Delta Air Lines' (DAL) 4-Year Contract With Pilots Ratified
Delta Air Lines DAL received encouraging tidings on the labor front when the Delta Master Executive Council ("MEC"), represented by the Air Line Pilots Association, announced the ratification of a four-year deal pertaining to wage increase. Evidently, 96% of the eligible pilots participated in the voting procedure with 78% of them voting in favor of the deal.
The approval makes DAL’s 15,0000 pilots eligible for a 34% pay-raise over the next four years. This will increase DAL’s costs to the tune of about $7 billion. The pay-raise apart, the deal includes provisions aimed at improving pilots’ quality of life. The contract takes effect from today (Mar 2) and becomes amendable on Dec 31, 2026.
Expressing delight on the development, MEC chair Captain Darren Hartmann said “This industry-leading contract is the direct result of the Delta pilots’ unity and resolve. Despite a two-year delay in negotiations due to COVID, we never lost sight of our goal to obtain significant across-the-board enhancements to our pilot working agreement.”
With U.S. airlines grappling with pilot-shortage, the bargaining power of this group has naturally increased as air-travel demand is buoyant, having bounced back very strongly from the pandemic lows.
Zacks Rank & Key Picks
Delta currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Transportation sector are American Airlines AAL and Alaska Air Group ALK, both carrying a Zacks Rank #2 (Buy), presently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
American Airlines is being aided by the improved air-travel-demand scenario. Owing to upbeat air-travel demand, operating revenues at AAL in fourth-quarter 2022 increased 39.3% year over year. Buoyant air-travel demand is also reflected by the total operating revenue increase of 16.6% from the fourth-quarter 2019 (pre-COVID-19) levels despite 6.1% lower capacity.
Driven by soaring demand on healthy bookings, management expects total unit revenues in the first quarter of 2023 to be roughly 24-27%, higher than the level recorded in first-quarter 2022. The AAL stock has evidenced the Zacks Consensus Estimate for first-quarter 2023 earnings being revised upward by 100% in the past 60 days.
Alaska Air too is being aided by the buoyant air-travel-demand scenario. On the back of upbeat air-travel demand and favorable pricing, Alaska Air reported better-than-expected earnings per share in fourth-quarter 2022.
Alaska Air expects to boost its fleet and also workforce in 2023 to meet the anticipated high demand. ALK expects first-quarter 2023 total revenues to increase 29-32% from the first-quarter 2022 actuals. The Zacks Consensus Estimate for ALK’s current-year earnings has improved 12.4% over the past 60 days.
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Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
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