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A severe pilot shortage in the U.S. leaves airlines scrambling for solutions

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Airline pilots walk through the Ronald Reagan Washington National Airport on December 27, 2021 in Arlington, Virginia.

Anna Moneymaker | Getty Images

The United States is facing its worst pilot shortage in recent memory, forcing airlines to cut flights just as travelers are returning after more than two years of the Covid-19 pandemic.

The crisis has the industry scrambling for solutions.

At least one lawmaker is said to be considering legislation that could raise the federally-mandated retirement age for airline pilots from 65 to 67 or higher to extend aviators’ time in the skies.

A regional airline proposed reducing flight-hour requirements before joining a U.S. carrier, and airlines are rethinking training programs to lower the barrier to entry. Earlier this year, Delta Air Lines joined other big carriers in dropping a four-year degree from its pilot hiring requirements.

Several U.S. airlines, including Frontier, are recruiting some pilots from Australia. American Airlines is selling bus tickets for some short routes.

But some airline executives warn the shortage could take years to solve.

“The pilot shortage for the industry is real, and most airlines are simply not going to be able to realize their capacity plans because there simply aren’t enough pilots, at least not for the next five-plus years,” United Airlines CEO Scott Kirby said on a quarterly earnings call in April.

Kirby estimated the regional airlines United works with currently have about 150 airplanes grounded because of the pilot shortage.

Roots of the crisis

The Covid pandemic halted pilot hiring as training and licensing slowed. Airlines handed out early retirement packages to thousands of pilots and other employees aimed to cut labor bills when travel demand cratered during the depths of crisis.

“I feel like I walked away at the pinnacle,” said one former captain for a major U.S. airline who took an early retirement package in 2020.

Now airlines are desperate to hire and train pilots, but the rush may take too long to avoid flight cuts.

Major U.S. airlines are trying to hire more than 12,000 pilots combined this year alone, more than double the previous record in annual hiring, according to Kit Darby, a pilot pay consultant and a retired United captain.

The shortage is particularly acute at regional carriers that feed major airlines’ hubs from smaller cities. While hiring and retention bonuses have returned at those airlines, pay is lower there than at majors, and they are recruiting aggressively from those smaller carriers.

Phoenix-based Mesa Air Group, which flies for American and United, lost nearly $43 million in the last quarter as flight cuts mounted.

“We never fathomed attrition levels like this,” said Mesa CEO Jonathan Ornstein. “If we don’t fly our airplanes we lose money. You saw our quarterly numbers.”

It takes Mesa an estimated 120 days to replace a pilot who gives two weeks’ notice to go to another airline, according to Ornstein.

“We could use 200 pilots right now,” he said.

Some carriers like Frontier and regional airline SkyWest are recruiting pilots from Australia under a special visa to help ease the shortfall, but the numbers are small compared with their overall ranks and hiring goals.

Regional carrier Republic Airways, which flies for American, Delta and United, last month petitioned the U.S. government to allow pilots to fly for the airline with 750 hours, half of the 1,500 currently required, if they go through the carrier’s training program. There are already exemptions to the 1,500-hour rule, such as for U.S.-military trained pilots and those who attend two- and four-year programs that include flight training.

The proposal has received pushback from family members of victims of 2009’s Colgan Air 3407 crash, the last fatal U.S. passenger commercial airline crash. The tragedy killed all 49 people on board and one on the ground, and ushered in the so-called 1,500-hour rule, aimed at ensuring pilot experience.

Sen. Lindsey Graham, R-S.C., is considering introducing congressional legislation that could raise the mandatory airline pilot retirement age to at least 67 from the current age of 65, according to people familiar with Graham’s plans. About a third of the airline-qualified pilots in the U.S. are between the ages of 51 and 59, and 13% of the country’s airline pilots will reach retirement age within the five years, according to the Regional Airline Association.

Graham’s office did not respond requests for comment.

Growth curtailed

Pilot and other worker shortages have forced airlines to rethink their growth plans. JetBlue Airways and Alaska Airlines are among carriers that have recently trimmed capacity.

SkyWest, for its part, told the Transportation Department it plans to drop service to 29 smaller cities that the government subsidizes through the Essential Air Service.

Service reductions could isolate smaller U.S. cities but Darby, the pilot pay consultant, said it could mean an opening for smaller competitors that don’t rely on regional airlines as much as major network airlines.

“If they don’t fly it, maybe a smaller airline will,” he said.

