After two years of saying higher wages was a better way to reward airline employees , American Airlines chief executive Doug Parker announced it will offer a profit-sharing plan to over 110,000 employees.
The Fort Worth-based carrier said it will put five percent of every pre-tax dollar it earns in 2016 into a profit-sharing pool that will be shared by pilots, flight attendants, mechanics, ground workers and all non-management level employees. If American is profitable in 2016, the profit-sharing payment will be made to employees in early 2017.
“We are taking this step because we have heard from many of you that a profit-sharing plan is important to our success as a team,” American CEO Doug Parker said in a letter sent to employees on Wednesday afternoon. “By eliminating profit sharing in exchange for higher base pay rates, we inadvertently have eliminated some of our shared sense of teamwork — and that was never our intent.”
United Airlines, Delta Air Lines and Southwest Airlines all offer employees a profit-sharing plan, which generally start with ten percent of pre-tax dollars being set aside. Delta paid out $1.5 billion in profit sharing to its workers for 2015 while Southwest paid out $620 million.
American’s union workers used to have profit-sharing plans as part of their contracts in 2014, receiving an $85 million payment for the company’s performance as it exited bankruptcy. But the carrier had rarely reached the goals in the program to trigger profit payments and union leaders agreed to permanent pay raises instead of profit sharing when Parker negotiated the merger between American and US Airways.
Parker routinely told employees during meetings that he believed workers preferred fixed pay increases instead of uncertain annual payments tied to profitability.
(culled from www.star-telegram.com)
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