Negotiating contracts between airlines and pilots always takes a long time. These are very complicated deals that address not just salaries and benefits, but also working conditions.
The current round of negotiations has put the airlines in a tough position because the covid pandemic has exacerbated a pilot shortage. Early retirements created heavy demand for pilots and that has given the various pilot unions the ability to get higher pay and more concessions from their airlines.
DON'T MISS: American And Southwest Airlines face a major strike risk
United Airlines, Delta Air Lines, and American Airlines (AAL) -) have all reached agreements with their pilots. And while the deals all vary, salaries will go up roughly 35-40%. That sets a framework for the Southwest deal, which Southwest Airlines Pilot Association (SWAPA) President Capt. Casey Murray acknowledged in an email to TheStreet.
"Our peers and the market have driven the pay and retirement aspect. SWA has to address those if they want to recruit and retain the best, most qualified pilots," he wrote.
Pay, however, is not what's driving the impasse between Southwest Airlines (LUV) -) and its pilots. Murray made it clear that the reasons his union has agreed to a deal — and has actually voted to authorize a strike — are scheduling and productivity.
"This is the main driver of customer dissatisfaction with delays and canceled flights," Murray wrote. "It’s also the direct cause of multiple major meltdowns SWA has suffered over the years culminating in the largest meltdown in aviation history. This inefficiency must be corrected," Murray wrote.
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Southwest's pilots have been critical
Southwest pilots voted overwhelmingly in favor of striking. They have also asked to be released from federal mediation.
That request was denied and the union cannot strike as long as it remains in mediation. If mediators release SWAPA, the union could not strike for at least 30 days. There are also steps both President Joe Biden and Congress could take to prevent a strike.
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In addition to their criticisms of the negotiating process, SWAPA also released a letter critical of management after its holiday meltdown. Basically, the pilots' union blamed the airline's woes on management moving away from the path set by founder Herb Kelleher.
"How did we get here? How did we go from the most stable and profitable airline in history to the greatest meltdown in airline history? As with most organizations, the answer can be distilled down to one word: Leadership. Actually, in our case, it’s three words: Lack of leadership," the association shared.
That letter was released after the airline's systems failed during the 2022 holiday season stranding thousands of passengers.
Southwest's CEO remains confident
Southwest CEO Bob Jordan has chosen to not engage with his union or really any critics. The airline has been aggressively addressing its technology problems in order to prevent a future meltdown.
So far, that has been working as the airline had near-perfect performance over the summer including the Memorial Day, Labor Day, and 4th of July holidays. Jordan, who has faced a lot of criticism has sort of just pushed forward trying move past the airline's problems.
That's sort of the attitude he took toward the company's ongoing labor issues during remarks at the 11th annual Morgan Stanley Laguna Conference.
"I'm really proud of our labor and our teams that work on all that because we have 11 contracts, we have closed nine of them in 10 months. I think it's a record for Southwest Airlines. I'm very pleased. I mean nine agreements in 10 months is huge," he said.
The CEO did acknowledge that work remains to be done.
"We have two to go, two big ones with our flight attendants and our pilots but we will get there. But again, we're fully accrued to the extent that we understand where the negotiations are today and where the market is today," he added.