One of the biggest hurdles to bringing in new pilots is the cost of schooling. While salaries for widebody captains at major airlines can exceed $350,000 a year, getting qualified takes years.

At ATP Flight School, the largest in the country, it costs close to $92,000 for a seven-month, full-time program to get initial licenses. It can then take about 18 months or longer for pilots to build up enough hours to fly, often by instructing student pilots or sometimes by flying banners near beaches.

“It’s not a car wash,” Darby said. “You can’t just get someone to come in from the street.”

In December, United started teaching the first students at its own flight school, the United Aviate Academy, in Goodyear, Arizona, with a goal of training 5,000 pilots there by 2030. United says it aims for half of that number to be women or people of color. The company covers the cost of pilots’ training up to the point of receiving their private pilots’ license, which it estimates to be around $17,000 per student.

Other carriers have turned to low-interest loans or other initiatives to ease the financial burden on students.

“There’s no quick fix,” Darby said.

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‘Minions: The Rise of Gru’ tops $108 million as parents flock back to cinemas, kids in tow

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“Minions: The Rise of Gru” is the sequel to the 2015 film, “Minions,” and spin-off/prequel to the main “Despicable Me” film series.

Universal

Families have gone bananas for “Minions: The Rise of Gru.”

Over the weekend, the Universal and Illumination animated feature tallied more than $108 million in ticket sales.

The fifth film in the Despicable Me franchise generated an additional $93.7 million from international markets, bringing its estimated opening weekend haul to $202 million globally.

“With the incredible success of ‘Minions,’ the notion that family audiences were avoiding movie theaters due to Covid concerns can be shelved,” said Paul Dergarabedian, senior media analyst at Comscore.

Box office analysts had wondered if this segment of moviegoers was still avoiding cinemas after Disney and Pixar’s “Lightyear” took in just $51 million during its domestic debut last month, below expectations of $70 million and $85 million.

It was unclear if tough box office competition led to “Lightyear’s” less than stellar debut or if consumers were confused about the film’s release. After all, there has not been a theatrical release of a Pixar film since 2020′s “Onward.” The last three from the animation studio, “Soul,” “Luca” and “Turning Red,” were all released on streaming service Disney+.

“Minions: The Rise of Gru” represented 54% of all domestic moviegoers over the weekend, with 68% of ticket holders being part of family groups, according to data from EntTelligence.

“What this weekend has showcased is a triumphant return to cinemas by families, laying to rest any lingering and outdated pandemic narrative that parents and kids only want to watch movies at home,” said Shawn Robbins, chief analyst at BoxOffice.com. “When the right content is out there, people will show up.”

The film is expected to add another $20 million in ticket sales in the U.S. and Canada on Monday, bringing its holiday weekend total to $128 million.

Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal is the distributor of “Minions: The Rise of Gru.”

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American Airlines scheduling glitch allows pilots to drop thousands of July flights

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An American Airlines Boeing 787-9 Dreamliner approaches for a landing at the Miami International Airport on December 10, 2021 in Miami, Florida.

Joe Raedle | Getty Images

A glitch in a scheduling platform allowed American Airlines pilots to drop thousands of July assignments overnight Saturday, their union said, a headache for the airline as it tries to minimize flight disruptions during a booming travel season.

American said it didn’t expect the problem to affect its operation, including during the busy July Fourth holiday weekend. The union and airline are now discussing additional pay for pilots whose dropped trips the airline reinstated, the Allied Pilots Association said.

“As a result of this technical glitch, certain trip trading transactions were able to be processed when it shouldn’t have been permitted,” the airline said in a statement. “We already have restored the vast majority of the affected trips and do not anticipate any operational impact because of this issue.”

More than 12,000 July flights lacked either a captain, first officer, or both, after pilots dropped assignments, the Allied Pilots Association said Saturday. APA said the airline reinstated about 80% of the trips.

Pilots can routinely drop or pick up trips, but time off in the summer or holidays is hard to come by for airline employees as schedules peak to cater to strong demand.

On Saturday alone, American had more than 3,000 mainline flights scheduled and they were 93% full, according to an internal tally. Flights left unstaffed, however, are an additional strain on any airline.

The glitch occurred during a rocky start to the Fourth of July weekend when thunderstorms and staffing issues caused thousands of U.S. flight delays and hundreds of cancellations.

A similar issue occurred in 2017, when a technology problem let American’s pilots take vacation during the busy December holiday period. The carrier offered pilots 150% pay for pilots that picked up assignments.

