Recently, we’ve seen major US airlines report their financial results for 2024. Among the “big three” US carriers, the results are exactly what you’d expect — Delta had the best performance, United just slightly trailed, and American was a distant third.
Related to this, one interesting thing has been seeing how profit sharing differs at these carriers. American just revealed the details of its employee profit sharing for 2024, and the numbers are leaving people very frustrated.
In this post:
American employees get disappointing profit sharing
@xJonNYC shares American’s profit sharing numbers based on 2024 performance, broken down by work group. Profit sharing is calculated as a percentage of eligible earnings, as follows:
- American pilots get 1.5% profit sharing
- American flight attendants get 1.1% profit sharing
- American management staff get 1% profit sharing
- Other American work groups get 1.5% profit sharing
Perhaps most interesting here is that flight attendants are getting just 1.1% profit sharing, which is significantly worse than at other carriers. At Delta, flight attendants are getting 10% profit sharing, while at United, flight attendants are getting 5.3% profit sharing (and they’re already not happy about that, since it’s a huge reduction compared to the 9.2% profit sharing for 2023).
So yeah, Delta flight attendants are getting more than 9x as much profit sharing as American flight attendants. On the plus side, at least American flight attendants managed to ratify a new contract, so their standard pay is much better than it was a year ago.
In fairness, it’s not like American flight attendants are actually used to significant profit sharing. In 2016, they received 3% profit sharing, and they haven’t received that big of a payout ever since.
As part of their new contract, American flight attendants will have the same profit sharing formula as Delta going forward. The catch is that American’s profits are unlikely to be as big as Delta’s profits anytime soon, so American flight attendants likely aren’t looking at meaningful profit sharing anytime soon.
American and Delta pilots have the same profit sharing formulas, with pilots at the former airline getting a 1.5% bonus, and pilots at the latter airline getting a 10% bonus.
Maybe American management should have a new pay structure?
It’s interesting to consider airline CEO compensation in 2023 (I haven’t yet seen 2024 numbers). American CEO Robert Isom received $31.4 million in compensation, only marginally less than the pay of Delta CEO Ed Bastian, and way more than the pay of United CEO Scott Kirby.
It’s amazing how American’s board seemingly settles for the direction that Isom’s team is leading the company, given the lackluster performance. And I guess they must be happy with what’s going on, or Isom wouldn’t be rewarded so generously.
Here’s an idea — how about paying American’s top executives purely in the form of profit sharing? Make it a similar formula to what employees get. They get a small percentage of the first $2.5 billion in profits, and a bigger percentage of profits above that. Let’s see how that works out.
So much about the way that publicly traded companies in the US do business just makes little sense to me, in particular the relationship between executives and the board. For how many years can you let someone keep doing the same thing while underperforming, without thinking that it might be better to try a fresh approach?
It’s just a shame that frontline staff are stuck working for a management team that has no vision, where they’re unlikely to see any meaningful profit sharing.
Bottom line
American has revealed its profit sharing structure based on 2024 financial performance, and work groups are looking at getting anywhere from 1-1.5% bonuses. So while Delta flight attendants get a 10% bonus, and United flight attendants are unhappy with their 5.3% bonus, American flight attendants are getting just a 1.1% bonus.
Ultimately at American there just aren’t many profits to share, and that’s the fault of the company’s leadership team, which can’t seem to develop a cohesive strategy. American is essentially a high cost version of a low cost carrier, except with a lucrative loyalty program.
What do you make of this American profit sharing mess?
Need knew upper management
Isom needs to seek other employment
Everyone is replaceable
What profits do employees expect to share if the company isn't making any?
You can't manage your way out of over unionization. American has almost 35% more employees than Delta and United with similar fleet size and revenues. American will always be a distant 3rd with the current employee structure.
It's time to pull someone like Richard Anderson out of retirement and have him lead AA out of it's problems. He's only 69, and I'm sure his "do not compete" clause has long expired. At it's core, AA is still salvageable company. It just needs someone like Anderson with a great industry track record to grab the reins and turn it around.
he's a businessman, not a magician.
