American Airlines has formally presented a contract proposal to its pilots union, whose board will decide whether to send it to members for a vote.
According to a letter sent by American President Scott Kirby to the Allied Pilots Association on Tuesday, the proposed contract would give pilots the highest pay rate among legacy carriers.
“It is my hope that as we build a stronger, more trusting relationship that, together, we will be able to reach the best economic considerations for the 100,000 employees of American and the company in the future,” Kirby wrote in the letter, obtained by the Star-Telegram.
The proposal does not include the company’s initial request to add five seats to the regional jet work scope section of the contract to allow regional carriers, like Envoy Air and Piedmont Airlines, to fly jets with 81 seats instead of the current limit of 76.
Kirby said adding those five seats would translate into tens of millions of dollars in new revenue annually for the airline.
“Even though we believe the scope request is in the best interest of all involved, we believe that establishing trust with our employees is even more important,” Kirby wrote. “Today’s proposal omits a request to add five seats to the 76-seat jets as a sign of good faith to demonstrate the trust we want to build.”
Union president Keith Wilson said the board will convene on Wednesday to consider the proposal and to determine its next steps.
“Although management has characterized its proposals as ‘comprehensive,’ they read more like a broad outline of the contractual areas management wants to discuss,” Wilson told pilots in a message Tuesday evening. “From our vantage point, the proposals appear incomplete, as they do not address many of APA’s quality-of-life-related negotiating priorities.”
The two sides previously agreed to a 30-day negotiating extension that lasts through Saturday. The new contract would cover pilots from both American and US Airways.
If the union decides by the end of the week to send the proposal to members for a ratification vote, there is a further extension for 45 days. And if a contract agreement is reached outside of arbitration, pay rates would take effect Dec. 1, regardless of the effective date of the contract.
This week, American’s flight attendants rejected a contract agreement that included pay raises but did not have a profit-sharing plan. The company and the Association of Professional Flight Attendants are scheduled to begin binding arbitration meetings Dec. 3. Both sides have said the contract determined by the arbitration panel will likely be worth $82 million less in wages and benefits than the contract that was rejected.
Shares of American Airlines Group [ticker: AAL] have been largely unaffected by the labor news at the carrier. On Tuesday, the stock closed down 39 cents at $43.44.
Wolfe Research analyst Hunter Keay told investors he did not believe that the rejection by the flight attendants will affect negotiations with pilots.
“If anything, this slightly increases the chance that pilots ratify their likely soon-to-be-announced” tentative agreement, Keay wrote in a research note sent to investors Monday. “We believe APA (the pilots union) will increase its outreach to its members to ensure something similar doesn’t happen, as the stakes are about the same if they reject a TA (e.g., it goes to arbitration).”