Details have been revealed about the new contract deal American Airlines has tentatively struck with its flight attendants and it represents a big raise for every flight attendant plus retroactive pay, boarding pay, and other benefits. But with AA losing money flying, how long will this new contract last?
Tentative Contract Will Give Flight Attendants Big Raises At American Airlines
As noted by JonNYC, the Association of Professional Flight Attendants (APFA) made public the details of the tentative contract. The tentative deal includes:
- hourly pay increases
- boarding pay
- retroactive pay
- profit sharing
- improved 401(K) matching
Let’s briefly look at each one.
Hourly Pay Increases
At the bottom end, entry-level wage would jump from $30.35/hour to $35.82/hour (18% pay increase). At the high end, senior flight attendants working at least 13 years with AA would jump from $68.25 to $82.24 an hour (20.5% pay increase). These numbers would rise each year as well for the next four years.
Boarding Pay
Flight attendants will receive boarding pay at hte rate of 50% of “standard” pay, in line with what Delta Air Lines flight attendants now earn.
Will these be the end to pushback over pre-departure beverage service?
> Read More: American Airlines Flight Attendant Boasts, “I Don’t Do Pre-Departure Beverages Anymore”
Retroactive Pay
As is customary with flight attendant contracts, retroactive pay will be awarded between the time in which the contract became amenable and today. Specifically, that will include:
- 3% retroactive pay for 2020
- 4% retroactive pay for 2021
- 4% retroactive pay for 2022
- 10.8% retroactive pay for 2023
- 20% retroactive pay for 2020 (through August 31, 2024)
It’s striking that flight attendants will get a pay bump for the pandemic years when taxpayers continue to pay them despite virtually zero air travel demand…
Profit Sharing
While the APFA claims the new contract is more lucrative than what non-unionized Delta flight attendants recently gained, it is not…because Delta is so much more profitable.
Theoretically, AA employees will see a higher profit share, but that will require the company to be profitable. The new contract offers profit sharing equating to 10% of pre-tax earnings up to $2.5 billion and 20% of pre-tax earnings above $2.5 billion.
Improved 401(K) Matching, Per Diem
Per diems and 401(K) contributions will also go up.
- Company contribution from 3% to 5%
- Matching contribution from 2.5% to 4%
9% is not bad…
Domestic per diems will rise over 30% over the next four years.
I Worry For The Future Of American Airlines
To be clear, I want all workers to earn a living wage and believe no worker should have to go on public assistance (doing so is essentially the employer passing the buck to taxpayers). But I put “for now” in my title because I do wonder for how long flight attendants will enjoy these higher wages. Or will this deal even be finalized?
Indeed, flight attendants typically reject the “first offer” as part of the pageantry union contract negotiations. Will they do so here in hopes of something even better?
The problem is American Airlines loses money flying. Its AAdvantage loyalty program has been able to prop it up, but a fundamental failure of leadership and vision has made world’s largest airline struggle to profit.
While that is not the fault of flight attendants, it is a problem for flight attendants because AA does not exist in a vacuum. There’s hope among some in the airline industry like United CEO Scott Kirby that airlines can simply raise prices in unison because demand is “inelastic.”
I do not agree with that assessment and I think we will also see carriers spring up to fill voids left by other carriers. It won’t be possible to keep routes high between busy city pairs because if American raises prices by limiting flights, other carriers like Spirit or Frontier will fill the void.
Thus, I am fairly pessimistic about AA’s long-term prospects. With demand tapering off after an extended “revenge travel” boom, the future is uncertain: and that is not good news for the Dalllas-based carriers or the pilots and flight attendants who have benefited (or will soon benefit) from higher wages.
Sure, we can all agree that CEO had no business making $31 million last year. But the real problem is the leadership of the entire C-Suite and how American Airlines has failed to keep up with its peers.
Thus, to flight attendants, I say enjoy your higher pay…while it lasts.
CONCLUSION
Details have been revealed about the tentative new contract between American Airlines and its flight attendants. By in large, the union did an excellent job in securing back pay, boarding pay, and pay hikes to keep up with inflation.
But in the long-term, all these gains may be for naught if AA cannot figure out its flying problem…
image: American Airlines
I think it’s a great contract. For all the flight attendants commenting about how their raise doesn’t match inflation, there’s an important lesson to be learned from any business school: Inflation and salary increase definitions are not the same. While inflation and salary increases generally trend upward together and impact each other, they are driven by different inputs. INFLATION is defined by changes in the cost of goods, like housing and fuel. SALARY is driven by changes in supply and demand of labor, caused by new demographic trends, labor participation, and unemployment. For this reason, your pay raise will never perfectly align with current inflation; it’s unrealistic, and it’s not going to happen. Here’s a historical example: 1979 was the year of the highest non-wartime inflation on record at 13.7%, yet average pay raises were only 8.7%. Conversely, in 2001, inflation rates were at an all time low at just 1.9%, but average salary increases were over 4%. Your money goes further in lower inflation years, and it’s stretched in high inflation years. Don’t turn down a good contract because you think you should get a raise that matches inflation; you won’t. Unfortunately, hat’s not how capitalism and free market economies work.
