Regional pilots at two of American Airlines’ (NASDAQ: AAL) wholly owned subsidiaries, Piedmont and Envoy, are getting a 50 percent pay raise from now until the end of August 2024.
This latest move by American’s subsidiaries comes after the CEO of the mainline carrier, Robert Isom, told investors at a conference that its regional partners had to park up to 100 airplanes this summer because there weren’t enough pilots to fly them. The pay raise will make these pilots the highest paid at the regional level, and the airline hopes it will help the company stave off pilot attrition and recruit new hires as demand continues to ramp up.
Piedmont first officers will now see first-year pay begin at $90 an hour, up from $51, while first-year captains will earn $146 an hour, up from $78.
When the company announced the pay hike, it said it worked with the Air Line Pilots Association (ALPA) last weekend to secure the deal. Envoy and ALPA could extend the agreement later if demand persists.
Piedmont operates the Embraer ERJ145, which seats up to 50 passengers for American’s routes between small cities. When the company had to park some of its fleet, that hurt its revenue, and some small towns lost airline service.
In a statement, Piedmont’s CEO Eric Morgan said, “This deal will attract new first officers and the experienced captains we need for future opportunities while also taking really good care of the pilots already flying for Piedmont.”
The airline plans to hire more than 400 pilots this year and said it would prioritize experienced direct-entry captains. Because of a pilot flow-through agreement with the American mainline carrier and a recent uptick in demand, Piedmont is losing as many as 25 pilots a month, which means it would lose three of every four pilots it hired. So, it needs to hire more pilots faster than it can replace them or continue to lose business.
“With more pilots, we can get more of our aircraft back in the air,” Morgan said. “That benefits the communities we serve and all of our team members.”
Piedmont pilot wages will be 50 to 70 percent higher (57 percent on average) than the next highest paid regional carrier, Endeavor, the wholly owned regional carrier for Delta Air Lines (NYSE: DAL). With bonuses, Piedmont says its new hires would make as much as 31 percent more than an Endeavor pilot and even 10 percent more than pilots at leading ultra low-cost carriers (ULCCs) during the first five years.
Line check airmen who train other new hires and pilots will get the highest raise, up to $427.50 an hour under the new contract.
To sweeten the deal, Piedmont also said one of the terms of the agreement would allow pilots from other airlines to credit their seniority from other airlines toward increased pay at Piedmont. It’s one of the first indications of a national seniority list that has been argued for on some pilot messaging boards but has proven to be a contentious issue.
At the time of the announcement, Piedmont’s vice president of flight operations, Steve Keefer, said he hoped the deal would put “the competition on notice.”
Similarly, Envoy, American’s largest regional carrier that also operates a fleet of Embraer jets, announced its version of its contract with ALPA with similar increases.
“With this agreement,” Envoy said in a statement, “pilot pay rates increase to be higher than other non-American Airlines Group regional carriers, by 6 percent for Envoy first officers and 10 percent for Envoy captains.”
Additionally, Envoy pilots will receive a Pilot Supply Premium of 50 percent added to their hourly rate for all compensable hours from the effective date of the contract through the end of August 2024. Envoy will also enact a “1:1 longevity match” program, which will credit pilots with previous Part 121-airline experience to match compensation closely.
Furthermore, with its flow-through agreement to American’s mainline also in place, Envoy promised that it would pay the 20-year captain’s rate to any pilot who hadn’t been offered a position at American Airlines by the end of their fifth year of service.
With two out of three of American’s regionals increasing pay, it is expected that PSA Airlines, the third wholly owned regional in the consortium, could soon follow suit.
Pilot pay increases at the regional level aren’t really a surprise. A few weeks ago, JetBlue’s (NASDAQ: JBLU) CEO told investors that pilots could expect wage inflation over the next few years, as airlines would have to compete for pilots as they grew their operations to meet demand. The U.S. airline industry plans to hire as many as 30,000 pilots by 2030.
Across the board, airlines are on a hiring spree. According to the Bureau of Transportation Statistics, U.S. scheduled passenger airlines added 5,137 full-time equivalents for the 12th consecutive month of job growth. Passenger airlines added 5,448 employees in April for a 12th consecutive month of job growth dating back to May 2021.