APA Negotiations

Wages/Pay Rates

Competitive labor costs have two main components: compensation that recognizes the skills and experience of employees, and the overall cost structure that rewards productivity and allows a company to compete effectively in the market. The significant drivers and competitive measurements of pilot costs are wages, pensions, vacation, pay guarantees, sick time and health benefits.Based on publicly available data from the U.S. Department of Transportation, American has the highest pilot costs of the network passenger carriers, many of which the company competes with on a head-to-head basis.

As we’ve said throughout negotiations, pay rates are historically one of the last areas of discussion. The company’s proposals on pay are directly linked to other elements within the contract, particularly retirement benefits and productivity, and reflective of our competitive position within the industry. American Airlines pilots are now paid at or near the top of the industry based on a number of factors, including hourly wages, premium pay and guaranteed income for hours worked.

One of the primary goals of the proposals is to make compensation more streamlined and straightforward. AA has proposed eliminating many of the intricate formulas and premiums that drove complexity. Those funds would be redeployed and incorporated into the new, higher pay rates.

The company has offered the APA two approaches to a contract, both of which will make AA pilots among the best paid in the industry. Realizing that some pilots may value higher pay increases up front, one option offers larger and quicker increases in exchange for contractual changes in retirement and gradual changes to medical benefits and work rules. The other option offers more modest increases in exchange for no changes to retirement benefits for current pilots, immediate increases to medical benefits and enhanced productivity. Regardless of the option the union chooses, all pilots will see a base wage rate increase and have opportunities to earn more compensation through seat movement.

For a comparison of how the Option A and Option B pay rates stack up for other aircraft and seat types, click here.

Equipment Grouping
The formula in today’s pilot contract dictates that any aircraft AA operates has its own pay rate. For similar sized aircraft, the difference in rates are minor – sometimes just $1 or $2. But even small differences in rates can encourage pilots to bid into a higher paying aircraft.

This is an inefficient system that inflates our training costs, takes pilots out of the cockpit for a couple of months for training events and at times, forces pilots to change bases or commute long distances because of relatively small rate differentials.

So instead of dozens of different pay rates, the company proposes grouping equipment into pay bands. Pay bands will set common rates of pay across multiple pieces of equipment, instead of basing pay on an individual aircraft’s speed, weight or mileage.

Pay banding would make us competitive with other airlines, lower training costs and offer pilots more stability and career predictability. In return, training costs will be significantly reduced and the company will be better positioned to bring new aircraft into service.