American Gets Post-Merger Boost as Pilots Back ContractMary Schlangenstein
American Airlines Group Inc. cleared a crucial hurdle in the 2013 US Airways merger as pilots approved a five-year contract that will provide an immediate 23 percent pay increase and annual raises.
The accord unites pilots from American and US Airways under one compensation and work-rule system, letting the carrier capture more efficiency from its combination. American has said the contract will add $650 million to pilot costs in 2015, including $50 million for retroactive pay to December 2014.
Members of the Allied Pilots Association voted 66 percent in favor of the agreement, the union said Friday in an e-mail. The contract provides industry-leading base pay for American pilots, according to the Fort Worth, Texas-based airline.
“Today’s results provide immediate and significant pay increases to our pilots, and represent another step forward in our integration,” American President Scott Kirby said in a statement.
The carrier expects to move both airlines onto a single operating certificate early in the second quarter and combine reservation systems in the last half of the year.
In addition to the initial 23 percent increase retroactive to last month, pilots will get 3 percent raises every January from 2015 through 2019. The union represents 15,000 pilots from American and US Airways.
Under the agreement, pay for a 12-year captain flying American’s largest jets would rise to $293.11 an hour in January 2016 from a new rate of $276.28 retroactive to December 2014. A fifth-year first officer flying single-aisle models like Boeing Co.’s 737 would get an increase to $142.18 from $134.02 over the same period.
The pilots’ union “will now focus on further engagement with American Airlines management to address ongoing shortcomings in our contract,” Keith Wilson, union president, said in a statement. “Our total compensation will still trail industry-leader Delta, while work rules affecting our pilots’ quality of life need meaningful improvement.”
While American has said the new contract would give its pilots base pay rates 7 percent higher, on average, than Delta Air Lines Inc., some pilots opposed the agreement because it didn’t provide profit sharing.
American has said it’s better to give workers higher base pay rates than at-risk compensation that could be limited by things beyond an airline’s control, like Ebola or an economic downturn. The airline on Jan. 27 reported a record 2014 profit, excluding some items, of $4.2 billion.
American dropped 6.1 percent to $49.07 at the close in New York, its largest one-day slide since October 2014. It joined declines at all other carriers in the Bloomberg U.S. Airlines Index, which also tumbled the most since October 2014.
Delta said this month that it would pay more than $1 billion in profit-sharing to employees, equal to more than 16 percent of their pay last year. Southwest Airlines Co. will pay out a record $355 million.
The most-experienced pilots on American’s biggest planes now are paid an average of $213,800 a year, or $38,000 less than peers at Delta, according to data compiled by Kit Darby, an aviation consultant in Peachtree, Georgia.