GOL, American Airlines' Codeshare Pact To Boost Connectivity

In a customer-friendly move, American Airlines (NASDAQ:AAL) has entered into a codeshare agreement with GOL Linhas (NYSE:GOL) , a São Paulo, Brazil-based airline. The deal will, however, have to be approved by the authorities in Brazil and the United States before it becomes effective.

On materialization, the pact between the carriers will boost connectivity between United States and Brazil. For example, GOL’s passengers will be able to travel to more than 30 destinations in the United States. As a result of the agreement, passengers of either carrier can purchase tickets of connecting flights using one reservation. The contract also provides extended and seamless connectivity between flights of the two carriers. Moreover, passengers of both carriers will enjoy benefits like seamless ticketing and better baggage check-in facilities.

Notably, a codeshare deal allows sharing of flights, which implies that a passenger has the free will to avail any flight operated by either of the companies under the agreement, irrespective of the flight number.

While the code share pact, on materialization, will enable American Airlines to boost its Latin American footprint, association with an U.S.-based heavyweight is a positive for GOL Linhas as well. This is because in 2019, GOL’s partnership with another U.S. airline heavyweight, Delta Air Lines (NYSE:DAL) , was terminated, with the latter offloading its stake in the former.

The code-sharing deal apart, American Airlines was also in the news when it reached Agreements in Principle for five new joint collective bargaining agreements worth $4.2 billion, with its mechanics union (TWU-IAM). Notably, TWU-IAM association represents more than 30,000 employees of American Airlines. Notably, the agreements in principle with the union pertain primarily to wage hikes, working conditions and retirement benefits.

However, there is still some way to go before the deal becomes effective. TWU-IAM and American Airlines will now “finalize and proof contract language” of the provisions of the tentative contracts that have been agreed upon. This will be followed by the ratification voting procedure.

American Airlines will be hoping that the deal clears the hurdles and eventually materializes. It would then imply a happy ending to the more -than four years of bargaining between the mechanics and American Airlines.

Zacks Rank & a Key Pick

American Airlines carries a Zacks Rank #3 (Hold). A better-ranked airline stock is Spirit Airlines (NYSE:SAVE) carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Spirit Airlines have gained more than 7% in the past month.

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