American Airlines said pay rates will not be retroactive to December if the contract is not approved by January 19.
On Friday evening, the Allied Pilots Association announced that its pilots would vote on the new contract between January 14 and January 30, missing the January 19 deadline set by the company.
“We told APA the deadline for retroactivity was January 19, and APA understood that timeline, and indeed assured us it was manageable. If APA does now need more time, that is OK. So long as ratification is complete by January 31, the new rates would be effective with the February bid (the bid beginning January 31),)” American president Scott Kirby said in a letter sent to pilots late Friday evening.
Kirby expressed disappointment that talks between the pilots and management became contentious in the past few weeks.
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“While the negotiations are over, I personally hope our pilots ratify our offer because I think you deserve the extra $2 billion, but should you all disagree and decide you prefer the current contract, we will respect that decision,” Kirby said.
Keep reading for the full letter from Kirby
Letter to American pilots
Since I wrote to you on December 23, two issues have been raised by the APA that characterize our leadership team as being unreasonable: the calendar day/long rate rig proposal made by APA on January 3 and now the January 19 ratification requirement for the pay rates to be retroactive to December 2. I want to give you our perspective on both issues:
During negotiations in November, the union proposed calendar day. When the Company did not agree, around Thanksgiving, APA instead proposed increasing the rig time, and we agreed to bring it up to 5:10. We believed that issue was closed out with the union. Then, with the previously agreed January 3 deadline to retain retroactivity approaching, the union made the long rate rig (calendar day) proposal. The Company looked at that idea but could not agree because the cost—about $80 million per year—was too expensive on top of the almost $2 billion of economic improvements already included in the Company’s offer ($400 million per year on average). To put that $80 million per year in context, it is roughly the same as an additional 3% pay increase.
We did commit to working to reduce the duty day rigs. There is no guarantee we can do so, and we probably won’t be able to solve everything. But we know this is an important issue to our pilots, we don’t like those trips either, and we would very much like to make those better. But the blunt instrument proposal that APA made at the last minute was too broad, so we declined the offer.
This one requires a little history. Recall that the original extension agreement provided that the new pay rates would be retroactive to December 2 if the JCBA was concluded (approved by the APA Board and, if necessary, ratified) by December 31. During the week of December 15, the APA made an extraordinarily regressive proposal to management after months of negotiations. We took this as a clear sign that negotiations were over and we proffered for arbitration on December 23. On the same day, we announced a company-wide 4% increase for all non-union employees below director level and for all unions that had reached JCBAs. We communicated to our pilots that, as a result, our offer now included pay rates 23% above our current scales. We also communicated that negotiations had ended but our offer would remain open until arbitration began in late February.
On that day, per a request from APA, we agreed that the new pay rates would be retroactive if the Board approved the Company proposal by a January 3 deadline and ratification was concluded by January 19. Now, today— January 9 —APA has requested an extension to January 31 for retroactivity. We again have declined and APA is again stating we are being unreasonable.
We disagree. We are not talking about retracting an offer if this deadline is not met. We are talking about a deadline to maintain pay retroactivity. We did not allow the APFA this much extra time to deliberate and retain retroactivity, and it is not fair to them or our other unions to allow the APA yet again more time. The APA Board has known about the January 19 deadline for retroactivity since December 23. And retroactivity could be achieved if the Company’s proposal was approved by the APA Board, without requiring ratification (as they proposed last weekend), before January 19.
Much of what we have learned in this negotiation is that, due to the history of labor relations at both American and US Airways, there is significant lingering mistrust. Your new management team is committed to improving that situation over time, but we can only build trust by doing things that are trustworthy — and that includes doing what we said we were going to do. We told APA the deadline for retroactivity was January 19, and APA understood that timeline, and indeed assured us it was manageable. If APA does now need more time, that is OK. So long as ratification is complete by January 31, the new rates would be effective with the February bid (the bid beginning January 31).
On a personal level, I must admit that I’m disappointed with how this process has evolved. From management’s perspective, we are working hard to reward our pilots with something above and beyond their existing contract — because you all have earned it. Offering a mid-contract, $2 billion compensation increase is something that has never happened at any company at any time that we know of. Somehow, however, this has turned into a negative and divisive issue, so it's time to be done one way or the other. While the negotiations are over, I personally hope our pilots ratify our offer because I think you deserve the extra $2 billion, but should you all disagree and decide you prefer the current contract, we will respect that decision.
Thank you very much for your continued commitment to American Airlines, and for your patience. It has taken an enormous amount of work by APA and the Company to get to this point, but we finally have a very good offer out to our pilots for a ratification vote. That is what we have been working towards and now it is up to you to decide. One way or another, we will get through this, and be in position to begin moving forward together. I, like you, am looking forward to that day.