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Delta Air Lines, Inc. (DAL) - free report >>
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Southwest Airlines (LUV) Sees Poor Tidings on Labor Front
Southwest Airlines (LUV - Free Report) flight attendants turned down a tentative contract pertaining to pay hikes and better working conditions. The Dallas-based carrier’s flight attendants are represented by the Transport Workers Union Local 556. In the voting procedure, 64% of flight attendants voted against the proposed five-year deal.
The contract, which was voted down, had proposed a 20% pay raise beginning next month in addition to a 3% annual hike in 2025, 2026, 2027 and 2028, per a CNBC report. Had the deal materialized, it would have resulted in a 36% pay increase for flight attendants at the top of the scale (throughout the contract) and up to 90% for other seniorities. Apart from pay raises, the provisional agreement also had provisions pertaining to paid parental and maternity leave with insurance coverage.
It seems that the provisions failed to meet the expectations of the flight attendants, as reflected by the union’s statement, “This proposed contract is not going to heal the hurt.” Following the rejection, the union will restart negotiations with the company to arrive at a mutually acceptable deal.
With U.S. airlines grappling with labor shortage in the post-COVID-19 high-travel demand scenario, the bargaining power of various labor groups has naturally increased. As a result, we have seen many labor deals being negotiated in the industry in the post-Covid scenario. Southwest Airlines’ flight attendants, too, are probably hoping to reach a better deal that makes them eligible for higher pay than what was proposed.
Other notable U.S. airlines like American Airlines (AAL - Free Report) and United Airlines (UAL - Free Report) are also involved in talks with flight attendants to arrive at acceptable deals. Delta Air Lines’ (DAL - Free Report) flight attendants are not unionized.
Reflecting the increased bargaining power of labor groups in the post-Covid era, pilots of AAL, UAL and DAL have secured lucrative pay raises lately. Southwest Airlines is yet to reach a deal with its pilots.
Each of the above-mentioned stocks currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.