The deal is worth about $10 billion, according to the Air Line Pilots Association, the pilots’ union. ALPA said on Friday that the new contract won 82% approval from the more than 97% of United pilots that voted on it.
Other unions are also pushing for improved pay and benefits, calling for strikes or potential strikes when negotiations fall short of demands. The United Auto Workers union is planning on expanding strikes against General Motors and Ford Motor to two U.S. assembly plants on Friday, UAW President Shawn Fain said.
The raises come as the New York-based carrier is in the process of trying to acquire Spirit, a merger the Justice Department has sued to block. A trial for that lawsuit is set to begin on Oct. 16 in Boston.
JetBlue agreed not to furlough or displace any flight attendants or close any associated bases for seven years after a potential acquisition of Spirit goes through, the memo said.
“The current contract was negotiated during COVID, and since then our inflight crewmembers pay rates have fallen below other airlines by a significant margin,” a JetBlue spokesman said in a statement. “Because our inflight crewmembers play a significant role in delivering the JetBlue experience, it’s important that we’re able to attract and retain high-quality crewmembers with competitive pay and benefits.”
“With this agreement made by your TWU Local 579 Executive Board and JetBlue, we support the JetBlue and Spirit transaction and will not hold an additional informational picket or speak publicly against the acquisition,” the union said in a note to members.
“We would not normally order jets this far out,” United’s chief commercial officer, Andrew Nocella, told reporters Tuesday. “Production lines, which are now regularly plagued by supply-chain disruptions and delivery delays, are also increasingly sold out for the entire decade.” Deliveries of the new planes are scheduled to start in 2028.
United’s order consists of 50 more Boeing 787 Dreamliners, adding to a firm order of 100 of the twin-aisle planes it announced last December, along with 50 more options. The airline has aggressively expanded its international service to try to capitalize on a resurgence of trips abroad, destinations that the new long-range 787 planes would serve.
The Chicago-based airline is also buying 60 Airbus A321neos, on top of the 120 it previously had on order with the European manufacturer, including 50 of forthcoming extra-long-range version. United added options for 40 more Airbus A321s.
United and other airlines have recently ordered new planes have said one way around infrastructure constraints is to operate larger aircraft with more seats on them, a practice known as upgauging. The airline said it expects an average of more than 145 seats per North American departure in 2027, up 40% from 2019.
While some market participants feel Honeywell’s new CEO Vimal Kapur is “going to make a big move somewhere,” Cramer said on Tuesday “the most important thing I heard was they’re going to be within or above expectations” for third-quarter earnings per share. Honeywell is set to report earnings before the opening bell on Oct. 26.
“This is a heavily shorted stock of late. People feel it’s lost its way,” Cramer said on “Squawk on the Street.” “I don’t know why people feel that way. You’ve got a new CEO, and he’s going to take action.” Honeywell’s stock has declined roughly 13% year to date, underperforming the overall S&P 500 and the industrials sector. On Tuesday, the stock fell modestly.
In a press release, Honeywell said it is realigning its business toward three “compelling megatrends”: automation, the future of aviation, and energy transition. Beginning in the first quarter of 2024, Honeywell will report results for four new operating segments.
Honeywell’s aviation unit is the company’s crown jewel, Cramer said, while also saying the restructuring announced Tuesday is “really kind of [Kapur’s] step one of what he intends to do.”
Kapur took over Honeywell’s top job in June from Darius Adamczyk, who had led the company since 2017. Cramer’s Charitable Trust, the portfolio used by the CNBC Investing Club, owns Honeywell shares. Within the S&P 500 industrials sector, Cramer’s Trust also owns Emerson Electric (EMR) and Caterpillar (CAT).
In its quarterly report Thursday, Delta said it expects adjusted, full-year earnings of $6 to $6.25 a share, after forecasting $6 to $7 a share in July. Delta cut its free cash flow estimate for the year to $2 billion from the $3 billion it forecast in the summer.
Delta and other airlines trimmed their third-quarter forecasts in recent weeks because of a surge in fuel prices.
“Obviously there’s some short-term pressure on fuel as fuel rose quickly in the third quarter and stayed relatively high into the fourth quarter,” Bastian noted.
