By Simon_sees of Flickr
Just wanted to comment on Horton’s announcement of 2500 new pilot hires in the next 5 years. According to the current numbers 2500 seems “very” enthusiastic and unprobable at best, unless they know something the public doesn’t know (huge additional short term narrow body order, a large buy out of pilots,…)
The first problem lies with their multiple announcements. The first announcement, expressed a buyout of 2200 flight attendants while hiring 1500 in the next year or two. A net reduction of 700 flight attendant positions over the next year. We need to know where those additional efficiency’s are coming from or is the company expecting shrinkage?
If the company is expecting shrinkage by reducing a net total of 700 flight attendants, where is the growth coming from to support 2500 new pilots(smaller airplanes?). Current projections show a demand for 1224 pilots due to growth through 2017 not including a 20% recall rate from current furloughs. With the recall rate it drops down to 887 pilots needed over the next 5 years.
If the demand for 2500 pilots is not all coming from growth then the rest should be coming from retirements. According to current mandatory retirement projections the company should see 771 retirements up through 2017. It is possible they could see more due to early retirements. Would it be enough to make up the difference of 887 pilots from growth, 771 from retirements (1658) and bring it to 2500 pilots.
What this means is in order to see Horton’s predictions come to fruition we need to see an additional 842 pilots come on the property due to growth (in an environment where we are seeing a net reduction of 700 flight attendant positions?) or 842 pilots (10% of the current pilot group) give up their premium seniority positions and pay in a form of early retirements. These current projections take into account a robust airline market over the next 5 years. The management team has built in enough flexibility at AA to further delay fleet growth in the event we see current economic stagnation continue which would further reduce pilot demand over the shortrun at AA.
Update
Thanks for the intel to those who shared it, it is uploaded to website. It does bring the five year total closer to Horton’s estimate. If we apply an 8% increase in pilot demand due to rest rules which is not included in the charts (although these may be washed out by increases in AA pilot work rule efficiency and PBS) it would bring the five year total up to just beyond 2000 pilots off the street. This does assume a 20% recall rate of remaining furloughs. If we add in that 20% to the total hiring that brings it up to just about 23-2400 pilots needed in the next 5 years, and the model could easily be off by by a couple hundred pilots.
When we consider the “training gap” of additional pilots to maintain staffing required for the amount of seat shifting that would occur with the amount of aircraft orders and retirements occurring, 2500 is becoming more probable by the day.
In the end looking at the FA hiring may have been a red herring, particularly when we add in the recalled FA’s and given their estimated productivity enhancements.
