American Airlines cancels hundreds of flights amid labor crunch

American Airlines is canceling hundreds of flights through mid-July partially due to labor shortages. Yahoo Finance’s Akiko Fujita and Zack Guzman discuss.

Video transcript

AKIKO FUJITA: Well, American Airlines facing a lot of unhappy passengers over the weekend after the carrier canceled hundreds of flights, Zack. And I'm looking at shares. It hasn't necessarily been hit too hard, down about 8/10 of a percent. A number of reasons that American Airlines has given, one being the labor shortage. They talked about a high number of sick calls, maintenance, and other staffing issues as well.

And we did get a statement from American Airlines in response to what played out over the weekend saying that we made targeted changes with the goal of impacting the fewest number of customers by adjusting flights in markets where we have multiple options for re-accommodation. And of course, while we're talking about hundreds of flights canceled over the weekend, this is something that American has said is going to continue into the peak of the summer travel season, saying cancelations are going to continue through mid-July.

It's part of an ongoing thing we've talked about, Zack, with labor shortages and companies trying to adjust.

ZACK GUZMAN: Yeah, and I mean for American, not just dealing with pilot shortages too but also crew. And we've talked about how stress they've been under these masks mandates and trying to enforce it, added responsibilities here and kind of the lack of time off if you are dealing with a shortage of workers there as well.

But I mean, it's also maybe worth reiterating the point that when we talk about the slowdown that happened in the pandemic, of course, always easier to turn the spigot off when it comes to functioning and running these companies than it is to turn it back on because you've got to deal with rehiring or bringing back furloughed workers here, Akiko. And it's not necessarily going to be a light switch you can switch.

And so I mean, it might point to-- I mean, they pointed to weather here. I'm not sure how big of a factor that is in something like this relative to kind of some of the labor shortages or issues around getting people to want to work again, just given the fact that this is a pretty intense bounce back.

This is stronger than people were expecting when we think about travel coming back and the way that you're only about, what, 25% off pre-pandemic levels now relative to where we were, complete collapse of travel in this country. So it's not an easy thing to come back. I don't envy the position of this company. And some people are criticizing the way that some at the top of the company have been able to maintain their compensation and benefits here relative to the workers who are on the front lines.

AKIKO FUJITA: Yeah. I guess the positive in all of this is the point you just made, which is travel is coming back, or demand for travel is coming back at a much faster rate than anticipated. But you've got to wonder whether American was really prepared for that. I mean, it's easy for us to criticize from the outside, saying, wait a second, given the last year and the challenges to the carrier-- but the sector as a whole has faced. Why weren't you necessarily prepared for that? But I think it does speak to the challenges we're going to continue to see in the space as well as the broader market.

And we've talked about labor shortages across the board here. And with airlines, it is specific, just given that so many were furloughed at the height of the pandemic. And to your point, there's some questions about executive compensation there and whether, in fact, there was proper planning here in place for the uptick that we're seeing now.

ZACK GUZMAN: And the thing is too, I mean, we don't talk about the corollary, right, the other side of this. What would have happened if some of those support networks that we had earlier in the pandemic weren't put in place? And you think about how airline workers were almost excluded from some of these packages and the way that that support might not have been there. How much worse it could have been, right, if all that happened when we had kind of the airlines union coming on, pleading their case really, and showing that this is going to be a much better way to go and why they needed some of that support?

And you wonder what it would have looked like too if we had this big bounce back in demand for leisure and just how many more flights would have been canceled if we didn't see that. So also kind of interesting to think about. But nonetheless, clearly, strong bounce-back here in travel. And workers are needed to kind of support that.