Southwest Airlines (NYSE:LUV) is a Dallas-based company that operates as a passenger airline company that provides scheduled air transportation services in the United States and near-international markets. Shares of this top airline stock have jumped 18% month-over-month as of close on Wednesday, December 20. Meanwhile, its stock is still down 10% so far in 2023.
Pilots at Southwest Airlines had threatened to commit to labour action over the 2023 holiday season to secure higher pay going forward. The closer we drew to the holiday season, the more likely that strike action appeared. Fortunately, a highly disruptive labour dispute was avoided late into the month of December.
Southwest Airlines and its pilots finally reached a tentative agreement on Tuesday, December 19. Union representatives indicate that both sides reached a five-year deal that will see the pilots’ union secure a 50% cumulative pay increases over the life of the contract. The deal will reportedly be worth $12 billion. That is compared to the $10 billion deal secured by the pilots’ union in their labour dispute with United Airlines earlier this year.
The voting members will still need to ratify the contract in an upcoming vote, but these tend to be a formality. Barring a major surprise, Southwest Airlines’ pilots can expect to go back to work with a new five-year contract under their belt.
Shares of Southwest Airlines are geared up for strong earnings growth going forward. Airliners are well-positioned to take advantage of the positive growth trajectory in the travel space over the coming years.
