With airlines like Northwest and Delta coming out of bankruptcy, it would appear that the US airline industry may finally have a period of modest profitability.
According to Reuters, that may not happen. Unions have given up so much on behalf of their memberships to help to keep the airlines alive that they are beginning to think it is their turn. "I think you will see people getting more and more aggressive with their companies and their management," said Patricia Friend, international president of the Association of Flight Attendants.
With fuel costs rising again, any move by the union to claw back wages and benefits could make life very tough on investors.
Concerns about fuel have dropped shares in American’s parent AMR (AMR) by 15% over the last three months. At US Airways (LCC), the stock is down over 30% for the same period.
While Wall St. might debate whether labor can get much from the airlines in terms of better pay and benefits, improved financial results at the companies will almost certainly set off a tug-of-war between management and employees.
Concessions or unrests. Investors lose either way.
Douglas A. McIntyre
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