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Southwest’s Tentative Deal With Pilots May Be in Jeopardy

Skift Take

Airline pilots have not had this much leverage in a long time, and it seems they want to use it. This is fine as long as carriers keep reporting massive profits. But if the industry suffers another downturn, airlines are going to have a tough time paying pilots so much money.

— Brian Sumers

Southwest Airlines Co.’s tentative labor agreement with its pilots, reached after more than four years of negotiations, may be in danger now that Delta Air Lines has a pending deal that would pay its aviators more.

The Southwest Airlines Pilots Association is seeking to reopen some sections of an accord reached Aug. 29, union President Jon Weaks said in an interview Monday. Southwest Chief Executive Officer Gary Kelly is considering a request from the union for a meeting, Weaks said.

“It is better for all parties to negotiate this now and have a clean tentative agreement process and a conclusion,” Weaks told pilots in an e-mail Monday. “There is a lot of mutual incentive for the company and SWAPA to fine-tune the current TA for changing industry dynamics and the needs of both parties.”

Pilots at major U.S. airlines typically seek industry-leading pay in contract talks, and Southwest’s union said it had succeeded in that goal before the Delta agreement on Friday. For Southwest, securing a contract settles questions about rising labor costs and will enable the carrier to use improved compensation as a recruiting tool.

Southwest didn’t immediately respond to a telephone call and e-mail seeking comment.

United Contract

In addition to the new Delta agreement, a contract extension approved by United Continental Holdings Inc. pilots earlier this year includes a provision that will boost their pay if Delta pilots secure a more lucrative deal. That would give both United and Delta pilots higher pay for the life of the Southwest contract.

The union expects that Southwest will want to re-do a section of the contract that gives the carrier the right to enter limited marketing partnerships with other airlines for its nascent international operations. Unlike an earlier accord rejected by pilots last year, the current agreement doesn’t include the names of any potential partners. That means the union would have the right to consider each tie-up separately, Weaks said, instead of as a group.

Southwest wants such partnerships, including interline or codeshare agreements, because they can enable airlines to sell tickets on each other’s flights and boost revenue at little or no extra cost.

Pay Percentages

Pay for Southwest pilots would increase 29.4 percent compounded over the term of its four-year tentative accord, while Delta aviators would get a cumulative 30.2 percent raise over the same time period under their Sept. 30 agreement in principle, according to the Southwest union. Pilots at both carriers must approve the pending contracts, with Southwest’s 8,400 aviators voting Oct. 8 through Nov. 7.

The two-year extension approved by United pilots in January included a 13 percent pay hike this year followed by a 3 percent increase in 2017 and 2 percent in 2018.

Failure of the Southwest agreement also could re-open a dispute over whether the company can fly the newest version of Boeing Co.’s 737, which is set to arrive next year. The union maintains pilots can’t fly the 737 Max under the current labor accord and has sued Southwest over the issue. Southwest believes it can operate the Max now.

©2016 Bloomberg L.P.

This article was written by Mary Schlangenstein from Bloomberg and was legally licensed through the NewsCred publisher network.

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