George S. May Business Blog

Southwest Airlines’ pilots turn down a pay raise

Southwest Airlines’ pilots have, surprisingly, turned down a new contract that would have given them a pay raise.

According to the union, the vote was very close, with less than 51 percent voting against (2,774 to 2,869) the five-year contract. This is the first time the pilots’ union has ever turned down a Southwest-proposed contract.

Carl Kuwitzky, the union president, said despite the pay raises, the proposed contract still “contained too many other negative aspects to ratify it.”

The Pilots’ perspective – What was wrong:

1) The contract called for pay raises of 2 percent each of the first three years, then raises based on Southwest’s profitability in the last two years for Southwest’s 5,900 pilots. Apparently the pilots were unenthused by this deal as other labor groups at Southwest received annual raises of 3 percent.

2) According to Kuwitzky, overtime pay and scheduling was a “concern”

3) Southwest, allegedly, is planning to sell travel to Canada and Mexico on partner airlines. Many of the pilots are considering this a threat to their jobs and objected to the part of the contract that would give Southwest more flexibility in striking so-called code-sharing deals.

“We reached a tentative agreement in good faith, and both sides put a lot of effort into getting to this point,” said Southwest vice president of flight operations Chuck Magill. Magill furthered that Southwest would “re-engage and work toward an agreement that best meets the needs of our company and our outstanding pilots during these challenging economic times.”

The company and the Southwest Airlines Pilots’ Association began negotiations in September 2006 and reached a tentative agreement in January.

It was news to me when I read that in the airline industry, labor contracts don’t expire. Contracts can be changed, however, once their expected term ends. On top of that, Federal law makes it difficult for airline employees to strike.

Looking forward, the union said the pilots would continue to work under terms of the current contract, and its directors would meet next week to plan for renewed bargaining with Southwest.

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