United Airlines (NASDAQ:UAL) has reached a preliminary contract agreement with its pilots, which includes cumulative salary hikes in the range of 34.5% to about 40% over a four-year period. The major pay hikes come at a time when airlines are seeing solid travel demand after the pandemic crushed the travel industry and caused billions of dollars in losses.
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United Strikes Deal with Pilots
The Air Line Pilots Association (ALPA) called the agreement a “significant milestone” for the 16,000 United pilots it represents. ALPA said that aside from notable improvements to compensation, the agreement also ensures a better quality of life, vacation, and other benefits.
The agreement still needs to be finalized and ratified by the pilots. The ALPA stated that the deal with United Airlines, which came after four years of bargaining, is worth about $10 billion. Last year, United pilots rejected a deal that had offered hikes of more than 14.5% over a period of 18 months.
United Airlines’ agreement with its pilots follows similar agreements by Delta Air Lines (NYSE:DAL) and American Airlines (NASDAQ:AAL) with their respective pilot unions. Pent-up travel demand following COVID-19 lockdowns and fewer pilots have increased the bargaining power of pilots, resulting in major airlines agreeing to significant pay hikes and better working conditions.
Upcoming Results
United Airlines is scheduled to announce its second-quarter results on July 19. Analysts expect the carrier’s adjusted EPS to jump to $4 from $1.43 in the prior-year quarter. Robust travel demand despite macro challenges is expected to drive higher profitability.
Is UAL a Good Buy Right Now?
Of the seven Top Wall Street Analysts covering UAL, five have a Buy rating while two have a Hold recommendation. The average price target of $70.50 implies 32.2% upside. It is worth noting that the top analysts have an impressive track record of generating attractive returns from their recommendations. Moreover, top analysts have remarkable success rates.
UAL shares have rallied over 41% year-to-date.
