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Here Is Why The Latest Southwest Pilot's Contract Could Be A Big Win For Spirit

Summary

Southwest Airlines management and union officials have reached a tentative agreement for a new pilot contract.

Four years of operating without a contract gave Southwest artificially low costs, allowing it to compete against the likes of Spirit better.

The terms of the pilot contract are such that Southwest will see a large operating cost increase, enhancing Spirit's low cost position.

Img 1: Southwest Airlines Pilots Picket In Dallas, TX

After four years of Southwest Airlines (NYSE:LUV) pilots being without a working contract union officials and management have come up with a new contract. The contract offers Southwest pilots a 15% wage increase upon signing it with a 3% increase each year after. It allows Southwest to interline with cross border airlines and code share on international flights. In addition, the contract paves the way for Southwest to operate the Boeing 737 MAX, something that could not be done under the previous contract. From talking with a some Southwest pilots it appears that...


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