American Airlines Pilots Approve New Contract, Boosting Stock and Pay

American Airlines Group stock experienced a rise after pilots ratified a new four-year contract. Under the new agreement, pilots will see an immediate increase in pay of 21%. This move comes as American joins United Airlines Holdings and Delta Air Lines in boosting pilot pay in response to increased customer demand amid the challenges of emerging from pandemic shutdowns.

The union representing 15,000 pilots expressed their satisfaction with the new contract, stating that it also includes benefits such as increased contributions to the 401(k) retirement plan. Overall pay is expected to rise by 46% over the next four years, amounting to $9.6 billion, which marks a significant increase compared to their previous agreement.

Captain Ed Sicher, the president of the Allied Pilots Association, spoke on behalf of the pilots: "The pilots of American Airlines have spoken: It's time to move forward with a new working agreement that provides substantial monetary gains and quality-of-life improvements."

American Airlines CEO Robert Isom expressed optimism about the agreement, highlighting its potential impact on pilot training capacity and career advancement opportunities: "This agreement will help American immediately expand our pilot training capacity to support under-utilized aircraft and future flying and provide our pilots with more opportunities to progress in their careers."

Following the announcement, American Airlines stock rose by 0.8%, while the S&P 500 saw a rise of 0.7% on Monday.

The pressure on carriers to address employee shortages and meet union demands for improved working conditions and higher pay has been mounting. American Airlines' previous offer fell through after United pilots agreed to a deal that raised pay by as much as 40% over four years. Delta pilots also recently approved a contract that raises pay by 34% over four years. As negotiations continue, Southwest Airlines remains the last of the four major carriers that has yet to reach at least a preliminary agreement with pilots.