Ted Reed , CONTRIBUTOR
Opinions expressed by Forbes Contributors are their own.
So far pilot contract talks at Spirit Airlines have produced a move to mediation, a work slowdown in May, a temporary restraining order that ended it, a 100% strike authorization vote and tentative agreements on several key issues.
They have not produced a contract and no talks are scheduled.
The contract, which covers about 1,800 pilots, became amendable on Aug. 1, 2015, about two years ago.
The talks are being conducted as the airline industry faces a pilot shortage, which encourages all carriers to boost compensation. Under their existing contract, Spirit pilots are paid significantly less than pilots at the big four carriers.
Currently, at ten years of seniority, a Spirit A320 captain earns about $160 an hour and a first officer earns about $109 an hour, while at United A320 captain earns about $260 an hour and a first officer earns about $177 an hour, according to the Air Line Pilots Association. The pay gap will be addressed in the new contract.
“We’ve been through a lot of difficult issues and made a lot of progress,” said Paul Slotten, an 18-year Spirit pilot who is a member of the negotiating committee for the Spirit chapter of ALPA.
“We’re very close on issues of compensation and we have agreed on a retirement package,” Slotten said Tuesday. “We have offered productivity changes that will help the company operate more reliably and efficiently, but the company won’t be able to take advantage of [them] until we get a tentative agreement.”
The changes would increase Spirit’s ability to reschedule pilots in the event of flight disruptions.
For the moment, however, the two sides are separated by three divisive key issues – pilot protections in the event of a merger, which is part of contract “scope” language; a long-term disability pay plan and pay rates for the time pilots spend on the road when they are not flying.
Slotten said Spirit needs to meet ALPA contract standards, including a requirement that before a merger occurs, a carrier must negotiate a joint bargaining agreement with its pilots. Spirit so far has declined. “From our standpoint, that is inadequate protection,” he said.
While contracts at American, Delta, Southwest and United all provide one hour of pay for every 3.5 hours spent on the road, Spirit provides an hour of pay for 4.2 hours on the road. “If they want to fly us in a way that is not efficient, we need to get paid fairly for being on the road,” Slotten said.
Spirit’s strategy of serving some destinations with single daily flights can complicate pilot scheduling.
Additionally, the current contract limits long-term disability pay for occupational injury to two years, which Slotten said is, “far inferior to the rest of the industry.
“We should not be unduly exposed to career-ending injuries,” he said.
Spirit spokesman Stephen Schuler said, “We are working diligently towards achieving a mutually beneficial contract. We remain committed to reaching an agreement as quickly as possible.
“With respect to collective bargaining in the airline industry, two years isn’t overly long, especially when negotiating on work rules in addition to pay rates,” Schuler said.
In September, 100% of pilots voted to authorize a strike. A strike could occur only if the National Mediation Board were to release the two sides from mediation.
On the July earnings call, Spirit said the pilot work slowdown in May resulted in about 850 cancellations and cost about $45 million, including about $25 million in lost revenue and about $20 million in additional operating costs, primarily related to passenger re-accommodation expenses.
The cancellations led to a brawl between passengers and airline employees at Fort Lauderdale International Airport. Subsequently a U.S. District Court judge issued a temporary order restraining the pilots from work slowdowns; it remains in effect.
Last week, Spirit said third quarter earnings were negatively impacted by more than 1,650 hurricane related cancellations and by “overhang from the pilot work action earlier in the year.”
Still, the carrier guided towards a third quarter unit revenue decline of 6.5%, better than previous guidance of between negative 7.0% and negative 8.5%, due to improving yields and better-than-expected load factors.
“The challenge here is getting back to the table to get a deal done,” Slotten said. “We look forward to the assistance of the NMB. The company needs to indicate more flexibility, because the proposal they have shared with the pilot group … would be rejected.”
Said Schuler, “We will meet again when the NMB decides it is constructive to bring the parties together.”