- American Airlines (NASDAQ:AAL) is offering pilots raises of nearly 17% by the end of 2024, a sign of the leverage that pilots enjoy as airlines struggle with a labor shortage, according to CNBC report.
- CEO Robert Isom said Thursday that the proposal would boost pilot wages at American to the levels detailed in a tentative agreement between United Airlines and its pilots, citing an internal video.
- Its proposal includes a 6% raise at signing and then 5% raises at the start of 2023 and 2024.
- The latest deal proposed to the pilots' union comes less than a week after United (UAL) and its pilots' unions came to a tentative pact that includes over 14% in total pay hikes over the next 18 months, the author notes.
- Airline stocks fell on Thursday amid a broad sell-off in travel and leisure stocks on recession worries.
- Read more on the recent issues encountered by American Airlines (AAL) as a result of the shortage.
American Airlines offers pilots almost 17% in pay hikes-CNBC report
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Comments (8)
Wage inflation is there. I see it in plumber service, AC, lawn care and what not. Most of the youngsters get into useless degree programs and not many to do any practical, manufacturing jobs.
Considering that inflation in BIden's America is running over 8.5%, AAL recognizes that it must pay its people wages that at least keep up with inflation.The real mystery is why UAL's union leadership agreed with UAL in offering such a sub-standard pay proposal that is on the verge of being shot down.
Note that AAL's offering is a company offering, not even a negotiated contract.Given that American is slowing its capex while UAL is accelerating its spending to levels that exceed what any US airline has ever done, it is UAL that is on the verge of breaking the bank under crushing debt.Those realities are incorporated into my assessment of AAL and UAL in these two recent articlesseekingalpha.com/...seekingalpha.com/...Of course the real barometer is when much financially healthier DAL and LUV weigh in esp. given that both have much more efficient operations and fleets and both will save at least a half billion dollars per year compared to AAL and UAL on fuel - because of LUV's fuel hedges and DAL's refinery strategy.The carriers that get hurt in all of this are the smaller low cost and ultra low cost carriers such as JBLU, ULCC and SAVE whose business models are already buckling under much higher costs and an inability to capture higher revenue - as indicated by the losses for JBLU and SAVE and the very low margins for ULCC.
While ALK is projecting nice profits, they will have to spend much more on labor which will erode their margins much more so than for the big 4.Never in the history of US aviation have the big 4 been more financially positively aligned relative to the smaller discount carriers
Note that AAL's offering is a company offering, not even a negotiated contract.Given that American is slowing its capex while UAL is accelerating its spending to levels that exceed what any US airline has ever done, it is UAL that is on the verge of breaking the bank under crushing debt.Those realities are incorporated into my assessment of AAL and UAL in these two recent articlesseekingalpha.com/...seekingalpha.com/...Of course the real barometer is when much financially healthier DAL and LUV weigh in esp. given that both have much more efficient operations and fleets and both will save at least a half billion dollars per year compared to AAL and UAL on fuel - because of LUV's fuel hedges and DAL's refinery strategy.The carriers that get hurt in all of this are the smaller low cost and ultra low cost carriers such as JBLU, ULCC and SAVE whose business models are already buckling under much higher costs and an inability to capture higher revenue - as indicated by the losses for JBLU and SAVE and the very low margins for ULCC.
While ALK is projecting nice profits, they will have to spend much more on labor which will erode their margins much more so than for the big 4.Never in the history of US aviation have the big 4 been more financially positively aligned relative to the smaller discount carriers
@ilovebacon
I think this all bodes well for airline labor. And it won't be just pilots. I know Delta gave raises to its non-contract personnel while it did not for pilots but there will be acute labor cost inflation - which is to be expected as airlines (at least most of them) start to make money again.
The bigger piece is that the low cost carriers other than LUV cannot withstand the level of pay raises that are going to be necessary to retain pesonnel. Even non-pilot airline jobs are less attractive given the massive inflation in the country. There will be a strong shift back to network/legacy carriers.
I think this all bodes well for airline labor. And it won't be just pilots. I know Delta gave raises to its non-contract personnel while it did not for pilots but there will be acute labor cost inflation - which is to be expected as airlines (at least most of them) start to make money again.
The bigger piece is that the low cost carriers other than LUV cannot withstand the level of pay raises that are going to be necessary to retain pesonnel. Even non-pilot airline jobs are less attractive given the massive inflation in the country. There will be a strong shift back to network/legacy carriers.