Kirby really is the only C suite guy in the industry with a track record of turning around businesses.
Glen Hauenstein deserves some credit too though. His work at EWR back in the day then Delta since merger manages to create the weird halo that the pretentious and arrogant guys like Ed and Richard get by doing little aside from create operational meltdowns then taking a paying passenger's seat to drink wine in Paris.
And...
Kirby really is the only C suite guy in the industry with a track record of turning around businesses.
Glen Hauenstein deserves some credit too though. His work at EWR back in the day then Delta since merger manages to create the weird halo that the pretentious and arrogant guys like Ed and Richard get by doing little aside from create operational meltdowns then taking a paying passenger's seat to drink wine in Paris.
And Glen also created the weird world that Timmy Dunn enjoys to bask in the glory he had nothing to do with.
Richard's gift is first mover status and being handed everything to him while he buys expensive socks. It isn't good management or turning things around.
Just look at his "turnaround" story at Amtrak after Delta. Richard doesn't have the foggiest clue how to deal with unions or businesses that don't have massive advantages like 4 monopoly hubs.
American holds almost $40B in debt vs. Delta's <$18B. American also has about 30,000 more employees eligible for profit sharing than Delta has. The formula, although the same out the "outside", is not really the same. American also includes their wholly-owned pilot group into the formula. So, more debt = less "profit" as the company pays off debt and more employee groups to share the profits with. Seems like this should be simple math.
A different approach (and result) over at Alaska Airlines...
"The Performance-Based Pay (PBP) program is unique because it aligns all employees with the same goals – beyond a simple profit-sharing program. In addition to profit metrics, we work as one team toward goals around safety, fuel efficiency, and guest experience."
"This year, it’s more than 11%, or roughly 6 weeks of additional pay."
CEO? I don't give AF about thier pay. What American needs is to get thier shit together and become a better airline if they want to increase thier profit sharing. EVERY flight I've been on in the last few years, EYERY one, has been delayed. Half of those canceled or rebooked causing major issues for me. A majority (though, not all) of the flight attendants are bitter and should have retired in the 80's. The...
CEO? I don't give AF about thier pay. What American needs is to get thier shit together and become a better airline if they want to increase thier profit sharing. EVERY flight I've been on in the last few years, EYERY one, has been delayed. Half of those canceled or rebooked causing major issues for me. A majority (though, not all) of the flight attendants are bitter and should have retired in the 80's. The only helpful American employees that deserve kudos are the EX-PLT phone agents who bust ass to fix all of the issues that American causes for thier customers.
American is a horrible airline - this is what happens when you can't fire people who don't give AF about thier own customers in an industry and government who have destroyed competition.
It is not fair to air hosts and hostesses that they are "bitter". They have sadly been putting up with uncivil behavior while doing the best they can at their jobs. I think a mature air hostess can provide reassuring service to a good portion of the passengers, as they tend to trust an older person rather than a young 20 year old (nothing wrong with youth and hope you don't see it as wrong)....
It is not fair to air hosts and hostesses that they are "bitter". They have sadly been putting up with uncivil behavior while doing the best they can at their jobs. I think a mature air hostess can provide reassuring service to a good portion of the passengers, as they tend to trust an older person rather than a young 20 year old (nothing wrong with youth and hope you don't see it as wrong). I think I blame the upper management of the company that does not invest in cleaning up its image and create an environment where people behave better, as behavior is influenced by surroundings.
Back in the 80's, flying was indeed a huge deal, nobody had to deal with the huge numbers of today's and people were indeed more polite. But how to explain that even in Greyhound buses, passengers are more polite than the ones using American Airlines? People are the same everywhere, so why this disregard for the hard working air hostesses and fellow passengers?
And the flight attendants refuse to provide service using the excuse of turbulence not to do so when there is absolutely no turbulence. Customers remember this. AA operates as if there is no choice.
