American Airlines’ Measly 1-1.5% Employee Profit Sharing

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.

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?