Labor disputes are not new to the airline industry. It is a known fact that airlines, being a service industry primarily, can be significantly bogged down by labor problems that tend to disrupt operations of a carrier. On the other hand, smooth and amicable solutions to labor issues make things much easier in the aviation space. Thankfully, the latest development on the labor front at American Airlines Group AAL calls for celebrations.
Members of the union (Communications Workers of America and International Brotherhood of Teamsters) representing the reservations and gate agents of this Fort Worth, TX-based carrier recently ratified a five-year contract which guarantees them higher pay. The contract covers around 14,500 passenger service employees of the company in the U.S.
The CWA-IBT represents the gate and ticket agents, Premium Service representatives, Reservations representatives and Travel Center representatives of the carrier. We note that the workers had not been unionized previously. They united under the CWA-IBT umbrella only last year. According to the update, approximately 9,500 members took part in the voting procedure, which was conducted by an independent third party. Approximately 73% of the votes cast were in favor of the deal.
According to a Bloomberg report, following the ratification of the deal, the concerned employees would see their wages go up by 30% on an average, with immediate effect. The initial increase apart, there would be further financial gains for the passenger service employees as per the contract.
We are not surprised by the outcome of the ratification voting procedure as the tentative agreement between the concerned parties was already inked in September this year. However, tentative agreements do not always culminate in the ratification of a deal. The latest example to this effect is Southwest Airlines LUV. Pilots at the Dallas, Texas-based low-cost carrier turned down a tentative labor contract pertaining to their pay raise on two major grounds, as per media reports. Apparently, the issues pertained to code share agreements and retro pay.
Republic Airways Holdings Inc. RJET, meanwhile, received positive news on the labor front just like American Airlines. Pilots at the Indianapolis-based carrier agreed to a deal that will ensure industry-leading compensation, job security and improved work rules for the pilots at Republic Airways.
With most airline companies enjoying robust financial health, it is quite natural that their employees would demand higher pays. As airline employees look to boost their pay, negotiations between carriers and various labor groups on new contracts pertaining to pay and other benefits continue to take the airline industry by storm.
Zacks Rank
American Airlines presently carries a Zacks Rank #3 (Hold). Investors interested in the airline space may consider Hawaiian Holdings HA, which sports a Zacks Rank #1 (Strong Buy).
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