Why American Airlines Shares So Little Profit With Employees

Delta Air Lines is spending $1.6 billion on profit sharing, giving employees a bonus of 16.6% of their pay on average.

American Airlines announced their profit sharing. It totals $230 million (including a shot in the arm from a Boeing 737 MAX settlement), equating to about 1.4% of employee pay.

American’s profit sharing is lower for (3) reasons:

  1. Lower profits – they simply make less money than Delta
  2. Lower percentage contribution of profit to profit sharing (5% vs 10% at Delta)
  3. More employees to spread the profit sharing pool across (they do less outsourcing)

CEO Doug Parker has described profit sharing as “not the right way to pay 100,000 employees that don’t have that much impact on the daily profits.”

Delta employees receive over 10 times the profit sharing payout that American Airlines employees will receive – although of course profit sharing isn’t the only component of total compensation.

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 InsideFlyer.com, 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. “not the right way to pay 100,000 employees that don’t have that much impact on the daily profits.”

    Just this line alone is all you need to read as to why employee moral at AA is where it is.

  2. I agree with Shaun’s comment.

    However, I should say, I would rather be paid with a higher base salary than profit sharing (who can predict profits) or bonus.

    Working in the financial sector, I have always been part of a bonus pool, which has paid 10% to 50% of my salary. My effort, performance, and performance evaluation have been pretty much unchanged from year to year. The variation in compensation was related to factors beyond my control.

  3. Yeah… many moons ago I worked on the ramp for a regional airline, and for awhile, they put in a profit sharing program that was based on company wide (not department wide) performance goals. Fully half of the profit sharing was based on completion factor (cancellation rates). For my department, that’s a pointless metric — unless I drove a tug into an airplane and took it out of service, very little of what we did was going to impact completion rate.

    Mishandled bags and on-time departures? Different story. (I know Gary hates D0, but handing out performance bonuses for A14 stats doesn’t make much sense either.)

    My profit sharing wasn’t really a function of my contributions. And I’d argue that completion rate is a poor performance metric too… completion rates across industry are very high — usually above 99% — and flights only get cancelled if there’s a *need*. Very few cancellations occur because someone didn’t hustle fast enough.

  4. American Airlines employees are already over compensated with very high union wages. That’s the reason for the above. Many of them rather fleece shareholders and guarantee a bankruptcy than have fair compensation but not excessive.

  5. Doug Parker and his three DUIs is an over inflated douche bag. American….where I used to have executive platinum status…quite frankly just sucks

  6. The average pilot salary at AA is now $240,000. Obviously, that’s good money. I’m sure almost every pilot feels they deserve more, but I’m not going to cry if their profit sharing isn’t equal to Delta’s.

  7. “not the right way to pay 100,000 employees that don’t have that much impact on the daily profits.”

    This is why AA customer service is so poor, both the inflight and call center.

  8. OJS says”….However, I should say, I would rather be paid with a higher base salary than profit sharing (who can predict profits) or bonus.”

    If one looks back at the start of 4th quarter each year, at least as far back as 2015, you will see a significant salary increase announcement from DL. Perhaps AA and others have kept up or exceeded that, but the increased compensation for DL staff has been both significant bonuses and not insignificant raises as well.

  9. John Waters who are you do judge what employees should and should not be paid? AA employees don’t come to Walmart and tell you how to greet customers. Keep your snout out of our affairs.

    As far as profit sharing Is concerned AA’s management is a complete failure. Morale is low because management pockets profits and refuses to settle labor contracts as efficiently as they line their pockets. Employees are angry and it shows in AAs ratings. This isn’t rocket science. Treat your employees well and they will treat your customers well.

  10. As a passenger ask yourself why are you forced to fly around in dirty planes with mechanical, delays, no catering, inop lava, etc………Meanwhile HDQ just built themselves a Palace in Dallas with over the top amenities for the suits to enjoy. The only one Doug cares about and takes care of is himself. He’s a selfish drunken man.

  11. The regional management style that is Doug Parker.. has taken our once proud,
    American Airlines,
    Brand and Name and ruined it! Not only for we the once proud employee’s, but for our passengers as well!
    This management “TEAM” yes we Crew Members hate their “TEAM” reference with it’s empty meaning.. has taken 3 airlines and merged them to make “the Largest Airline in the World” and according to the recently released Airline Standings (1-9) the Worst! As an astute person said..
    “..Going for 9.. because there ain’t no 10!”
    Bigger isn’t always better and everything Doug Parker touches ends up in Bankruptcy or Last Place! It’s past time for him and his inferior “Team Tempe” to go!

  12. I am an employee of the once-great American airlines, the relationship between American and it’s employees is like a bad marriage,each carrying baggage from previous relationships.. they need to bargain in good faith and get these contract negotiations done ,the longer they drag on the more bad blood increases moral dives and the stress it causes is deplorable. To give a raise one hand and then take it back in another area ,it’s a shell game…there’s a significant lack of progressive thinking on the part of the executives at American Airlines they’re playing the short game employees are more interested in the long game..

  13. But union wages across the board at American Airlines are less than all our major competitors currently pay so your logic is flawed and does not explain the drastic difference in profit sharing at my company.

  14. We have 2 corporate raiders doing what they do best robbing the passengers and employees before they sail off into the sunset with millions after another bankruptcy scam. Stay tuned

  15. “not the right way to pay 100,000 employees that don’t have that much impact on the daily profits.”

    Wow nice to know what my CEO thinks of me as an employee. Just a question though Mr. Bigshot CEO corporate officer. Without the employees working for American Airlines, what profits would you have to share?

    But then you must know a different way to get those profits since us 100,000 employees don’t impact it much right?

  16. Doug Parker is nothing but a drunk. He is a very selfish arrogant person. Notice I didn’t say man!!!! He has ruined a great company. I’ve spent 35 yrs with AA and have never been so unhappy and disappointed then I am now !!!!

  17. AA is very fortunate that the 100,000 employees also do not have a very important impact on customer satisfaction. Fortunately upper management can also take the credit for the low customer satisfaction. If employees do not make a difference then they have to own the entire experience. Most employees at this point are simply going through the motions. You pay them just enough to not quit and they do just enough to not get fired.

    Enjoy your next flight on AA.

  18. Southwest employees are the highest paid (no mention) followed by Delta. Southwest profit sharing is less than DL. I feel so bad for the folks at AA. 1.6% barely covers your union dues.

  19. As a long time employee (38 yrs.). Who has now unfortunately ended up an AA employee. No reflection on legacy AA people. Those who I know are as professional as any in the industry. I dread going to work every day. I pray for a new contract with a buyout option.
    Old Dougie the Drunk told us a long time ago that our job function was only short term help, not career oriented. I’ve been told on many occasions that (if your not happy you should seek other employment). Nice response to a career emp. with more experience then most management when trying to solve work problems.
    Most of my co-workers are just going thru the motions. And new hires pick up on this quick. And before long they don’t care at all. I wouldn’t get on an AA flight if they paid me. AND THEY DO!

  20. Another reason why the employees do not recieve more in profit sharing is we have way to many managerial positions!!! In addition to way to many “other” departments that are of no need at all.

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