My company's preferred carrier is AA. I wish it would move to another one or give me the option to use any carrier as long as the prices are the same or less.
To be objective about it, we would need to know the base salary, which you don't provide. That hinders the comparison to know whether 1% is on top of a reasonably good salary, or pennies on top of already poor salaries for AA FAs.
You should Google how percentages work, Eric.
No vision for growth at American, they are happy with there big salaries and really could care less about the employees salaries and will ride it out till they are fired! Where else can someone get a 31 million dollar bonus for a failed operation???! Fire them all not just Isom .
Where else? It is the American way. Corporate life is littered with people who fail upwards.
It is customary for a CEO to make 260X over wage workers as they assume responsibilities. There would be massive employee layoffs if the FAA were to make regulatory changes.
As far as service goes ; once I stopped flying non rev 5 yrs ago I receive better service as an elite member.
Seems quite simple right? AA just managed to produce a tiny profit so there simply is little to share. If AA staff got their hands out of their sleeves like staff other airlines do more profit can be generated. My experience with AA staff, with a few positive exceptions, has been mostly horrendous. The opportunity window for AA staff to improve performance, behaviour and attitude is enormous.
Seems about right. My experience is I get about 10-15% of the service on AA vs DL. Provide a better product and people will pay for it.
Could be worse. Virgin Australia only offers their employees a chance (no guarantee) to win 10000 velocity points a quarter, despite record profits.
Paying execs based on profit as you suggest would incentivize them to not negotiate with the unions. Didn’t AA take a ~$1B hit in FY24 on pilot and FA raises alone? It seems like “profits” were shared via raises, with additional raises laid out for this year and next.
The problem with renumeration being based purely on profit sharing is that the executives would then be incentivized to maximize short term profits at the expense of longer term stability or growth. If they're smart about it (which may be a stretch) they could probably get away with it for a couple of years, raking in the dollars, before they resign or are fired, leaving the airline in even worse business shape (which is possible).
This is exactly what Alan Joyce did at Qantas.
"Here’s an idea — how about paying American’s top executives purely in the form of profit sharing?"
C'mon, Ben, you know the answer. The average duration that an airline CEO will retain his/her position is about 6.5 years. If you want your airline managed to turn in superb numbers in the near time while potentially going off a cliff in the mid tem, pay the C-suite purely based on profit sharing. There's already too...
"Here’s an idea — how about paying American’s top executives purely in the form of profit sharing?"
C'mon, Ben, you know the answer. The average duration that an airline CEO will retain his/her position is about 6.5 years. If you want your airline managed to turn in superb numbers in the near time while potentially going off a cliff in the mid tem, pay the C-suite purely based on profit sharing. There's already too much managing to quarterly and yearly revenue/profit projections in publically traded companies.
If you're unhappy with your remuneration, go work for a company that pays you better! Of course none of them will do that, because it would mean sacrificing their precious, sacred seniority privileges, so they just stay where they are, complain endlessly, and take their disgruntlement out on the paying customers.
If the CEO has the board in his/her pocket they can get away with low performance. There's not much vision at AA. The assumption seems to be the coach product is not worth spending a nano second on and at best a step above Frontier. Lack of planes inhibits more lucrative International flying, namely premium.
A bunch of the clubs that are drab, look like something out of 1984, crowded, dirty and it seems the...
If the CEO has the board in his/her pocket they can get away with low performance. There's not much vision at AA. The assumption seems to be the coach product is not worth spending a nano second on and at best a step above Frontier. Lack of planes inhibits more lucrative International flying, namely premium.
A bunch of the clubs that are drab, look like something out of 1984, crowded, dirty and it seems the front desk staff is overburdened and can't provide the kind of travel assistance they used to.
Inflight standards are all over the place and no effort to tighten them up.
"Make it a similar formula to what employees get."
Unfortunately, they will call it "communism."
Or is it “accountability”
I'm so embarrassed for American. Everyone is making money hand-over-fist, offers generous bonuses, and AA comes out with this embarrassing and sclerotic 1.5%.