In a bid to stay competitive, American Airlines (NASDAQ: AAL) says it is willing to step up pay incentives for pilots that keeps pace with those offered by Delta Air Lines, offering what it says would be $7 billion in incremental increases over a new four-year contract.
The airline is prepared to offer its pilots a compensation package that translates into a 21 percent pay increase in the first year, ramping up to a 40 percent increase by year four, American Airlines CEO Robert Isom said Tuesday.
The proposal came a week after Delta pilots ratified a new contract that increases salaries by 34 percent over the next three years, for a $7 billion cumulative pay raise for the airline’s 15,000 pilots by December 2026.
The effects of the new Delta contract cast new light on pilot pay industry-wide. Air Canada pilots, for example, said the increases mean Delta pilots earn up to 45 percent more per hour, Reuters reported.
American Airlines has taken note as well.
“That deal will determine compensation, benefits, and quality of life for pilots across the rest of the industry,” Isom said in a statement. “That means something extraordinary for American’s pilots,” he said, adding, “Our team members—including our pilots—will be paid well and they will be paid competitively.”
In addition to the average pay increase of 21 percent in the first year of a new contract, American pilots can expect “a much richer profit-sharing program,” as well as “a bump” in the airline’s annual contribution to 401(k) in the second year.
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By the fourth year, American pilots will see a total pay increase that will average about 40 percent, he said.
Announcement from @AmericanAir CEO Robert Isom today to pilots. He’s ready to match the dollars in @Delta pilots newly ratified deal, with even more quality of life guarantees. By year 4, narrow body captain tops at $475,000, wide body captain $590,000 annually. pic.twitter.com/0pEPCAM3Lo
— Doug Dunbar (@cbs11doug) March 8, 2023
“By the end of the agreement, factoring in base salary and increased 401(k) contributions from the company, a narrowbody captain at top of scale would make $475,000 a year—or $135,000 more a year than they earn today. A widebody captain at top of scale would earn $590,000 a year—that’s $170,000 more a year than they earn today,” Isom said.
“It is what you deserve, and it can be negotiated and made available quickly,” he added.
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