Ch 11 will fix this contract problem. Typical unions demanding unreasonable pay from a company that will probably enter ch11 in the future. High costs without the margins to back it up. Like you said enjoy it while it lasts
On the point of price elasticity, does anyone have any insight on how/why US carriers are able to keep charging extortionate fares for their long haul routes, and particularly premium cabins, well after the end of any ‘revenge travel’? I keep seeing business class offers from Europe to the far East for ca. €1500 return (in the past few days EY and RJ have published some deals that are even cheaper) whereas buying a ticket for a similar distance with the USA as the point of origin is 350%+ more expensive.
And Watch out for Huge price increases for the consumer/passenger. The CEO ain’t going to take a pay cut.
Stop with the pre departure beverage service discussion and how long with this contract last discussion! Your articles are very anti union, the big 3 airlines will always make money, even when the industry has its bumps! I’m very pleased that APFA stood their ground against AA management. Delta flight attendants are being mis-lead, they took a major hit last weekend during the IT meltdown, and management failed them on all levels. Where is the voice for them? So spare me all this Delta is better talk! I fly American often and I support what the flight attendants were able to achieve!
I’m sure it’s well-deserved (eye roll x 1000).
Sick of hearing their warn-out complaints about a non-livable wage, etc. You had no clue of the wages and probable hours you will work when you applied ?…… the job that one out of thousands are fortunate to get? You would think they would appreciate the odds they were up against. Once they’re in that “sharp” uniform, all humility and common sense goes out the window; everyone from one minute of seniority to dozens of years, become radical social activists with all the unreasonable demands, rebellion and complaints.
And it’s Striking that Pilots got 40% Pay Raises AND RETRO PAY…Try telling them they Don’t Deserve it!…Give Me A Break!…But let’s Rag on the Flight Attendants while these Airline CEO’s & Upper Management are Raking in Tens of Millions of Dollars not to mention Deferred Comp Stock Options and Whatever else they can Toss into their contracts Approved by The Board of Directors who are themselves Richly Rewarded…Because of Course They Deserve it!
And Right-This-Way YOU ARE HILARIOUS!…Sharp Uniforms??…Radical Social Activists??…Does that Include Picketing Pilots too??…or Just a Bunch of Flight Attendants Standing Up For Themselves??
FA’s standing up for themselves? standing up against what ? a livable wage they already have ?…..
and you’re all negative about millionaire CEO’s/ management + stock options +++ ? Are you not aware that this is the case with every big business (Starbucks, Amazon, etc) or are you living under such a heavy unmovable rock? As well, you’re okay with complaining about pilots’ gripes but not okay that anyone should object to FA gripes?
Pilots fly the plane, FA’s serve coffee**, I hardly think they deserve upwards of $82/hour. FA’s signed up knowing full well they would work 40 hours a month. Are they stopped from working overtime or trading shifts to work more hours,….no. They don’t even need a college education to get this job. No sympathy for FA’s or pilots here. You don’t like the pay, the job ?…..go someplace else and see where you’re going to work with no college education and get even your starting pay at AA ($30.35/hour).
**Yes, I know they are primarily there for our safety and I’m all for that (good training) but really $82/hour ? Firefighters in some cities make a lot less than that. FDNY for one (if you Google it). Safety is first but really are we sitting on the edge of our seats with every flight we take, assuming that some major disaster is going to happen? Thankfully, safety events are infrequent. They can take their unreasonable selfish demands someplace else as far as I’m concerned.
On one hand I live seeing AA corporate getting squeezed. On the other hand AA has the worst FAs in America.
It’s a wash.
Complain away Right- This -Way!!…I know…it’s your Right and Mine Too…We have that in Common but Apparently Not Much Else…Yes Right-This-Way I Am Aware that Every Big Business in Corporate America has a Huge Pay Gap between their CEO’s/Upper Management and their Average Joes & Joan’s…Sad But True…So Right-This -Way Gotta Go Fly The Friendly Skies…I Assume That The Tentative Will Pass …But I wouldn’t vote for it…20% after 4.5 years??…A Big Fat NO!…Ciao!