Delta Takes Aim at American for Its Lack of Profit Sharing

NEW YORK (TheStreet) -- Some people in Atlanta seem to be getting a kick out of labor's call for profit sharing at American (AAL) .

Stories on a Delta (DAL) employee Web site, posted Monday and Tuesday, attack rival American for not paying profit sharing in a year when Delta will pay out more than $1 billion.

Tuesday's story began: "Despite pressure from his employees to implement a profit-sharing program, American Airlines CEO Doug Parker said Monday that profit sharing is outdated."

The story quoted Parker, in an interview with Reuters, as saying, "We should move back to what normal industrial companies do, which is pay people [what] they earn" without profit sharing.

It also quoted from a 2007 US Airways press release, issued after the company distributed profit-sharing checks, as saying: "I'm delighted that today our employees will share in this success through our profit-sharing program." At the time, Parker was US Airways CEO.

The story noted that Alaska (ALK) , Southwest (LUV) and United (UAL) all have profit-sharing programs, and said "Delta is expected to pay more than $1 billion in profit sharing to employees for 2014, the highest payout in the industry. Total 2014 profit sharing for Delta employees will average nearly two months' salary."

A similar story was posted on the Delta Web site on Monday. It was titled, "Delta compensation eclipses American counterparts," and began with this sentence: "Delta people will earn on average 26% more total pay in 2014 than their American Airlines counterparts, according to Delta's latest competitive review of compensation."

That story said the compensation review took into account Delta base pay rates, profit sharing and "Shared Rewards payouts" for reaching operational performance goals, as well as American flight attendant compensation following an arbitrator's ruling Saturday.

"American flight attendants at the top of scale will be paid $3.35 less than their Delta counterparts in their new contract," the story said, noting that American flight attendants last month rejected a tentative agreement that was intended to match planned 4% pay rate increases at Delta but did not include profit sharing.

That story said Parker "has been opposed to profit sharing for his employees even as the company reported surging profits," and referred to two recent statements Parker has made.

In one, Parker declared at an employee meeting in November that "it's just not the right way to pay 100,000 employees that don't have that much impact on the daily profits."

After a critical response from some employees, he clarified by saying that daily profits can be tied to exogenous events such as fuel prices and Ebola.

"The philosophy is different at Delta," the article said. "The goal is a business model that is consistently profitable even amidst events like global outbreaks of disease, political unrest and spikes in jet fuel prices."

That model meant that Delta earned $3.44 billion through the first nine months of 2014 and that "Delta people will receive a profit-sharing payout for 2014 valued at more than $1 billion, or about two months' pay on average."

American spokespeople were not immediately available for comment.

- Written by Ted Reed in Charlotte, N.C.

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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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