Allegiant Air’s pilots ratify new contract

Allegiant Air said its pilots represented by the Teamsters union ratified a new five-year contract, ending labor issues at the Las Vegas-based budget carrier at a time the U.S. airline industry is grappling with a shortage of pilots.

The contract, effective Monday, offers pilots a pay hike of up to 31 percent, paid vacation of up to four weeks, an improved scheduling system and a massive increase jump in the company's 401(k) contributions.

More than 86 percent of the votes from pilots were in favor of the contract, the airline said on Thursday.

Allegiant Air, owned by Allegiant Travel Co, had 625 full-time pilots at the end of 2015.

The U.S. airline industry has been facing a pilot crunch after the Federal Aviation Administration ruled in 2013 that co-pilots must train for a minimum of 1,500 hours to qualify to fly a passenger or cargo plane. The previous requirement was 250 hours.

This has significantly pushed up the cost of training for aspiring pilots at a time of slow salary growth.

Regional carrier Republic Airways Holdings Inc filed for bankruptcy in February, blaming several quarters of falling revenue after having to ground aircraft amid a pilot shortage.

Allegiant Air had been in unsuccessful talks with its pilots for years.

The pilots had accused the airline of failing to abide by a 2014 federal court injunction directing it to restore their benefits and work-rule protections to levels negotiated earlier.

Last year, the pilots even threatened to go on a strike but a U.S. court blocked them from taking action.

Meanwhile, Allegiant said Friday it will buy new aircraft for the first time, in a purchase valued at $1.2 billion, as the discount carrier speeds its shift to a fleet of all Airbus Group planes by mid-2019.

Buying the 12 A320 jets with currently available engines allows the airline to add planes 'opportunistically” as Airbus switches its focus to pricier models with new, more fuel-efficient turbines, Allegiant CEO Maury Gallagher said in a statement Friday. The purchase of new aircraft doesn't represent a change in the low-cost carrier's strategy, he said.

Discounts are customary in such transactions.

The jetliners will build on Allegiant's efforts to improve operations after diverted flights and emergency landings raised concern at the carrier over the last year. Federal regulators said last week that while they found deficiencies in training manuals and practices during an extensive review, the shortfalls were minor and 'non-systemic.”

The purchases will move up the retirement of Allegiant's oldest planes from an earlier plan of fall 2020.