Here’s how Delta performed in the three months ended Sept. 30 compared with Wall Street expectations based on consensus estimates from LSEG, formerly known as Refinitiv:
Delta brought in adjusted revenue of nearly $14.6 billion for the period, up 13% year over year and in line with analysts’ expectations.
Net income for the period was $1.11 billion, or $1.72 per share, up 59% from $695 million, or $1.08 per share, during the same period a year earlier. Adjusted for third-party refinery sales and other items, the company earned $2.03 during the quarter.
Delta and other global airlines have cited particularly strong demand for trips abroad, with trans-Atlantic travel a standout. The Atlanta-based carrier reported revenue for those flights was up 34% in the third quarter compared with last year.
In addition to a surge in international trips, the carrier has said it has seen a sharp increase in demand for premium seats, like business class or premium economy. Main cabin revenue came in at $6.62 billion, up 12% on the year, while premium product sales rose 17% to $5.11 billion, Delta said.
“I know the lower-fare airlines are having some challenges but our premium product, especially domestically is doing very, very well,” Bastian said in the interview. He added that business travel is more than 80% recovered to 2019 levels.
However, Delta President Glen Hauenstein said Thursday on an earnings call that the Hollywood and autoworkers strikes have hurt demand from those sectors.
Delta has a more than 70% market share in Detroit and nearly 20% at Los Angeles International Airport, the most of any carrier.
Delta came under fire from customers last month when it announced it would make it harder to earn elite frequent flyer status and said it will scale back access to its popular airport lounges after travelers experienced long entry lines. Weeks later, Bastian said the carrier would make changes to those new policies, which he said might have gone “too far.”
The strikes have had “a not insignificant change in the business travel to and from Los Angeles as well as now the UAW strike, which curtailed a significant amount of the business in Detroit,” Hauenstein said on an earnings call Thursday. “We are probably the most impacted by those two sectors.”
The United Auto Workers’ targeted strikes, which began after major Detroit automakers and the union failed to reach labor deals before a September contract expiration, are entering their fourth week — and escalating.
Hollywood writers earlier this week ratified a new three-year contract after nearly 150 days of work stoppage that suspended significant film and TV production.
But Hollywood actors, represented by the Screen Actors Guild-American Federation of Television and Radio Artists, are still on strike. And late Wednesday, the Alliance of Motion Picture and Television Producers, which represents production studios like Disney, Universal, Netflix and others, said talks have been been suspended with the two sides far apart on a deal.
A company survey of corporate customers found that a majority expect their travel to stay the same or increase in the last three months of this year and into 2024, Hauenstein said.
The fourth-quarter guidance “is bleak and worse than our estimates,” wrote Helane Becker, an airline analyst at TD Cowen, in a note on Wednesday. “Given the projections that this will be a long war we are looking at the lower end of the forecast range and assuming no service by year end.”
United and other U.S. and international carriers halted their flights to Israel earlier this month. United had more service to Israel than any of the U.S.-based airlines with service from Washington, D.C.; Newark, New Jersey; and San Francisco, accounting for 2% of its capacity.
United said its fourth-quarter revenue will rise year over year between 9%, if Israel flights remain suspended through the end of the year, and 10.5% if the suspension lasts only through October. Its costs, excluding fuel, will likely rise between 3.5% and 5% in the fourth quarter from 2022, United said.
Speaking to CNBC’s “Squawk Box” on Wednesday, CEO Scott Kirby attributed the increase to “much higher labor costs than anyone anticipated at the start of the year,” delayed aircraft from manufacturers and air traffic controller shortages.
The Israel service suspension comes after a robust summer for air travel with revenue growth for international destinations outpacing sales of domestic tickets. That has put big, global carriers such as United and Delta on better footing than some discount airlines such as Spirit, which focus more on U.S. cities and expect losses.
When asked on an earnings call on Wednesday whether customers were canceling their trips to other international destinations lately, Kirby responded: “We’re not seeing that at all.”
Here’s what United reported for the third quarter compared with what Wall Street expected, based on average estimates compiled by LSEG, formerly known as Refinitiv:
United posted third-quarter net income of $1.14 billion, or $3.42 a share, versus $942 million, or $2.86 a share, a year earlier. Adjusting for one-time items, United posted earnings per share of $3.65.