American and its pilots’ union, whose relationship has been fraught, are in the middle of contract negotiations and the airline most recently offered nearly 17% raises through 2024.

Union president Capt. Ed Sicher, who started his term Friday, told American’s roughly 15,000 pilots Saturday night that American Airlines CEO Robert Isom said he is committed to paying an “inconvenience premium” to aviators whose trips American put back on their schedules after the glitch.

“To Mr. Isom’s credit, he called me four times today to commit to mitigating the damage from this debacle,” Sicher wrote late Saturday. “We started at a 200% override, although the details of this pay are still the subject of negotiations and there is no guarantee of the details or the amounts.”

American Airlines declined to comment on Sicher’s message to pilots.

American’s pilots have picketed recently against grueling schedules, something they want to be addressed in a new contract. Pilots at Delta and Southwest have picketed in recent weeks for similar reasons.

Sicher also struck an upbeat tone about contract talks with American, particularly about quality-of-life issues.

“Please understand that no firm commitments have yet been made, but I feel that we have, at least for the first time since negotiations began, received positive indications that management is motivated to achieve collaborative solutions to longstanding problems with our current contract that will greatly enhance our ability to trade our trips and consequently enhance our quality of life,” he wrote.

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Trump media company subpoenaed in federal criminal probe of SPAC deal

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Former U.S. President Donald Trump gives the keynote address at the Faith & Freedom Coalition during their annual “Road To Majority Policy Conference” at the Gaylord Opryland Resort & Convention Center June 17, 2022 in Nashville, Tennessee.

Seth Herald | Getty Images

Donald Trump’s media company was subpoenaed by a federal grand jury in connection with a criminal probe, according to the company with which the former president’s firm plans to merge.

Digital World Acquisition Corp. said in a filing Friday that Trump Media and Technology Group received a subpoena from the grand jury in Manhattan on Thursday. The Trump company also received a subpoena from the Securities and Exchange Commission regarding a civil probe on Monday, DWAC said.

DWAC also said some current and former TMTG employees have also recently received grand jury subpoenas.

The filing came days after DWAC said the government investigations could delay or even prevent its merger with Trump’s newly formed company, which includes Truth Social, a social media app intended to be an alternative to Twitter.

Neither TMTG nor a spokeswoman for Trump immediately responded to CNBC’s requests for comment.

The Justice Department and the SEC, which regulates the stock market, are investigating the deal between DWAC and Trump Media. By merging with DWAC, which is a kind of shell company called a special purpose acquisition company, or SPAC, Trump’s firm would gain access to potentially billions of dollars on public equities markets.

Trump established Truth Social months after Twitter banned him for his tweets on Jan. 6, 2021, when hundreds of his supporters stormed the U.S. Capitol in a bid to overturn Joe Biden’s victory in the presidential election. Trump Media’s CEO is former Rep. Devin Nunes, one of the former president’s most ardent loyalists in the Republican Party. Trump is also considering whether to run for president in the 2024 election.

Trump has continued to spread the lie that the election was stolen from him. His alleged involvement in the Jan. 6 insurrection is being probed by a House select committee that has accused the former president of being at the center of a multipronged conspiracy to block the peaceful transfer of power to Biden.

Early criticism of the Trump-DWAC deal came from Sen. Elizabeth Warren, D-Mass. In calling for an investigation, she wrote to SEC Chair Gary Gensler in November, telling him that DWAC “may have committed securities violations by holding private and undisclosed discussions about the merger as early as May 2021, while omitting this information in [SEC] filing and other public statements.”

DWAC shares are far off their highs, closing Friday at $24.20. The stock had surged above $90 in October, after the deal with Trump’s group was announced.

DWAC on Monday revealed in a securities filing that it learned June 16 that each member of its board of directors received subpoenas from the same federal grand jury.

The grand jury sought documents similar to those the SEC already requested as part of its civil probe, DWAC said. The company itself was served with a subpoena a week ago with similar requests, along with other requests relating to communications, individuals and information involving Rocket One Capital.

DWAC also revealed Monday that a board member, Bruce J. Garelick, had told management that he would quit the board during the previous week. Garelick said his resignation “was not the result of any disagreement with Digital World’s operations, policies or practices,” according to the company filing.

— CNBC’s Kevin Breuninger and Thomas Franck contributed to this story.

This is breaking news. Please check back for updates.

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