FORT WORTH- American Airlines (AA) has opted to reduce its workforce by 656 individuals to consolidate its customer service units. Among the cuts, 335 positions will be eliminated in Phoenix (PHX) and 321 in Dallas (DFW).
When a business implements cost-cutting measures and asserts that these actions are intended to enhance customer service, it prompts a cautious reaction.
Will it Improve the Service?
Typically, companies tend to present layoffs in a positive light, as it is more palatable than admitting job losses occurred to boost profits. On occasion, a company may rationalize layoffs or workforce reductions by stating an intention to substitute personnel with technology.
While this approach may be effective in certain domains like warehouses and order picking, it has proven disastrous in other instances.
For instance, self-checkout systems may necessitate fewer personnel, but they have simultaneously provided customers with increased opportunities for theft. This technology has also complicated retailers’ ability to distinguish intentional theft from inadvertent mistakes, such as customers forgetting to scan an item.
Automation has yielded varying results in terms of customer service. While automated phone lines and chatbots occasionally succeed in providing the necessary information, they often result in frustrated customers shouting “person” into their phones or struggling to convey the right words to be transferred to a human representative.
Reducing staff seldom translates to improved service. This is why passengers of American Airlines (AA) should exercise caution regarding the changes.
American Airlines Cuts Customer Service Staff
The restructuring aims to merge multiple teams into a single entity, now referred to as the Customer Success team. This consolidated group will be responsible for handling a wide range of issues, from dealing with canceled or delayed flights to addressing lost luggage.
In theory, this shift could simplify the process for customers facing various problems, offering them a single point of contact.
As for remaining functions, such as handling easily addressed issues like a damaged suitcase, they will be redirected to existing international contact centers operated by American and its partner airlines. These centers, primarily managed by American, operate 24/7 on a daily basis, ensuring continuous assistance.
Additionally, American Airlines has introduced self-service tools, a move that might reduce the demand for traditional customer-service support.
“The airline was initially lacking sufficient staff to offer reasonable service,” observed Gary Leff from View From the Wing.
Leff expressed significant skepticism about the decision, stating, “If American were genuinely committed to enhancing this aspect, rather than viewing it primarily as a cost center, the appropriate approach would be to enhance processes and service initially, and then consider staff reductions if they were genuinely unnecessary. In this instance, American is initiating layoffs upfront while pledging improved service at a later stage.”
Working on Reducing Debt
The COVID-19 pandemic resulted in significant debt for American Airlines. As of the end of Q4, the company reported $3.6 billion in current maturities of long-term debt and finance leases, along with $29.2 billion in long-term debt and finance leases, net of current maturities.
In efforts to alleviate its debt burden, American Airlines has been actively working towards reduction, achieving notable success.
Chief Financial Officer Devon May highlighted this progress during the airline’s fourth-quarter earnings call, stating, “Our relatively low capital requirements, coupled with our free cash flow production, has facilitated significant improvement in strengthening the balance sheet.”
May further shared, “We have now reduced total debt by approximately $11.4 billion from peak levels in 2021. By the end of this year, we expect to have reduced total debt by approximately $13 billion from peak levels in 2021, which represents over 85% progress towards our $15 billion total debt reduction goal.”
Despite having a smaller customer service department, American anticipates serving more passengers in 2024.
May mentioned, “This year, we’ll finally be producing more capacity than we did in 2019. As anticipated, we plan to grow capacity by mid-single digits year-over-year in 2024. This growth will be facilitated by improved asset utilization and new aircraft deliveries.”
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