A pilot performs a walkaround before a United Airlines flight
Leslie Josephs/CNBC
U.S. passenger airlines have added nearly 194,000 jobs since 2021 as firms went on a hiring spree after spending months in a pandemic slump, in line with the U.S. Department of Transportation. Now the industry is cooling its hiring.
Airlines are near their staffing needs however the slowdown can also be coming partially because they’re facing a slew of challenges.
A glut of flights within the U.S. has pushed down fares and eaten into airlines’ profits. Demand growth has moderated. Airplanes are arriving late from Boeing and Airbus, prompting airlines to rethink their expansions. Engines are in brief supply. Some carriers are deferring airplane deliveries altogether. And labor costs have climbed after groups like pilots and mechanics signed recent contracts with big raises, their first in years.
Annual pay for a three-year first officer on midsized equipment at U.S. airlines averaged $170,586 in March, up from $135,896 in 2019, in line with Kit Darby, an aviation consultant who makes a speciality of pilot pay.
Since 2019, costs at U.S. carriers have climbed by double-digit percentages. Stripping out fuel and net interest expenses, they’ll be up about 20% at American Airlines this 12 months and around 28% higher at each United Airlines and Delta Air Lines from 2019, in line with Raymond James airline analyst Savanthi Syth.
It’s more pronounced at low-cost airlines. Southwest Airlines‘ costs will likely be up 32%, JetBlue Airways‘ up nearly 35% and Spirit Airlines will see an increase of just about 39% over the identical period, estimated Syth, whose data is adjusted for flight length.
Easing hiring
Friday’s U.S. jobs report showed air transportation employment in August roughly according to July’s.
But there have been pullbacks. In essentially the most severe case, Spirit Airlines furloughed 186 pilots this month, their union said Sunday, because the carrier’s losses have grown within the wake of a failed acquisition by JetBlue Airways, a Pratt & Whitney engine recall and an oversupplied U.S. market. Last 12 months, even before the merger fell apart, it offered staff buyouts.
Other airlines are easing hiring or finding other ways to chop costs.
Frontier Airlines continues to be hiring pilots but said it’s going to offer voluntary leaves of absence in September and October, when demand generally dips after the summer holidays but before Thanksgiving and winter breaks. A spokeswoman for the carrier said it offers those leaves “periodically” for “when our staffing levels exceed our planned flight schedules.”
Southwest Airlines expects to finish the 12 months with 2,000 fewer employees compared with 2023 and earlier this 12 months said it could halt hiring classes for work groups including pilots and flight attendants. CFO Tammy Romo said on an earnings call in July that the corporate’s headcount would likely be down again in 2025 as attrition levels exceed the Dallas-based carrier’s “controlled hiring levels.”
United Airlines, which paused pilot hiring in May and June, citing late-arriving planes from Boeing, said it plans so as to add 10,000 people this 12 months, down from 15,000 in each 2022 and 2023. It plans to rent 1,600 pilots, down from greater than 2,300 last 12 months.
It is a departure from the previous years when airlines couldn’t hire employees fast enough. U.S. airlines are often adding pilots continuously since they’re required to retire at age 65 by federal law.
Airlines shed tens of hundreds of employees in 2020 to attempt to stem record losses. Packages of greater than $50 billion in taxpayer aid that were passed to get the industry through its worst-ever crisis prohibited layoffs, but many employees took carriers up on their repeated offers of buyouts and voluntary leaves.
Then, travel demand snapped back faster than expected, climbing in earnest in 2022 and leaving airlines without experienced employees like customer support agents. It also led to the worst pilot shortage in recent memory.
In response, firms — especially regional carriers — offered big bonuses to draw pilots.
But times have modified. Even air freight giants were competing for pilots in recent times but demand has waned as FedEx and UPS look to chop costs.
American Airlines CEO Robert Isom said in an investor presentation in March that the carrier added about 2,300 pilots last 12 months and that it expects to rent about 1,300 this 12 months.
“We might be hiring for the foreseeable future at levels like that,” he said on the time.
Despite the lower targets, students proceed to fill classrooms and cockpits to coach and construct up hours to grow to be pilots, said Ken Byrnes, chairman of the flight department at Embry-Riddle Aeronautical University.
“Demand for travel continues to be there,” he said. “I do not see a long-term slowdown.”
