Southwest Airlines, pilots union reach labor deal with 50% raises

Southwest Airlines and its pilots’ union have reached a new preliminary labor agreement that would give pilots 50% cumulative pay increases over the life of the contract, a deal that could end years of tense negotiations.

Southwest is the last of the largest U.S. passenger airlines to strike a deal that is set to give pilots big pay hikes.

The five-year deal is worth about $12 billion, Casey Murray, president of the Southwest Airlines Pilots Association, told CNBC on Tuesday. In comparison, larger rival United Airlines‘ new four-year pilot contract is worth about $10 billion, according to the aviators’ union.

Southwest’s pilots will need to approve the contract. CNBC reported earlier this month that the company and the union were close to a deal.

If the agreement is approved, pilots would get 29.5% pay increases upon the contract’s signing. The deal would bring the hourly rate for a 12-plus year captain to $368.47 an hour and new first officer’s pay to $135.20 an hour by 2028, according to the union’s summary of the agreement.

The airline said it was “pleased” to reach the agreement in principle for the company’s nearly 11,000 pilots.

“The AIP is a key milestone in the process, and we look forward to the next steps,” it said in a statement.

American, United and Delta finalized pilot deals earlier this year that were worth billions and gave aviators double-digit pay hikes. The Covid-19 pandemic derailed negotiations across the sector, pausing pay increases across the highly unionized industry even when demand returned and inflation hit multidecade highs.

Once the contract becomes amendable, Southwest pilots would get 2.5% annual bonuses until the airline and union reach a new agreement.

FedEx pilots rejected an preliminary deal earlier this year, while UPS pilots’ union is set to start negotiations in mid-2024.

As travel demand snapped back, pilots, flight attendants and other aviation workers have pushed for not just higher pay, but also better working conditions such as more predictable schedules.

Southwest pilots and flight attendants have complained about erratic schedules, particularly during disruptions. One driver of Southwest’s holiday meltdown last year, which stranded some two million customers, was old software that left crews out of position for rescheduled flights. The U.S. Department of Transportation fined the airline $140 million for its handling of the crisis, it announced Monday.

The new pilot contract would also improve pay for pilots who are on reserve, which requires them to stand by for an assignment. It also would include more generous retirement packages and per diem allotments for pilots.

Southwest’s flight attendants recently rejected a preliminary deal in a vote, though the union has said there will be a re-vote, citing complaints about technical glitches in online voting.

Labor unions have flexed their power throughout the year, yielding a string of big labor deals including agreements between Hollywood studios and actors, and the studios and writers, as well as between automakers and the United Auto Workers union. Those agreements followed prolonged strikes.