JetBlue Pilots Approve First Labor Deal in Airline’s History

(Bloomberg) -- JetBlue Airways Corp.’s pilots approved the first labor contract in the carrier’s history.

The four-year pact was approved by 74 percent of those voting, with 98 percent of eligible pilots participating, the Air Line Pilots Association said in a statement Friday. The agreement is effective Aug. 1 and was reached after more than three years of negotiations.

The contract raises pay rates for Airbus A320 pilots by 18.5 percent and for the carrier’s Embraer 190 pilots by 6.8 percent, on average, the JetBlue ALPA chapter said in an email. Pilots also gained better vacation and disability benefits, the union said.

“It provides significant pay increases, improvements to retirement, and enhanced working conditions,” ALPA President Tim Canoll said in a statement.

The labor deal will boost costs at JetBlue just as the New York-based airline is seeking to carve as much as $300 million a year from spending by 2020. While the full terms of the deal haven’t been disclosed, Raymond James Financial Inc. analyst Savanthi Syth has estimated a first-year cost of $130 million. JetBlue had 3,037 pilots at the end of last year.

‘Market Competitive’

JetBlue said the contract includes “market competitive pay rates, per diems and 401(k) provisions.” A company spokesman declined to elaborate on terms.

“I appreciate the hard work and dedication of both the ALPA and JetBlue negotiating teams in coming to an agreement that is fair for our pilots and that allows JetBlue to continue to grow, compete and succeed,” Joanna Geraghty, JetBlue’s president and chief operating officer, said in a statement.

The shares gained less than 1 percent to $17.99 at 2:43 p.m. in New York. JetBlue plunged earlier this week after its forecast indicated that costs would rise more than some analysts expected.

The outlook raised doubts about whether JetBlue can meet its goal of holding costs for each seat flown a mile to an increase of no more than 1 percent this year. JetBlue is eliminating an unspecified number of jobs, primarily at its headquarters, to streamline operations as part of a savings plan. Employees in customer-facing jobs, including pilots, flight attendants, gate agents and baggage handlers, aren’t involved in the reductions.

The pilots’ decision to join ALPA in 2014 ended a “direct relationship” between the carrier and its employees that JetBlue had touted as an advantage. The company’s flight attendants voted earlier this year to join the Transport Workers Union, after two previous attempts failed.

The biggest U.S. airlines typically have at least four major unions, representing pilots, flight attendants, mechanics and airport ramp workers.

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