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.
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.
