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Republic Airways Continues to Gain on Tentative Labor Deal

Shares of Indianapolis-based Republic Airways Holdings Inc.RJET have more than doubled ever since the parent company of Republic Airlines and Shuttle America announced a tentative agreement with its local pilots' union (Teamsters Local 357) earlier this week. The provisional deal pertains to the terms of a new three-year contract for the regional carrier's 2,100 pilots represented by the International Brotherhood of Teamsters.

Following the consensual tentative agreement, the pilots will vote on the same after a thorough review. The ratification voting procedure is scheduled to conclude in late October. The contract, if accepted, will ensure industry-leading pay, apart from job security and improved work rules for the pilots at Republic Airways.

The development provides a much needed relief for Republic Airways as it lays to rest, at least for the time being, the possibility of the company filing for Chapter 11 bankruptcy protection. We expect investor focus to remain on further updates on this burning issue.

We note that labor issues are not unique to Republic Airways. Southwest Airlines Co. LUV is also undergoing a similar phase with pilots of the Texas-based low-cost carrier scheduled to vote next month on a tentative deal pertaining to their pay, retirement benefits as well as provisions to improve working conditions. Meanwhile, pilots at Delta Air Lines DAL had turned down a contract in July this year.

With most airline companies enjoying solid financial health, courtesy low oil prices , employees are naturally looking for higher pay.

Zacks Rank

Republic Airways Holdings currently carries a Zacks Rank #4 (Sell). A better-ranked stock in the airline space is Virgin America VA , sporting Zacks Rank #1 (Strong Buy).

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SOUTHWEST AIR (LUV): Free Stock Analysis Report

REPUBLIC AIRWAY (RJET): Free Stock Analysis Report

DELTA AIR LINES (DAL): Free Stock Analysis Report

VIRGIN AMERICA (VA): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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