WSJ: $UAL's Inflation Warning

WSJ headline: United Airlines’s Inflation Warning

Sub-headline: Pilots get a 14.5% wage increase over 18 months, as airfares spike.

Anyone who’s flown recently knows they had better check their expectations of an on-time departure at the gate. A pilot shortage and other labor issues have disrupted flights across the country. While flying has rebounded to near pre-pandemic levels, many pilots have retired. Competition for pilots is fierce. An American Airlines subsidiary recently announced a 50% pay increase through August 2024.

United is trying to keep up with competitors with its new pilot contract that includes a 14.5% raise over the next 18 months. It also creates a new eight-week maternity leave benefit, improvements to long-term disability benefits, enhanced overtime and creation of a tax-advantaged retirement plan, according to the United pilots union.

Generous as the offer may seem, the pay increase isn’t all that much higher than the consumer-price index, which last month increased 8.6% over the last year. After inflation, the 14.5% raise amounts to about a 1.6% increase over 18 months. For pilots who live in Sun Belt areas where inflation is running hotter than 10%, such as Phoenix, it’s a decline in real wages if inflation stays this hot through the next year.