American Airlines pilots reach deal to match gains at rival United

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CHICAGO (Reuters) -American Airlines’ pilots union on Thursday said it has reached an agreement in principle with the company on enhancements to a new labor contract that would bring it in line with the gains for aviators at rival United Airlines.

The union had asked for improvements to the tentative contract agreement, saying its ratification was in “jeopardy” after United raised the benchmark with its own deal. It later put off a vote on the deal.

North American pilots have been commanding higher salaries and improved working conditions with travel demand remaining buoyant, despite airlines raising fares to cover higher costs.

The Allied Pilots Association (APA), which represents over 15,000 American Airlines (NASDAQ:AAL) pilots, did not specify the value of the revised deal. But American Airlines CEO Robert Isom last week said bringing the proposed four-year contract in line with United’s deal would enhance its value by more than $1 billion, making it worth well over $9 billion.

The APA said the revised agreement needs an approval from its board, after which it would be sent for a ratification vote.

An American Airlines spokesperson described the revised deal as a contract that its pilots deserve.

Jefferies analysts estimate the United States is short about 10,000 pilots, with the supply-demand gap projected to last until 2027.

United’s deal came months after pilots at Delta Air Lines (NYSE:DAL) ratified a new contract that includes over $7 billion in cumulative increases in pay and benefits over four years.

While the APA reached a tentative deal with American Airlines in May, the union argued its proposed pay rates as well as some quality-of-life items in the agreement paled in comparison with those in United’s preliminary deal.

For example, the APA pressed for additional sick days to meet gains secured at Delta and United.

Airline unions negotiate their contracts in a pattern bargaining process, where a deal at one carrier acts as a benchmark for other companies.