American Airlines Profit Sharing: How It Works

American Airlines is one of the biggest airline companies in the world and operates around 6,800 flights every day in over 50 countries. It has around 129,700 employees and welcomes more than 200 million passengers onto its flights every year.

The company's annual revenue in 2023 was $53 billion and it generated more than $13 billion in the fourth quarter alone.

The good news for its employees is that the company has started paying out profit shares again after a lengthy break.

But what does this mean?

Well, in this guide we'll tell you everything you need to know about American Airlines' profit sharing plan. This should help you decide if it's a good choice for your own company.

What Is American Airlines' Profit Sharing Plan?

American Airlines' profit sharing plan rewards its pilots, flight attendants, and all other eligible employees for their hard work by providing them with a share of the company's profits.

Its plan was launched in 2016, which is much later than some of its competitors in the airline industry, and the plan has been said to be less generous than other major airlines.

Still, its introduction has been warmly welcomed by employees and the company believes it has many benefits.

What employees have received

In 2023, the total amount of profit sharing payments American Airlines gave to its employees was $130 million. This was the first time in three years that American's employees had received a profit sharing payout.

How American Employees Feel About the Profit Sharing Plan

Generally, reviews on sites like Glassdoor suggest American Airlines employees are happy with the fact they receive profit sharing payments.

However, there are also some negative employee reviews that compare the plan unfavorably to other companies' plans, such as Delta Air Lines. It's clear that American Airlines flight attendants are aware they receive less than Delta flight attendants.

Intended Benefits of American's Profit Sharing Program

The benefits of profit sharing are wide and varied. They include:

• Employee engagement and loyalty: As employees become more invested in the company's success, they become more engaged with their work and tend to have higher levels of job satisfaction. They also often feel more loyalty toward the company.
• Incentivizing staff: It's a great way for employers to incentivize their employees with financial rewards based on the company's performance.
• Sense of ownership: When employees reap the benefits of the profitability of the company, they feel like they have a stake in its long-term success. This fosters a sense of ownership which can motivate them and boost productivity.
• Collaboration and teamwork: Profit sharing plans can motivate teams to collaborate and work together more efficiently to achieve profitability for the company, as they know this will benefit them too.

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How Does American Airlines' Profit Sharing Work?

Here's how its profit sharing plan works.

Calculating profit sharing amounts

The exact formula the airline uses to calculate its payment amounts isn't publicly available, but we do know that it bases the calculations on 5% of its pre-tax earnings. The profit sharing percentage for each employee is then calculated.

The maximum payout an employee can receive is 10% of their annual income. So, if an employee earns $50,000 per year the maximum they can receive is $5,000.

Distribution of profits to employees

The payments are made annually and usually happen around the third week of March. It's paid as a lump sum as part of an employee's regular paycheck.

Taxes and other considerations

Profit sharing payments are included as part of an employee's net income and are taxed at the usual rates the employee pays on the rest of their pay.

Who Is Eligible for American’s Profit Sharing?

To be an American Airlines profit sharing partner, you need to be over 21 and must have worked for the company for at least 12 months. This includes union and non-union employees. Level 5 employees aren't eligible.

Other Employee Benefits American Offers

Aside from the plan, some of the other benefits American offers its employees include:

Free flights

The airline provides all employees and their families with free travel on American flights. They're also entitled to free travel with American's partner airlines, including United and Delta.

Health, wellness, and insurance

American provides their employees with:

• Life insurance
• Health insurance
• Dental insurance
• A Health Savings Account (HSA)
• Vision insurance
• PTO (Vacation/Personal Days)
• An Employee Assistance Program
• Disability Insurance
• Accidental death and dismemberment (AD&D) insurance
• On-site gyms at airports

Credit union

The company also operates its own credit union that offers significant discounts to its employees. Plus, they host financial planning seminars to help their employees make better financial decisions.

Other Companies Offering Profit Sharing

Of course, it's not just American Airlines that thinks profit sharing is a great idea. Let's take a quick look at some of the other companies with profit sharing plans.

Home Depot

Home Depot is the largest home improvement retailer in the world and it shares its profits with its employees to motivate and inspire them.

From 2018 to 2022, the company paid out $2 billion in profit sharing payments. In 2022, their eligible employees received a total of $409 million.

Southwest

Southwest is one of the industry leaders when it comes to profit sharing plans and it paid out around $81.4 million to eligible employees in 2023. This averaged out to around $1,356.23 per employee.

Delta

Delta paid out an incredible $1.4 billion to its profit sharing employees in 2023. This meant each of its eligible employees received around $4,545 on average.

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