Southwest to pay record $228 million in profit-sharing

Posted Monday, Apr. 14, 2014  comments  Print Reprints
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Southwest Airlines said its employees will receive a record $228 million as part of its profit-sharing plan this year.

The payments, which workers will receive in September, are 88 percent more than the $121 million awarded in 2013, the Dallas-based carrier said Monday.

“We had a great year in 2013 because of their collective efforts and contributions toward Southwest’s success and profitability,” CEO Gary Kelly said.

Southwest is in tense contract negotiations with most of its unions. The carrier wants more flexibility in using part-time workers and is trying to negotiate performance bonuses instead of fixed pay increases.

“Those are the kind of things we’re trying to negotiate, where we can get the tools we need to keep our company successful, protect our low-fare brand and share the rewards with our employees,” Chief Operating Officer Mike Van de Ven told Bloomberg News recently. “We’re trying to give our employees a secure future with a lot of upside.”

Southwest noted in its profit-sharing statement that employees have received $2.5 billion over four decades in the program.

The airline is one of several with profit-sharing programs. Delta Air Lines employees received $506 million in profit-sharing in the fourth consecutive year the Atlanta-based carrier has rewarded its workers.

Fort Worth-based American Airlines paid $85 million in profit-sharing to its workers in March, the first time in over a decade for the carrier. However, most of the airline’s labor unions negotiated profit-sharing plans out of their new contracts in exchange for pay raises and other considerations.

Shares of Southwest (ticker: LUV) closed down 24 cents at $22.51 on Monday. Shares are up almost 20 percent since Jan. 1.

Southwest’s labor costs now lead the industry after bankruptcies allowed larger competitors to restructure contracts and trim compensation. More than 80 percent of the airline’s workers are represented by unions, and talks are underway with flight attendants, pilots, mechanics, ramp workers and others.

“We are making progress every time we meet, but some of these issues are just difficult,” Van de Ven said.

In February, leaders of 12 union groups protested to Kelly after a website created by Southwest posted negotiation updates and details of existing contracts, including salary and other contract data. Southwest responded by taking down the public side of the website.

“We’ve made adjustments to the content based on initial feedback from the unions,” Southwest spokesman Brandy King said at the time.

In January, a judge rejected a request from Transport Workers Union Local 555 to bar Southwest from requiring workers to provide proof of illness when they missed work. The airline asked for the documentation after sick calls among baggage handlers and other ramp workers left the company short-handed during a winter storm in January.

Staff writer Andrea Ahles contributed to this report, which includes material from Bloomberg News.

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