American Airlines has agreed to offer an employee profit-sharing program to its non-management employees, joining the other major U.S. airlines which offer the perk.
The largest U.S. airline by traffic had previously avoided offering the benefit in new labor contracts but has backed off that stance and will now pay out 5% of pretax profits to eligible workers. In the past American Airlines (AAL) said it would rather offer higher base pay, which comes with certainty for both employees and the company, but workers were unhappy that other carriers like Delta, Southwest, and United Continental all had such benefits, reported the Wall Street Journal.
“We are taking this step because we have heard from many of you that a profit-sharing plan is important to our success as a team,” Doug Parker, CEO of American Airlines, wrote in an employee memo obtained by the WSJ. “Although we continue to beleive the most effective way to increase compensation is through higher base pay, we recognize there is a team-building component to profit-sharing.”
American’s 5% profit-sharing compromise is still below its rivals, though the company has said it wants to keep a higher hourly pay rate than other airlines. Last year, employees working for Delta (DAL), Southwest (LUV), and United Continental (UAL) brought home a total of $2.82 billion in profit-sharing income. Delta, which has one of the most generous profit-sharing plans, alone accounted for $1.5 billion of that total.