For the second month in a row, over 100 pilots have chosen to retire from American Airlines, which could impact the carrier’s fall schedule.
The Allied Pilots Association said that 129 pilots will retire on Oct. 1. Last month, 111 pilots, many who flew Boeing 777s on international routes for American, also retired.
The Fort Worth-based carrier said it will be able to operate its schedule "with minimal customer inconvenience." However, American is anticipating near-term staffing shortages as it made a proposal to the APA late Friday afternoon to help mitigate the issue.
"In preparation for a higher than usual number of retirements, we’ve taken a number of steps to minimize any customer inconvenience," said American spokeswoman Susan Gordon. "We have made a proposal to the APA that would mitigate near-term staffing shortages that is good for both the airline and our pilots. Recent schedule reductions also have allowed us to absorb a higher retirement number than our historic rate for our current schedule."
American has already cut capacity in the fourth quarter partly because of the high number of pilot retirements. Usually about a dozen pilots retire from the carrier each month.
The APA told its members in a hotline message Friday that it is evaluating management’s proposal but did not give details of the proposal.
The high number of retirements is partly due to the pilots’ concerns about the financial health of American Airlines and because of a rule in the pilots’ retirement funds, APA spokesman Captain Sam Mayer said.
In addition to their pensions, American pilots also have a defined contribution retirement plan, called "Plan B." That plan’s rules allow pilots to lock in the value of the fund 60 days before their effective retirement date, so pilots who retire on Oct. 1 can lock their plan value based on stock market values on Aug. 1. The Dow has dropped 8 percent in the past two months.
"Our pilot pensions are tied to the stock market and the recent performance of the market has led several people to retire," said APA spokesman Captain Sam Mayer. "You’ve got segment there that is concerned about the economic uncertainty in the industry and in particular to American Airlines."
Shares of AMR also fell below $3 on Friday, closing at $2.96, down 5 percent.
It takes six to eight weeks to train a pilot on a new aircraft, and American has been recalling 30 to 40 pilots a month. Last year, the carrier announced that it was recalling 250 pilots as it added international routes as part of its agreement with British Airways and Iberia.
More pilots will have to retire starting in December 2012 because of requirements by the Federal Aviation Administration. In 2007, the FAA increased the mandatory retirement age for pilots from 60 to 65, which led many to stay on the job longer. The first group of pilots who will be forced to retire under the new requirement will hit 65 at the end of next year.
-Andrea Ahles