In recent weeks, we’ve seen most major US airlines release their 2023 proxy statements, which contain all kinds of interesting information. Among those is the executive compensation at these airlines…
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Comparing pay among US airline CEOs
I think it’s interesting to take a look at how US airline CEOs were paid in 2023, since it’s the first time since the start of the pandemic where airline executives didn’t have limits on their pay.
The CARES Act provided government aid to all US airlines, though it came with some stipulations, which applied through April 1, 2023. With the CARES Act, CEOs at US airlines had their pay capped. They could earn at most $3 million, plus 50% of their total compensation that exceeded $3 million in 2019.
With that in mind, what did airline CEO pay look like in 2023? Here’s a high level rundown, with a comparison of 2023 and 2022 total compensation:
- Delta Air Lines CEO Ed Bastian earned $34.2 million in 2023, compared to $9.6 million in 2022
- American Airlines CEO Robert Isom earned $31.4 million in 2023, compared to $4.8 million in 2022
- United Airlines CEO Scott Kirby earned $18.6 million in 2023, compared to $9.8 million in 2022
- Southwest Airlines CEO Bob Jordan earned $9.3 million in 2023, compared to $5.3 million in 2022
It’s important to emphasize that while the above are the amounts of the total compensation, the structure of this varied by airline, so we’re not talking about all cash compensation here.
As you can tell, Delta’s Ed Bastian was the highest paid CEO. His $34.2 million in pay included a $950,000 base salary, a bonus of $1.9 million, a one-time $20 million award (comprised of $10 million in cash over two years, plus $10 million in stock awards vested over three years, based on performance), and more.
American’s Robert Isom wasn’t far behind this. His $31.4 million in pay included a $1.3 million base salary, a bonus of $2.75 million, $7.8 million in non-equity incentive compensation, and $19.5 million in stock awards.
What can we really make of these numbers?
There’s no denying that at publicly traded companies in the United States, we have some of the highest executive compensation in the world. CEOs at US airlines make multiples of what CEOs at most foreign airlines make, and that’s just a commonly accepted practice.
There’s no point in comparing 2023 numbers to 2022 numbers, given that 2022 numbers were capped due to the CARES Act. I will say, looking at these numbers, what stands out to me the most is Robert Isom’s compensation:
- I’m not saying Bastian “deserves” $34+ million, but at least he’s running the world’s most profitable airline, and is a good leader
- Meanwhile American lags both Delta and United significantly when it comes to financial performance and having a vision; Isom has done very little to improve the airline, and for those efforts, he gets $31+ million in pay
- I’ve been impressed by what Kirby has done at United, so I’d say United is getting quite the deal with him, as he’s “only” making a bit over half as much as Bastian and Isom 😉
It’s sad what low standards American’s board has for executive performance. But I can’t say I’m surprised, given the cozy relationships that exist…
Bottom line
While airlines aren’t exactly the highest margin businesses, airline CEOs are compensated as if they are. 2023 was the first year since the start of the pandemic where airline CEOs had no restrictions on their compensation, and the numbers reflect that.
All major airline CEOs saw huge pay increases, with Delta’s Ed Bastian coming in on top, with $34.2 million in compensation. American’s Robert Isom wasn’t far behind, with $31.4 million in compensation, while United’s Scott Kirby was a distant third, with $18.6 million in compensation.
What do you make of these compensation numbers?
Amazing that people bitch at bank CEOs.. Jamie Dimon made $36 million for delivering a $60 billion profit last year. Ed Bastian made a cool $34 million for delivering a $5 billion profit.
Pay consultants will say airline CEO talent is hard to come by.. meanwhile the industry is an oligopoly.
More proof America is a third world country with a Gucci belt
This rises to a level of sinfulness. What do these people do to justify a salary increase let alone total package salary. They charge exorbitant bag fees and then raise their salaries with board members that vote for it knowing their own compensation will increase. This is what’s wrong in this country. CEO’s are way overcompensated ripping off the companies and shareholders.
All I can say here is WOW!!!! Must be nice to go from a $4 MILLION dollar pay day to a $31 MILLION pay day a year later all while these airlines make it hard to even get a 2% yearly raise!! ABSOLUTELY RIDICULOUS! COMPANIES SHOULD AT LEAST CARE ABOUT THEIR REGULAR WORKFORCE!
I remember Doug Parker had $0 base salary when he was CEO of AA. I wish all CEOs followed that example.
and you realize he bought back billions of dollars worth of stock using debt, not internally generated cash, which is part of why AAL took on so much debt?
The other part of AAL's debt is its massive purchases for new aircraft when the company was barely profitable.
being compensated only in stock is great IF and ONLY IF an exec can't try to manipulate the stock price.
And the sad reality is that AAL's...
and you realize he bought back billions of dollars worth of stock using debt, not internally generated cash, which is part of why AAL took on so much debt?
The other part of AAL's debt is its massive purchases for new aircraft when the company was barely profitable.
being compensated only in stock is great IF and ONLY IF an exec can't try to manipulate the stock price.
And the sad reality is that AAL's stock continued to fall EVEN WITH the massive stock buybacks. Ask Southwest now how much profitability matters to your stock price even when you have as clean of a balance sheet as LUV has
That's about the WORST way to run a company.
