SCOOP: While American Airlines Prepared To Furlough Thousands Of Workers, Management Got Raises

At the beginning of February American Airlines sent out 13,000 WARN Act notices letting employees know they might be furloughed at the beginning of April. At the same time American was preparing to provide widespread across-the-board raises to management.

View From The Wing has learned that American provided Level 5 (manager) employees and above with raises starting in February.

This week President Biden signed the American Rescue Plan which included $14 billion for a third airline payroll bailout. The deal requires American to keep workers on payroll through September 30, in exchange for approximately $3 billion. (Employing the workers that would have been furloughed will cost them less than $100 million per month for six months, according to an explanation during its last earnings call.)

But the airline was handing out raises at the same time their hands were out to Congress. And now that the third airline bailout is law, taxpayers will be covering the cost of pay hikes for management.

American Airlines explains that they restored manager pay in many cases to 2019 levels, and that non-union employees below the manager level can expect compensation changes soon as well. According to airline spokesperson Andrea Koos,

After cancelling our annual merit program in 2020, we reinstituted the program for non-represented management team members for 2021. We did complete the annual process for some of our management and support staff during the first quarter.

There was no change in total compensation for these team members and each individual’s total compensation remains consistent with 2019 levels. Of course, those who are capped due to CARES Act limits will not receive any increases to total compensation – and this includes Doug, Robert and the entire senior executive team.

We will begin the merit process for the balance of our management team members (levels 1-4) next quarter. In addition, our frontline team members will continue to receive their increases in accordance with their contracts for 2021, and step increases for union-represented team members were not changed and ran as scheduled in 2020.

Government payroll support does limit pay increases for the highest paid executive management at the airline, however, and it doesn’t appear that American breached these limits.

  • Employees who earned more than $425,000 in 2019 cannot be paid more than that now
  • Those who earned over $3 million in 2019 cannot be paid more than $3 million plus 50% of the amount over $3 million they were paid in 2019.

The story is reminiscent of former CEO Don Carty losing respect of his workforce after paying retention bonuses to management while asking unionized workers for givebacks in the aftermath of 9/11. The controversy forced Carty out in 2003.

American Airlines isn’t alone in rewarding management workers who remained after 30% were let go in 2020. Last month Delta Air Lines gave bonuses to all management employees ranging from $8000 to $250,000 or more.

The carrier needs to retain the management talent that they have left, while at the same time they have over 10,000 more unionized employees than they need to staff the flights for which they see passenger demand. But awarding raises while mass furloughs were on the table is especially tone deaf in light of the airline’s history of rewarding management at the expense of the front line under prior leadership.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Gary Gary Gary

    The pandemic didn’t do anything to “union” workers pay on payroll. They still received yearly increases based off years of service not performance which is so ass backwards and doesn’t help anything. Management haven’t seen raises or merit increases in over a year. AAL is losing top talent due to this. I do see that you said the carrier does need to retain good talent, which I was kind of surprised to see you say anything like that about AA, which is true. I hope your AAL mole is found and fired especially since they are over that level 5 if they have provided you with that email.

  2. It is very evident that Mr Leff hates AA and will spin any story to make the carrier look bad. I take anything he writes about AA with a grain of salt (and most of it not factual) and so should anyone who reads his biased blog. Don’t be hater Gary…life is too short!

  3. Why are you so upset over this? Frankly most workers are basically a commodity in that many can do their job. On the other hand management requires certain experience and skills that are often unique. If companies don’t reward valued management employees they will leave for other opportunities.

    Obviously none of you had ever work in senior management. I was a senior expect of 4 different national companies (plus owned my own business for a while). The class warfare BS is crazy.

    Get over it Gary – you won’t change the world or economics.

  4. @Ross K – funny the claim “most of it not factual” isn’t backed up by even a single example.

    This is at least the fourth name you’ve posted under, and have acknowledged the accuracy of my AA reporting in the past while complaining about it (“obvious you have someone inside at AA”)

  5. re: The carrier needs to retain the management talent that they have left …

    Yes, they need to retain, but where can these people go? Are the other airlines hiring away middle management from their competitors in this day and age? I don’t think there is competition for these resources and I don’t see the need to pay for retention incentives at this time.

  6. @Gary – In 2020, lots of AA management took a 10% to 50% pay cut for about 6 months. All AA did was restored the pay levels of 2019. I am an AA manager and I am not expecting to make a dollar more than my 2019 pay. Stop spreading mis-information.

