the one-time charges, AMR would have made a profit of $110 million.
Although American had thousands of flight cancellations and delays in the last two weeks of the quarter, the company said the impact was "not material" to its third-quarter results. But the chief commercial officer, Virasb Vahidi, said American expects October revenue to be affected.
"There will be some impact on the fourth-quarter revenues given the lower booking trends we were seeing over the past few weeks which impacted October," Vahidi said. "But it's really too early to estimate the impact either for October or in the full quarter."
In a letter sent to workers Wednesday morning, AMR Chief Executive Tom Horton said operations have stabilized after a few weeks of delays and cancellations.
"The past few weeks have tested us all," he said.
Horton did not comment specifically on a possible merger with US Airways or the company's request to the Bankruptcy Court this week for an extra 30 days to submit its reorganization plan.
"Our careful review of strategic alternatives continues, but regardless of the outcome, our improvement in both revenues and costs reflects what the new American can be," Horton said.
The carrier had $211 million in special accounting charges related to severance costs and $137 million in reorganization items, such as refinancing aircraft and paying fees to consultants.
AMR said average fares paid by customers increased 3.5 percent from the third quarter of 2011. The company cut American's capacity by 2.5 percent, resulting in a record-high consolidated load factor of 84.7 percent for AMR.
The company said it expects fourth-quarter capacity to be up less than a half-percent from the fourth quarter of 2011.
The company said it ended the third quarter with $4.2 billion in cash, not including a restricted cash balance of $847 million.
American's plan to hire 1,500 flight attendants over the next year marks the first time in over a decade that it has hired attendants.
"This is the downstream effect of the Voluntary Early Out Program, which we fought very hard for," said Laura Glading, president of the Association of Professional Flight Attendants. "Not only did it give our senior members a dignified path to retirement, but it moved everyone else up the seniority list. I'm happy to welcome our new colleagues."
The carrier said about 2,250 flight attendants applied for the early-out option, which offered a $40,000 severance payment.
For new hires, recruitment will start in November, with training to begin in January.
American has about 16,000 flight attendants, at an average age of 51, according to the association.
Their average annual salary is $45,000, American said, higher than the national average of $37,740 for flight attendants in 2010, according to the latest data from the Bureau of Labor Statistics.
Vahidi said American will have more flight attendants in training next year as all domestic crew members are trained on international routes, as part of the new contract, and crew members are trained on the Boeing 777-300 and Airbus aircraft that will enter the fleet.
He said much of the 3 percent operating-cost improvement in the third quarter does not include labor cost savings from the carrier's new contracts with the flight attendant, mechanic and ground crew unions.
"We think we have closed more than half of our margin gap versus the industry just in the third quarter of restructuring, and we feel very, very good about that," Vahidi said, noting that most of the cost improvement came from lower interest expenses, aircraft leases and rent.
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