American Airlines has re-instated its profit-sharing program, which had been in place prior to its 2015 merger with US Airways.
The program, which took effect with its 2016 annual earnings, will pay out in early 2017. It puts 5% of every pre-tax dollar the company earns into a profit-sharing pool to be shared by all employees, with the exclusion of some senior management.
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“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,” the airline wrote in a letter to employees. “Although we continue to believe the most effective way to increase compensation is through higher base pay, we recognize there is a team-building component to profit sharing.
“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.”
In the letter, the company also acknowledged that the 5% funding rate for the profit-sharing plan is lower than programs offered by its peers, but it said it would offer hourly pay rates higher than those same peers in the contracts it is negotiating now and in the future.
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“As we have demonstrated in all joint contracts already reached, our view continues to be that we should set industry-leading pay rates as we negotiate our contracts so that higher pay is reflected in each paycheck, every pay period, throughout the year, and that your paycheck recognizes the work you do every day,” said the letter to employees.
American Airlines will require the approval of its unions before the program is implemented for each group of its represented employees, but it said it the letter it expects the union leaders to readily agree.
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