Trip,
What's your category and seat? 747s gone, half the 777 are long in the tooth, ERs have no teeth. A350 isn't a 787. 330s won't revitalize the Pacific.


Hank

 

Profit sharing is a percentage of profit from the entire corporate entity and as the company grows and becomes more profitable we gain from that corporate growth regardless of the operational growth or decline. This kind of compensation is reserved for only the upper levels of management and the revenue generators that bring additional revenue to the business.

We now have $7 billion in profits we collect on. If the margin remains constant (which the leadership has said is sustainable in every forum they can) then as the company grows we get additional compensation that is not connected to a negotiations or market pilot rates.

 

Exactly. Yet this is lost on some. PS makes us true stakeholders -- whether we have WB growth, NB growth, or just become a travel agency. If we "monetized" it we would never -- ever -- get that share of the pie back.

 

Bob, let me try to address each of your points:

1. Equity holders are people who own stock, not those that receive profit sharing.
2. Profit Sharing absorbed into pay rates grow at a compounded rate with every future pay raise. Profit Sharing is not compounded by future pay raises. Do you understand the power of compound interest?
2. Profit Sharing exchanged into pay rates can be negotiated away (with the stroke of a pen), whereas Profit Sharing can simply disappear without negotiation. I prefer to have the option of negotiation.

 

The shrinking minority of people regurgitating this misleading information refuse to accept reality. "Every future pay raise" will undoubtedly be a function of the market rate, with very little deviation. PS monetized gives you a pay raise that might exceed your peers for the duration of a single contract. Next time around, your pay rate increase will be smaller as a result. Your PS will then be gone (or reduced) and your rates (and total compensation) will just be industry standard.

Why do you suspect management makes the same argument that you do... do they want us to have much larger W2s than everyone else, or do you think they are trying to reduce costs over time?

I know I can't convince most people of your opinion, but I'm glad that fewer and fewer are being played by management or by those who only care about compensation in the next few years before retiring.

 

notEnuf, this is a good explanation. But there is a way to transfer even more value to the pilot group. The explanation is connected to my previous explanation to Bob. Here's how...

Take the initial portion of Profit Sharing value, the amount paid out at the 10% level, and convert it to a pay raise. That value then compounds every year we get a pay raise, increasing in value. Retain the amount above the 10% payout to participate in your description above. Do the math. This is a more valuable approach.

 

Pay raises would then be smaller as a result of the higher starting point. Do that math... not over 3 years but over 10-20 like many of us care about. We're gonna miss that PS soon after we trade it away.

 

I understand compound interest. I also understand that I am soooo happy we didn't accept TA1. And soooo glad you don't make decisions for the group.

 

Ted, you've hit on a point that is poorly understood. Profit Sharing exchanged into pay rates raises costs, reducing the profit sharing payout. But what is important to understand is the formula of distribution. Let's look at the math.

Let's say $100 million of Profit Sharing is exchanged for an equivalent Pilot only pay raise.
This increases costs $100 million and reduces profit by $100 million (admittedly a simplistic view).
I'll be generous to your point of view and say the entire $100 million came from the 20% portion of PS payout.
In other words, the PS payout is reduced by $20. The pilot portion is about $7 million. This reduction is overcome by future compounded pay raises. The long term benefit outweighs the initial year reduction.

As well, you can see that the increased costs and concomitant reduction in profit and profit sharing is born by ENTIRE group of employees, while the benefit (the pay raise) goes only to the pilots.

 

Do you disagree with his point that this jump in rates would be absorbed by future contracts being more in line with peers? If I take your compound interest example out to just a few future contract cycles, we'd double the pay rates of our peers. Do you really believe the company will do that? I don't.