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SWA Question for Chase or others

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Well-known member
Nov 25, 2001
About profit sharing and stock options you posted this:

"Profit sharing after 5 years & upon age 55, stock options are available but for new folks the returns on them won't come for many years."

Are you saying no profit sharing until 5 years or not fully vested until then?

What significance does age 55 have?

How about expounding on the stock options statement too.

Profit Sharing

Some numbers on profit sharing sharing:
22 YEAR AVERAGE 10.08%
YRS. 1994 - 2004 11.15%

All employees are vested in the profit sharing after 5 years with the company. For example, hired in Oct 99, employee is vested come 1 Jan 05. Leave before that, no money, leave after that you can roll the money over into another tax deferred account or take a withdrawal with a penalty. Firs time you can touch the money is at 59 1/2. My mistake on the 55 yrs of age.

Stock options are a long discussion & quite honestly for anyone hired after Jan '02, they will be of no value since the price won't be established until Jan '03. Not trying to dodge the bullet but options are great things if there is a large amount of time until you have to exercise them. In the case for many of us & anyone hired this yr to the end of the last option distribution, Sept '03, the options are small change. I do expect our pay rates to go up with a new contract to hopefully industry average with more stock options added to the pie to get our pilots to industry leading. Some folks like the options (higher seniority), others (low seniority) don't. We'll see what happens. Hope this helps,


there is a 401K matching from the company of 7.3% of income (up to the IRS limit) but no money is contributed unless the employee contributes some of his own money. To max out the company matching therefore you have to give up 7.3% of monthly salary to max out the company benefit. Other airlines don't have this matching requirement. Various mutual funds or company stock you can put this in. Profit sharing is the same thing, various funds or company stock.
Thanks for your reply.

I understand how the stock options have worked in the past. I've read as many of the posts as possible on the old forum.

You seem to be saying that due to the close proximity to 2004 that the stock options are winding down? Am I reading you correct? I'm a bit confused since I remember reading two lengthy letters on Planebusiness. One from the SWAPA leader and one from Herb. Herb seemed to say that even the 2nd year FO could excercise his options for a profit of 2K-8K(that was when the stock price was around $30).

On a side note, how difficult would it be for a first year guy to pick up enough open time to gross $4500 or $5000 per month. I saw that you earned 45K in your first year. I remember SWADude said about a year ago that he was grossing around $6000 per month by picking up open time.
The answer to your question depends a lot on which domicile you live in/near & how much time you wish to be on the road. I would say a VERY aggressive 1st yr pilot could earn $60-$70K by working the near maximum of 100 hrs per month depending on the domicile. It is true 1st year folks fly at 2nd yr rate when flying open time or extra fly however certain domiciles have a history of having EF/OT scarfed up by everyone & others don't. For example, Dallas has everything picked up usually, HOU is less so. Not sure about BWI but I think less inclined to pickup vs MCO where pickups occur alot.

As for the options issue, options can be held out to '07 in which they then MUST be exercised or lost. However, the amount of options received by someone hired in '02 will be 2531 shares. The "strike" price will be established on Sept 1, '03. If the price on that date is $15 & the price in Sept '07 is at 30 after no splits your profit will be around $35K of which you'll have to pay taxes on as if it was salary. Again, the options were put into place to offset the lower pay. It's all in the numbers. Hope that helps,


I'm definitely not a CPA so this explanation is from FO financial planning 101 which requires a 1st grade education, take it for what its worth.
Two questions.

How about picking up time in PHX?

When is the earliest one can exercise those 2531 shares assuming you recieved them in Sept. 02?
Don't know about PHX. I've heard mixed things about folks picking up out there.

You can exercise the options immediately if you so desired. I assume you're familiar with options (I wasn't) but for you to exercise the options immediately you would want the stock to increase quite dramatically, 25/50/75%. Otherwise if your option price on 1 Sept '03 was $15 & by 1 Dec '03 the price has gone up $18 & you decide to exercise your option to sell you will have only gained the profit ($3 or 20%) X 2583 - payroll taxes/income taxes, etc. Obviously your choice. For example for my options right now I'd only have a net gain of under $200 for my 3000+ options from my 1 Sept issuance date. Hope that helps. cheers,


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