American Airlines says 'strong' profit to allow bigger wage hikes

[Omaha Steve]

Source: CNBC-Reuters

American Airlines said Tuesday that it plans to pay flight attendants an additional four percentage points on top of raises already averaging 10 percent, thanks to profits that have strengthened as oil prices have collapsed.

In a letter to employees, Chief Executive Officer Doug Parker said "very strong" results for 2014 would allow the carrier to lock in substantial wage hikes for the flight attendants. Other work groups would also see improvements in their raises—once their respective contracts are ratified.

Plummeting oil prices have slashed costs at the world's largest airline by passenger traffic, which is poised to save more than its competitors because it did not hedge against prices rising.

Unions have called on Parker to tie employee compensation to the company's performance, but Parker has opposed profit-sharing, practiced by Delta Air Lines, United Airlines and Southwest Airlines.

FULL story at link.

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Getty Images
A file photo of American Airlines flight attendants


Read more: http://www.cnbc.com/id/102294049#.

[SoapBox]

1. Delta is gonna be so pissed off.

Hahahaha!

Delta has been gloating through memos, to their flight attendants how great they have it, being non-union and how burned the American flight attendants got by going to arbitration (and it's like comparing apples to oranges). Now it's a different story...bet Delta doesn't promote this news!

The employees better get ready to also suck up loses on that old oil refinery that Delta bought, now that oil prices have plunged.

Lastly, American wants the FAA to remove a route authority that Delta has dropped for the winter (Seattle to Tokyo Haneda)...American wants to move it to Los Angeles and serve it daily.

Poor old Delta is having a bad "day".

[mountain grammy]

2. Sad, because they used to be one of the best

when I worked in the industry some 30 years ago. Everyone admired Delta, they set the standards. Greed destroys every good thing.

[FBaggins]

5. This appears to be an unsupported assumption

The union was fighting for AA to give them profit-sharing like Delta's. Delta's profits have been rising rapidly on a growing top line, better utilization expected in the coming months, and the same declining fuel prices that AA is benefiting from. There's every reason to believe that those higher profits result in higher profit sharing for Delta employees. You haven't demonstrated that the raise compares favorably to the profit sharing that AA refused to grant the union.

For the record... the AA raise would have to compare to the billion dollar profit sharing payout from Delta. That's roughly two months worth of salary.

The only place where AA seems to stick out over DL is that they didn't hedge their fuel prices, so they benefit more from the decline.

The employees better get ready to also suck up loses on that old oil refinery that Delta bought, now that oil prices have plunged.

Why? Falling oil prices don't reduce profits for refineries.

Lastly, American wants the FAA to remove a route authority that Delta has dropped for the winter (Seattle to Tokyo Haneda)...American wants to move it to Los Angeles and serve it daily.

It doesn't make much difference if American "wants" the FAA to do something. It has to actually happen before it's a "bad day". Given Delta's strategy to avoid actually dropping the HTE route (the way AA did a year ago), DL will probably win on the technicality.

[dixiegrrrrl]

3. Oh my.......this is gonna get interesting.

Had not stopped to think about airlines + gas prices.

[petronius]

4. I have somewhat mixed feelings about those profits, considering I just bought my

most expensive domestic ticket in years. Still, AA was the best of a lot of bad deals and the personnel were quite good all the way through, so I'm glad the painful dent in my wallet is at least in part going to people who deserve it...

[Skittles]

6. ripping off customers with bag fees has really paid off