In 2012, Horton offered profit-sharing to every AA employee in the 1113 term sheets; 15% first-dollar profit-sharing computed on the pre-tax income, excluding special items. So what did the APA do? Traded away 2/3 of that profit sharing (10% of the 15% offered) for a small increase in hourly rates. Oops.
Earlier this year, the APA pilots received profit-sharing based on 2013 profits that were equal to about 1.5% of their W-2 earnings. Had they not given away 2/3 of their profit-sharing, they would have received about 4.5% of their W-2 in profit-sharing. For this year, the pilots would have received more like 10% to 12% of their W-2 earnings, but they gave it away. Higher hourly rates are an absolute necessity, but you never give away profit-sharing once it's on the table. Demand pay raises independent of the profit-sharing, but don't trade away the profit-sharing potential.
Now that the combined airline is on track to record profits equal to several billion dollars a year, the APA asks "where's our profit-sharing?" Parker's answer: "You gave it away in 2012."
Earlier this year, the APA pilots received profit-sharing based on 2013 profits that were equal to about 1.5% of their W-2 earnings. Had they not given away 2/3 of their profit-sharing, they would have received about 4.5% of their W-2 in profit-sharing. For this year, the pilots would have received more like 10% to 12% of their W-2 earnings, but they gave it away. Higher hourly rates are an absolute necessity, but you never give away profit-sharing once it's on the table. Demand pay raises independent of the profit-sharing, but don't trade away the profit-sharing potential.
Now that the combined airline is on track to record profits equal to several billion dollars a year, the APA asks "where's our profit-sharing?" Parker's answer: "You gave it away in 2012."