Boeing 737 grounding, labor dispute delays American's plan to increase seating on planes

Key Points
  • American Airlines has struggled with flight cancellations and delays this summer amid the long grounding of the Boeing 737 Max and a protracted labor dispute with its mechanics.
  • The airline has lagged its peers in profit margin and performance.
American Airlines aircraft prepare for flight at O'Hare International Airport in Chicago, Illinois.
Scott Olson | Getty Images

American Airlines' operational struggles this year have forced it to pause plans to add more seats to aircraft as the carrier grapples with the Boeing 737 Max grounding and a protracted labor dispute.

American has canceled thousands of flights this summer due to the Boeing 737 Max grounding after two fatal crashes. It also has faced hundreds of other cancellations and lengthy delays amid a feud with its mechanics' union, which the airline said engaged in an illegal work slowdown to gain leverage in contract talks. The union has denied the allegations.

The airline's stock is down nearly 16% this year. Southwest, which has more Max planes than any other U.S. airline and also had to shrink passenger capacity this year as a result, is up 12%. United is nearly flat and Delta is up about 15%.

This year "should have been much better for American," Robert Isom, American's president, said at an investor conference on Wednesday. "There are no excuses. It is our job to get our arms around this."

American is about one-third of the way through with its program to add more seats to planes, Isom said. The airline had been increasing seating on its existing Boeing 737 fleet from 160 to 172 seats.

"We thought that we would be much further along," he said. "But our modification program, as a result of the operations difficulties, we had to put that on hiatus."

Regulators worldwide grounded the Boeing 737 Max in mid-March after two fatal crashes claimed 346 lives. Approaching the six-month mark, they still have not said when they expect to allow the planes to fly again, prompting airlines to cancel flights into late 2019 and early 2020.

On Sunday, American pulled the planes from its schedule for another month, through early December, and the repeated delays have complicated the airline's plans to remodel its cabins to fit more travelers. United made a similar move, removing the planes from its schedules until Dec. 19. Southwest doesn't expect to fly the Boeing 737 Max until early January.

Last week, American told reporters at an industry conference that its customer service representatives have been calling travelers affected by repeated disruptions to apologize and in some cases offering compensation, such as frequent flyer miles.

American Airline CEO: We remain in limbo on the 737 Max