Pilots' Win: American Airlines Commits To 46% Total Compensation Boost

American Airlines Group Inc. AAL’s pilots have clinched a new contract that promises a substantial salary increase.

Over the contract’s four-year span, pilots can anticipate an average salary hike of over 21%, but when combined with other benefits, the total compensation could surge by more than 46%, the Wall Street Journal reported Monday.

This move comes as airlines face a dual challenge: a noticeable shortage of pilots and a robust resurgence in travel demand. To remain competitive, airlines are compelled to match or even surpass the compensation packages offered by rivals. Negotiations have been tense, with pilots pushing not just for better pay, but also for improved scheduling, leave policies, and other benefits.

Factoring in enhanced 401(k) contributions, the total remuneration for American Airlines pilots will witness a rise of over 46% throughout the contract. This includes an immediate 21% pay bump, coupled with enhanced sick leave provisions and other terms.

Robert Isom, the CEO of American Airlines, highlighted on Monday that this $9 billion deal would pave the way for broader training programs and open up more avenues for pilots. The Allied Pilots Association, representing 15,000 pilots from American Airlines, confirmed that a whopping 73% gave the green light to this agreement.

The new contract, spanning four years, promises pilots an immediate payout of around $1.1 billion. This encompasses one-off payments, ratification bonuses, consistent annual pay hikes, and a slew of enhanced benefits and work regulations, as outlined by the union.

Earlier this year, Delta Air Lines, Inc. DAL set a precedent with a contract that promised its pilots a 34% raise over four years. Meanwhile, United Airlines Holdings Inc. UAL pilots are on the brink of finalizing a deal that could see their paychecks swell by 34.5% to 40%.

Although American Airlines had initially reached a tentative agreement with its pilots in May, United’s more enticing offer momentarily disrupted the negotiations. However, American Airlines soon decided to match United’s offer, ensuring parity in wages and back pay.

With these developments, Southwest Airlines LUV remains the sole major U.S. airline yet to finalize at least an initial agreement with its pilots. Last month, Southwest pilots made an unsuccessful bid to exit the federal mediation for contract discussions, hinting at a potential strike.

On the stock market front, shares of American Airlines AAL witnessed a 0.7% uptick following the announcement, reversing an earlier 0.6% dip.

This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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