American Airlines CEO went around their pilot union, telling cockpit crew that they’re ready to pay them up to $590,000 per year, essentially matching Delta’s new pay rates and improving on scheduling and other quality of life issues.

Immediately following this message, the board of the Allied Pilots Association agreed to seek authorization from pilots for a strike.

AA pilots, not, per se, stoked? pic.twitter.com/u0u9a3FA7i

— 🇺🇦 JonNYC 🇺🇦 (@xJonNYC) March 9, 2023

There are two views, generally, about this strike authorization vote. One is that it’s business as usual. They’re in negotiations and want to ‘keep the pressure on’ so the logical step is a strike threat. The other view is that there’s anger at the company for making an end run around the union. However these aren’t as mutually exclusive as they first appear.

• Unions want a strike authorization vote to make threats of a strike credible. Meanwhile they tell members that the strike authorization vote gets them the contract they want meaning it makes a strike unnecessary. Many members will vote to authorize a strike without wanting to strike, and they’re told voting to strike doesn’t mean striking – it’s a way to get what they want without doing so.

• At the same time a strike vote makes an actual strike more likely. It’s one step towards a strike, and it hands power to union leadership and gives them the choice (once the National Mediation Board releases them to do so).

• A strike isn’t the only way a pilot union threatens the company. Pilots can work to rule. They take longer, double and triple checking everything ‘for safety’ and out of ‘an abundance of caution’ to slow down the operation. They find issues that aren’t safety problems, that they’d normally fly with, and reject an aircraft. They get paid to foil the airline operationally.

So what is the union doing here, seeking a strike authorization right as the airline is offering to give them the pay they want and expect, and improved work rules as well?

Negotiations aren’t done. Many of their members will be happy with the message. The union doesn’t want to close up shop on negotiations, they still need to get work rule details ironed out. To union negotiators it’s too early to celebrate, and their members have expectations of a Delta contract not just in pay rates but in all respects and they aren’t actually there yet.

If pilots celebrate prematurely that’s going to help the company and prevent the union from getting all the details it wants. So a strike vote signals to the company that this isn’t done. And a successful strike authorization vote means there’s still pressure to negotiate since there’s still a threat to the airline.

There’s some risk in running the strike authorization vote. The union could lose it! But:

1. They won’t lose the authorization vote, because the union will explain that’s caving at the finish line
   
2. The strike authorization vote will go on for two months, so that gives the union two months of negotiating – when the company says they want to wrap a deal quickly – while the pressure is on.

The company won a PR coup by telling pilots they can have a 21% pay increase in the first year and 40% by the fourth year of the deal. It’s right there in front of them. The union needs to push back so that they can improve not just wages but get closer to Delta on work rules as well. They need to change the narrative.

Publicly, though, they won’t get much sympathy. The headline top pay of $590,000 underscores that pilots aren’t oppressed workers, exploited by management. In fact the huge raises being offered are in stark contrast to modest changes offered to most of management. The C-Suite has done well on compensation, but middle managers are seeing, in many cases, low single digit changes.

Nonetheless, the goal of American pilots is to be like Delta pilots in all respects. Work rules are costly, too, and American can’t afford the pay increases they’re offering to pilots as it is.

The company reports a $7 billion cost increase over four years for the contract they are offering. That is more than the airline earns now. With $2.1 billion in interest payments and an average cost increase for pilots of $1.7 billion. The company’s net income was $328 million in 2022, though conditions improved through the year with American earning $827 million in the fourth quarter (having lost money early in the year).

United CEO Scott Kirby has observed that higher pilot pay helps high cost major airlines at the expense of lower cost carriers, whose pilot pay increases represent a higher percentage of total costs. Similarly, though, pilot pay increases at financially stronger Delta disproportionately harm airlines with weaker financials like American.