Under normal circumstances, the revelation that an airline like American Airlines (NASDAQ:AAL) is facing potential labor trouble would hit hard. However, the firm is actively working to turn that situation around and potentially nip a problem in the bud. That was enough for investors, who sent American shares up fractionally in Wednesday afternoon’s trading.
But it’s clear that the union supporting American flight attendants—the Association of Professional Flight Attendants (APFA)—is preparing for a potential long haul. It’s already established a strike command center, likely readying for a potential walkout. With 27,000 flight attendants involved, there’s a potential for significant disruption going into the summer travel season.
But the deadline for talks has been extended by the National Mediation Board, and reports note that American came back with a 17% raise for the flight attendants. That may serve to cut the problem off at the knees and prevent any serious disruption before it can even happen.
A Timely Hike
Given that American flight attendants—at least, the entry-level ones—pull in about $27,000 annually before incentives and before taxes, there’s likely a need for a pay hike here. Especially given the recent price hikes on food and gasoline and everything in between. While American’s offer is substantial, it may not prove to be enough. And American may not be inclined to do a lot more; this hike came following five weeks of negotiation, reports noted. Further, American demanded concessions from the flight attendants, which could cause further issues.
Is American Airlines Stock a Buy, Sell or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on AAL stock based on nine Buys, four Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 22.37% loss in its share price over the past year, the average AAL price target of $16.17 per share implies 38.74% upside potential.
