An American Airlines 787 is loaded with cargo at Philadelphia International Airport.
More companies are warning that a surge in the cost of fuel and employee pay hikes will eat into profits this quarter.
Companies from aerospace manufacturers to package delivery giant UPS are digesting big new labor deals. While unions in the auto industry and Hollywood push for better compensation, they are not alone. Delta Air Lines
cut its adjusted third-quarter earnings forecast to between $1.85 to $2.05 per share from an earlier estimate of $2.20 to 2.50. The carrier said it is paying more for fuel than it expected but said maintenance costs were also higher than anticipated.U.S. American Airlines is expecting adjusted earnings per share of between 20 cents and 30 cents in the third quarter, down from a previous forecast of as much as 95 cents a share. This is due to higher fuel prices and upcoming pilot labor agreements. American expects adjusted earnings per share of between 20 cents and 30 cents in the third quarter, down from a previous forecast of as much as 95 cents a share, citing more expensive fuel and a new pilot labor deal.
The company expects to recognize a $230 million expense for that new contract, which includes immediate 21% raises for pilots, and compensation increasing more than 46% over the duration of the four-year contract, including 401(k) contributions.
Elsewhere, labor unions from Detroit to Hollywood have pushed hard for raises, better benefits and schedules in new contracts. The Teamsters union, which represents about 340,000 package carriers workers in the United States, and UPS reached a new agreement that included raises for full- and half-time employees. This deal narrowly avoided the possibility of a strike. The company stated that a driver’s pay and benefits could reach $170,000 by the end of a five-year agreement. The company said that the cost of the deal would be $500 million higher than originally forecast in 2023’s second half. UAW President Shawn Fain announced Wednesday night that the ET deadline for Thursday was approaching. The union has sought nearly 40% hourly pay increases over new contracts as well as a reduced 32-hour workweek and other improvements.Other unions also are seeking higher compensation. The Hollywood writers and actors strikes began in May and mid-July, respectively, with members demanding better pay to match changing industry dynamics in the entertainment-streaming era.American Airlines offered flight attendants 11% pay increases the date a new contract starts, and 2% raises after that. But the Association of Professional Flight Attendants said the union wants 35% increases at the start of a new deal, followed by 6% annual raises.Unions have argued that workers didn’t get raises during high inflation in recent years since the Covid pandemic derailed talks.Strong travel demand has helped the largest carriers more than cover their higher expenses. Some carriers are experiencing a slowdown in sales as the slower travel season begins. Spirit Airlines on Wednesday said it expects a deeper loss than previously forecast and lower revenue.
Frontier Airlines warned Wednesday that “in recent weeks, sales have been trending below historical seasonality patterns,” and forecast an adjusted loss for the quarter.
– CNBC’s Michael Wayland and Gabriel Cortes contributed to this article.