by Josh Lew
Last updated: 12:00 PM ET, Fri January 22, 2016
Photo courtesy of Alaska Airlines
After announcing record profits on Thursday, both Alaska Airlines and Horizon Air have promised large year-end bonuses for their employees. The extra cash will add up to about nine percent of employees annual wages. That means that workers will be given the equivalent of an extra five weeks' worth of pay.
Passing on some of the profits
This seems like a generous move, especially as other major carriers are making noise about cutting operational costs and employee expenses. Alaska and Horizon, both of which are owned by Alaska Air Group, have given bonuses annually for each of the past seven years. Usually, these extra payments add up to one month or a few weeks' worth of additional salary. However, the amount of the bonus depends on a number of different variables, including cost effectiveness and overall profits. So the better the airlines' bottom lines look, the bigger the bonuses will be.
The overall year-end bonuses will total about $98 million this year. This will be spread over 14,000 employees, most of whom work and live in the Seattle-Tacoma area (though some call Alaska or Portland, Oregon home). Additional performance-based bonuses will also be given.
A banner year
Alaska CEO Brad Tilden trumpeted his airline's employee relations in a conference call with the media and financial analysts on Thursday. He said that company execs are "very proud that when our company does well, our employees benefit… This is the seventh consecutive year, where our employees will get a full month's pay and performance bonus. This alignment is very powerful and we believe it will do nothing but benefit us in future years."
Alaska did indeed have a banner year in 2015. The carrier had nearly $848 million in profits for the year. That was up from $605 million earned in 2014. Alaska's stock is performing well, and it was able to raise its quarterly dividend by 38 percent. So investors are also getting a little bit of extra cash in their pockets as well.
Not without controversy
The announcement comes after controversy earlier this week at SeaTac. On Martin Luther King Jr. Day, 30 workers protested at the airport, saying that they were not being paid the legal minimum wage of $15 per hour. Most of the protestors were baggage handlers who work on Alaska Airlines flights. However, they are not officially employed by the airline. They work for one of its contractors, Menzies Aviation, which has had labor relation problems in the past as well.
Alaska Air Group has voiced opposition to the $15 minimum wage, however, which it says unfairly singles out certain travel and hospitality industries, but does not apply to other sectors. Because it has offered employee bonuses for the past seven years, this year's $98 million perk is not a one-time PR stunt in response to the protests, but it certainly won't hurt Alaska's image as the wage controversy simmers at SeaTac.
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