The kids were also working “more hours than legally allowed and violated federal regulations that forbid employing workers under 14 years of age in non-agricultural occupations,” the release said.
The department obtained a federal consent judgement on Sept. 8 that requires the operator of the Hebron warehouse to stop employing children and warns the operator against violating federal child labor laws in the future.
Win.IT America Inc. was founded in 2013 and is the U.S. branch of WinIT Information Technology Co., a Shanghai, China-based integrated supply chain solutions provider with over 700 employees in the U.S. Australia, Germany, and Great Britain, officials said.
The penalty comes amid a crackdown of child labor violations in the U.S., which Wage and Hour Division Regional Administrator Juan Coria in Atlanta said was seeing an “alarming increase.”
“Employers are responsible for taking all appropriate actions to verify that they are not illegally employing children. When they fail to meet these obligations, we will act swiftly to hold them accountable and protect our nation’s youth,” Coria said.
In the fiscal year of 2022, the U.S. Department of Labor found child labor violations involving nearly 4,000 children nationwide, an increase of more than 60% over the past five years.
Delta last month first announced sweeping changes to its loyalty program so that it is based solely on how much customers spend, and announced dramatic limitations to entry to its Sky Clubs for customers with certain American Express credit cards.
Delta CEO Ed Bastian said in late September that the airline went “too far” with its changes. Delta has been grappling with how to handle swarms of elite frequent flyers and high-fee credit card holders that caused long lines and crowding at the clubs.
Following the Covid-19 pandemic, airlines have grappled with how to best reward frequent flyers who returned in droves after spending heavily and racking up miles on rewards cards, even when they weren’t traveling.
“We very much believe in never causing a situation where everyone has a premier status which obviously results in no one receiving an adequate level of premier benefits,” United Airlines chief commercial officer Andrew Nocella said on an earnings call Wednesday.
Sky Club entry changes
Delta CEO Bastian said access to the airline’s airport lounges have been a top concern for customers, many of whom had unlimited access to Sky Clubs through credit cards.
They will also be able to buy Sky Club day passes for $50 a day after they have used up their days.
American Express Platinum cardholders will get 10 visits a year, up from a planned limit of six, starting February 2025.
However, Delta SkyMiles Platinum cardholders still won’t get automatic Sky Club access through the card starting next year, a change Delta announced last month. Customers can buy a membership or enter if they meet loyalty program spending thresholds for elite status.
Earning elite status gets (slightly) easier
Bastian said another concern of customers was how to access elite frequent flyer status, which comes with perks from early boarding and complementary upgrades to vacation credits.
Delta last month said it will reward customers based on how much they spend on Delta or co-branded credit cards, a similar model to one American Airlines uses. That won’t change, but Delta is lowering the spending requirements to earn the status tiers.
Each dollar spent on Delta equals one Medallion Qualifying Dollar, but credit card holders also earn fractions of MQDs when they spend on the card.
Here’s how American Airlines performed in the third quarter compared with what Wall Street anticipated, based on an average of analysts’ estimates compiled by LSEG, formerly known as Refinitiv:
While airlines have enjoyed a resurgence of travel since the Covid pandemic ended, especially for international destinations, fares broadly have dropped from last year.
Boeing 787-9 Dreamliner, from American Airlines company, taking off from Barcelona airport, in Barcelona on 24th February 2023.
American said it expects unit revenue in the fourth quarter to drop between 5.5% and 7.5% from a year earlier with unit costs, excluding fuel, up 5% to 7% year over year and capacity up 4.5% to 6.5% from the same period of 2022.
The company lost $545 million, or 83 cents per share, during the third quarter, down from a profit of $483 million, or 69 cents per share during the same period a year earlier. It was the carrier’s first loss since the first quarter of 2022. Capacity was up 7% from a year ago.
CEO Robert Isom told staff in a note that “while there were bumps along the way, such as significantly higher fuel costs that resulted in lower earnings in the quarter, our team continues to excel at controlling what we can control, which will make us successful no matter the environment.”
