United Airlines CEO says proposed Delta contract could set benchmark for other carriers
American and United Airlines pilot unions rejected proposed deals in November
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United Airlines CEO Scott Kirby said the tentative contract between competitor Delta Air Lines and its pilots will help all major carriers "get deals done on the same terms."
On Friday, Delta offered its pilots, represented by the Air Line Pilots Association (ALPA) — and who vowed to strike if a new deal isn't ratified — a 34% cumulative pay increase over three years, including an immediate raise of at least 18% on the date the contract is signed, according to Reuters.
The deal hasn't been approved by the union yet. But if it is, the contract could set the standard for competing carriers who are also in the midst of contract negotiations with their pilot unions.
United Airlines CEO Scott Kirby and Executive Vice President John Laughter of Delta Air Lines testify before the Senate Commerce, Science, and Transportation Committee hearing in the Russell Senate Office Building on Capitol Hill, in Washington, U.S. (Chip Somodevilla/Pool via Reuters / Reuters Photos)
DELTA AIR LINES OFFERS PILOTS A NEW CONTRACT AS POTENTIAL STRIKE LOOMS
"The really good news is it means we'll all get deals done essentially on the same terms and can move forward," Kirby told Reuters Monday.
He noted that pilot wages will be pushed up industry-wide and therefore so will airfares for travelers.
"The biggest news for an investor perspective is cost convergence in the industry means that what is different now is all the low-cost carriers are going to have come up to these much higher pay rates," he told the outlet.
"This is going to wind up like oil prices — it's going to be a pass through." he added.
United Airlines Boeing 787-9 takes off from Los Angeles international Airport on July 30, 2022 in Los Angeles, Calif. (AaronP/Bauer-Griffin/GC Images / Getty Images)
DELTA PILOTS OPEN VOTING FOR STRIKE AUTHORIZATION AS CONTRACT NEGOTIATIONS FALTER
However, pilot unions have rejected proposed contracts from American and United Airlines last month.
The Allied Pilots Association (APA) which represents American Airlines pilots, said in early November that its board of directors rejected a proposed agreement that would have offered a raise of about 19% over two years.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| DAL | DELTA AIR LINES INC. | 63.30 | -0.03 | -0.05% |
| UAL | UNITED AIRLINES HOLDINGS INC. | 95.24 | +0.84 | +0.89% |
| AAL | AMERICAN AIRLINES GROUP INC. | 14.37 | +0.17 | +1.20% |
APA spokesperson Dennis Tajer told FOX Business the proposed tentative agreement failed to meet membership’s contract goals.
"American management has done very little to address contract provisions regarding schedule reliability and instead focused more on keeping mainline pilots’ pay increases as low as possible," Tajer said.
Delta Air Lines pilots, represented by the Air Line Pilots Association, protest outside Terminal 4 at JFK International airport in New York City, June 30, 2022. (Reuters/Shannon Stapleton / Reuters Photos)
Just before that, United Airlines pilots overwhelmingly rejected a tentative agreement announced in June. The airline had offered more than 14.5% cumulative pay increases and enhanced overtime and training pay. However, the proposed agreement fell short of the industry-leading contract United pilots earned and deserve, the union said.
"It’s more than just the money, pilots across the industry are demanding a work-life balance and for respect and certainty of their schedules," Tajer told FOX Business Tuesday.
About one quarter of the Delta's latest proposed deal "is repairing those fundamental maladies," he said.
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ALPA said last month that the U.S. is producing a record number of certificated airline pilots this year, with more pilots in the market today than there are jobs available. According to the Federal Aviation Administration, 9,397 new commercial airline pilot certificates have been issued in the last 12 months, exceeding airline analyst forecasts and airline pilot demand.
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