Labor trouble has emerged as a major sore point for the U.S. aviation industry of late. The pilot scarcity induced delays/cancellations of many flights, thereby disrupting air-travel that rebounded from the pandemic lows. Amid this problem, pilots at American Airlines AAL are likely to get a nearly 17% pay raise per CEO Robert Isom. The new proposal is reportedly made to the union representing the pilots, the Allied Pilots Association.
The proposal includes a pay hike of 6% on commencement of the contract followed by 5% raises at the start of 2023 and 2024. Moreover, if the deal gets ratified by Sep 30, this year, there are other lucrative incentives like retroactive pay. Due to pilot shortage, AAL, currently carrying a Zacks Rank #3 (Hold), recently decided to drop two regional routes from Sep 2022.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In view of this acute crisis, the proposal from the CEO is a very timely and welcoming one. AAL’s proposal comes close on the heels of United Airlines’ UAL pilots, represented by the Air Line Pilots Association, approving a tentative agreement on modified terms for their collective bargaining deal.
The provisional deal, which will now be put to vote, on successful ratification will make the pilots eligible for pay raises, totaling more than 14.5% within 18 months. The same is retroactive to the commencement of the current year. Apart from the increment, UAL pilots will get other benefits in the event of their deal materializing.
Coming back to the American Airlines story, the new offer is being reviewed by the Allied Pilots Association. Per Isom, “United put forth industry leading pay, and we matched that for our team”.
AAL and UAL apart, pilots of other U.S. airlines continue to protest against lack of remuneration and below-par working conditions. For example, pilots of Delta Air Lines DAL picketed at airports throughout the country on Jun 30.
The protests by Delta’s pilots erupted as talks between the union and DAL on a fresh contract were stalled. Pilots at DAL are still being covered under the collective labor agreement inked in 2016.
Watch this space for further updates on the issue of pilot crunch that gripped the U.S. airline industry.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
American Airlines Group Inc. (AAL) : Free Stock Analysis Report
Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
United Airlines Holdings Inc (UAL) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research