Southwest Airlines seeks to avoid labour cost hikes and improve employee efficiency in ongoing contract negotiations with a range of employee groups.
At a 13 June conference, the Dallas-based carrier's chief financial officer Tammy Romo says keeping labour costs in check is a key goal of the carrier, which faces competition from major network airlines that have reduced employee costs in recent years thanks to bankruptcy restructurings.
"We have opportunities to improve our efficiencies as we go through this round of negotiations," says Romo at the Deutsche Bank Global Industrials and Basic Materials Conference. "We would want to maintain our labour unit costs."
"Certainly we wouldn't want [them] to be any higher," she adds.
Romo notes that Southwest's salaries are at the top of the industry, partly because "many of the [other] carriers went through bankruptcy."
Contracts with thousands of Southwest's roughly 46,000 employees are under negotiation, or will be soon, the airline tells Flightglobal.
The company is currently in formal discussions with its 6,200 pilots, 8,400 ground employees (including ramp, operations, provisioning and freight workers), 1,750 aircraft maintenance technicians and 5,100 customer service staff.
In addition, Southwest recently began contract discussions with its 10,000 flight attendants and will begin negotiations with 40 facilities maintenance technicians and 160 material specialists later this year, the airline says.
Within the next several years contracts with dispatchers, aircraft appearance technicians, flight simulator technicians and flight crew training instructors will also become amendable, according to Southwest's 2012 annual report.
"As we continue these talks, we never lose sight of the fact that the company, the unions and our employees want the same thing: to keep Southwest strong during these challenging economic times - positioning Southwest for growth and prosperity for many more years to come," the airline tells Flightglobal.
Roughly 83% of Southwest's staffers are unionised.
Though Southwest has historically been known as the USA's low-fare leader, in recent years its costs have increased to levels approaching US legacies carriers, and analysts have noted its fares are no longer all that low.
Southwest itself has said labor costs threaten its low-fare status.
"The company's ability to control labour costs is limited by the terms of its [collective bargaining agreements], and increased labour costs have negatively impacted the company's low-cost competitive position," said its annual report.
In 2012, Southwest's cost per available seat mile (CASM) was 12.85 cents, having risen every year since at least 2008, when its CASM was 10.24 cents.
Salaries, wages and benefits accounted for 29% of Southwest's operating expenses in 2012, the 2012 report says.
By comparison, low-cost carrier JetBlue Airways reported CASM of 11.34 cents for 2012 and Spirit Airways had a CASM of 10.09 cents, the lowest among US carriers, according to regulatory filings.
CASM at the four legacy US carriers - US Airways, United Airlines, Delta Air Lines and American Airlines - ranged from 13.22 cents to 14.97 cents in 2012.