![]() ![]() If they do not agree with the demands from the unions, the union can easily blame bean counter mentality for it which they can directly tie to the same bean counter mentality that caused big problems at Southwest Airlines operations in December. The advantage for Southwest Airlines management is that they messed up so badly in December that its negotiation position is mediocre at best. That is why airline management is looking to reach labor agreements with pilot unions, but these negotiations are not going easily. It would leave airlines with lower top lines, but higher carried costs. While hiking pay does make sense at this time, it makes less sense over the longer term as air travel demand patterns normalize again. These arguments are demand and inflation. One major reason is because pilot unions are pursuing labor agreements with permanently higher pay using what is expected to be temporary arguments to support a pay hike. It goes to show that reaching a new labor agreement is not easy. Delta Air Lines ( DAL) has reached a tentative agreement with its pilots, but it still needs to be ratified by the pilots. American Airlines ( AAL) and United Airlines ( UAL) have both attempted to reach an agreement with unions for a new agreement, but have been unable to reach an agreement or even a tentative one. Reaching a new pilot agreement is easier said than done. The argument that they should be earning more because they are operating in a system with significant shortfalls asking pilots to go above and beyond to deliver is easily made.įurthermore, since a new labor agreement has not been reached for three years, the easy argument is that the current labor agreement that is in effect does not reflect the current realities, which include shortages and inflation and as a result do not value the pilots. management look bad, and the union knows this. The fact that Southwest Airlines was not able to adequately deal with these issues filled pilots with a sense of embarrassment, and the fact that it took days before the CEO addressed the issues did not make things better. management is at its weakest point after their embarrassing dealing with winter storm Elliot, which sent the airline into meltdown mode uncovering significant system and operational shortfall at Southwest Airlines. The other side of the equation is that Southwest Airlines Co. So, the pilot union is deriving strength in negotiations from the strength in air travel demand and high demand for pilots. With high demand for air travel and pilot shortages, the value of pilots to airlines is increasing, and unions are recognizing this as a perfect opportunity to negotiate new long-term labor agreements seeking better pay supported by temporary high inflation. The timing of the announcement of a strike vote and a possible strike is not odd, because in some way you have to enter those negotiations when you are strongest, and that is what we have seen pilot unions do recently. However, it would be detrimental to the union’s position in negotiations if they would simply state they expect a deal would be reached. Simultaneously, I also do think that the union is calling for a strike vote months from now, because while they do want to send the warning shot to Southwest management, they do believe an agreement can be reached before a strike vote and an eventual strike could take place. So, in the early announcement, I do see a way to force management to reach an agreement as soon as possible. By making an early announcement, the union is creating the uncertainty early on which could ultimately hurt bookings and force Southwest Airlines management to reach a labor agreement as soon as possible. I think the reality is somewhat different. The union also claims this will allow customers to book elsewhere in order for their summer vacations not to be disrupted. What is, however, happening is a call from the pilot union of Southwest Airlines pilots for a strike authorization vote, which would allow the almost 10,000 pilots of Southwest Airlines to vote somewhere after May 1 st.Īccording to SWAPA, the pilot union, the date of May 1 st gives the union time to prepare for the strike. One thing to keep in mind is that there is no imminent strike at Southwest Airlines happening anytime soon. Southwest Airlines Pilots Could Call For A Strike The move comes at a time when Southwest Airlines is under significant pressure, and I believe that does not come as a surprise as I explain in this report. ( NYSE: LUV) pilots is calling for a strike authorization vote in May. ![]()
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