As American Airlines (NASDAQ:AAL) tries to cope with a steep shortage of pilots, one of the airline’s regional carriers is taking a drastic step, CNBC reported shortly after the market closed yesterday. Specifically, the regional carrier, Envoy Air, is raising pilots’ compensation by 200% for additional flights that they agree to fly during nearly all of July. In early trading, AAL stock climbed 3% to $14. Yesterday the shares fell 2,5%.
Envoy is offering “triple pay” to its pilots who agree to work on flights from July 2 to July 31 to which no pilot has been assigned yet. American told CNBC that it does not have a shortfall of pilots every day during the July 2 to July 31 period. Additionally, the airlines reported that it “has had an extraordinary completion factor for the month of June.”
The Impact of the Pilot Shortfall
American Airlines grounded 67 flights last Monday, and at least 800 flights were cancelled by all U.S. airlines on the same day. Last Saturday and Sunday, 634 flights and 868 flights were called off by U.S. airlines, respectively.
American has said that it is unable to use 100 of its regional aircraft because of the pilot shortage, and it is ending service to four small cities starting in September.
Triggered by strong demand currently and actions taken by airlines during the pandemic, shortages of pilots and other airlines personnel are likely to negatively affect airlines and travelers throughout the summer, CNBC quoted experts as saying.
On the other hand, the airlines industry has blamed shortages of air-traffic controllers, who are hired and managed by the Federal Aviation Administration (FAA), as the main culprit for the flight cancellations.
More About American Airlines and AAL Stock
Citi recently issued a bullish notes on the top four U.S. airlines, including American. Citing a record high level of demand for flying, the firm expects the airlines to perform very well going forward.
In the last month, AAL stock has tumbled about 25%.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
