Chicago-based United Continental Holdings UAL, the parent company of United Airlines, recently reached an agreement with the labor union (Association of Flight Attendants or AFA), representing its flight attendants. The agreement aims to bring the carrier’s 25,000+ flight attendants into a single work group.
However, there is a long way to go before the objective of the agreement is fulfilled. The contract will take the shape of a provisional deal following approval by the Joint Master Executive Council, including all Local Presidents. The immediate course of action involves the concerned parties working on the language of the contract.
Tentative agreements do not necessarily mean that the deal will be operational. They will be effective only on ratification. For example, last year, Southwest Airlines' LUV pilots rejected a tentative labor contract pertaining to their pay raise.
Whatever be the outcome, it cannot be denied that United Continental has adopted a more labor-friendly approach under CEO Oscar Munoz compared to his predecessor Jeff Smisek. In this year itself, the company has signed multiple contracts with pilots, IAM-represented employees and dispatchers whereas the company was grappling with frequent problems on the labor front under Smisek.
Consequently, we expect investors to keenly await updates on the agreement with flight attendants.
Zacks Rank & Stocks to Consider
United Continental currently carries a Zacks Rank #5 (Strong Sell). The carrier’s bearish rank can be attributed to fears of reduced travel demand following the Brexit vote and the surge in terror attacks.
Investors interested in the airline space may consider SkyWest, Inc. SKYW and Air France-KLM SA AFLYY. Both the carriers sport a Zacks Rank #1 (Strong Buy).
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