AA Seeks Better Employee Relations via Profit Sharing
Joe Cortez March 25, 2016
Letter to employees pledges five percent of pre-tax earnings into employee share pool.
As part of an effort to win employees over, American Airlines is sharing the wealth through a profit-sharing program. In a letter co-signed by airline chief executive officer Doug Parker and president Scott Kirby, the airline announced the plan, beginning with 2016 earnings.
Under the program, American will begin dedicating five percent of their pre-tax earnings outside of special situations towards a dedicated employee fund. At the end of the year, the fund will be distributed evenly among hourly workers, supervisors and non-senior managers. Although the profit sharing margin is lower than their competition, the executives hope to balance the profit sharing with unilateral wage increases.
“We believe this will provide the best of both pay structures: higher base rates as we negotiate new contracts and a shared sense of teamwork throughout the year as we deliver industry-leading financial results,” the two executives wrote in their co-signed letter.
The move comes after a very tense public exchange of words between American employees and their executive team. At the beginning of March 2016, the Allied Pilots Association (APA) representing American pilots sent an open letter to Parker, calling the merged airline “outright embarrassing.” The pilots accused American of continued payroll mistakes and “contractual abuses,” demanding immediate action.
Days after the letter was sent, Parker acknowledged that the employees “still don’t trust us” at the J.P. Morgan Aviation, Transportation and Industrials Conference. The former US Airways executive noted that improving employee relations was a top priority for the post-merger carrier.
In a bulletin to members, the APA expressed guarded optimism for the profit sharing plan. “APA has repeatedly cited the value of profit sharing in engaging and motivating employees,” communications director Gregg Overman stated in the hotline message. “We have pointed out how in a service-intensive business such as ours, effective employee engagement is critical.”
[Photo: American Airlines]
