By Jeffrey Dastin and Ankit Ajmera
(Reuters) - American Airlines Group (O:AAL) pilots have voted to accept a five-year contract that will raise their wages substantially and cement their relationship with the management, the pilots union said on Friday.
About 66 percent of the pilots who voted cast their ballots in favor of the contract, which will raise their pay by 23 percent retroactive to Dec. 2 and by another 3 percent above their original wages retroactive to Jan. 1, plus another 3 percent in 2016.
About 94 percent of the members voted during the two-week election, the union said in a statement. (http://bit.ly/1tFiTu5)
The company, which runs the world's largest combined airline by passenger traffic since it merged with US Airways in December 2013, employs about 15,000 pilots totally, represented by the Allied Pilots Association.
American Airlines' shares were down about 3 percent at $50.65 before the news. They remain mostly unchanged since.
While American Airlines has said the outcome will increase its costs by about $650 million in 2015, analysts view the news as a win for the airline, which appears to have earned the favor of its workers while locking in a joint contract faster than newly merged airlines often do.
"APA will now focus on further engagement with American Airlines management to address ongoing shortcomings in our contract," APA President Keith Wilson said.
A "no" vote would have sent the pilots and management to binding arbitration, which would have capped wage gains to zero percent for December 2014, 3 percent for January and an extra 13 percent a year later, per an agreement that the pilots union had accepted during the merger.
"Getting a ratified contract speeds up merger integration, (makes for) a more efficient operation ... reduces uncertainty and de-risks the business," said CRT Capital Group analyst Michael Derchin in an email.
Going into Friday, it was not immediately clear which way American Airlines' pilots would vote. The union had expressed frustration about work rules in the contract, such as the fact that pilots do not receive pay for each calendar day they are away from home but are not on an assignment.
"Our total compensation will still trail industry-leader Delta, while work rules affecting our pilots' quality of life need meaningful improvement," APA President Wilson said.
Negotiations to amend the pilots contract at Delta Air Lines (N:DAL) can begin as early as April.
American Airlines' flight attendants were the first and only work group to reach a joint union-backed contract since the merger, receiving it in arbitration in December.
The "company has successfully built the foundation of a new bridge of trust with the combined pilot group," said airline industry consultant Robert Mann in an email.