In a recent news release, American Airlines (NASDAQ: AAL) announced an interim agreement with the TWU-IAM Association, an alliance between the Transport Workers Union (TWU) and the International Association of Machinists and Aerospace Workers (IAM), that will result in a significant pay increase for roughly 30,000 maintenance, fleet service and other related employees represented by the TWU-IAM Association. The two parties will continue negotiating toward a joint collective bargaining agreement for the represented groups in the weeks to come, but the pay increases stemming from this interim agreement went into effect immediately following American’s August 5 news release.
“We are pleased to reach this innovative and unprecedented agreement with the Association, which will provide immediate and significant pay increases for 30,000 of American’s more than 100,000 team members,” Robert Islom, chief operating officer of American, stated in the news release. “With 12 diverse workgroups represented by the Association, reaching a single agreement for this specific set of co-workers is taking longer than any of us anticipated. Today’s interim agreement is unique… we have joined together to put the interests of our co-workers and Association members first.”
Wage increases stemming from this agreement were separated into four unique classifications. Maintenance and related employees received average pay increases ranging from 15 to 36 percent. Fleet service employees received a 24 percent raise. Tower planners received a pay increase of 31 percent, and weight and balance planners are eligible for a 55 percent bump to their hourly wages. Following implementation of this interim agreement, AAL employees represented by the TWU-IAM Association boast the highest hourly wage rates amongst their peers at other network carriers.
“We will continue to work toward a single agreement that accommodates the unique needs of each of these diverse groups, and remain committed to reaching that single agreement as quickly as we can,” concluded Islom.
A major point of contention in the ongoing negotiations pertains to maintenance and fleet service stemming from AAL’s 2015 merger with US Airways. The company’s interim agreement with the TWU-IAM Association includes a provision that allows represented employees to work on both pre-merger American and US Airways aircraft, but it exists in a limited fashion. American will look to expand upon this provision through its ongoing negotiations in order to enable more efficient maintenance of its sizable fleet, which is currently the world’s largest commercial fleet with nearly 950 aircraft.
News of this interim agreement was followed by an update on American’s recent financial performance. On Tuesday, the company reported its July and year-to-date 2016 traffic results. AAL’s total revenue passenger miles were down 0.3 percent year-over-year in July, totaling 21.7 billion. Total capacity for the month, on the other hand, was up 2.3 percent from July 2015, with 25.5 billion available seat miles. As a result, American anticipates that its third quarter 2016 revenues per available seat mile will fall by as much as five percent from last year, leading to pretax margins between 12 and 14 percent, excluding special items.
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