It incentivizes them to do whatever it takes to keep them stock price up, just long enough for them to immediately, and often to the detriment of the company's long-term well being.
If you need a reference, witness one The Boeing Company.
immediately benefit*
Someone, not Tim Dunn, would be readied to attack anyone if they say that the CEOs are getting paid too much.
not to stir the pot, but given that this article isn't getting near as many responses as the careless tourist, it is worth noting how much more AAL's current execs are making than Scott Kirby - and presumably the rest of the execs at UAL, many of which came from AAL when it became clear that Kirby was not the heir apparent when Parker would retire.
Isom apparently was better connected to the board...
not to stir the pot, but given that this article isn't getting near as many responses as the careless tourist, it is worth noting how much more AAL's current execs are making than Scott Kirby - and presumably the rest of the execs at UAL, many of which came from AAL when it became clear that Kirby was not the heir apparent when Parker would retire.
Isom apparently was better connected to the board then and now.
Isom inherited alot of the problems AAL has now including a balance sheet that Parker destroyed while buying back stock because he was compensated solely on stock price and Kirby's need to fly "strategic routes" which lost loads of money.
It is also fair to note that Isom has figured out what needs to be done to restore AAL to profitability but hasn't accomplished much more than cutting AAL's spending and helping to stabilize its balance sheet and cutting large portions of AA's network which leave it for less able to compete with DL and UA.
Kirby has been at UA for 7 years and is just now beginning to demonstrate improved financial performance; his strategy to hold onto older aircraft during the pandemic didn't result in better finances. His aggressive growth plan is being scuttled by Boeing - even though UA ordered more MAXs and 787s during the pandemic and accelerated the growth plan even though the MAX 7 and 10 were years behind being certified.
The EWR meltdown was purely the result of being overscheduled and UA has pulled back EWR to reliable levels but left DL with an even larger lead in number of flights in NYC. Leaving EWR on a private jet while the operation melted down didn't help Kirby and neither does the FAA's safety audit which is even further slowing down the growth plan. The percentage of existing aircraft that have been reconfigured is still very low.
Kirby has figured out what needs to be done; he hasn't come up w/ viable plans or succeeded at implementing them. Brian Sumers notes that Kirby is a lot less vocal which probably is the result of people on the board telling him that vowing to take out multiple competitors and trash your regulators doesn't end up well.
UAL stock had a good ride in the fall but has not done as well over the past year as DAL. UAL did manage to recently displace LUV as the 2nd highest market cap US airline but both are still around 50% less than DAL.
Kirby and UAL will get there but it will be a decade into his reign before real and sustained successes on his plans take place.
Boards have to compensate based on what takes place so Kirby will get a nice check - and stock - in time.
. . . NO DOUBT,
..... this article looks like has given you an org.. ("push") like no other in a long time? :-)
Strange, because it means you need to deserve such an amount as a CEO of an Airline.
Yes, DL is good (mostly) but it's also in the hands of there employees too!
Never forget the small people!
it is precisely because DL has been pretty consistent in raising frontline employee including unionized pilots as well as with generous profit sharing that it gets so little flack from its employees for its exec pay
The remuneration seems reasonable based on the size of the organisation’s and the fiscal activity of the groups accounts.
What’s the difference in Islam’s “ a bonus of $2.75 million, $7.8 million in non-equity incentive compensation” did they pay him in points for the latter?
Corporations pay their executives whatever the board of directors decide. If you have an issue with that amount, then I suggest you purchase enough stock in the airline to get a seat on the board.
Reading comments about "fair pay" from a bunch of people obsessed with traveling on points is laughable.
Gross, a corporate shill
100% agree
Yeah and there is no money for front line employees....
Not sure which airline you are referring to but Delta has doled out 3 pay raises to its non-contract employees - including FAs - since 2022 and was the first of the big 4 to settle w/ its pilots in what became the blueprint for pilot compensation.
AA and UA have yet to settle with their FAs while WN's settlement might bring retro pay into the equation. AA and UA's labor costs are going to...
Not sure which airline you are referring to but Delta has doled out 3 pay raises to its non-contract employees - including FAs - since 2022 and was the first of the big 4 to settle w/ its pilots in what became the blueprint for pilot compensation.
AA and UA have yet to settle with their FAs while WN's settlement might bring retro pay into the equation. AA and UA's labor costs are going to go up hundreds of millions of dollars per year to settle w/ their FAs and they will face significant cash outlays if retro is included.
UA's "almost profit" in the first quarter would not have happened if they had settled w/ all of their labor groups at DL labor rates or higher.
fair and accurate post, Ben.
Airlines compete for executives from across industries. Airlines historically have "promoted from within" which means you repeat the same mistakes over and over.
Delta accurately compares its financial performance to broader industry and does fairly well based on that metric.
and execs still make up a small percentage of total labor costs - and airline frontline labor is compensated above average compared to US workers.
CEO makes over $31 million in a year while claiming the company can’t afford to give flight attendants a wage adjustment that keeps up with inflation…
Irrelevant really. 31 a year dish out by flight attendant per hour is 17 cents per hour
I don't think you have a good sense of the economics at play. American has ~27k flight attendants at last count. Even if Isom donated his entire $31m compensation to their pay, it would come out to an extra ~$1150 per year per flight attendant.
(Not a defense of Isom — who I think is way overcompensated — but a reality check on the cost of labor.