Is AA Following Through With Improved Employee Relations Promise?

by Josh Lew
Last updated: 12:30 PM ET, Mon March 28, 2016

Photo via Wikimedia Commons

American Airlines appears to be putting its money where its mouth is. Having promised to improve employee relations after an image-tarnishing string of complaints from pilots and other workers, the carrier just announced that it will use some 2015 gains to make profit-sharing payments to employees. Shortly afterward, American came to an agreement with its flight attendants, who will get a six percent raise.

A surprise raise?

The pay hike covers all 25,000 flight attendants who currently work for the airline. American's cabin crews agreed on a new contract in 2014. There was an unusual clause in that agreement that called for pay to be adjusted to match whatever deal competitor United Airlines offered its flight attendants.

Technically, United has not yet reached a new deal, but, in a show of good faith, American decided to offer the increase to its employees ahead of schedule. CEO Doug Parker, who promised to improve employee relations after a sharply worded letter from disgruntled pilots, explained the move in a letter to flight attendants announcing the raise: "We are making this adjustment now because none of us expected our flight attendants to have to wait this long to receive that increase, and it remains unclear when United will reach a joint agreement with its flight attendants."

Serious about making improvements?

So how much will flight attendants be making? New hires will make $26.16 per hour when they start. The previous starting wage before the raise was $24.67. Senior cabin crew will make significantly more than that. After 16 years with the airline, a flight attendant can expect to earn $60.13 per hour (up from $56).

The raise came without the traditional back and forth between the airline and the union. Perhaps this was to show that American's execs are serious about making the behind-the-scenes improvements that they have promised.

Profit sharing, but not until next year

The flight attendant raise isn't the only perk that American is promising. Five percent of AA's 2015 profits will be given to employees as part of a profit-sharing scheme. Workers will not see the money right away, however. It will be paid into a fund and the first payment will be disbursed in 2017.

Money isn't the only issue

One of the major complaints raised by pilots was that American's competitors had made moves to improve employee relations, while the airline's execs seemed to be happy simply maintaining the status quo. Parker addressed that concern by saying that American planned to outdo its competitors when it comes to employee pay: "We plan to offer hourly pay rates higher than those same peers in the contracts we're negotiating now and in those to be negotiated in the future."

The money will certainly be welcome, but pilots have also spoken of problems coming from the culture created by the carrier's middle management. This negative work environment was their biggest complaint in recent communications with Parker. That problem will probably be more difficult to address.