Another labor problem in air travel seems to be brewing, as airline United Airlines (UAL) recently offered up a contract to some of its technicians. It did not take long for those technicians to reject said contract. That in turn sent the stock skidding downward, as it lost over 4% in Thursday afternoon’s trading.
The technicians—represented, at last report, by the Teamsters union—rejected the proposal about as thoroughly as possible, with 99.5% of the membership coming out against it. Chris Griswold, airline division director, and Sean O’Brien, General President, declared that United Airlines could not “…strong-arm 10,000 Teamsters technicians into accepting a terrible deal.”
What was in the proposal was not noted, and United made it clear that this was a minor setback. In fact, United noted, this was not actually a contract vote, as it has not offered a proposed contract as yet. The negotiations for a new contract are still ongoing, therefore. But with the Teamsters suspending talks already, United noted, it may be a while before an actual contract emerges.
Night and Day Difference
This news, meanwhile, comes at a terrible time for United, who recently suffered at the hands of a comparison effort staged by Business Insider. It set up a comparison flight between United and rival Delta Airlines (DAL), and specifically focused on the “lowest tier of airfare.” What that comparison revealed was downright shocking.
Apparently, the differences between Delta’s cheapest flight and United’s cheapest flight are substantial, to the point where the two flights ultimately felt like two completely different classes. The biggest issue seems to be that Delta recently started refreshing its fleet of Boeing (BA) 737-800 models, while United merely plans to do so in the fairly near future. Thus, Delta was left offering comparatively higher-end models in the lower-priced fares, while United was still offering planes from years ago. Further, Delta was also offering some Airbus (EADSY) flights, which seemed to make a difference as well.
Is United Airlines a Buy, Sell or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on UAL stock based on 15 Buys assigned in the past three months, as indicated by the graphic below. After a 56.33% rally in its share price over the past year, the average UAL price target of $130 per share implies 74.03% upside potential.
