American Airlines Group Inc. has finally caved in to the demands of its employees. The Texas-based company gave in to the its workers' demand for a profit-sharing scheme. This move has practically removed the obstacles hindering the carrier's performance and its labor relations.
With this profit-sharing program, the publicly traded holding company joins other big U.S. carriers such as Southwest Airlines Co, United Continental Holdings and Delta Airlines Inc. in sharing some of its revenues with workers.
In this regard, AAGI will earmark 5 percent of its pretax income, excluding one-time items into its profit sharing fund, said Doug Parker, Chief Executive Officer to the workers on Wednesday through a message. The first tranche will be given in early 2017.
American Airlines, the largest U.S carrier by traffic, had striven long enough with employees that want specific wage increases and surety of their paychecks. It has even provided its workers with considerable pay increases with the new contracts since it was merged with US Airways.
However, there are still employees who wanted the perks that the three nearest rivals of AAGI give their workers - profit sharing.
"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," Parker told his employees in a memo.
"Although we continue to believe the most effective way to increase compensation is through higher base pay, we recognize there is a team-building component to profit-sharing," he added.
American Airlines profit-sharing scheme is a sudden reversal for Parker. In January, he defended the carrier's decision to give higher base rates instead of giving a share of the company's profit.
He said that such programs are dependent on travel demands and should not be the basis for rewarding employees. But the airline's executives eventually saw that the differences in viewpoints were delaying the company's march for a cultural change.