The fallout from American Airline’s pilot scheduling glitch could cost the business $10 million.
The figure originates from a recent JPMorgan report estimating the total price of the airline’s decision to dual pay for pilots who have offered to complete around the December holidays.
Last week, the Allied Pilots Association, which represents American Airlines (AAL) pilots, revealed that thousands of holiday flights were without pilots just because a system scheduling error had accidentally given too many employees time off in December.
To fix the difficulty, American and the union negotiated a good pay rise for pilots who offered to fly the unassigned flights. American and the union have got explained no flights will be canceled.
Related: American Airlines: We’ve enough pilots for December
The APA said on Sunday that those employees who’ll be piloting flights afflicted by the glitch will make 200% wages — an increase from the 150% discussed earlier.
“We’ve reached an arrangement that people believe will make sure that our customers’ holiday travel plans aren’t disrupted while likewise recognizing our pilots’ extra efforts to help resolve this task,” the APA said.
JPMorgan airlines analyst Jamie Baker wrote found in the survey that “initially, we were somewhat disappointed by the 200% headline.”
“After all, the existing contract affords management the discretion to pay 150% for these types of events,” he said.
Ultimately, however, Baker concluded that the decision to twice pilots’ pay could stave off bad press and passenger anxiety, adding that the “difference between a 150% and a 200% pay rate [is] sufficiently immaterial.”
Baker reached the $10 million shape by estimating pilot pay in December as a share of American’s quarterly wages and benefits and deciding that about 1,500 flights can get flown by pilots making 200% pay.
Helane Becker, a great airline analyst for Cowen, was harsher on your choice. She wrote on Mon that the maneuver “produced no goodwill for American as in our check out the union goes on to take good thing about their company.”
American Airlines said it doesn’t touch upon analyst reports.