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AA's Parker, he's REALLY against profit sharing. Article

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General Lee

Well-known member
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Aug 24, 2002
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20,442
American CEO to airlines: Stop sharing profits

December 16, 2014 Reuters



By Trebor Banstetter, Corporate Communications

Despite pressure from his employees to implement a profit-sharing program, American Airlines CEO Doug Parker said Monday that profit sharing is outdated.

In an interview with Reuters, Parker suggested that all airlines should stop sharing profits with employees. "We should move back to what normal industrial companies do, which is pay people [what] they earn" without profit-sharing, Parker said.

American's unions have been pushing the company to share profits "which are expected to be at record levels this year" with employees. The lack of profit sharing was cited by many flight attendants when they voted down a tentative contract agreement last month. Pilots also have been calling for the company to share its record profits with employees.

Profit-sharing gives workers "a feeling of being valued," said Leslie Mayo, a spokeswoman for the Association of Professional Flight Attendants, which represents workers at American, told Reuters.

Parker wasn't always opposed to sharing profits. In 2007, when US Airways distributed profit-sharing checks to employees Parker said in a press release that "I'm delighted that today our employees will share in this success through our profit sharing program." He was the airline's CEO at the time.

Reuters reported that the Allied Pilots Association, which represents American's pilots, said a recent contract offer still leaves its members far behind their counterparts at Delta because of profit-sharing.

Delta is expected to pay more than $1 billion in profit sharing to employees for 2014, the highest payout in the industry. Total 2014 profit sharing for Delta employees will average nearly two months' salary.

According to Delta's latest competitive review of compensation, Delta people will earn on average 26 percent more total pay in 2014 than their American Airlines counterparts.

Southwest Airlines, United Airlines and Alaska Airlines also have profit-sharing programs.





The APA recently estimated and stated that DL would give out profit sharing worth 19% of the W2 (2014's W2) for 2015. (Feb 14th, although 5% was already given in October, so 14% in Feb). That's in addition to the higher rates. Plus, that profit sharing check (s) also has an additional 15% DC fund tagged onto it. So, a $20K check (pre tax) would have an additional $3K put into the DC fund as well. It's a great deal.


What will the APA settle for? What will Parker do?



Bye Bye---General Lee
 
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Funny. Our d-bag CEO wants to move us TOWARD a "profit-sharing" scheme instead of legitimate salary increases. Problem is, the benchmarks, caveats, and conditions would guarantee that we would NEVER see a nickel.

I'll take REAL salary and benefits thankyouverymuch.
 
Thanks to Consolidation, the big 3 have become a lot more profitable and stable. Debt is being paid off, fuel is declining, bag fees and change fees seem accepted by the public, etc. Things are looking good right now. Of course Parker wants to avoid doling it out, and I'm sure he will take a huge piece of profit sharing himself. He sure isn't helping his "team" get motivated...

As far as an increase in salary goes, that is good, but to replace profit sharing (about 19% of W2 for 2015's payout (14% on Feb 14th due to other 5% paid early in OCT), it would have to be a huge raise (Capts or FOs making more than $250k this year will get an additional $47K+), and I don't think Wall St likes when employee groups get huge raises. (It doesn't bother me, though)

So, sneaking in profit sharing may be a good thing for everyone.



Bye Bye---General Lee
 
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Parker thinks the pie is only so big and any whipped cream has to come at the expense of less pie. A company has myriad ways to manipulate profit. Most of them have nothing to do with the work pilots do. Companies can lose money on hedges, or auction rate securities or bad PR due to shortsighted corporate decisions or many other things (all things AWA/US did by the way).

Unions should negotiate the best deal (short and long term) possible and then make sure it is scrupulously enforced. If folks want to share in profits, go buy stock.

AA's issues are deeper than employee negotiations. They have jettisoned almost every vestige of the AWA culture which formed the basis for the success that US and later AA relied on for resuscitation. AA has not become a more nimble competitor, just a larger and more entrenched version of itself, which does well in good times, but may suffer far more than the rest when (not if) fortunes reverse.
 
So, sneaking in profit sharing may be a good thing for everyone.



Bye Bye---General Lee

For you, my friends at Delta, SWA, and potentially at AA, that may be true. For us, NOT so good. So please don't say "everyone."

Our clueless, tone-deaf, union-busting lawyer CEO wants to use the carrot of "profit sharing" to weasel out of any improvements during our contract fight. He has NO intention of paying us a nickel. In fact, he wants to REDUCE overall compensation by 5% over 5 years.
 
That bastion of the rich and shameless.

NJA
 
Ok, well I hope things go well over there. I really do. But I think GL is talking to airline guys. We're going to have to put together some serious calculus and methodologies to get our $ back. I'm talking multiple levels of outside the box thinking. So that's where the profit sharing thinking is coming from. May not work for you, but last time I checked, you guys didn't lose a pension and didn't get your wages rolled back 50%, is that right? Have you been in a BK type contract at all in the last decade?
 
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Unions should negotiate the best deal (short and long term) possible and then make sure it is scrupulously enforced. If folks want to share in profits, go .

I agree with what you're saying about negotiating. But if PS is there to be captured, get it. Give nothing for it. Don't figure it as part of compensation but make sure it's covered if a profit is made. So many of the non contract employee groups do get it, and it's almost like a corporate PR kind of consideration.

You know it's kind of like what you thought about age 65. That wasn't a contract thing, but you sure wanted the potential $ the extra 5 years would get you. Think of PS in the same way. (Except this won't "stain ur blade")
 
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No, it's nothing like Age 65. If pilot groups wanted to buy an Age 60 retirement in contract negotiations they could, but obviously none have. For all the hew and cry, it would never pass.

Profit sharing is never going to be handed out as a "gimmee" to labor. They will get it in lieu of book rates and its an inconsistent bargain. If you "give nothing for it" then by definition it is worthless and certainly not worth gambling on an arbitration ruling that has all downside risk (sound familiar USAPA?).

Age 65 made sense in light of pilot longevity. Congress was not going to negotiate an early retirement for pilots by retaining an outdated law. Pilot unions undermined their credibility by opposing it on the basis of safety. The water has passed under that bridge and not worth arguing over. But to draw an equivalence between Age 65 and Profit Sharing is a non sequitur.
 

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