MIAMI— On Monday American Airlines’ customer service and reservations agents formally ratified a new five-year labor deal, reports the Wall Street Journal. The contract includes marked pay raises of about 30%, increases that now constitute industry-leading wages, topping those at Delta by 3%. Communications Workers of America and International Brotherhood of Teamsters, the two unions representing the employees, said about 9,500 of 14,500 workers voted, with an overwhelming 73% supporting the deal.
The terms laid out in the contract will hold for at least five years, after which the contract becomes amendable.
The new contract adds to the list of labor agreements struck since the American – US Airways merger, with the company’s flight attendants and pilots also flying high with new deals. The integration process previously halted much significant discussion, but with the two airlines now formally and operationally unified, the timing appeared ripe to formalize an agreement.
Mike Lo Vuolo, a staff representative for the union group, expressed pleasure in the contract’s ratification. Overall, he called it “a great contract,” while acknowledging it did not cover “everything [the union wanted].” The airline similarly voiced strong support for the new deal. Kerry Philipovitch, American’s senior vice president of customer experience, labeled the agreement as “a critical step in making us truly one combined team,” touting “the best service in the industry” that his agents offer customers.
In addition to higher pay, the contract also features strengthened furlough protection, better benefits, increased premiums for irregular shifts, and work exclusivity. According to the Dallas Morning News, the unions will develop two committees to produce a combined seniority list, which they will then present to the agents for ratification.
The contract’s approval reflects on the newly gushing profitability within the industry. Bankruptcy restructuring combined with drastically cheaper fuel has lifted airline profits, and many employees, including those at American, have attempted to renegotiate wages that better match their company’s success. Hammering out a more favorable deal for front-line employees mirrors the broader trend within the industry, with many airlines choosing to deploy some profits internally and reward their own employees.
However, despite the new agreement and financial windfalls virtually across the board, some notable labor turmoil persists elsewhere. American Airlines previously struck new contracts with their pilots and flight attendants, but major contract rejections still ring at Delta Air Lines and Southwest Airlines. Pilots at both airlines as well as flight attendants at Southwest recently turned down large pay raises. The employees claimed that the pay increases did not sufficiently compensate for the large concessions made during lean years brought about by the recession.
American’s relative willingness to sign agreements may represent an attempt to finalize labor negotiations quickly to avoid doling out potentially larger pay raises later. Despite the newly realized profitability, management still prefers to guard the airline from potential fuel spikes or possible macro-economic dips. Its newly ratified contracts generally usher in industry-leading pay, and American probably would rather reward its employees now before contracts elsewhere raise the bar higher.
The agreement also creates a sense of stability within the airline. And it’s more than likely that, after the airline’s bankruptcy proceedings and merger with US Airways, front-line employees will value some stability with the “new American.”
The new labor contract takes place immediately. With Thanksgiving still close in the rear view mirror, American’s front-line crew carved out better pay and better conditions at the world’s largest airline. For these employees, it appear the next five years will feature brighter skies.