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American Airlines CEO strikes optimistic tone, contrasting with peers at Delta and United

April 16, 2020
5 min read
American Airlines CEO strikes optimistic tone, contrasting with peers at Delta and United
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American Airlines CEO Doug Parker is optimistic that the country may be "ready to get moving again," even as his counterparts at other major carriers repeatedly warn of tough times ahead for the industry.

"In just the last week we started to see bookings outside of 90 days start to tick up a little bit," Parker told CNBC on April 15. "Those could be changed in the future... but it seems to be a little bit an indication that maybe our country is ready to get moving again.”

The leader of the world's largest airline continued his positive outlook in a separate message to travelers posted on American's website later the same day.

"When you’re ready to fly again, we’ll be here," Parker said after outlining all the steps American was taking to make travelers feel "safe and comfortable."

Get Coronavirus travel updates. Stay on top of industry impacts, flight cancellations, and more.

But Parker's comments stand in stark contrast to those from Delta Air Lines CEO Ed Bastian and United Airlines CEO Oscar Munoz and president Scott Kirby. Delta and United are the world's third- and second- largest carriers, respectively, as measured by available seat miles for 2019.

"We expect to fly fewer people during the entire month of May than we did on a single day in May 2019," Munoz and Kirby told staff on April 15. They added that, while receiving $5 billion in payroll assistance from the government, employees should be ready for the airline to shrink its workforce after Sept. 30.

Who, then, is right?

Related: United Airlines warns staffing cuts to come as it slashes May flying by 90%

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All recent indicators show passenger numbers way down. Screenings at Transportation Security Administration (TSA) airport checkpoints have held around 4% of the number a year ago for several days. Airlines for America data shows a similar bottoming out with passenger traffic down 97% year-over-year during the seven-days ending April 12.

Stabilizing traffic numbers, however, does not necessarily mean a recovery is in the offing.

Many states and major cities in the U.S. remain under shelter-at-home orders, including the economic juggernauts of California and New York. At the same time, restrictions on international arrivals remain in place in many countries around the world.

“I think this industry is going to be smaller for some period of time here as we build back, and I don’t know what that pace of recovery will be," Bastian told staff on April 8. "It will really be dictated based on when customers feel safe to travel again in large numbers.”

Related: Delta CEO says industry nears ‘bottom’ of coronavirus crisis, recovery a ways off

Bastian's message was, like that of Munoz and Kirby, that Delta would be smaller post-coronavirus — both operationally and in terms of its workforce.

Wall Street analysts estimate that passenger numbers will be around 30% lower next year than they were in 2019. This is about 10 points worse than forecasts just two weeks ago, an indication that things are getting worse -- not better.

In a report on April 13, Cowen analyst Helane Becker estimated that a 30% smaller airline industry could result in as many as 125,000 furloughs or lay offs. This would translate to a reduction of more than 35,000 staff at American, 25,000 at Delta and 27,000 at United.

"Job losses will come mostly from American, Delta and United as the other carriers look to wait out the downturn in demand," she wrote. "The airlines will likely look to make those hard decisions in September when hopefully demand starts to show improvement, with a clear indication of something returning to normal in 2021."

Related: US airlines’ first bailout aid was tougher to get and came with more strings than expected

Aside from Parker's comments, American has taken steps that show it takes the crisis seriously. The airline was the first to publish drastically reduced May and summer schedules of the major U.S. carriers, and could cut flights further if people do not start traveling again.

In addition, the airline has indicated that it will seek a $4.75 billion loan from the government's $2 trillion coronavirus bailout package. This is separate from the $5.8 billion in payroll assistance that it has already indicated it will accept.

The funds American plans to tap are, as analysts have pointed out, intended as something of a final alternative for companies that have exhausted nearly all other funding sources. Their only other option, barring the government funds, being bankruptcy.

Related: American Airlines’ summer schedule rebounds in some hubs, but not all

Featured image by AA parked planes at various locations including Tulsa and Pittsburgh. Photos courtesy American Airlines.

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Why We Chose It

Sometimes it's worth a large investment to reap the benefits of a great credit card. That's exactly the case with the Amex Platinum card. In exchange for the annual fee, you'll unlock access to the Amex Membership Rewards program that let you access airline and hotel transfer partners, along with new lifestyle and travel credits. This card is also incredibly rewarding for travel purchases, helping you rack up a ton of Membership Rewards points for your next award trip.

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  • The Amex Platinum comes with access to a premium concierge service that can help you with everything from booking hard-to-get reservations to finding destination guides to help you plan out your next getaway.

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  • The high annual fee is only worth it if you’re taking full advantage of the card’s benefits. Seldom travelers may not get enough value to warrant the cost.
  • Outside of the current welcome bonus, you’re only earning higher rewards on specific airfare and hotel purchases, so it’s not a great card for other spending categories.
  • The annual airline fee statement credit can be complicated to take advantage of compared to the broader travel credits offered by competing premium cards.
  • Earn 80,000 Membership Rewards® points after you spend $6,000 on purchases on your new Card in your first 6 months of Card Membership. Apply and select your preferred metal Card design: classic Platinum Card®, Platinum x Kehinde Wiley, or Platinum x Julie Mehretu.
  • Earn 5X Membership Rewards® Points for flights booked directly with airlines or with American Express Travel up to $500,000 on these purchases per calendar year and earn 5X Membership Rewards® Points on prepaid hotels booked with American Express Travel.
  • Get $200 back in statement credits each year on prepaid Fine Hotels + Resorts® or The Hotel Collection bookings, which requires a minimum two-night stay, through American Express Travel when you pay with your Platinum Card®.
  • $240 Digital Entertainment Credit: Get up to $20 back each month on eligible purchases made with your Platinum Card® on one or more of the following: Audible, Disney+, The Disney Bundle, ESPN+, Hulu, Peacock, SiriusXM, and The New York Times. Enrollment required.
  • $155 Walmart+ Credit: Cover the cost of a $12.95 monthly Walmart+ membership with a statement credit after you pay for Walmart+ each month with your Platinum Card. Cost includes $12.95 plus applicable local sales tax. Plus Ups are excluded.
  • American Express has expanded The Centurion® Network to include 40+ Centurion Lounge and Studio locations worldwide. There are even more places your Platinum Card® can get you complimentary entry and exclusive perks.
  • $200 Airline Fee Credit: Get up to $200 in statement credits per calendar year in baggage fees and more at one select qualifying airline.
  • $200 Uber Cash: Enjoy Uber VIP status and up to $200 in Uber savings on rides or eats orders in the US annually. Uber Cash and Uber VIP status is available to Basic Card Member only.
  • Get up to $300 back per calendar year on the Equinox+ digital fitness app, or eligible Equinox club memberships when you pay with your Platinum Card. Enrollment required. Learn more.
  • Breeze through security with CLEAR® lanes available at 100+ airports, stadiums, and entertainment venues and get up to $189 back per calendar year on your membership when you use your Card. Learn more.
  • $695 annual fee.
  • Terms Apply.
  • See Rates & Fees