An airline expert looking Wednesday at Hawaiian Airlines’ tentative contract agreement with its pilots said the 40 percent wage increase offered to veteran captains flying the company’s largest aircraft still won’t match the hourly rate of their mainland peers.
The agreement was made public Tuesday night and still needs to be ratified by the 674 union members. If approved, it would end two contentious years of negotiations and bring Hawaiian pilots closer to parity with other major airline pilots.
The agreement comes as Hawaiian continues to produce company-record earnings while fuel costs remain low.
“While the pilots are getting a significant bump in pay, it is still a little shy of what their mainland competitors are getting, at least in the first year,” John Reardon, an airline expert with Pasadena, Calif.-based Western International Securities Inc., said Wednesday. “However, the escalators (annual wage increases) bring them up to parity over time.”
The most experienced captains flying Hawaiian’s largest jets, the Airbus A330, would see their hourly pay jump from about $207 an hour to $290 an hour once the contract is signed, and then get $300 an hour later this year with the rate reaching $337 an hour in 2022.
By comparison, pilots at Delta Air Lines and American Airlines this year are making $312 and $302 an hour, respectively, according to the website airlinepilotcentral.com and other data available online. In 2019, the last year of their current contract, they will make $334 and $320, respectively. United Airlines, which reached a two-year contract extension last year, has language in its contact in which its wages are written to track with pay increases at Delta.
“I am relieved that the pilots and the airline reached an agreement,” Reardon said. “From what I hear, both sides won something. The pilots are going to get a substantial raise in pay retroactively (roughly $40 million dating back to when their contract ended in September 2015). The company is going to be able to maintain the same work rules. The state and its citizens are going to be spared a work stoppage that would have been very disruptive.”
Hawaiian spokeswoman Ann Botticelli said Wednesday that the airline would not comment on the agreement at this time.
“It is important for us to honor the negotiation process by refraining from comment until it has been completed,” she said. “It is not appropriate for us to comment in any way prior to that.”
The Air Line Pilots Association, which represents the Hawaiian pilots, still is completing a few parts of the remaining contract language before reviewing it and sending it out to members for ratification.
Hawaiian recently reached agreements with unions representing its machinists, clerical workers and dispatchers and is currently negotiating with its flight attendants, whose contract ended in January.
In last month’s earnings conference call, Hawaiian President and CEO Mark Dunkerley said the airline doesn’t benefit “from being sort of hung out there waiting for us to get a result” from negotiations.
“My personal hope is that we can get to a point where a tentative agreement can be signed and where the union can put it out to the membership,” he said.
The reaction on Wall Street to the tentative deal was muted on Wednesday with shares of the parent company, Hawaiian Holdings Inc., rising just 10 cents to close at $50.50.
“I was surprised that news of a resolution did not generate a more positive reaction,” Reardon said. “I think that may be because people are focusing on the increased costs the company is looking at. Analysts are going to have to trim their earnings estimates. That will be the first earnings estimate cut for the company in a number of years.”
Hawaiian reported last month that net income in 2016 rose 33.7 percent to $244.1 million from $182.6 million in 2015 despite $95.1 million in special items that reduced earnings in the fourth quarter. In previous years, Hawaiian had net income of $53.2 million in 2012, $51.9 million in 2013 and $69.9 million in 2014.
