American Airlines boosts employee pay as earnings fall

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American Airlines boosts employee pay as earnings fall

New York (AFP) – American Airlines announced an unexpected pay increase for employees even as it reported lower first-quarter earnings Thursday which it blamed on high fuel costs.

Net income was $234 million, down 66.6 percent from the year-ago period, due primarily to increased fuel costs.

Revenues were up two percent to $9.6 billion.

But the company’s share price fell sharply after the announcement, which included a plan to bring base pay for its pilots and flight attendants into line with competitors. The surprise increase comes outside of normal contract negotiations.

Chief executive Doug Parker described the move as “a very important step to rebuild trust with our team” during a conference call with analysts.

The company announced the increase late Wednesday, in a letter to employees from Parker noting the pay gap between employees at American and those at rivals like Delta and United. 

“Absent any action, these gaps would remain at similar levels until those contracts become amendable in December 2019 for flight attendants and January 2020 for pilots,” he said. 

“This doesn’t feel right for the new American and it doesn’t feel consistent with our commitment.”

The airline has offered a base pay boost of five percent to flight attendants and eight percent to pilots. That will increase costs by $230 million in 2017 and $350 million in 2018 and 2019, American said in a securities filing late Wednesday.

Shares tumbled 4.6 percent to $44.25 in pre-market trading.

American Airlines passenger planes are seen on the tarmac at Miami International Airport in Miami, Florida, June 8, 2015
Copyright AFP/File ROBYN BECK

 

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