American Airlines management and its pilots union plan to keep negotiating toward a joint contract to cover pilots at both American and US Airways after union leaders sent the company a counterproposal Friday.
Negotiations will continue even though a deadline will pass Saturday with neither side formally extending the talks. Instead, the two sides said they will try to hammer out a deal for pilots to vote on before the scheduled start of binding arbitration in mid-January.
“We don’t have a deal, but we’ll continue discussions next week,” American spokesman Casey Norton said.
This week, American sent a formal contract proposal to the board of the Allied Pilots Association that included pay rates that were higher than those at other large network carriers and a scope change that would allow regional carriers to fly medium-size planes with up to 70 seats.
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According to a person familiar with the negotiations, American offered an 18 percent pay raise that would take effect Dec. 1. However, the proposal did not include profit-sharing, which some pilots would like to see now that American is posting profits.
The union said reaction to the proposal was “overwhelmingly negative.”
The union had negotiated a profit-sharing plan in previous contracts, but it paid out only once as the airline has struggled to make money since 2001. Union leaders negotiated away profit-sharing for a 2.5 percent wage increase in 2013 based on projections that then-US Airways Chief Executive Doug Parker and his management team made for the merged company.
Meeting this week, the union board discussed the proposal but declined to send it to members for a ratification vote. On Friday morning, the union sent a counterproposal to the company that includes a 16.29 percent pay increase for two pilot classifications and pay increases for the rest that would match various aircraft-specific rates at Delta Air Lines.
It added a 10 percent pay increase on top of those pay rates for 2015 and 3.5 percent pay increases each year from 2016 through 2019.
The board said it will reconvene Tuesday afternoon after negotiators from the company and the union meet.
“We are committed to securing a negotiated agreement commensurate with your sacrifices, your role in bringing the merger to fruition and your critical role in our revitalized airline’s day-to-day success,” union President Keith Wilson said in a note to pilots Friday evening. “As the pilots who fly for the world’s largest airline — a company producing the highest profits in its entire history — nothing less will do.”
Under a memorandum of understanding signed by American, US Airways and the pilots unions at both carriers before the merger, pilots received an additional $522 million over six years on top of the base contract that the APA negotiated with American during bankruptcy.
The extra money, which can be in the form of pension, pay or per diem rates, translates to about $87 million a year. In arbitration, the contract value is capped at the amount specified in the memorandum.
Flight attendants at American rejected a tentative contract agreement Sunday that was valued at $82 million more than the pact workers will receive from an arbitration panel. Arbitration for the flight attendants begins in early December.
More Envoy cuts
Separately, the pilots union and American’s regional carrier, Envoy Air, said Friday that more operational cuts could be announced soon.
In a message sent to Envoy pilots, union leader Sam Pool said additional announcements by American Airlines Group will be made soon and could harm the airline’s operations.
“Without sufficient pilots, our aircraft are at risk of being parked or, more likely, reassigned to other carriers. Without sufficient pilots, remaining Envoy domiciles may not be properly staffed and consequently face uncertainty,” said Pool, chairman of the Air Line Pilots Association master executive council for Envoy. “And lastly, without a viable growth plan here, AAG will likely attempt to place any new aircraft at other regional carriers.”
Pool said contract talks between management and the union had been going well until the middle of this week, when American said it was terminating negotiations.
“Last week’s negotiations actually moved management and ALPA closer to — not further from — an agreement. The discussions were honest, direct, and businesslike,” Pool said. “Needless to say, we were surprised by management’s ensuing silence.”
This year, Envoy pilots rejected a contract that would have frozen pilot pay rates until 2018 in exchange for the placement of larger regional jets at the airline. The two sides have held intermittent talks since March, with no new agreement.