Back to top

Image: Bigstock

UPS Inks Tentative Deal With Pilots' Union on Contract Extension

Read MoreHide Full Article

United Parcel Service (UPS - Free Report) received encouraging tidings on the labor front when UPS Airlines and the Independent Pilots Association (IPA) inked a provisional pay-related deal. However, specific details of the agreement are kept under wraps.

The IPA, a collective bargaining unit, represents the 3,300 plus professional pilots at UPS. However, the new contract still has a long way to go before it becomes effective. We note that tentative agreements do not necessarily mean that the deal will be operational. The provisional contract signed by UPS will now be voted upon by the union members.

Per IPA’s president Captain Robert Travis "Over the next month we will present this tentative agreement for a two-year contract extension to our crewmembers with an unqualified recommendation for ratification. This tentative agreement is unanimously approved and endorsed by the six-pilot IPA Executive Board." 

The voting procedure has to be completed by Aug 3. The provisional deal will be valid only if the voting result is favorable. On successful ratification, IPA’s contract with UPS will be extended to Sep 1, 2025.

UPS shares have declined 18.7% so far this year due to headwinds like high fuel costs and supply-chain woes.

Zacks Investment Research
Image Source: Zacks Investment Research

However, successful ratification of the above deal may boost the stock. We expect investors to await further updates on this issue.

Zacks Rank & Key Picks

UPS currently carries a Zacks Rank #3 (Hold). Investors interested in the Zacks Transportation sector may consider some better-ranked stocks like Southwest Airlines (LUV - Free Report) , Star Bulk Carriers (SBLK - Free Report) and Forward Air Corporation (FWRD - Free Report) .  LUV currently sports a Zacks Rank #1 (Strong Buy), while SBLK and FWRD currently carry a Zacks Rank #2 (Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Continued recovery in air-travel demand bodes well for Southwest Airlines. Anticipating a steady improvement in its bookings, the carrier expects to reap profits in the remaining three quarters of 2022 as well as during the full year. LUV's management predicts operating revenues to increase 12-15% in the second quarter of 2022 from the comparable period’s level in 2019. LUV is seeing strong bookings for the spring and summer trips.

The positivity surrounding the Southwest Airlines stock is evident from the Zacks Consensus Estimate for current-year earnings being revised in excess of 100% upward over the past 60 days. LUV has a Growth Style Score of B.

Star Bulk Carriers’ earnings surpassed the Zacks Consensus Estimate in three of the preceding four quarters and missed the mark once, the average surprise being 7.1%.

Shares of Star Bulk have gained more than 36% over the past six months. Improvement in economic activities is aiding the SBLK stock.

Higher volumes owing to a better freight market environment bolster Forward Air’s top line. Thanks to growth in its operations, FWRD is committed to rewarding its shareholders with dividends and share buybacks. In February 2022, FWRD’s board approved a 14% hike in its quarterly dividend payment, taking the amount to 24 cents per share.

The Zacks Consensus Estimate for Forward Air’s 2022 earnings has been revised 15.5% upward in the past 60 days. FWRD’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 10.2%.

Published in