Southwest Airlines Unveils New Look with Heart. Photo: Stephen M. Keller.

MIAMI — Southwest Airlines has reached an agreement in principle (AIP) with the negotiating committee of its pilot union, possibly ending an often contentious four-year period during which the pilots saw no change in their contractual status.

The negotiating committee will work this week to draft final language for the TA, after which it will pass through the normal Southwest Airlines Pilots Association (SWAPA) ratification process amongst close to 8,000 Southwest pilots. The first step is for SWAPA’s board to meet in mid-September and decide whether the contract is worthy of being ratified. If a vote is taken, it would conclude in early November.

Southwest’s prior contract became amenable on September 1, 2012, and the new contract offer covers the period from then to now with 100% retroactive pay, including for pilots that are deceased and no longer with Southwest. The retroactive pay amounts to a 3% increase in 2013 and a 4% increase for 2014 and 2015, and both amounts are subject to a match on profit sharing and 401k.

The core contract includes an immediate 15% pay raise on October 1, 2016 and 3% annual raises on September 1, 2017-2020. All told, Southwest’s pilots are getting a big pay bump.

Additionally, the issue around the 737 MAX was resolved. Moving forward any aircraft with more than 175 seats or that requires a different type rating will drive a re-opening of negotiations until the new contract covers the additional variants.  The contract also becomes amenable on its own on August 31, 2020.

For Southwest’s management part, they won the right to sign code share agreements and other marketing partnerships with carriers on international routes. The right has been long sought by Southwest’s management team as a means of improving traffic volumes on its international routes.

However, the right is somewhat limited, in that if Southwest is forced to contract and furloughs any of its pilots, all of the agreements will have to be wound down and further partnerships will be held off until all furloughed pilots are recalled.