Wolfe Trahan's airline analyst Hunter Keay provided the following commentary on APA/AMR negotiations in a recent note to investors:

"APA's bargaining leverage with management increases literally every day. The union's leverage increased significantly when AMR bought 460 airplanes without pay rates in place, and mass retirements means AMR is basically relying on a good faith effort from APA to essentially allow the company to schedule fewer pilots to work more hours.

We believe that APA has decided (shrewdly, in our opinion) that AMR is in a position of bargaining weakness, and as such APA has notified management that modifications to work rules should be included as part of a broader collective bargaining agreement, not as a one-time event.

In addition, as pre-delivery payments increase for B777-300ER aircraft, AMR's bargaining position will likely only weaken (barring cancellation of the orders, which, by the way, would make us incrementally positive on the stock) - we have little doubt APA is acutely aware of this."