General Lee
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- Joined
- Aug 24, 2002
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American Airlines: About Those Labor Negotiations?
By Ben Levisohn
A week ago, American Airlines (AAL) and the Allied Pilots Association said they would keep talking about a new contract that would include American and US Airways pilots. Today, Wolfe Research's Hunter Keay and team bring us up to date on those negotiations:
Mark Elias/Bloomberg News
We think American Airlines and APA (the union) are taking some time off from negotiations this week after extending a soft negotiating deadline last Friday. American Airlines management can send negotiations to binding arbitration whenever it wants but we think both American Airlines and APA view that as undesirable. Key issues remain open relating to work rules, but we believe profit sharing is off the table in either an arbitrated or negotiated outcome. Pilots are likely getting a raise of about 15% " the only issue is whether that raise is in January 2015 (negotiated outcome) or January 2016 (arbitration outcome)"
New labor deals are not in American Airlines' 2015 [cost per available seat mile, or] CASM ex-fuel guide of ~flat. We think most people know that. We believe American Airlines? reaches a deal with APA by mid-December and, if so, we think a realistic 2015 CASM ex-fuel number is +2% y/y. If not we would likely keep it closer to +0.5% y/y from the FA deal. But the pilot cost savings benefit would likely not be reflected in the stock given its temporary-ness and negative impact on pilot relations.
Labor relations seem to be the furthest thing from investors' minds today, however, as plunging oil prices send airline shares soaring. American Airlines has climbed 9% to $49.02 at 11:21 a.m., while Delta Air Lines has gained 6% to $46.89, United Continental has jumped 7.4% to $60.80 and Southwest Airlines has risen 6.9% to $41.99.
Bye Bye---General Lee
By Ben Levisohn
A week ago, American Airlines (AAL) and the Allied Pilots Association said they would keep talking about a new contract that would include American and US Airways pilots. Today, Wolfe Research's Hunter Keay and team bring us up to date on those negotiations:
Mark Elias/Bloomberg News
We think American Airlines and APA (the union) are taking some time off from negotiations this week after extending a soft negotiating deadline last Friday. American Airlines management can send negotiations to binding arbitration whenever it wants but we think both American Airlines and APA view that as undesirable. Key issues remain open relating to work rules, but we believe profit sharing is off the table in either an arbitrated or negotiated outcome. Pilots are likely getting a raise of about 15% " the only issue is whether that raise is in January 2015 (negotiated outcome) or January 2016 (arbitration outcome)"
New labor deals are not in American Airlines' 2015 [cost per available seat mile, or] CASM ex-fuel guide of ~flat. We think most people know that. We believe American Airlines? reaches a deal with APA by mid-December and, if so, we think a realistic 2015 CASM ex-fuel number is +2% y/y. If not we would likely keep it closer to +0.5% y/y from the FA deal. But the pilot cost savings benefit would likely not be reflected in the stock given its temporary-ness and negative impact on pilot relations.
Labor relations seem to be the furthest thing from investors' minds today, however, as plunging oil prices send airline shares soaring. American Airlines has climbed 9% to $49.02 at 11:21 a.m., while Delta Air Lines has gained 6% to $46.89, United Continental has jumped 7.4% to $60.80 and Southwest Airlines has risen 6.9% to $41.99.
Bye Bye---General Lee
