Profit Changes Tone of Contract Talks

For the first time since the late 1990s, union negotiators are going to the table with an economic breeze at their backs.

The union, Southwest Airlines Pilots' Association, is seeking improved benefits and pay. Big hourly rate increases are not a top bargaining objective, they say. But the pilots at the Dallas-based discounter do want more money. To get it, they're willing to increase their time in the air -- and on the clock -- as long as they don't increase the number of days they work each month.

Union chief Ike Eichelkraut figures that will improve Southwest's industry-leading productivity while boosting pilots' W-2 income. But management says experiments with new scheduling techniques like those sought by the pilots so far have been unsatisfactory. Legal limits on pilots' working hours and Southwest's fast-growing route system make it hard to schedule them to fly more than they already are.

Management had asked to delay negotiations for a year, but pilots voted not to go along.

Joe Harris, Southwest's chief contract negotiator, says the delay would have given the company and the union "the chance to get another year of experience of operating in these very uncertain times under our belts before we begin negotiating." Harris says the pilots' rejection of the proposed delay doesn't necessarily portend difficulty in negotiating the new contract. "We're ready to move forward," he says.

Costing more cash

But there's little doubt that a new pilots deal at Southwest will end up costing additional cash at a time when the low-cost leader is fighting a worrisome upward creep in virtually every spending category. Southwest expects to add about 600 pilots to make up for retirements and to staff the 35 or so new planes it will add to the fleet in 2007. The newcomers, Harris notes, will come in at the lower end of the pay scale, easing the cost creep. But it won't fully offset the carrier's rising labor costs.

Harris says Southwest pilots understand the need to control costs and improve productivity.

"Thankfully we have a willing partner in this," Harris says. "Our pilots want to achieve the same goals. But it's not going to be easy."

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