American Airlines Boeing 777-223(ER) (29578/185) N770AN departs Los Angeles International Airport (LAX/KLAX) on December 11, 2013.
(Photo by Michael Carter)
American Airlines and its pilots, represented by the Allied Pilots Association (APA), remain locked in talks over a new contract proposed by management last week and a union counterproposal, with each side claiming that its version is in the pilots’ best interest.
Management’s original proposal included a scope rule change that would have added five seats to 70-seat regional jets, but that has been dropped. American and the union remain in talks on other issues with the contract, including duty days, but the main sticking point is on compensation.
The proposed contract does away with profit sharing, which CEO Doug Parker has gone on the record as saying is an “inefficient” way to pay airline employees. Instead, management is offering what it says is an 18% pay increase over Delta Air Lines’ pilot compensation—the standard by which both APA and American are measuring pilot pay—plus a 3% annual raise through 2019, a person familiar with the talks said.
The union disputes these figures. Instead, APA said the 18% premium applies only to one band of pilots, while in fact for 60% of its members—Boeing 737-800 captains—the absence of profit sharing makes the pay premium over Delta only 1%.
Hourly compensation proposed by American management is higher than that for Delta pilots, but without profit sharing American’s pilots would be paid less than Delta’s, APA president Keith Wilson said in a message to union members. For this year, APA estimates Delta’s profit sharing for pilots to be 15% over base pay, Wilson said.
In lieu of profit sharing, APA has countered with a 10% premium over Delta pilot pay. Talks on this point are continuing this week. “The good news is, we’re talking,” an APA spokesman said.
Unlike traditional labor talks regulated by the National Mediation Board and the Railway Labor Act, the contracts currently being negotiated are part of the continuing effort to create a joint collective bargaining agreement to merge the American and US Airways contracts.
The two sides had set a Nov. 15 deadline for the deal to go to binding arbitration if an agreement could not be reached, but the deadline has slipped as management and union talks continue.
If the two sides cannot reach a deal this week, the matter goes to binding arbitration, the terms of which were set out a memorandum of understanding (MOU) before the merger was finalized last year.
Any contract that emerges from arbitration is expected to be cost-neutral, according to the terms of the MOU, which means pilot compensation will be roughly an average of Delta and United Airlines pilot pay.
However, the union warns there will be a cost in goodwill if the contract goes to arbitration.
“There will be a cost to the culture we have tried so hard to foster by going to arbitration,” the APA spokesman said.
The contract talks with the pilots are the latest labor travail to beset American. Last week, Association of Professional Flight Attendants (APFA) members narrowly rejected the contract proposal hammered out by management and APFA leadership. That contract now goes to binding arbitration, expected to begin next month.
Parker, then CEO of US Airways, made engaging American’s labor groups a hallmark of his team’s merger proposal in 2012, and the unions’ involvement in merger negotiations are thought to have eased the deal’s approval.
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