Media reports of a pilot strike at Charter Airline, a subsidiary of Air Transport Services Group Inc.
With pilots refusing to bid for extra work, ABX Air is unable to crew its entire charter schedule, analyst Vernon mentioned. ABX is the primary cargo operator for DHL Express in the United States and among the several operators contracted by Amazon to support its Prime Air network. The news of the strike comes ahead of the
Implications For Amazon And DHL Express
“Because of more favourable labour agreements, ABX can crew a 767 aircraft at a straight rate of pay that is 26 percent lower than either UPS or FDX (more if you include the benefit of more productive work rules and lower minimums). ABX air claims a portion of that benefit as margin but passes the majority of the cost benefit on to customers like DHL and Amazon,” Vernon explained.
While the work slowdown would likely
Implications For UPS And FedEx
The work slowdown would likely boost volumes for both UPS and FedEx in the near term. In the longer term, the pay hikes by low cost airlines would mean a rise in the price floor for long haul express in and out of the United States, Vernon stated.
Bernstein has a Market Perform rating and a $159 price target on FedEx, and an Outperform rating and a $116 price target for UPS.
|Nov 2016||Axiom Capital||Maintains||Buy|
|Oct 2016||Goldman Sachs||Maintains||Buy|
|Oct 2016||Credit Suisse||Maintains||Outperform|
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