American Airlines reaches interim deal to hike ground staff wages

August 5, 2016 10:29 AM EDT

An American Airlines airplane sits at a gate at the O'Hare Airport in Chicago, Illinois, U.S. October 2, 2014. REUTERS/Jim Young/File Photo - RTSGXOR

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(Reuters) - American Airlines Group Inc (NASDAQ: AAL) said it had reached an interim agreement with a labor union to raise wages for about 30,000 of its ground staff, effective immediately.

The company said on Friday it expected the hike to increase its pretax operating costs by about $75 million in the third quarter and $120 million in the fourth quarter.

The agreement was reached with the TWU-IAM Association, which is an alliance between the Transport Workers Union and the International Association of Machinists and Aerospace Workers.

The pay hikes range from 15 to 36 percent for maintenance and related employees, 24 percent for fleet service employees, 31 percent for tower planners and 55 percent for weight and balance planners.

The increases now give employees in each of these groups the highest hourly wage rates amongst their peers at other network carriers, American Airlines said.

The association commenced the joint contract negotiations with the company in December.

Shares of American Airlines were up 1.2 percent at $33.99 in mid-morning trading.

(Reporting by Arunima Banerjee in Bengaluru; Editing by Kirti Pandey and Maju Samuel)

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