By Rajesh Kumar Singh
CHICAGO (Reuters) -Pilots at JetBlue Airways (NASDAQ:JBLU) Corp have overwhelmingly approved a two-year contract extension, their union said on Monday.
The Air Line Pilots Association (ALPA), which represents more than 4,600 pilots at JetBlue, said 75% of the pilots voted in favor of ratifying the agreement, which provides for a compensation increase of 21.5% over 18 months as well as other monetary improvements.
The deal, effective Feb. 1, is further evidence of the bargaining power pilots are enjoying as carriers staff up to meet booming travel demand.
Analysts at Jefferies estimated that the United States is short of 10,000 pilots. This shortage is projected to last until 2027.
JetBlue deal includes a market rate adjustment provision to ensure the pay rates for its pilots align with future contracts at big national carriers. Pilots would also get a one-time payment up to $17,000.
In all, the agreement is estimated to result in a gain of $675 million over two years for JetBlue pilots.
In July, JetBlue agreed to buy Spirit Airlines (NYSE:SAVE) in a $3.8 billion deal, which is expected to close no later than the first half of 2024. While Spirit's shareholders have approved the merger, the fate of the deal hinges on securing regulatory approvals.
After the Spirit deal, the New York-based carrier and its pilots entered into negotiations for a short-term contract extension.
ALPA said the agreement has put JetBlue pilots in a "strong position" for future negotiations.
"As JetBlue pursues this merger, this agreement protects the career expectations of JetBlue pilots while the market for pilots rises," said Chris Kenney, chair of ALPA's JetBlue unit.
ALPA has also secured as much as a 43% cumulative weighted average pay raise for Spirit pilots in a new contract.