January 31, 2018 / 10:38 PM / 9 months ago

Spirit Airlines, pilots union reach agreement on pay hike contract

Jan 31 (Reuters) - Spirit Airlines Inc has reached a five-year tentative agreement with its pilots for pay and benefit increases, the group's union said on Wednesday, signaling an end to an acrimonious years-long negotiation.

The new contract includes an average pay increase of 43 percent for the carrier's 1,800 pilots, double-digit contributions to pilots' retirement plans and $75 million in ratification compensation.

"This tentative agreement represents a positive step toward recognizing our pilots' contributions to the airline," said Stuart Morrison, chairman of the Spirit unit of the Air Line Pilots Association.

Contract negotiations had dragged on for nearly three years, the union said.

Relations between pilots and management reached a head last summer when Spirit accused pilots of engaging in an illegal work slowdown, resulting in hundreds of flight cancellations and costing the company some $8.5 million in revenue.

Spirit is just the latest U.S. carriers to agree to hefty pay increases for its employees, following years of stagnating wages and painful contract deliberations.

While higher wages benefit airlines by promoting loyalty and boosting morale, salary and benefit hikes weigh on carriers' bottom lines and drag on unit revenue, which has only recently begun to trend positive after several quarters of decline in the metric.

The new Spirit contract is pending pilot approval. Pilots will vote in February on whether to ratify the agreement.

Reporting by Alana Wise in New York; Editing by Lisa Shumaker

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