A day after American Airlines management proposed terms for a new contract, the head of the Allied Pilots Association said the proposal just won’t do.
APA president Keith Wilson said that the initial feedback from pilots “has been overwhelmingly negative. No disagreement here. Management’s initial proposals are seriously lacking on various fronts.”
Two issues stuck out, from Wilson’s letter: regional jets flown by other airlines on American’s behalf and the size of the proposed pay raises.
First, American’s proposal to raise the limit on smaller regional jets from 65 seats to 70 seats was a surprise, particularly given that AA president Scott Kirby had sent a letter saying that American was abandoning a proposal to add five seats to the 76-seat regional jets.
“When compared to the industry standard, what management has proposed would dramatically increase the number of 70-seat commuter aircraft and related capacity flown by regional affiliates,” Wilson said.
“In addition, management does not appear to be interested in providing our pilots with a compensation package comparable to industry leader Delta Air Lines,” Wilson said.
“While initially proposed pay rates are fractionally higher than Delta’s current pilot pay rates, there’s little adjustment for the absence of profit-sharing, which this year will equal 15 percent of annual earnings for Delta pilots. This means that American Airlines pilots’ compensation would continue to trail industry leader Delta by a significant margin,” he said.
“Meanwhile, our airline is producing its best-ever financial results, with forecasts of industry-leading profits and margins going forward. What’s wrong with this picture?” he asked.
Keep reading for Wilson’s letter.
Management’s Initial Proposals Are Seriously Lacking
Since I forwarded management’s initial joint collective bargaining agreement economic proposals to you yesterday, the feedback we have received on the proposals has been overwhelmingly negative. No disagreement here. Management’s initial proposals are seriously lacking on various fronts.
After reading the letter from American Airlines President Scott Kirby yesterday morning addressed to the APA board of directors, your APA leadership expected something a lot different from what we received. Mr. Kirby noted that issues regarding Scope bring with them “a lot of history and skepticism,” and he’s right. The contrast between Mr. Kirby’s letter and the proposals that followed will only add to that baggage. While there was no call for an increase from 76 seats to 81 seats on commuter aircraft, management instead simply shifted their aim with a Scope proposal to add five seats to the medium-sized (up to 70 seats) regional jets. Moving this limitation would be well outside the industry standard. When compared to the industry standard, what management has proposed would dramatically increase the number of 70-seat commuter aircraft and related capacity flown by regional affiliates.
In addition, management does not appear to be interested in providing our pilots with a compensation package comparable to industry leader Delta Air Lines. While initially proposed pay rates are fractionally higher than Delta’s current pilot pay rates, there’s little adjustment for the absence of profit-sharing, which this year will equal 15 percent of annual earnings for Delta pilots. This means that American Airlines pilots’ compensation would continue to trail industry leader Delta by a significant margin. Meanwhile, our airline is producing its best-ever financial results, with forecasts of industry-leading profits and margins going forward. What’s wrong with this picture?
Delta’s CEO recently addressed the importance of a “positive employee culture” and “rewarding employees with pay for performance through profit sharing,” adding that it “drives revenue growth and better financial returns.” American Airlines management evidently believes otherwise. With the exception of Spirit Airlines, American Airlines is the only other airline that does not provide profit-sharing to its pilots.
Management’s initial proposals would have American Airlines pilots remaining under bankruptcy-era work rules and likewise do not address length-of-service credit and numerous other important quality-of-life issues that we have raised in bargaining. Additionally, their initial proposals fail to recognize that Delta pilots are on the cusp of negotiating a new contract that will likely lead to pay rate increases that will surpass management’s proposed pay rates in quick fashion.
During a recent conference, Mr. Kirby stated that better labor relations “lead to better financial results and better customer service.” Management’s initial proposals are inconsistent with that virtuous cycle and with the positive employee culture that has made this merger so successful thus far.
Where do we go from here? The APA board of directors convened at 1 p.m. today to discuss management’s proposals and determine our next steps. The APA Negotiating Committee, Scope Committee, Industry Analysis Committee and director of economic and financial analysis addressed the board this afternoon.
Our goal remains a negotiated agreement reached at the bargaining table. Management’s latest proposals have made attaining our goal more challenging.