Paychecks for 30,000 American Airlines mechanics and ground workers will be getting bigger.
The Fort Worth-based carrier and the TWU-IAM Association announced on Friday that mechanics, baggage handlers and other fleet service employees will receive a double-digit pay raise in November as part of an interim agreement reached between management and the unions.
The employees will also receive a lump sum payment and retirement improvements as part of the deal. Pay raises range from 15 to 36 percent for mechanics, 24 percent for ground workers, 31 percent for tower planners and 55 percent for weight and balance planners, American said.
“Association members will not have to wait to share appropriately in the success of their airline while their negotiating committees bargain hard to complete the process,” said association chairman Sito Pantoj and vice chairman Harry Lombardo in a statement.
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While other unions such as the pilots and flight attendants negotiated new contracts with double-digit pay raises, mechanics, baggage handlers and other ground workers have been without a joint bargaining agreement since American Airlines and US Airways merged in December 2013.
The two sides are still in contract negotiations. The union said American is also considering bringing back some maintenance work that had previously been outsourced to third-party firms.
“With 12 diverse work groups represented by the association, reaching a single agreement for this specific set of co-workers is taking longer than any of us anticipated,” said American’s Chief Operating Officer Robert Isom.
In a Securities and Exchange Commission filing Friday, American told investors that the new pay rates will increase its operating costs by $75 million in the third quarter and $120 million in the fourth quarter. The pay rates are comparable to those at Delta Air Lines and United Airlines, the carrier said.
Shares of American (ticker: AAL) rose 2 percent, closing at $34.45 on Friday.
Wolfe Research analyst Hunter Keay told investors in a research note that the new agreements could help with American’s flight operations.
“This will allow [American] more flexibility with its fleet and operation, as legacy [US Airways] mechanics will be able to work on legacy [American] planes, and vice versa, something that was previously prohibited,” Keay wrote. “Getting these deals done removes a distraction, too, and will also allow [American] to start culling its currently fat headcount (perhaps through attrition and buyouts) in the coming years, without fear of negotiating consequence.”
American has 123,500 employees, with more than 80 percent represented by unions.
While the TWU-IAM members have not received any significant pay increases since the merger, legacy American employees received smaller, incremental raises that were part of their contracts negotiated during bankruptcy. Meanwhile, former US Airways mechanics and ground workers are working under a deal reached with American in 2014.
Last year, legacy American ground workers also received almost 5 percent pay raises that increased starting pay to $9.84 an hour. Employees with 10 years of seniority earn $24.09 per hour. Ground workers at former US Airways locations are paid between $10.59 and $24.39 per hour depending on seniority.
The ground workers are also part of the new profit-sharing plan that American management announced this spring. American is putting 5 percent of every pre-tax dollar it earns in 2016 into a profit-sharing pool that will be shared by 110,000 employees. If American is profitable this year, the payment will be made to workers in early 2017.
“We’re committed to doing things differently at the new American,” said American spokesman Matt Miller, adding that more than 75 percent of the TWU-IAM workers will receive a $17,000 annual increase. “It’s a new day at American, and a new day for our fantastic colleagues.”
In 2015, the pilots approved a contract with 23 percent pay raises. Earlier this year, flight attendants received a 6 percent raise in advance of a contract clause that goes into effect after United Airlines reaches a new deal with its flight attendants. American chose to adjust pay scales in April instead of waiting for the United to come to its deal.