UBS Remains Sidelined on American Airlines (AAL) After Meeting with Union Leaders
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UBS reiterated a Neutral rating and $38.00 price target on American Airlines (NASDAQ: AAL) after hosting meetings with APA union senior leadership. APA views its current contract as financially uncompetitive, highlighting total annual compensation for a 777 pilot as likely to be ~$100K lower at AAL relative to DAL over the next 12 months.
Analyst Darryl Genovesi commented, "We hosted a meeting in NYC with President Daniel Carey and other senior leadership from Allied Pilots Association (APA), the labor union representing AAL's pilots. Discussion covered pilots' dissatisfaction with their wages and benefits in light of recent "better" deals achieved by other airlines' pilots, and their desire for early renegotiation of their current collective bargaining agreement, which is not officially amendable until Jan 2019 (unless both sides agree to amend early). While management is under no obligation to mark the pilots up to competitors' pay rates before Jan 2019 (or ever), we view AAL's still-contentious relationship with the pilots as a modest risk for it."
Shares of American Airlines closed at $46.08 yesterday.
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