After a big dip on Friday morning, American Airlines Group Inc. (NASDAQ:AAL) shares are now trading higher.

The air carrier faces potential labor unrest as its unionized flight attendants threaten to strike, following failed negotiations over a new contract.

Union representatives indicated major issues, including wage increases and retroactive pay, remain unresolved, according to a report from Bloomberg.

The union advised all flight attendants to prepare for a possible strike, citing significant differences on key issues.

It expressed doubt that the National Mediation Board (NMB), which had been mediating the discussions, would schedule further talks.

The union cannot legally strike while in mediation, but if the NMB declares an impasse, it would initiate a 30-day cooling-off period before a strike could occur.

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American Airlines stated it anticipated additional negotiation dates will be set by the NMB. "We made good progress in negotiations this week, adding even more to the industry-leading proposal we've had on the table for months," the airline said in a statement.

"We look forward to continuing negotiations so our flight attendants can benefit from the contract they deserve."

This is not the first time the union has raised the prospect of a strike. Last month, following another round of unsuccessful negotiations, the union advised members to prepare for a walkout.

recently, the airline lowered its adjusted earnings forecast for the second-quarter from a range of $1.15 to $1.45 per share to a new range of $1 to $1.15 per share.

The company also lowered its guidance for adjusted operating margin by 1% to a new range of approximately 8.5% to 10.5%.

Price Action: AAL shares are trading up by 0.13% at $11.26 on Friday morning.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo: Courtesy American Airlines