American Airlines Group Inc.’s
AAL,
new agreement with its pilots “seems like a mixed result for the carrier,” Citi analyst Stephen Trent said in a note late Monday. The deal could “materially” cut down on risks related to labor strife and staff availability, but “the operational cost increase is not insignificant,” the analyst said. Moreover, that increased cost comes at a time that demand for domestic fights is moderating, at least over the short term, the analyst said. American Airlines “has very little exposure to the international long-haul corridors, which is currently supporting its competitors’ revenue generation,” Trent said. “As such, this agreement’s impact on American’s earnings could depend on whether potentially higher block-hour utilization offsets the anticipated seat mile cost pressure,” he said. The airline’s pilots ratified the contract earlier Monday. Shares of American were flat in the extended session after ending the regular trading day up 0.8%. Citi has the equivalent of a hold rating on American’s stock.
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