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FedEx (FDX) Reaches Provisional Deal With Pilots' Union

FedEx Corporation FDX received encouraging tidings on the labor front when the union (Air Line Pilots Association or ALPA) representing the company’s pilots reportedly inked a tentative deal on pay hikes. Further details have not yet been disclosed.

Earlier this month, almost all pilots had voted in favor of a strike. However, the materialization of a strike would have been extremely difficult and could have been blocked either by the Congress or the President. This latest development on the labor front is a positive one.

The provisional deal, with pilots of FDX’s air delivery unit, is expected to go a long way in preventing a pilots’ strike. With the summer season fast  approaching, a strike by pilots would have severely hampered operations as demand is expected to swell during the period.

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 provisional deal inked by FedEx will now be voted upon by union members. It will be effective only if the voting result is favorable.

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In view of the staff shortage in the transportation sector, the bargaining power of various labor groups has naturally increased as air-travel demand is bouncing back very strongly from the pandemic lows.

Shares of FDX have outperformed the industry in the year-to-date period. The stock has increased 30.6% compared with the industry’s 5.5% gain.

Zacks Investment Research
Zacks Investment Research


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Zacks Rank & Key Picks

FedEx currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Zacks Transportation sector are Copa Holdings CPA and Allegiant Travel Company ALGT. While Copa sports a Zacks Rank #1 (Strong Buy), Allegiant carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Copa Holdings is benefiting from an improvement in air-travel demand. In first-quarter 2023, passenger revenues increased 28.5% from first-quarter 2019 levels due to higher yields.

CPA’s focus on its cargo segment is encouraging. In first-quarter 2023, cargo and mail revenues grew 51.8% from first-quarter 2019 levels on higher cargo volumes and yields.

Copa Holdings' fleet modernization and cost-management efforts are commendable. The Zacks Consensus Estimate for current-year earnings has been revised 21.3% upward over the past 60 days.

Allegiant is seeing a steady recovery in domestic and leisure air-travel demand. In first-quarter 2023, operating revenues grew 29.9% on a year-over-year basis. Passenger revenues, accounting for 93.7% of the top line, increased 31.3% on a year-over-year basis.

Allegiant's fleet-modernization efforts are encouraging. The Zacks Consensus Estimate for ALGT's current-year earnings has been revised upward by 47% in the past 60 days.

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FedEx Corporation (FDX) : Free Stock Analysis Report

Copa Holdings, S.A. (CPA) : Free Stock Analysis Report

Allegiant Travel Company (ALGT) : Free Stock Analysis Report

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