Current Extension Expires August 31

On Friday, pilots at Southwest Airlines -- the most profitable US carrier -- voted to reject the airline's offer of a one-year contract extension, in favor of starting negotiations on a new pay deal.

The Dallas Morning News reports those talks will likely begin in August. More than 80 percent of pilots represented by the Southwest Airlines Pilots Association voted against the contract extension, the union said.

"Our pilots are among the most experienced Boeing-737 pilots in the industry and have the honor of working for an airline with an outstanding management team," said SWAPA President, Capt. Ike Eichelkraut. "We look forward to continuing the spirit of partnership that has existed between our pilots and our Company for more than three decades. For us, formal negotiations is a periodic opportunity to adjust work rules and compensation for our pilots while, at the same time, ensuring the continued growth, success and profitability of our Company."

Pilots at the airline have worked under the same basic contract for that past 12 years -- and despite the fact that Southwest pilots are now the highest paid among US carriers (as pilots at competing carriers have had to take sharp pay cuts in the current financial climate) one analyst says the pilots have picked the right time to try to get a better deal.

"Their people are the best paid in the industry but probably one of the most productive, and that's the way they have to keep it," said Calyon Securities analyst Ray Neidl to the DMN. "I don't think the one-year extension makes a difference. You're better off going after a new contract."

Among the issues Southwest pilots are likely to address include securing rights to operate more flights in the post-Wright Amendment era, as well as insuring other routes don't go to pilots at Southwest code-share partner ATA.

The airline says it welcomes talks... but CEO Gary Kelly has cautioned pilots in the past to not expect a whole lot more than what they're getting now.

"We have enjoyed pay rate increases every year, and that's a remarkable accomplishment," Kelly said last month. "If pay rates are going to continue to increase, we have to find ways to offset" higher fuel costs.

Even with Southwest's legendary fuel-hedging program and low operating costs... that has become increasingly difficult to do, with the airline maintaining an average one-way fare of just over $100.

FMI: www.southwest.com, www.swapa.org