Robust Airline Profits will influence Pilot Contract Talks in 2015

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With U.S. airlines awash in cash these days, one of the big questions in the industry has become how much of that wealth will pilots seek next year when contracts at several carriers come up for renegotiation.

Contracts at four large airlines—Delta Air Lines, Hawaiian, Spirit, and Jazz Aviation, a regional operator for Air Canada—are up for talks in 2015, covering nearly 15,000 pilots represented by the Air Line Pilots Association, the largest pilots union in North America. JetBlue Airways’ 2,500 pilots are also hoping to secure their first contract next year, after voting this spring to join ALPA.

U.S. carriers are producing enormous profits after years of consolidation. In the most recent quarter, the six largest U.S. carriers collectively earned $3.97 billion, with American, Southwest, Alaska Airlines, and JetBlue all reporting record net income for the period. U.S. carriers lost almost $60 billion from 2000 to 2009.

“This is really a good story,” ALPA President Lee Moak said Tuesday during a visit to Bloomberg Businessweek in New York, part of a quick tour to assure Wall Street analysts that ALPA’s contract demands won’t prove onerous to airlines. “I almost can’t stand it, it’s so good.”

Shareholders have started to realize returns in the form of dividends and stock buybacks. Thanks to the profits, pilots now see themselves as collaborators with management—they increasingly lobby alongside airline executives in Washington. That, says Moak, deepens the working relationships. “All of a sudden, you find yourself on the same side of 95 percent of the issues,” he says.

Another boost has come from profit-sharing schemes adopted by the airlines as a way of rewarding employees when times are good—and the deals carry no commitments should profit shrink. In February, Delta paid employees, including its 11,900 pilots, a record $506 million in profit sharing, equal to about 8 percent of annual salaries. The airline forecasts that amount to increase next year, given higher profit this year.

More… http://www.businessweek.com/articles/2014-08-13/airline-profits-will-drive-2015-pilot-contract-talks

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