Southwest Airlines Co.’s stock rose Thursday after it said it reached a tentative agreement with the union that represents 18,000 of its staff that handle baggage, provisions, and cargo for the carrier.
New Contract Proposal
Southwest shares (LUV, +2.01%) were up 0.7% in premarket trading as it confirmed a new pact with Transport Workers Union Local 555, which includes its agents that handle ramp duties, operations, provisioning, and cargo.
The new contract proposal will now go before union members for a ratification vote.
Improvements in the New Contract
Some of the changes from the rejected contract include wage increases at every step, and reduction of the current 13-step wage scale to an 11-step wage scale. The new contract would pay a combined lump sum bonus of $140 million, up from $70 million.
For retirement, it boosts the employer contribution to 10% of an employee’s eligible compensation, from 9.3%.
Updated Salary Details
The contract includes base salaries of $19.45 an hour in 2024 for new hires for ramp and provision work and up to a maximum of $38 an hour. The wage would increase by 3% per year over the next four years.
For new hires in operations and cargo, new hires will earn $19.80 an hour and up to $38.35, with 3% annual raises through 2028.
Meanwhile, Southwest pilots in January ratified a contract that offered to increase their pay by almost 50% by 2028.
Delta Air Lines (DAL, +0.39%) and American Airlines (AAL, +0.61%) have also inked new contracts with pilots in the past year.
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