More Airline Layoffs (LCC, AMR)

If you are often in major airports, it is frankly hard to see how the airline carriers still have pressure compared to six to twelve months ago.  The airports and planes are full to the point that when making reservations there are either only middle seats available or you have to get your seat when you get to the airport.  But this is also because airlines have cut down their capacity.  And with lower capacity comes lower servicing needs.  And less servicing creates more opportunities for airlines to fire workers.  That is what we are seeing from AMR Corp. (NYSE: AMR) and from US Airways (NYSE: LCC).

AMR telegraphed today that over the next year it plans to close or downsize some of its aircraft maintenance facilities.  The tally comes to close to 700 jobs, or 5% of its maintenance staff.

US Airways (NYSE: LCC) issued a release today saying that it was “realigning its operations to focus on the airline’s core network strengths.”  It is cutting flights at certain locations and suspending certain destinations.  In short, this is the heave-ho for workers too.  The company is slashing about 1,000 jobs across its system during the first half of 2010.  The breakdown (about) is 600 airport passenger and ramp service positions, 200 pilots, and 150 flight attendants.

These new rounds of layoffs are on the heels of many airlines recently announcing fare hikes and after US passengers base have endured a nickel-and-dime effort by the industry.  What is odd is that tomorrow we get a look at the unemployment in weekly jobless claims and our first look at Q3’s Gross Domestic Product.  We have been in a recession since the end of 2007 by most counts yet the GDP did not officially reflect that.  Estimates are for a 3.0% gain in GDP, the first positive GDP report in the cycle.

You have to wonder if the airlines are sticking it to their workers and customers right on the cusp of at least a partial recovery.  With almost 10 of every workers officially out of work, this all feels like insult on top of injury.   Unemployment is a lagging indicator that often does not improve until well after a real recovery has been seen.  It just does not likely feel like a lagging indicator if you are a worker that gets canned at the end of a cycle when there are no job prospects in the field in which you work.

JON C. OGG