Southwest pilots vote to authorize strike ahead of summer travel season

Yahoo Finance's Diane King Hall discusses Southwest Airlines pilots voting to authorize a strike shortly before the start of the summer travel season, past pilot strikes, and Southwest's stock.

Video Transcript

RACHELLE AKUFFO: Southwest is facing some turbulence after pilots for the airline voted for a potential strike, as extended contract negotiations came to a head. Yahoo Finance's Diane King Hall joins us now with the details. Hey, Diane.

DIANE KING HALL: Hey, Rachelle. Well, nearly 100% of Southwest pilots have voted in favor of a strike. It comes after several years of negotiations as pilots push for an overhaul of the carrier's scheduling system. That doesn't mean they walk off the job right away. Now federal law prohibits them from actually striking unless allowed by the National Mediation Board. That's the federal agency that oversees labor relations and negotiations in the airline industry, Rachelle.

RACHELLE AKUFFO: And you think of the timing. I mean, this does not sound good, and begs the question, has there ever been a pilot strike in the summer?

DIANE KING HALL: Yes, so there have been strikes in the past, but they are rare. Spirit pilots went on strike in the summer of 2010. That was just for a week. It did have an impact, and the last time, though, a major carrier dealt with a pilot strike was 25 years ago, when Northwest Airlines, you may remember that name, pilots struck for two weeks.

It is a tenuous time between industry top brass and the unions. American Airlines pilots also recently voted in favor of a strike and United pilots are out picketing today. Now keep in mind about 80% of US air travel is handled by American, Southwest, United, and Delta Airlines. So the powers that be want to do what they can to avoid a strike.

Last year, Delta pilots voted in favor of a strike before eventually striking a new deal, that included pay raises over a four-year term. This all comes at a time when the government is trying to hold the airline industry to account for controllable issues. Now, the Biden administration proposed a rule earlier this week, it feels like longer ago, that would mandate compensating passengers for flight cancellations or major delays.

Why does that matter? New federal data shows that most flight delays over the past several years were due to issues within the carrier's control. And Southwest has to perform well this summer season, given what happened in the winter. And I want to give a quick check on where Southwest shares are right now.

They're under a little bit of pressure, down about 8% as investors just try to read the tea leaves on what does this mean. I mean, Southwest has been having, I would say a rough year, but it's been ongoing since the end of last year, Rachelle.

RACHELLE AKUFFO: Yeah, we remember that winter nightmare. Hopefully it doesn't come to that. A big thank you there, Diane King Hall. Thanks so much.