American Airlines makes major customer service changes

The airline has taken some curious steps that will prompt passengers to be very wary.

Jan 31, 2024 - 00:30

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American Airlines makes major customer service changes

Anytime a business makes cuts and tells customers that the effort is designed to better serve them, it raises a yellow flag.

Generally, every company tends to sell layoffs as a positive because that's easier than coming out and saying that people lost their jobs because the company wanted to make more money.

Sometimes a company might justify layoffs or other personnel cuts by saying that they plan to replace people with technology. That works in some areas like warehouses and order picking, but it has been a disaster in others.

Self-checkout, for example, might require fewer people, but it has also enabled customers to more easily steal. That technology has also made it harder for retailers to know when theft is intentional and when customers simply fail to scan an item by accident.

Automation also has had mixed success when it comes to customer service. Sometimes automated phone lines and chatbots get people the information they need, but on many occasions that automation leads customers to angrily yell "person" into their phone or try to find the right words to type to get transferred to a human.

Having fewer staff rarely leads to better service. That's why American Airlines (AAL) - Get Free Report passengers should be very wary of the airline's latest changes.

American Airlines is cutting its customer service staff.
Image source: Shutterstock

American Airlines makes customer-service cuts

American Airlines has decided to pare 656 workers as it consolidates its customer-service units. The cuts include 335 people in Phoenix and 321 in Dallas.

The changes will consolidate multiple teams into one group. So the same group, now called the Customer Success team, will handle everything from canceled or delayed flights to lost luggage.

In theory, this could make things easier for customers dealing with multiple problems as they would have a single point of contact.

"Remaining functions, including single, easily addressed issues like a damaged suitcase, will be shifted to existing international contact centers run by American and its partner airlines. Those centers, mostly belonging to American, operate daily around the clock," according to the airline.

American Airlines has also added self-service tools, which could lower the demand for customer-service help.

"The airline was understaffed to begin with relative to providing reasonable service," View From the Wing's Gary Leff wrote.

Leff was notably skeptical of the move.

"If American was interested in improving this function, rather than seeing it primarily as a cost center, the correct way to do this would be to improve processes and service first, and then trim staff if they were actually unneeded. Here, American leads with the layoffs while promising better service later," he added.

Lower debt is an American Airlines priority

The covid pandemic left American Airline with significant debt, The company reported $3.6 billion in current maturities of long-term debt and finance leases as well as $29.2 billion in long-term debt and finance leases, net of current maturities, at the end of Q4.

American Airlines has been working to lower its debt and has had some success.

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"Our relatively low capital requirements, along with our free cash flow production has allowed for significant progress in strengthening the balance sheet," Chief Financial Officer Devon May shared during the airline's fourth-quarter earnings call.

"We have now reduced total debt by approximately $11.4 billion from peak levels in 2021. And by the end of this year, we expect to have reduced total debt by approximately $13 billion from peak levels in 2021, which is over 85% of the way towards our $15 billion total debt reduction goal."

With a smaller customer-service department, American expects to serve more passengers in 2024.

"This year, we'll finally be producing more capacity than we did in 2019. Consistent with our prior expectations, we plan to grow capacity mid-single digits year-over-year in 2024. This growth will be enabled by improved asset utilization and new aircraft deliveries," May added.

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