America West Airlines pilots finally have a contract. After fours years of negotiations and two failed votes, the Air Line Pilots Association narrowly approved a 3-year-deal Tuesday, a decision the company says will pave the way for the Tempe-based airline's continued growth.
“The pilot leadership is certainly pleased the pilots have decided to move forward,” said Amy Scarlett, union spokeswoman. “More importantly, they all recognize this is just a foundation for the future. It is a still a pretty split pilot group. We have a lot of work ahead of us to get us closer to our industry peers.”
Of the 1,505 pilots eligible to vote, 96.5 percent participated with 771 pilots, or 53.17 percent voting to ratify the pact. It was the third vote this year after tentative agreements were turned down in March and this month. The company and the union admit there are still issues outstanding. America West agreed with the federal government to limit labor costs in order to receive backing for a loan, so talks could be just as difficult in the future.
America West CEO Doug Parker said the approval is an important step forward in the carrier's continuing transformation to a leading low-cost airline. Pilots have played an important part in the company's turnaround, Parker said, adding he was grateful for their professionalism and integrity during negotiations.
“Even though today’s ratification represents a new chapter for our airline, we realize our work is not done,” Parker said in a statement. “We will continue to work hard to build a culture of open communication and mutual respect. Last, but certainly not least, today’s announcement reaffirms America West’s commitment to provide outstanding customer service.”
The company announced last week that it plans to hire 1,000 new employees next year with 70 percent of the positions expected to be filled in the Valley.
It also will add six planes to its 140-jet fleet as part of a plan to grow 10 percent a year. The pilot's contact contains a 14 percent pay raise, 11 percent now and 3 percent in 2007. It was sweetened with more benefits after it failed earlier this month. Long-term disability payments were extended from age 60 to age 65.
All pilots will receive a signing bonus that will be contributed to a 401(k). For captains, the bonus is $12,000 and for first officers, it's $7,200. In the failed agreement, the bonus was not offered to pilots nearing retirement. A bridge retirement program was extended to pilots who have retired since the the contract became amendable in May. 2000. “We heard very clearly from our pilot group that they wanted to take care of our retirees,” Scarlett said.
Pilots will also get a bigger share of the savings that results in the company being cost-effective and efficient. All of the improvements that were added to the contract since the failed vote were funded by the pilots increasing their productivity by three hours per month, the union said.
“There was no additional money in this contract,” Scarlett said. “The pilots will be working more. Pilots will be working more so they need fewer pilots and less overhead so the money that they save with that is the money they used to pay for this contract. We are paying for it.”
During talks, the company has argued it is constrained by an agreement with the Air Transportation Stabilization Board.
Following the terrorist attacks of Sept. 11, 2001, the airline secured $380 million in loan guarantees from the federal government. Part of the agreement stipulates America West will keep labor costs within certain percentages until the loan is paid off.
In the airline's business plan, it agreed not to exceed self-imposed limitations on pay raises. If the airline violates the boundaries set in the business plan, it could be forced to repay loans earlier than planned.
Jeff McClelland, the carrier's chief operating officer, said the same problem will exist when negotiations begin again.
“Our ATSB loan has an amortization period that goes out through 2008 so as long as we have the ATSB loan outstanding, we do have the same ATSB constraints,” he said.
Following the failed vote this month, Parker told the union his offer still stood and that there was a chance $18 million due to go to retirement accounts as part of the contract could dry up because of an accounting glitch. Because of the ATSB loan terms , the carrier could not carry the money over into 2004, Parker said. America West began labor negotiations with its 40-dispatchers last spring. Talks with its Teamster's mechanics began in October and the company expects to start negotiations with flight attendants early next year.
The company's stock rose 43 cents Tuesday, or 3.64 percent to $12.24 a share.