United Continental pilots OK joint union contract
Dec 15, 1:05 PM (ET)
By JOSHUA FREED
United Airlines pilots have agreed to a new joint union contract, bringing the airline closer to finalizing its merger with Continental.
The new four-year contract, which includes raises averaging 43 percent and bigger retirement contributions, covers those who came from United as well as pilots who flew for Continental before the carriers merged in 2010 into United Continental Holdings Inc. (UAL) Pilots now only fly under the United name.
As part of the deal, the airline's roughly 10,000 pilots also will divide a $400 million lump sum. In exchange, the contract gives United Continental the ability to launch a major expansion of the use of larger regional jets with 70 or more seats. Those jets, most ranging in size from 50 to 76 seats, are operated by regional airlines.
United and other carriers have been especially eager to expand usage of the larger 76-seat planes because they can be flown profitably even at higher fuel prices. But pilots at the big airlines generally oppose them because they don't want the airline to shift too much flying to the smaller, cheaper planes.
Seniority is important to pilots because it governs who gets the most desirable schedules and who gets to fly which planes, which is a big factor in their pay. Seniority integration is expected to take several months and often includes binding arbitration.
The Air Line Pilots Association said Saturday that 67 percent of the United and Continental pilots who voted elected to approve the contract. All told, nearly 98 percent of the 10,193 eligible pilots participated in the ratification vote.
For pilots who came from United, the new contract replaces a deal made in 2005, when that airline was operating under bankruptcy protection. Union representatives for United and Continental pilots said the contract hails the end of bankruptcy and concessionary contracts.
"For too long, the pilots of United and Continental have had to shoulder more than their share of the burden as our respective airlines struggled through the difficult economic times of the past decade," the union representatives said in a statement. "We now stand ready to embark on a fresh start for the pilots and the airline."
United Continental, based in Chicago, called the contract ratification an important step for its pilots, as well as the company, which now will get to use more regional jets. Right now, United is using just 153 jets with 70 seats. The new contract allows it to add 68 more in that size range starting in 2014, and more in future years if it also adds planes with more than 100 seats. The new contract represents an even bigger departure from Continental's old limits on regional jets.
United is the world's biggest airline by traffic. Its main competitor is No. 2 Delta Air Lines Inc. (DAL), where pilots over the summer approved a contract that also allows it to add more 76-seat regional jets. Pay under the new United contract is also similar to Delta's, which is widely considered a model in the industry.
At American, a new deal approved by pilots on Dec. 7 will allow the addition of 76-seat regional jets and an expansion of the number of larger regional planes. Currently American has 47 regional jets seating a maximum of 65 passengers, while the rest of its regional jets all have 50 or fewer seats.
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