In the past week, flight attendants at United Airlines UAL voted overwhelmingly in favor of a strike, demanding a new contract. A strike vote does not mean that flight attendants will walk off their jobs with immediate effect. Labor trouble is rampant at Air Canada ACDVF with unionized pilots voting to authorize a strike.
According to Ryanair Holdings’ RYAAY CEO, Michael O’Leary, the downward trend observed in recent months with respect to airfares has leveled out. On a somber note, two workers of Delta Air Lines DAL were killed and one seriously injured due to an accident at an airline maintenance facility in Atlanta.
Read last week’s Airline Roundup here.
Recap of the Recent Most Important Stories
1. Flight attendants at United Airlines, represented by the Association of Flight Attendants-CWA (AFA), voted overwhelmingly in favor of going on strike (99.99%) in the event of UAL management failing to agree to significant improvements. UAL’s flight attendants’ demands include a double-digit base pay hike, pay for time at work on the ground, job security and retirement benefits. This is the first time since the 2005 bankruptcy negotiations that flight attendants at the major airline have voted in favor of a strike. The union is likely to request a release from the National Mediation Board leading to a 30-day "cooling off" period and strike deadline.
UAL currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
2. Air Canada pilots, represented by the Air Line Pilots Association union, voted to authorize a strike with 98% voting members in favor of the strike. More than 5,000 pilots are represented by the union. They have been demanding pay raises to narrow the gap with their U.S. counterparts. Pilots picketed at major airports across the country in support of their demand. Air Canada aims to reach an agreement with the union during the 21-day cooling-off period.
3 Ryanair’s CEO stated that the downward trend witnessed during summer pertaining to average fares has leveled out. With fears of a double-digit fare decrease subsiding, he expects airfares during the summer peak season to decrease around 5%. This renewed expectation has boosted the airline’s stock price.
4. Two DAL workers lost their lives at a maintenance facility at Hartsfield-Jackson Atlanta International Airport following an explosion in the facility’s wheel and brake shop. One person was seriously injured. The accident, thankfully, didn’t affect DAL’s customer or maintenance operations.
Performance
The following table shows the price movement of the major airline players over the past week and during the last six months.
Image Source: Zacks Investment Research
The table above shows that most airline stocks traded in the green over the past week. The NYSE ARCA Airline Index inched up 0.5% to $51.05. Over the past six months, the NYSE ARCA Airline Index decreased by 23%.
What’s Next in the Airline Space?
News updates are likely to hog the limelight with the earnings season over. Apart from traffic-related news, updates pertaining to airfares and the reduced pricing power of airlines cannot be ruled out going forward. With air travel demand recovering, airlines are likely to add routes to match the buoyancy.
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Ryanair Holdings PLC (RYAAY) : Free Stock Analysis Report
Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
United Airlines Holdings Inc (UAL) : Free Stock Analysis Report
Air Canada (ACDVF) : Free Stock Analysis Report
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