American Airlines Group Inc (AAL) Looking For Major Layoffs As The Airline Shifts 50 Aircrafts To Regional Carriers

Envoy Air, subsidiary of American Airlines Group Inc (NASDAQ:AAL), is ready with a plan to transfer up to 50 aircrafts to different regional carriers starting in 2015. As a matter of fact this aircraft transfer program is likely to lead to some major job cuts.

One of the primary reasons behind this strategic step is the declining number of pilots in Envoy Air for the past several months. Kenji Hashimoto, senior VP of American Airlines Group Inc (NASDAQ:AAL), said,

“Given the number of Envoy pilots flowing through to American each month or leaving due to normal attrition, Envoy will not have the pilots we need to fly our 2015 schedule. Without a cost-effective pilot agreement in place, Envoy will not secure new jets and faces challenges in recruiting new pilots without the promise of a renewed fleet.”

Americal Airlines (AAL)

The major staff that is likely to be affected with these layoffs includes maintenance staff, although gate agents, baggage handlers, and ticket agents will be retained during this transition. The primary subsidiary of American Airlines Group Inc (NASDAQ:AAL) to receive these aircrafts include Piedmont Airlines, which is likely to receive 20 aircrafts, Trans States Airlines and other subsidiaries.

The shares of American Airlines Group Inc (NASDAQ:AAL) fell nearly 2% and are trading at $43.31.

The airlines recorded net profit of $1.2 billion in its third quarter 2014 and its net GAAP profit was $942 million, which is the highest quarterly profit recorded by the airlines in its history. Net operating revenues in the quarter were $11.13 billion as compared with the operating revenues in $6.82. Similarly, the airlines improved its net quarterly income to $942 million as compared to the net income of $289 million. As of now, the company has market cap of $31.67 billion with 70% institutional ownership.

This article has been written by Prakash Pandey.

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