In the past couple of weeks, we’ve seen most major US airlines report their financial results for 2023. Among the “big three” US carriers, the results are exactly what you’d expect — Delta did best by a long shot, followed by United, followed by American.
Related to this, one interesting thing has been seeing how profit sharing differs at the major US carriers. American just announced the details of its employee profit sharing for 2023, and the numbers are leaving people very frustrated.
American flight attendants get 1.1% profit sharing
The exact profit sharing arrangement differs by work group, though the flight attendant profit sharing is perhaps the saddest, in particular compared to peers. Among the “big three” US carriers, here’s the profit sharing arrangement for flight attendants (with the percentage being in relation to eligible annual pay):
- Delta flight attendants are getting 10.1% profit sharing
- United flight attendants are getting 9.2% profit sharing
- American flight attendants are getting 1.1% profit sharing
So yeah, Delta flight attendants are getting more than 9x as much profit sharing as American flight attendants, and that doesn’t even account for them having better pay to begin with (though American flight attendants are in the process of negotiating a new contract). So it sounds like most American flight attendants might be getting a check for a few hundred bucks, to thank them for a year of hard work.
Flight attendants confront CEO about disappointment
American CEO Robert Isom held a town hall with employees today, and there was a heated exchange between him and Julie Hedrick, president of the Association of Professional Flight Attendants (APFA), the union representing flight attendants. @xJonNYC shares a couple of clips of the interaction, and wow.
Flight attendants have been waiting five years on a new contract, so Hedrick confronts him about that, along with the paltry profit sharing that flight attendants are getting. As you’d expect, she gets quite some support from the audience. Isom responds by saying that:
- “We, as a company, have a lot of work to do yet, we’re recovering from a really deep hole”
- “We’re not as profitable as the industry leader, we are not, we’re far less profitable than the industry leader, and that’s why all these things that we talk about doing — straightening out our balance sheet, getting more efficient, finding ways to generate more revenue, all of that enables us to pay something that, let’s face it, is hard for us to do, given that we’re not as profitable as the industry leader”
Separately, a more junior flight attendant delivered a heartfelt message to Isom, explaining how her poor pay at American doesn’t even let her live a comfortable life where she can cover her expenses.
What a frustrating situation
I understand why flight attendants are angry. They want a new contract, and haven’t received a raise in five years. They’re also frustrated by the lack of profit sharing, and that just comes down to American’s small profits.
Flight attendants at American deserve a new contract, plain and simple, and should be paid more. It’s ridiculous that in 2023, you have full time employees who are in some cases making less than $30,000 per year, all while being based out of a city with a high cost of living. This isn’t about greed, it’s just about being able to pay your bills.
But I also understand where Isom is coming from. American isn’t as profitable as competitors, and having industry leading pay without having industry leading revenue isn’t a formula for success.
Ultimately what this comes down to is American’s poor management strategy, which I just can’t wrap my head around. American has been lagging competitors financially for more years than I can count. Yet despite that, American has kept the same management team, and they keep doing exactly the same thing and expecting different results. It’s absurd.
American needs a new leadership team with a new vision, rather than just trying the same thing over and over. American doesn’t try to differentiate itself with product. The airline is essentially just a massive domestic airline connecting Charlotte and Dallas to everywhere, while flying to a few long haul joint venture hubs, and offering summer seasonal service to Europe.
Virtually every single one of American’s “big” strategies just hasn’t panned out. Los Angeles transpacific hub? Nope. Seattle long haul hub? Nope. New York long haul hub? Nope. The list goes on…
Here’s an idea — how about paying American’s top executives purely in the form of profit sharing? They get a certain percentage of profits, and the compensation percentage increases the bigger the profits.
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? The same can be said for JetBlue under Robin Hayes’ tenure…
Bottom line
American flight attendants have just learned that they’re getting 1.1% profit sharing for 2023, and they’re not happy with that, when Delta flight attendants are getting 10.1% profit sharing. I don’t blame them for their frustration.
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 Spirit, except with a lucrative loyalty program.
What do you make of this American profit sharing fiasco?
