Analyst Jamie Baker of JP Morgan suggests that contract talks at American Airlines aren't likely to produce a steep increase in employee wages, and could even result in a pay cut. Here's what he said in a report:
We ascribe a 50% probability to a wage increase no larger than 10%, 30% probability to wage-neutral contracts, and 20% probability to lower wages. Yes, we just said 'lower wages'. Management and pilot rhetoric likely to deteriorate next year, but pilots know they're walking a tightrope. Any involvement of an NMB-appointed mediator down the road would likely focus on the fact that AMR wage rates are meaningfully higher than market to begin with. Sure, pilots may ask for hefty increases, but the facts remain: AMR wage rates are already uncompetitive, and negotiations are taking place against a backdrop of economic uncertainty. Not too shabby of a position for management, or stakeholders, to be in, in our view.