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United Airlines (UAL) Pilots Likely to Get Huge Pay Hike

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Labor trouble has emerged as a major sore point for the U.S. aviation industry of late. Amid this problem, United Airlines Holdings, Inc. (UAL - Free Report) announced that it received some encouraging news on the labor front as UAL pilots, represented by the Air Line Pilots Association, Int’l (ALPA), approved a tentative agreement (TA) on modified terms for their collective bargaining deal.

The United Master Executive Council represents 14,000 professional pilots at UAL. 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 TA will now be sent to the membership for ratification.

The voting procedure must be complete by Jul 15. The provisional deal will be valid only if the voting result is favorable. On successful ratification, the TA will generate an additional value of $1.3 billion for the United Airlines pilots over the course of the two-year agreement.

Under the terms of the agreement, pilots will get three pay-rate raises totaling more than 14.5% within 18 months, retroactive to the commencement of the current year. The deal also includes a new eight-week paid maternity leave benefit, better overtime and premium pay, a new retirement plan and improved scheduling provisions, among other benefits.

Per the chair of ALPA’s UAL pilot group, Capt. Michael Hamilton stated, “This agreement raises the bar for all airline pilots and leads the industry forward. Our ability to reach this agreement, and the current success of United Airlines, is driven by front-line United pilots who stayed unified and focused throughout negotiations despite the incredible challenges we faced during the largest disruption in the history of aviation”.

Zacks Rank & Key Picks

United Airlines currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the broader Zacks Transportation sector are Ryder System, Inc. (R - Free Report) , C.H. Robinson Worldwide, Inc. (CHRW - Free Report) and GATX Corporation (GATX - Free Report) .

Ryder has a trailing-four quarter surprise of 48.2%, on average, with its earnings having surpassed the Zacks Consensus Estimate in all the last four quarters. R is benefiting from improving economic and freight conditions in the United States.

Revenues in all segments grew (on higher rental revenues, new business and favorable pricing) in first-quarter 2022. R currently carries a Zacks Rank of 2.

The expected long-term (three-to-five years) earnings per share (EPS) growth rate for C.H. Robinson is pegged at 9%. Better freight market conditions are aiding CHRW.

In first-quarter 2022, the top line improved 41.8% owing to favorable truckload pricing for customers and handsome profits in ocean freight. CHRW currently sports a Zacks Rank of 1.

GATX has a trailing-four quarter surprise of 40.1%, on average, with its earnings having surpassed the Zacks Consensus Estimate in all the last four quarters.

The gradual improvement in the North American railcar leasing market is a boon for GATX. GATX currently has a Zacks Rank #2 (Buy).