American Airlines Chief Executive Doug Parker said airlines should stop sharing profits with employees and improve wages instead, despite persistent pressure from his own workers to link part of their pay to the company's performance. In an interview, Parker, the head of the world's largest airline by passenger traffic, called profit-sharing outdated.
Competitors Delta Air Lines, United Airlines and Southwest Airlines still tout the millions of dollars they give to employees each quarter. "They're bankruptcy-era contracts, and we're past those days," Parker said, adding that airlines offered profit-sharing in the last decade to make up for wage cuts. "We should move back to what normal industrial companies do, which is pay people (what) they earn.
"People prefer to have the certainty" of wages, he said. American merged with US Airways a year ago and is in the process of negotiating contracts that cover workers from both airlines. While some work groups from US Airways, including ticket and gate agents, still have profit-sharing under their old contracts, American's refusal to share recent profits has frustrated workers at the carrier, which earned a record $942 million last quarter.
Delta shared $384 million of profit with its workers last quarter, while Southwest paid employees $100 million on top of their wages. United, which does not share profits quarterly, doled out $190 million for 2013. Unions representing American's pilots and flight attendants have pressed hard for profit-sharing. They say it would put them on par with counterparts at other airlines and note that American's former contracts provided for it.
Profit-sharing gives workers "a feeling of being valued," said Leslie Mayo, a spokeswoman for the Association of Professional Flight Attendants (APFA), which represents workers at American. Last month, American's flight attendants narrowly rejected an agreement worth $193 million more than their current contract, in part because it did not include profit-sharing. The talks moved to arbitration, where APFA asked for the option to concede $50 million in wages per year in exchange for profit-sharing if another workgroup at American gets it.
But the arbitrators rejected the request, giving American its first joint labour contract after the merger. Parker has expressed willingness to restore the millions of dollars that the flight attendants voted down, according to APFA. American's pilots are pushing for profit-sharing as well. In 2012, management offered them continued profit-sharing or pay increases in a temporary agreement through 2017. With the company still in bankruptcy, they chose the increases. Now American is offering a replacement deal that it says would give the pilots industry-leading wages, but without profit-sharing.
The Allied Pilots Association, which represents American's pilots, says the offer still leaves its members far behind their counterparts at Delta because of profit-sharing. American's leadership "has listened to our concerns more than the previous management team," APA President Keith Wilson said, although negotiations have started to strain relations.
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