Republic Airways Holdings Inc. announced Tuesday that a majority of its 2,100 pilots have approved a new three-year contract that significantly raises their compensation, ending a years-long labor dispute that threatened to put the regional airline out of business.
The agreement will replace the current eight-year-old agreement on or about Nov. 1, Indianapolis-based Republic said.
About 85 percent of the pilots participated in the contract vote, with more than 76 percent voting in favor of the contract. The pilots are represented by the International Brotherhood of Teamsters’ Local 357.
“Today’s ratification by the IBT represents a significant positive step forward for our pilots and our airline,” said Matt Koscal, Republic vice president of human resources, in a written statement. “The new contract recognizes the importance of our pilots in our future success and it gives us a strong foundation on which to rebuild our operation and to move forward with the restructuring of our airline.”
In August, Republic warned that it might have to seek bankruptcy protection if it couldn’t work out a contract. The lack of a labor deal caused pilot shortages and prompted the carrier to renegotiate flying contracts with the companies for which it operates regional aircraft—American Airlines Group Inc., Delta Air Lines Inc. and United Continental Holdings Inc.
Delta has since filed suit against Republic for allegedly violating their agreement.
The situation worsened later in August when the Teamsters recommended against allowing members to vote on the carrier’s latest offer. Republic shares lost most of their value after the announcement.
But Local 357 made a counter-proposal in early September that sparked more negotiations and led to the new agreement.
The new pact invests about $50 million a year on average over the three-year duration of the new agreement and includes both a ratification bonus and an anniversary bonus, Republic said. Improved pay rates include a boost to $40 per hour for first-year pilots
Republic called the first-year rate “transformational,” and said the new pay scale “recognize Republic’s pilots as leaders in the regional airline industry.”
The company also said the labor deal “includes significant improvements in work rules and pilot quality of life. “
Republic shares fell 7.4 percent Tuesday on heavy trading volume, to $5.88 each. The shares had been on the rise in recent days on anticipation of the agreement.
The shares have fallen 60 percent since the beginning of the year.