American Airlines pilots agreed in principle on a new contract

American Airlines pilots have agreed in principle on a new contract, their union said on Friday, ahead of a busy summer travel season after years of negotiations with the largest U.S. carrier. The Allied Pilots Association (APA), which represents over 13,000 pilots at Texas-based American, said it will move forward with completing contractual language before presenting the contract to its board for an approval.

The union did not share contract details. American did not quantify the contract value but said it provides pay and profit sharing that match the top of the industry with improved quality-of-life provisions. Two sources with direct knowledge of the matter said the contract lasts four years with pay rates comparable to those secured by pilots at Delta Air Lines, reports BSS.

American’s contract includes improvements on scheduling, a critical issue for pilots seeking better work-life balance in a profession that often requires them to be away for days from their families, they said.

The previous contract came up for renewal in 2020. Last year, the pilots turned down an offer that included a 19% pay hike over two years.

Industry officials say Delta’s pilot contract has become a new benchmark for contract negotiations in North America. It is fueling demands for higher wages at Canadian carriers, whose pilots want to narrow the pay gap with their U.S. counterparts.

American had estimated that matching Delta’s deal would cost it about $8 billion over four years. Delta’s pilots in March ratified their contract which includes over $7 billion in cumulative increases in pay and benefits over four years.

It underscores pilots’ bargaining power as airlines rush to boost staff numbers ahead of what is shaping up to be a busy summer travel season. American, Delta, United Airlines (UAL.O) and Southwest Airlines (LUV.N) are estimated to hire about 8,000 pilots this year.

Analysts at Jefferies estimate the United States is short about 10,000 pilots. This supply-demand gap is projected to last until 2027.

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