Delta's (DAL) Latest Pilot Agreement Pressures Competition
Its new pilot agreement traded higher wages for more regional jet flying flexibility. This allows DAL to greatly reduce 50-seat flying, which has proven uneconomic, say analysts.
"Delta will likely use larger regional jets, which passengers prefer and which are more profitable. We believe the wage increases will be more than offset by cost savings from the larger planes," said Imperial Capital.
"More importantly, DALs new contract puts pressure on the other legacy carriers, whose unions are renegotiating contracts with the increased pay rates in mind," noted a recent report.
Imperial Capital said it views Delta as the best pure-play legacy carrier.
"U.S. Airways’ (NYSE: LLC) shares seem tied to the results of a potential AMR merger, and United's integration issues may take time to resolve."
Today, following the company's earnings report, Imperial maintained an Outperform rating on Delta Air Lines (NYSE: DAL) but trimmed its price target to $19.00 (from $24.00).
For an analyst ratings summary and ratings history on Delta Air Lines click here. For more ratings news on Delta Air Lines click here.
Shares of Delta Air Lines closed at $9.64 yesterday, with a 52 week range of $7.08-$12.25.