With the rising labor prices and slewing U.S airlines investment projects, passengers can now expect a much pricier airfares this coming 2018.
In the coming periods, the following airline companies are expected to have higher non-fuel expenses which instigated a decline in its share price rates: JetBlue Airways, Southwest Airlines, Alaska Airlines and American Airlines, United Airlines. This also threw cautions to passengers that a hike in fare prices would certainly come in the forthcoming months.
Such hike can also be rooted from the pilots and cabin crew’s new agreements as it revealed a record-high in profits which just added demands for enhanced employment relations.
JetBlue A320 at Orlando
“In an industry that took so much away from its employees … of course once they were earning billions of dollars in net profits again they were going to have to give some of that back,” Seth Kaplan of Airline Weekly told reports.
Additionally, One-off bills for restructuring and expansion projects also factored to the price hike in some of the mentioned airline companies.
The technology cost of United Airlines is expected to increase in the coming year with plans on refurbishing its revenue management systems.
Furthermore, Alaska Airlines is shelling out for its recent acquisition of Virgin America. More so, Southwest Airlines is paying for extended-range authorization to inaugurate the transportation of Boeing 737s to the state of Hawaii.
Analyst Rajeev Lalwani stated on reports that the collective outcome will be the unit costs expanding by 1 to 2 percentage points through the board in the coming 2018.
According to reports, these companies should have fewer difficulties with such hike because of the resilient demand. As for their shares for the time being, they unfortunately experienced a decline since the summer of the current year. With that, investors should estimate some problems for the time being.
The Standard & Poor’s Airlines Index of five main U.S. transporters is currently facing a decline by 15% since beating an all-time elevation back in July.
FSM News is a daily updated news website about the happenings in the stock market, financial realms and the world economy. Subscribe to further educate yourself about the field that you are to partake in. FSM News is here for you.