Southwest Airlines, pilots union reach labor deal

Southwest Airlines and its pilots’ union have reached a new preliminary labor agreement, ending months of tense negotiations.

Southwest is the last of the largest U.S. airlines to strike a deal that is set to give pilots big raises.

The union didn’t immediately provide details about the pay increases, but the five-year deal is worth about $12 billion, Casey Murray, president of the Southwest Airlines Pilots Association, told CNBC on Tuesday. In comparison, larger rival United Airlines‘ new four-year pilot contract is worth about $10 billion, according to the aviators’ union.

Southwest’s pilots will need to approve the contract. CNBC reported earlier this month that the two sides were close to a deal.

“We are pleased to reach an Agreement in Principle with the Southwest Airlines Pilots Association for Southwest’s more than 10,000 Pilots,” Southwest said in a statement. “The AIP is a key milestone in the process, and we look forward to the next steps.”

American, United and Delta finalized pilot deals earlier this year that were worth billions and gave aviators double-digit pay hikes. The Covid pandemic derailed negotiations across the sector, pausing pay increases across the highly unionized industry even when demand returned and inflation hit multi-decade highs.

As travel demand snapped back, pilots, flight attendants and other aviation workers have pushed for not just higher pay, but also better working conditions such as more predictable schedules.

Southwest pilots and flight attendants have complained about erratic schedules, particularly during disruptions. One driver of Southwest’s holiday meltdown last year, which stranded some 2 million customers, was old software that left crews out of position for rescheduled flights. The U.S. Transportation Department fined the airline $140 million for its handling of the crisis, it announced Monday.

Southwest’s flight attendants recently rejected a preliminary deal in a vote, though the union has said there will be a re-vote, citing complaints about technical glitches in online voting.

Labor unions have flexed their power throughout the year, yielding a string of big labor deals including agreements between Hollywood studios and actors, and the studios and writers, as well as between automakers and the United Auto Workers union. Those agreements followed prolonged strikes.