The long-running dispute between American Airlines management and its pilots seems likely to be resolved this month, but at a high cost to the airline. In return for compromises on the issue of regional jets, the pilots have won a wage increase that is almost double that of the previous offer.
The new tentative agreement on the table gives the pilots a 9 per cent pay rise over five years and $5.75 million in AMR stock options. An earlier agreement, which was rejected by the Allied Pilots Association, offered 5 per cent over four years and with fewer stock options.
In return, American has the right to put regional jets in its American Eagle commuter fleet, but only with considerable restrictions and guarantees that include a no-furlough clause for all current APA members over the lifetime of the contract.
'It seems an expensive deal for American,' observes one Wall Street analyst, 'But the feasibility of American pilots flying regional jets was not at all a good idea. It is not surprising that American was very firm on that. If you look at the pay rates, the difference is mind boggling.' American pilots earn an average of $120,000 a year, against Eagle pilots' $35,000.
While the new agreement establishes an important principle for American, it contains many restrictions on the use of small jets. For example, at least 85 per cent of Eagle jets have to be used on routes that feed hubs and certain markets are excluded altogether. Eagle jets are also prevented from replacing American jets on routes which are profitable. A ballot of all APA members is expected to take place on or around 5 May.
Source: Airline Business
