American Airlines hands out double-digit pay raises to 30,000 workers

American Airlines hands out double-digit pay raises to 30,000 workers

Scott Mills finishes fueling up an American Airlines jet at Dallas/Fort Worth International Airport. (AP Photo/LM Otero, File)
By Conor Shine Follow @Conor_Shine
The Dallas Morning News
Published: 05 August 2016 09:29 AM
Updated: 05 August 2016 04:06 PM

Nearly a third of American Airlines’ workforce woke up to a happy surprise Friday morning -- they’re getting raises worth 15 percent to 55 percent, effective immediately, that will give them the highest hourly rates of the major U.S. network carriers.

The deal announced between the Fort Worth-based airline and the TWU-IAM Association covers 30,000 mechanics and ground workers who are currently in negotiations for a new contract. It's expected to cost American an additional $195 million through the end of the year, according to a filing with the U.S. Securities and Exchange Commission.

After years of stagnant wage growth following a decade of bankruptcies and mergers, carriers have enjoyed sky-high profits in recent years -- American earned $950 million in its most recent quarter -- largely due to low fuel costs. Some of those earnings have been returned to workers through new labor contracts.

While pay increases of 20 percent or more aren't unheard of in the industry, they're usually spread out over multiple years of the contract.

What makes American's case unique is that this deal was approved separately from the full contract still being negotiated and union workers will see the increase immediately.

The agreement will also loosen up some lingering restrictions on maintenance from American’s 2013 merger with US Airways that will allow maintenance and fleet service employees to work on aircraft from either of the legacy carriers, something that wasn’t always possible before. American said the change will improve maintenance scheduling and workforce efficiency.

American Airlines Chief Operating Officer Robert Isom called the agreement with TWU-IAM "innovative and unprecedented" for providing pay increases outside of a new contract agreement.

Negotiations between the two sides started in December, and on Friday, Isom said reaching a new agreement “is taking longer than any of us expected,” a by-product of the unique structure of the TWU-IAM.

The association was born out of the 2013 merger, when the Transport Workers Union, which represented legacy American ground workers, and the International Association of Machinists and Aerospace Workers, the union at US Airways, formed an alliance.

Together, the association represents 12 groups of employees, covering mechanics, fleet service workers, tower planners, weight and balance planners and more.

“The process of bargaining joint contracts after a mega airline merger like American and US Airways is complex and time consuming,” the TWU-IAM said in a statement. “Association members will not have to wait to share appropriately in the success of their airline while their negotiating committees bargain hard to complete the process."

According to American, the raises include a 15 percent to 36 percent pay increase for maintenance employees, 24 percent for fleet service workers, 31 percent for tower planners and 55 percent for weight and balance planners. Union officials said the raises average out to 22 percent per employee.

The company has been working to improve labor relations with employees since the merger, with CEO Doug Parker repeatedly saying that the company has to “manage differently.”

“What matters the most is making sure you have your team excited and engaged,” Parker said in March, at a time when the company’s pilots union was blasting the return of a “toxic” culture at the airline.

While criticism from the pilots union hasn’t subsided, American has gone about finding ways to increase employees pay, often outside of the traditional bargaining process.

In March, the company announced a profit-sharing program for its more than 100,000 employees worth 5 percent of the company’s pre-tax income.

The airline also accelerated a scheduled six percent raise for its flight attendants that took effect in April.

“Our team has waited long enough for this pay increase,” American spokesman Matt Miller said of Friday’s announcement. “It's a new day at American and a new day for our fantastic colleagues."