Delta Air Lines is boosting many of employees’ base pay by 14.5 percent, but it’s also reducing profit sharing.
The move comes as Delta’s billions of dollars in profit reach new heights.
Delta said the pay rates for flight attendants, ground workers and certain administrative workers takes effect Dec. 1, and will give most Delta employees a combined 18 percent increase pay hike for 2015, including raises in April. The airline, one of the region’s biggest private employers, also is increasing its 401(k) match by 1 percentage point. It will now match the first 6 percent.
Delta CEO Richard Anderson and president Ed Bastian told employees in a memo that the company is giving “record pay raises in a year of record profits. Few companies can match that.”
At the same time, the company will change the formula for profit sharing. Delta has been paying out 10 percent of profit until profitability reaches a trigger for a 20 percent rate of profit, currently $2.5 billion.
The trigger starting in 2016 will be the prior year’s pre-tax profit, which in 2014 was $4.5 billion.
Delta paid a record $1.1 billion in profit sharing bonuses for 2014 performance, amounting to more than 16 percent of employees' pay.
The change means that if Delta’s profit continues to grow, the company will pay out less in profit sharing than it would under the old system.
On the other hand, employees could benefit from the new formula if profit falls well below $2.5 billion and the company subsequently recovers.
The shift of some compensation from profit sharing to base pay is similar to what Delta negotiated with leaders of its pilots union earlier this year. However, the pilots voted against the proposed deal. Some pilots said the pay increases, including an immediate 8 percent hike, were not high enough to reflect the company's increased profits and to make up for concessions made by pilots in the past when Delta went through bankruptcy restructuring.
While Delta’s pilots are unionized and negotiate labor contracts, other Delta employees are not represented by unions.
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