Flight attendants at Alaska Airlines, the wholly owned subsidiary of Alaska Air Group (ALK), have voted in favor of a five-year labor contract. The contract has been ratified following 3 years of negotiations between the company’s flight attendants and management. The new contract covers 3,400 flight attendants of Alaska Airlines.
Provisions, such as pay raises, to improve the quality of life of flight attendants are included in the new contract. The relation between airline companies and labor unions are governed by the Railway Labor Act, which states that a collective bargaining agreement between an airline and a labor union does not expire; it instead becomes amendable as of a stated date. The above mentioned contract will become due for amendment on Dec 17, 2019. Failure to amend terms and conditions suitably may lead to work stoppages or strikes, and thereby hamper operations.
Although the contract stands approved at Alaska Airlines, things are not so pleasant for rival American Airlines Group (AAL) on the labor front. We remind investors, that last month flight, attendants at American Airlines Group voted down a joint five-year labor contract, which would have covered approximately 24,000 stewards of American Airlines and U.S. Airways. The two entities had merged in late 2013 to create the current American Airlines Group. The rejection of the contract, due to the absence of a profit-sharing plan, serves a blow to the integration process. Other leading carriers such as Delta Air Lines, Inc. (DAL) have shared profits with their employees in the past.
According to media reports, Southwest Airlines (LUV) is also facing labor-related issues. Baggage handlers with the carrier are displeased over contract talks. They are of the opinion that the carrier is neglecting its workers and passengers and are protesting against delays in Southwest flights
Zacks Rank
Alaska Air Group currently carries a Zacks Rank # 2 (Buy). Southwest Airlines is a better-ranked stock in the aviation industry with a Zacks Rank #1 (Strong Buy).
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