Southwest Pilots Reject New Contract

Southwest Airlines Co.'s pilots voted down a new contract that would have raised their wages by more than 17%, highlighting broader labor discord in the industry as employees seek richer compensation amid record profits.

The Southwest Airlines Pilots' Association on Wednesday said nearly 62% of its 8,000 members voted against the new four-year deal, reached after three years of negotiations, with 38% casting yes votes.

The vote mirrors an even wider rejection of a new contract in July by Southwest's flight attendants. That same month, Delta Air Lines Inc. pilots also rejected a new contract.

When airlines are producing record financial results as they are today, contract negotiations become trickier. In all three of those cases, the rejected tentative agreements contained hefty raises, but ultimately the workers weren't satisfied.

"Despite increased compensation and some work-rule improvements, there were new company allowances in this agreement that our pilots did not find palatable when compared to the potential gains," said Capt. Paul Jackson, president of the Southwest pilots union.

The No. 4 U.S. airline by traffic, Southwest will continue working until it has a contract that meets the needs of the pilots and the company, said Craig Drew, vice president of flight operations. Southwest said it expects mediated discussions to resume next spring under the guidance of the National Mediation Board.

The aviators' current contract opened for renewal in September 2012, and that pact will stay in place until a new one is reached. The pilots union leadership in September agreed to put the new proposal to a ratification vote, but the union board didn't endorse it.

About 87% of Southwest's 12,000 cabin-crew attendants rejected a six-year labor agreement that their union had said would maintain their industry-leading wages, benefits, and work rules. That pact had opened for renewal more than two years earlier, and negotiations were difficult because Southwest wanted to hold the line on its relatively generous labor costs when it was generating record profits.

A wide majority of Delta's 12,800 pilots also turned down a new deal even though it contained pay increases and the promise of 60 new airplanes joining Delta's fleet. But the pact contained concessions, according to some Delta aviators, including a big potential reduction in the amount of profit-sharing the pilots would receive and a new sick-leave policy they didn't like. Soon after the vote, the chairman of the leadership council of the Delta pilots union resigned.

In coming days, about 9,000 mechanics at United Continental Holdings Inc. are expected to hold a vote on a six-year tentative agreement. The tentative deal, which United says is "industry-leading," would be the first joint contract since the company was formed five years after a merger. Some mechanics already are grumbling that the proposed deal isn't good enough.

United and its flight attendants union have been mired in negotiations since 2012, hoping to reach their first joint labor contract since the 2010 merger. But those talks have been slow, despite efforts by the National Mediation Board to bring the parties along. The board is a federal agency that oversees bargaining in the airline and railroad industries.

Not all deals get voted down. A majority of the pilots at regional carrier Republic Airways Holdings Inc. last month approved a new deal that raised pay and improved work rules. But that group faced the possibility that Republic would file for bankruptcy protection if it couldn't solve its pressing pilot hiring and retention challenges. The new deal, which dramatically boosts starting pilot pay, is expected to help Republic stem the loss of pilots to other carriers and revive its recruitment pipeline.

Write to Susan Carey at [e-mail]

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(END) Dow Jones Newswires

November 04, 2015 17:45 ET (22:45 GMT)

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