MARKET REPORTS 

American Airlines Gets an Upgrade as Carriers Cut Flight Schedules

American Airlines has announced it will be removing 259 daily departures from its schedule by the end of 2020 as it looks to reduce the size of its fleet. This is part of the “best-in-class” fleet renewal program the carrier announced in November 2018, which aims to acquire 67 new aircraft by 2023. Additionally, the airline plans to modernize its Boeing 737 aircraft by 2020 to better compete with large Gulf carriers. The new 737s will have a more efficient airframe and are expected to reduce maintenance costs. These new aircraft will join a record 280 planes they’ve ordered.

The airline has yet to reveal the exact amount of money it is saving through the change, but claims it will reduce fuel costs by 6 million gallons per year. The airline also states that the changes will take an estimated 4,200 employees off its payroll.

In total, a total of 261 departures are being removed from the American’s daily schedule. With another 157 departures moving to American’s maintenance and operation hubs, the airline claims to be able to decrease labor costs by over $500 million by 2020. It’s hoped that moving more work to “economies of scale” will have a positive impact on the employees’ pay and benefits.

There are currently 45 passenger planes left on American’s fleet that will not be in use in the future. This number includes five Boeing 777 aircraft that won’t be being used until 2022 due to the strong demand for the twin-engine aircraft.

American Airlines will likely come under heavy pressure from competitors who are already looking to cut down their schedules. US Airways has announced it plans to cut down on its schedule starting this fall, claiming the new US Airways F7N will take off three hours earlier to reduce costs. United Airlines is also rumored to be planning on making some schedule cuts.

Reducing the size of the airline’s fleet by 3.5% will also help increase the number of seats American can offer. When compared to American’s two major competitors, JetBlue and Delta Air Lines, the carrier’s current passenger aircraft are under 10% smaller on average than Delta’s, while JetBlue offers 9.2% more seats on average. It’s yet to be seen if the new smaller fleet is enough to stop American from falling behind in the race to provide the most number of seats for its passengers.

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