An American Airlines 787 loads luggage at Philadelphia International Airport.
A growing number of companies are warning that rising fuel costs and employee pay hikes will weigh on profits this quarter.
Companies from aerospace manufacturers to package delivery giants UPS A new large-scale collective bargaining agreement is being finalized. Meanwhile, unions from the auto industry to Hollywood are pushing for better pay. Airlines, whose biggest expenses are jet fuel and labor, have been particularly hard hit.
delta airlines The company on Thursday forecast adjusted earnings for the third quarter of $1.85 to $2.05 per share, down from its previous estimate of $2.20 to $2.50. The airline said it was paying more for fuel than expected, but maintenance costs were also higher than expected.
U.S. jet fuel at major airports averaged $3.42 a gallon as of Tuesday, up 38% from two months ago, according to the industry group Airlines for America.
on wednesday, american airlines The earnings forecast has been revised downward in response to the revision. alaska airlines and southwest airlines. American Airlines expects third-quarter adjusted earnings of 20 cents to 30 cents a share, up from previous expectations of up to 95 cents a share, citing higher fuel prices and a new pilot labor agreement. Revised downward from.
The company expects to recognize $230 million in costs on its new contract, which includes an immediate 21% pay increase for pilots and a more than 46% increase over the four-year term of the contract, including 401(k) contributions. Includes compensation for
Elsewhere, unions from Detroit to Hollywood are pushing for raises, better benefits and better timelines for new contracts. UPS Also in July, the Teamsters union, which represents about 340,000 workers at the freight carrier, agreed to a new collective bargaining agreement that includes pay increases for both full-time and part-time workers, raising the possibility of a strike. narrowly avoided.
UPS employees ratified the agreement last month. By the end of the five-year contract, drivers can earn $170,000 in salary and benefits, the company said.
Earlier this week, the shipping giant outlined the costs associated with the deal, saying that the costs associated with it will increase at a compound annual growth rate of 3.3% over the next five years.
“Our costs in the first year were higher than we originally anticipated,” Brian Newman, UPS’s finance chief, said on an investor call this week. He said it would cost $500 million more than expected in the second half of 2023.
As of noon Thursday, there still appeared to be a gap in negotiations between the United Auto Workers and Detroit automakers for a new collective bargaining agreement, with the “possibility” of a strategic strike for both companies after Thursday’s deadline of 11:59 p.m. ET. is high,” UAW President Sean Fein said Wednesday night. . The union is demanding improvements such as a nearly 40% increase in hourly wages compared to the new contract, as well as a reduction in the 32-hour work week.
Other unions are also demanding higher pay. The Hollywood Writers’ and Actors’ Strikes began in May and mid-July, respectively, with members demanding better pay in line with changing industry trends in the entertainment streaming era.
American Airlines is offering flight attendants an 11% raise on the first day of their new contract and a 2% raise thereafter. However, the Association of Professional Flight Attendants said the union wanted a 35% raise at the start of a new contract and 6% annually thereafter.
Unions have argued that workers have been denied raises in the face of high inflation in recent years since negotiations stalled due to the coronavirus pandemic.
Strong travel demand is helping the biggest airlines more than cover their high costs. But some airlines are seeing sales crack as the slow travel season begins. spirit airlines said Wednesday that it expects its losses to be wider and its revenue to be lower than previously expected.
Frontier Airlines warned on Wednesday that “sales have trended below historical seasonal patterns in recent weeks.” Predict adjusted losses For the quarter.
– CNBC’s Michael Wayland and Gabriel Cortes contributed to this article.