Originally Posted by
Bluedriver
Major airline CBA's require the numbers used for profit sharing payout calculations be the same as those reported to shareholders. Many of these plans pay out large sums of money, in most years... Delta has had to pay particularly large payments to employees, and the CEO (past or present, can't remember which) has said they regret giving such a rich plan. Southwest has also paid large sums to employees, regularly. United just enriched their plan to match Delta's in their new agreement.
Tell me, if it was so easy to simply "accounting trick" these payments away, why haven't they been able to do it? Why are these other airlines writing these big checks if they can just manipulate the payments away?
Of course I know there are "gimmicks" that can be used, I've literally said as much in these posts. I've also given some reasons why they don't work long term in many/most cases.
I’ve mentioned to you before the difference between growth companies and dividend companies. LUV pays a dividend, DAL pays a dividend. Investors buy these stocks expecting a share of profits. SAVE and JBLU are growth companies, investors expect to make money through share price increase by achieving target growth rates. To achieve these growth targets, annual profits are either put back into the company (research plow back ratios) or to service debt to do the same. It’s not some tin foil hat conspiracy accounting tricks to hide profits, it’s all public record. Large, established companies are the most likely to pay significant dividends, since substantial growth is more expensive and less likely means of boosting share price (and thus shareholder wealth). This is why those Delta pilots get more significant profit sharing checks, and why the current B6 language doesn’t yield very much.
Even combined with NK, JetBlue has some serious capital expenditures ahead of it if they want to continue growth and expansion to break into the legacy playing field. More planes, more staff, more infrastructure. It’s highly unlikely that JBLU will offer a dividend to shareholders for the foreseeable future. This is also why it’s unlikely that stronger profit sharing language will result in those fat annual checks you salivate over. Revenue sharing may result in that, but a slice of the pie before all the bills are paid, or even the shareholders are paid, well that’s an even tougher ask.
TL/DR it’s foolish to expect profit sharing to yield anything significant until the stockholders who own the company are receiving a taste.