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Allegiant Inks Tentative Labor Deal: Ratification to Succeed?

Zacks Equity Research

Allegiant Travel Company ALGT received a piece of encouraging news on the labor front when it inked a tentative deal with the International Brotherhood of Teamsters (IBT) — a labor union in the United States and Canada. Notably, this “agreement in principle” with the union pertains primarily to wage hikes,  retirement benefits for the 34 flight dispatchers of this Las Vegas, NV-based company.

However, there is still some way to go before the deal becomes effective and dispatchers clinch the long-awaited contract. It is important to note that tentative pacts do not necessarily mean that the deal will be operational. In fact, the union representing Allegiant’s flight dispatchers had inked a provisional deal last year too. However, the deal did not materialize then as the outcome of the ratification voting procedure was not favorable. Following this failure, negotiations resumed between the parties in January 2019, leading to the current agreement in principle.

Allegiant will be hoping that the contract gets through this time. The ratification procedure is expected to take place by Apr 30, 2019. Successful ratification would result in the first collective bargaining agreement for the flight dispatchers since they joined IBT. The union has been the sole representative of Allegiant’s flight dispatchers since Oct 26, 2016. Moreover, a favorable outcome of the ratification process would imply a happy ending to the negotiations between the dispatchers and Allegiant, which initially began in 2017.

Shares of Allegianthave outperformed the industry over the past six months. The stock has gained 2% against its industry’s 8.3% decline.

Six-Month Price Performance

On successful ratification of the provisional deal, the stock is expected to be boosted further. Naturally, we expect investors to keenly await further updates on this relevant issue.

Zacks Rank & Other Stocks to Consider

Allegiant carries a Zacks Rank #2 (Buy). Investors interested in the airline space may also consider some other top-ranked stocks like SkyWest SKYW, Azul AZUL and China Southern Airlines Company Limited ZNH, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of SkyWest, Azul and China Southern Airlines Company have gained 1%, 10% and 14%, respectively, in the past six months.

Zacks' Top 10 Stocks for 2019

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