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American Airlines Pilots Bid for Early Outs Under Virus Deal

March 26, 2020, 8:05 PM

About 600 American Airlines pilots could be selected for early retirement effective April 1, under a deal between the airline and its pilots’ union in response to the novel coronavirus.

Pilots who will be age 62 or older by May 1 were eligible to apply this week for “voluntary permanent leaves of absence,” according to the Allied Pilots Association. American will decide who is selected, and priority generally will go to pilots who are age 64 and then to those who are age 63. The types of aircraft the pilots fly will also be a factor, the union said in a message to its members.

The airline is expected to choose a minimum of 598 pilots for the early outs under a deal reached by American and the APA earlier this month. If American doesn’t get enough takers among that age group, the company may award early retirements to 62-year-old pilots, the union said.

Those selected for the early outs will get full benefits and about 60% of their regular pay—based on the number of hours that pilots generally fly each month—until they reach age 65, the mandatory retirement age for pilots, said Dennis Tajer, a spokesman for the union who is also a pilot at American.

The agreement, which also allows pilots to opt for short-term paid leaves of absence and voluntary long-term unpaid leave, will allow American to reduce its short-term costs while also maintaining a workforce that will allow the airline to get back up to speed quickly once the COVID-19 epidemic has abated, Tajer said. The “innovative” agreement is a model for the industry, he said.

Airlines are suspending flights to more and more destinations because of the epidemic. The economic ramifications could be massive. U.S. passenger and cargo carriers directly employ about 750,000 people worldwide and help drive more than 10 million U.S. jobs, according to Airlines for America, an industry association.

American Airlines didn’t immediately respond to requests for comments.

Leaves of Absence, Unpaid Leave

Pilots of all ages under the deal between American and the APA can bid for temporary leaves of absence with about two-thirds pay for periods of one, three, and six months. They also can request long-term unpaid leave with continued medical and other benefits.

Bidding for paid temporary leaves of absence or long-term voluntary unpaid leave begins Thursday evening, the APA said. Bids for early outs were due early Thursday, the union said.

Early-out awards will be announced Friday afternoon, and awards of paid temporary leaves of absence and long-term unpaid leave will be announced March 30, it said.

The union is continuing to bargain with American over a new collective bargaining contract, part of a wave of labor negotiations involving the top four U.S. airlines. The APA wants big changes to the current labor contract, which was reached during a time when American was in bankruptcy, Tajer said in an earlier interview.

Rebecca Kolins Givan, a professor at the Rutgers School of Management and Labor Relations, said the deal reached by the American pilots shows that airline unions have learned from the aftermath of the 9/11 terrorist attacks, which resulted in a sharp decrease in air travel that affected the industry’s bottom line.

“The airline industry went through a crisis like this after 9/11 and these unions have experience negotiating on behalf of their members during this time of extreme economic uncertainty,” she said.

To contact the reporter on this story: Louis C. LaBrecque in Washington at llabrecque@bloomberglaw.com

To contact the editors responsible for this story: Martha Mueller Neff at mmuellerneff@bloomberglaw.com; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com

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