Spirit Airlines pilots, represented by the Air Line Pilots Association (ALPA), ratified (23-Jul-2010) a new contract containing substantial pay rises and industry-leading work rules, following four years of talks and a Jun-2010 strike. The new five-year agreement increases hourly wages by an average of 10% for captains and 18% for first officers. In addition, the entire pilot group will receive a substantial signing bonus. The agreement also includes clarification on existing work rules, puts in writing long-standing operations practices, while providing the company with additional flexibility on scheduling. [more - ALPA] [more - Spirit]
Spirit pilots approve new contract
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Europe's aviation strike spike could signal a cyclical peak - with downturn to follow
One swallow does not make a spring and nor does a rash of aviation strike news guarantee a turning point for the aviation industry. But the signs are ominous. In the month of Jun-2016 (to 20-Jun-2016), there have been 136 articles on CAPA's website mentioning the word 'strike'. This compares with 81 for the first 20 days of Jun-2015. For 2016 so far (1-Jan-2016 to 20-Jun-2016), the 's' word has occurred in 594 articles – about 20% more than in the same period in each of the past two years. If this rate continues, 2016 could be the biggest year for strike-related articles since before the global financial crisis.
The vast majority of the Jun-2016 articles – 80% – relate to Europe. A significant source is air traffic control disputes, particularly French ATC. There have also been strikes and/or strike threats involving airport workers and ground handlers. Among European airlines, Air France has generated the most coverage for its ongoing dispute with its pilots, and it may also face a cabin crew strike. Lufthansa has not yet faced a strike by its employees this year, but has not yet reached new agreements with pilots or cabin crew after industrial action last year.
History tells us that labour's demands grow as profits rise. The apparent increase in industrial action this year could be a signal of an approaching peak in the airline profit cycle. There are other causes of unrest, such as impending French labour legislation, but the correlation reflects some history.
Spirit Airlines expresses cautious optimism about pricing improvement in the sagging US market
Similarly to the largest US global network airlines, the ULCC Spirit is welcoming signs of a modest improvement in the US pricing environment. The company’s decline in total unit revenues year-on-year in 3Q2016 slowed to single digits – compared with some of the steepest decreases recorded among US airlines for the past year. If the overall trends in the US market stick Spirit’s sequential unit revenue improvements should continue, reflected in projected further improvement in 4Q2016. However, unlike some US airlines, Spirit is not offering a specific timeframe for a return to positive unit revenue.
Spirit also posted sequential improvement from non-ticket revenue declines in 3Q2016. The airline has been battling soft pricing in baggage fees tied to lower ticket prices. It has been in the process of incorporating ways to shore up non-ticket revenue, including adopting more dynamic pricing of its ancillary products.
Throughout 2016 Spirit has retained a number of smaller-gauge Airbus A319s as it adopts a pivot in its network strategy – to smaller markets. Looking forward, the company is not ruling out talks with other manufacturers about its long-term fleet needs, reasoning that with Airbus’ strength among low cost airlines other airframers are ultimately going to act aggressively to secure new business.