DAL Delta Air Lines Inc

Regional carrier Republic Airways Holdings Inc., which warned over the summer that it could be forced to file for bankruptcy-court protection if it couldn't solve its pressing pilot hiring and retention challenges, said Tuesday that a majority of its 2,100 aviators approved a new three-year labor contract that significantly raises pay and improves work rules.

The pact, which will go into effect in a few days, will succeed the current contract, which hadn't been updated in eight years. The new deal lifts starting first-officer pay to $40 an hour, raises pay for other first officers and boosts captain pay. Indianapolis-based Republic said it would invest about $50 million a year over the three-year duration of the new contract, including signing bonuses and anniversary bonuses. This improved pay is expected to help Republic stem the loss of pilots to other airlines and revive its recruitment pipeline.

"The new contract recognizes the importance of our pilots in our future success and gives us a strong foundation on which to rebuild our operations and move forward with the restructuring of our airline," said Matt Koscal, Republic's vice president of human resources. Because it lacked enough pilots, Republic hasn't been able to meet its contractual schedules for its major airline customers, American Airlines Group Inc., United Continental Holdings Inc., and Delta Air Lines Inc.

The International Brotherhood of Teamsters, which represents the Republic pilots, said its members "have more than earned this industry-leading contract," according to Capt. David Bourne, director of the airline division of the union. About 90% of the eligible pilots participated in the vote, with 1,363 votes in favor and 421 against, the union said.

Earlier this year, American, United and Delta had allowed Republic to reduce its schedules. But Delta earlier this month sued Republic for breach of contract and recovery of damages for allegedly forcing Delta to cancel flights and preventing it from scheduling flights it otherwise would have scheduled. The suit was filed in Superior Court of Fulton County, Ga. Shortly afterward, Republic said it was aware of the complaint, denied it was in breach of Delta's agreement, but declined to comment further.

Mr. Koscal, Republic's human resources chief, said the company still has many challenges to overcome to achieve a successful restructuring of the regional airline. But the new pilot contract "helps move this process forward," he said.

Write to Susan Carey at susan.carey@wsj.com

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(END) Dow Jones Newswires

October 27, 2015 14:45 ET (18:45 GMT)

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