JetBlue will be walking a tightrope in 2014 as it continues negotiations with pilots. The airline has been falling behind rivals in terms of profit margins, but the struggle to retain pilots means JetBlue is going to have to increase their compensation. This is stuff to keep executives awake at night.
Amidst all the talk about a looming pilot shortage driven in part by new training requirements, JetBlue CEO David Barger said today he’s not worried about a pilot shortage — he’s concerned about keeping the pilots the airline already has on the payroll.
Over the long term, Barger said, retaining pilots is a key issue.
Speaking during JetBlue’s third quarter earnings call, Barger said the number of applications the airline receives for pilot jobs is “good.”
Speaking about cost headwinds in 2014, JetBlue CFO Mark Powers said the airline is continuing discussions with pilots about compensation and is committed to providing wages and benefits in line with their peers.
Through the end of 2012, JetBlue employed 2,204 pilots, all non-union, and they accounted for 40% of JetBlue’s salary expense.
Groups looking to unionize JetBlue’s pilots claim wages and benefits aren’t on par with peers at other airlines.
JetBlue acknowledged last year that it may have to raise compensation for pilots if it hopes to keep them.
“Our pilot pay structure, for example, is based on an industry derived average and to the extent our competitors continue consolidating and/or begin raising their pilot salaries in the face of a possible pilot shortage, we may have to address increased salary cost pressure to retain our pilots in an environment where our capacity is also forecast to continue to grow,” JetBlue stated in its 10-K annual financial filing covering 2012.
Barger said it takes about 6 to 6.5 years for pilots to achieve captain status at JetBlue and that not only compensation, but a host of other issues, including new aircraft types and lifestyle issues, will come to bear in retention efforts.
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