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Atlas Air Worldwide Holdings (AAWW) has filed a complaint in a federal court against its pilot unions as it battles to cap potentially spiralling labour costs.
The airline is attempting to create a joint contract for its Southern Air and Atlas Air pilots.
The carrier is arguing that under the two airlines’ collective bargaining agreements, the pilots must enter a joint agreement in the event of a merger. Atlas alleges that the pilots have refused to negotiate.
The move to court has been met with dismay by the pilots, who claim that Southern Air’s contract was a concessionary one, negotiated during bankruptcy and which “falls far below industry standards”.
Atlas Air, however, faces significantly rising labour costs as it extends its operations for Amazon. It claims that it will cost $18m on an annualised basis for Southern’s pilots to move onto Atlas contracts – an amount disputed by the union, which claimed it would actually cost $4m.
One financier told The Loadstar the $18m cost would amount to a “hit to earnings of about $0.65 per share, assuming Atlas is unable to pass it on to customers”.
He added: “Increased labour costs at Atlas are a certainty. It’s not clear when, but this shows the magnitude of the increase will be significant.”
According to the pilots, however, the carrier is already struggling to retain crew. They claim that in January, double the number left the company than the monthly average in 2016.
Atlas Air pilot Capt Michael Griffith claimed that “many long-time Atlas Air and Southern Air pilots [are] leaving for better opportunities at competitors like FedEx and UPS”.
He added: “It’s disturbing that instead of working with pilots on a comprehensive solution to our staffing crisis, in the form of a fairly negotiated and member-ratified collective bargaining agreement, executives at AAWW and their affiliates are resorting to wasteful and time-consuming litigation to try and force pilots into a contract that is even worse than what we’re struggling with now.
“This will only lead to more departures and fewer pilots coming to our airline, thereby putting our customers and shareholders at even greater risk,” he said.