A bond rating agency said the unionization of JetBlue’s pilots could increase long-term cost pressures on the carrier, but noted the carrier’s credit profile is improving nonetheless.
“The potential for the unions to negotiate pilot productivity and work rules could further affect cost,” Fitch ratings said Wednesday, in a prepared statement. “JetBlue's pilots are known to be some of the most productive in the industry, which could be a point of negotiation.
Fitch notes that any potential impacts will not be immediate, as the process of negotiating a joint collective bargaining agreement could take multiple years.”
Also, Fitch said, a potential side effect of unionization could be a broader push to unionize other groups at JetBlue. That could push wages higher.
The National Mediation Board said Tuesday that 71% of JetBlue’s 2,529 pilots had voted to join the Air Line Pilots Association. The pilots turned down unionization bids in 2009 and 2011, but JetBlue has been the only major airline whose pilots do not have union representation.
“JetBlue pilots have voted for ALPA representation so that we have the ability to improve our professional careers,” said Gustavo Rivera and Rocky Durham, co-chairs of the JetBlue Organizing Committee, in a prepared statement.
“As committed as we are to our objectives, we also want to work with management to ensure we continue to contribute positively to JetBlue's success. We believe in JetBlue and look forward to helping make this company one of the best in the industry,” the two pilots said.
In a brief statement, JetBlue CEO Dave Barger said “the National Mediation Board will authorize ALPA as the representative body for JetBlue pilots, and then both JetBlue and ALPA will organize negotiating committees.” Barger may have more to say Thursday, when JetBlue reports first quarter earnings.
Fitch has assigned JetBlue a B rating with a stable outlook. It said unionization has no immediate credit impact and any future cost increases related to unionization “would have to be sizeable to precipitate any negative rating action.”
In fact, Fitch said, it “views JetBlue's credit profile as improving and may consider a positive revision to the outlook or ratings in the near term if trends continue.” However, “the ratings remain constrained by high leverage, heavy upcoming capital requirements, a growth strategy that is more aggressive than its peers and a certain amount of geographic concentration in the East Coast.”
Even before the vote, JetBlue agreed to a 20% wage increase over the next three years, which will add roughly $145 million in costs.
Last week,
On Tuesday, JetBlue shares opened Tuesday at $8.81 and fell to $8.59. A half hour before the closing bell on Wednesday, they had risen to $8.64.
