Friday, May 04, 2007

American Airlines pilots seek 30.5% raise

APASeeking to make up for pay cuts they accepted several years ago, pilots at American Airlines are asking for a substantial raise. Their union, the Allied Pilots Association (APA), announced yesterday that they have "presented a plan for non-variable compensation designed to enable its pilots to share in the airline's financial recovery."
Under APA's plan, the pilots would receive a 30.5 percent pay rate increase on the date of signing retroactive to May 1, 2008 — the contract's amendable date — and five percent annual pay rate increases thereafter.

Over a three-year period, annual pay rate increases would average around 17 percent.

The plan also calls for signing bonuses equaling 15 percent of each pilot's total pay over the duration of the negotiations.

Management triggered the "early-opener" provision of the current contract on July 21, 2006, marking the start of negotiations.
APA president Capt. Ralph Hunter said, "Our airline's management has clearly demonstrated the ability to adapt to higher operating costs in areas such as executive compensation. We are confident the same will occur as part of appropriately paying our pilots.

"By accepting large bonuses during each of the past two years, management sent a strong signal to employees that it was time for financial recovery," Hunter said. "We concur with that assessment."

An Associated Press article in USA Today quotes a company spokeswoman who said the pilots' proposal had to be balanced against American's labor costs, which she said are higher than those of other carriers.

More from the USA Today article:
The unusually public offer comes against a backdrop of increasing labor-management tension at the nation's largest airline. Employees have been enraged by stock bonuses given to about 900 managers last month.

Unions estimate the value of the bonuses at more than $160 million. The company has disclosed multimillion-dollar payouts to a handful of top executives.

The bonuses were a reward for an increase in AMR's stock price, but union leaders say it was employee concessions that made the company's recovery possible.

Drew Keith, a former banker hired by the union to analyze airline industry finances, said a 30.5% raise next year would return the pilots' purchasing power back to pre-2003 levels.
A Reuters article, published on and elsewhere, explains things this way:
The APA's proposal comes less than two weeks after AMR disclosed that Chief Executive Gerard Arpey's 2006 compensation amounted to USD$5.4 million and that he would be paid USD$6.64 million as part of his 2007 compensation.

The union, whose members have given up USD$1.8 billion a year through pay cuts and work rule changes, complains that airline managers' compensation has recovered faster than workers' since the 2003 restructuring. AMR executives made sacrifices alongside the workers during the reorganization.

The bulk of Arpey's compensation comes from stock awards that hinge on company performance. It is common in the United States for a portion of executive pay to be put at risk.
APA points out that in a recent polling of its members, the pilots cited higher pay rates as their top priority in negotiations. The APA president notes, "Our pilots have spoken loud and clear that our next contract must include pay restoration. It is a prerequisite for them to ratify a new agreement."