American Airlines Pilots Get $1 Billion Pay Raise

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American Airlines raised the value of its contract offer to pilots by more than $1 billion, matching a more generous deal at United Airlines. The Texas-based carrier said Friday the changes bring the total value of the four-year proposed contract to $9 billion. Its pilots are due to vote on the agreement this week. The airline says the new proposal also includes a $1.1 billion lump sum payment to address pay differences and provides increased vacation, sick time, and other benefits.

According to a company statement, the company expects the contract to be approved by its pilots, pending any challenges from the federal government. The airline has been operating under a temporary extension of its existing contract for more than three months.

Airline earnings have been boosted by strong travel demand. But investors are concerned that the upturn could be temporary. Raymond James’ Savi Syth explains why.

Despite the economy’s strength, the airline industry struggles with a pilot shortage and tightening credit. American Airlines CEO Robert Isom is taking an unusual approach to negotiating with the pilots union. The airline has stopped information sessions with its 15,000 pilots to evaluate the company’s latest offer, which includes raises of up to nearly 17%.

The move comes after a tentative deal was reached at rival United Airlines with its pilots, which is widely seen as setting a new benchmark for the industry. The Allied Pilots Association has warned that ratification of America’s contract will be in jeopardy if it does not receive the same terms or better.

Founded over 95 years ago, the airline has a deep-rooted history of leading the industry through innovation and firsts, such as hiring the first Black U.S. commercial airline pilot and launching the world’s first loyalty program. Today, A.A. is one of the largest airlines in the world, with more than 2,000 daily flights to more than 350 destinations. The company serves customers with hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York City, and Philadelphia and is a founding member of the Oneworld alliance.

Shares of UAL are up 0.2% in premarket trading, having gained 5% in the past year. The stock is a constituent of the Dow Jones Industrial Average and the S&P 500 index. Seeking Alpha’s Factor Grades, which rate investment characteristics on a sector-relative basis, highlight its strong Revenue Growth, Profitability, and Cash Offer Cushion grades.

Airline stocks are rising despite weak forecasts from American and other carriers. Amid concerns over global economic uncertainty, several analysts are turning positive on the industry. But they are still cautious about predicting future air travel demand, which has been shaky since the pandemic began.

American Airlines has a long tradition of leadership that has led the way in aviation, hiring the first Black and female U.S. commercial pilots, introducing the world’s first loyalty program, and opening the world’s first airport lounges. The airline now has 130,000 team members worldwide focused on delivering world-class customer experience, building the company to thrive forever, and making culture a competitive advantage.

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