The Zacks Analyst Blog Highlights: American Airlines Group, Delta Air Lines, Spirit Airlines and Southwest Airlines

For Immediate Release

Chicago, IL – November 12, 2014 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the American Airlines Group (AAL-Free Report), Delta Air Lines, Inc. (DAL-Free Report), Spirit Airlines (SAVE-Free Report) and Southwest Airlines (LUV-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Tuesday’s Analyst Blog:

American Airlines Crew Votes Against 5-Year Labor Contract

Flight attendants at American Airlines Group (AAL-Free Report) voted down a joint five-year labor contract, which would have covered approximately 24,000 stewards of American Airlines and U.S. Airways, by a narrow margin. The rejection of the contract deals a blow to the integration process following the merger of American Airlines and U.S. Airways Group Inc., completed in late 2013 (read more: American Airlines to Merge with U.S. Airways).

The merger, which occurred after a bankruptcy filing by American Airlines, led to the formation of the new company – American Airlines Group – which has, since then, been trading under the ticker AAL on Nasdaq. Interestingly, the merged entity has witnessed huge profits.

According to the Association of Professional Flight Attendants, 8,180 votes were in favor of the deal (tentative agreement) while 8,196 were against it, which led to the rejection of the contract by a slender margin of 16 votes. The tentative agreement covered guaranteed pay raises but did not include a profit-sharing plan. Other leading carriers such as Delta Air Lines, Inc. (DAL-Free Report) have shared profits with their employees.

According to Reuters, the contract, had it gone through, would have been the first one since the merger to incorporate the combined workforce. American Airlines said that it was disappointed with the outcome of the voting as the contract, had it materialized, would have offered more economic value and better work rules than the one which will be now determined by the arbitration process.

With the contract being voted down, an arbitrator will decide the terms of the new agreement. The first arbitration meeting is scheduled to be held on Dec 3, 2014.

There will be no voting on the terms of the deal the arbitrator ultimately settles upon, which will be involuntarily imposed on the crew. However, the workers of both groups will continue to be governed by their respective contracts until the new contract takes shape. With the matter left to be decided by the arbitration process, the value of annual contract improvements over existing agreements is limited to $111 million.

We note that flight attendants had criticized the tentative agreement strongly when it was first announced in September this year, on grounds of the absence of profit sharing prospects.

We expect investors to remain glued to the arbitration proceedings to fathom the fate of the contract.

Zacks Rank

American Airlines carries a Zacks Rank # 2 (Buy). Better-ranked stocks in the airline space include Spirit Airlines (SAVE-Free Report) and Southwest Airlines (LUV-Free Report). Both the stocks sport a Zacks Rank #1 (Strong Buy).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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