In a big relief for American Airlines (AAL), the airline’s flight attendants have approved a five-year labor deal, securing raises of up to 20.5% starting in October. The agreement was approved by 87% of the flight attendants who voted in the union polls.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
Commenting on the deal, Julie Hedrick, president of the Association of Professional Flight Attendants stated that this contract marked a significant win for the airline’s 28,000 unionized flight attendants and will also include retroactive pay to cover the long negotiation period.
Deal Is a Big Relief for AAL
For American Airlines, this deal is a relief, as the company’s CEO Robert Isom commented, “Reaching an agreement for our flight attendants has been a top priority.” Earlier this year, American Airlines and the Association of Professional Flight Attendants (APFA), representing around 27,000 mainline flight attendants, had reached a tentative collective bargaining agreement.
Now, this agreement has been approved by the APFA Board of Directors and ratified by the flight attendants. As part of this deal, AAL will pay a one-time payment of around $500 million along with other benefit-related provisions.
Furthermore, flight attendants, like many other airline workers, have been pushing for better pay and work conditions following the disruptions caused by the COVID-19 pandemic and rising living costs.
Union Strikes Pose a Significant Risk for AAL
It is important to look at why it was necessary for AAL to reach an agreement with APFA. Indeed, according to the TipRanks Risk Analysis, a strike by the flight attendants could have hampered AAL’s operations and comprises a Production risk for the airline. This risk is higher for AAL as compared to the sector average of 18.5%.
What Is the Future of AAL Stock?
Analysts remain cautiously optimistic about AAL stock, with a Moderate Buy consensus rating based on four Buys, five Holds, and one Sell. Over the past year, AAL has declined by more than 15%, and the average AAL price target of $12.39 implies an upside potential of 13.8% from current levels.