  7. @Stop spreading Mis-information – try reading the post, because your comment saying I’m spreading misinformation says *exactly what I wrote* (American “restored manager pay in many cases to 2019 levels”)

  8. @Gary –

    You are right, the article says that. However when you bring in DL bonuses to draw parallels, you are putting a spin to it. And, people are going to read it as if AA gave raises and bonuses to the management. which is clearly not true. Specifically, the wording below is very misleading:

    “American Airlines isn’t alone in rewarding management workers who remained after 30% were let go in 2020. Last month Delta Air Lines gave bonuses to all management employees ranging from $8000 to $250,000 or more.”

  9. That’s awesome!!!

    Their shitty attitude deserve to get furloughed, and I wish they all get terminated!!!

  10. @Gary –

    But AA restoration of pay is not.

    To explain with simple numbers: an AA manager making $100 in 2019, made say $95 in 2020 should expect to make $100 in 2021.

    A DL manager making $100 in 2019, made $95 in 2020 should expect to make $105 given the one time bonus DL paid.

    There is no big scoop in AA’s case. But – we live in an “outraged” world, don’t we?

  11. @stop spreading misinformation
    Gary’s headline would make it sound as if AA was doing something improper when in fact after reading the details it seems much ado about nothing.

    I feel you deeply but know that Gary is a total HAAter so fret not. He can’t help himself.

  12. @Stop spreading Misinformation – you have to do the Delta math across two years, since they intend to not just bring people back to where they were but do a make-good on last year as well.

    In any case what makes this a story is (1) doing this while preparing to furlough 13,000 workers, and (2) with the airline’s hand out to taxpayers.

  13. No one would argue on the merit of making employees, including management, entirely whole. The issue is that US TAXPAYERS SHOULD NOT BE FOOTING THE BILL for it. Period, end stop. The bailouts need to stop…like 6 months ago.

  14. Nothing wrong with this. Many in management have extremely transferable skills and AA would face even worse retention problems if salaries remained static- it’s an investment in the future of the airline by making sure the talent to execute a recovery is there.

    It’s also worth a gentle reminder that most in management are solidly middle class. This work group has already gone through the layoff process- and the 30% are not coming back, unlike the FAs who were furloughed.

  15. @Gary – that’s exactly what I did, a DL manager is expected to make $200 for 2020 and 2021 while I will make $195. makes sense?

    1. Furloughing 13K unionized employees has nothing to do with restoring my pay. Most of the managers I know would have been more than happy to sacrifice their own compensation to save furloughs if it was truly a shared sacrifice. But – senior pilots, FAs, mechanics and other unionized employees were not willing to make those sacrifices. That’s the root cause for furloughs.

    2. I am with you for the PSP, they should not have done any of it. An outrage over that is fair but there is no reason to outrage over paying managers what they signed up for.

    In the honor of journalistic integrity, I truly hope that you will edit the article to correct the tone of it.

  16. Why was this even published? The airline shrunk due to weak demand thus not needing the 14,000 unionized workers until demand returned. No business in their right mind would keep extra people unless they had the means to do so. Airlines obviously didn’t and had to right size their company, just like restaurants and other impacted businesses. The government came in and said we’ll cover it until demand comes back. AA like thousands of other US businesses took the government money to protect its most valuable resource…its people! Parker did more than most CEOs to make sure that no unionized worker would lose pay, in fact many of those great people represented by unions are making more than they were in 2019! Management on the other hand made less in 2020. Bringing management pay back to 2019 pay makes sense regardless of timing. It’s the right thing to do. So how is this a story? Sounds like someone just likes to pick on AA no matter what they do.

  17. The Republicans have trained you all so well to allow for the socialisation of losses, that rather than call them out you all are fighting amongst yourselves

  18. Management played this poor, pitiful card in 2003. Cried to the workers Pull Together, Win Together “cheer”. Lied, cheated and stole millions from workers concessions by threatening the lawyers were on the courthouse steps with papers to file Bankruptcy. The ink wasn’t even dry on the BS give back paper when it was announced the top 35 Management people would be receiving bonuses. That is when the animosity with management and unions started. With Crandall, it was a love/hate. Since Don Carty it has been hate/hate.

  19. @gary AA reporting !!! that’s laughable . You have some mole copy and paste crap to you from our company website …. I wouldn’t call it reporting LMAO !!!

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