Daily Labor Report®

Future Delta Air Profit Sharing Not Guaranteed, Union Chief Says

Feb. 14, 2020, 9:23 PM

Delta Air Lines is celebrating what it’s calling a record $1.6 billion profit-sharing payout to about 90,000 employees, but the president of a union that wants to represent Delta flight attendants said profit sharing can be changed or ended unless it’s guaranteed through a labor contract.

“Having a union is the only way to keep profit sharing in place,” said Sara Nelson, president of the Association of Flight Attendants-CWA, which is launching a “Like It? Lock It In” Delta union organizing campaign timed to coincide with Valentine’s Day and the Delta payout. The AFA represents about 50,000 flight attendants at 20 airlines and it’s seeking to represent about 25,000 Delta flight attendants who currently don’t have a union.

This is the sixth year in a row that profit sharing at Delta has exceeded $1 billion, Delta Chief Executive Officer Ed Bastian said in a posting Friday on the company’s website. Delta has paid more than $6.5 billion in profits to its employees over the past five years, which is also a record, the company said, adding that most employees will receive 16.7% of their salary in profit sharing based on the airline’s 2019 financial results.

In 2016 and 2017, Delta “diminished” its profit-sharing formula for most employees, but unionized pilots refused to accept the change and because of their union contract were able to retain their existing payouts, Nelson said in an interview. The airline in the final quarter of 2017 restored the formula for all employees.

“There’s no certainty” in the absence of a union contract, Nelson said.

Delta employees in 2015 “shared feedback” that they would prefer less variability in their compensation, according to a company spokesperson. The company responded in 2016 with an 18.5% pay increase for flight attendants and ground employees along with the change to the profit-sharing program, which was restored for all employees beginning in October 2017, the spokesperson said.

Pilots at Delta retained their existing profit-sharing program in bargaining with the company that led to a four-year contract at the end of 2016.

“Delta’s flight attendants received the best profit sharing in the industry for more than a decade with no negotiations needed. That’s one of the many reasons why we believe our direct relationship with our flight attendants delivers more for them,” the spokesperson said.

Pilots are the only major employee group at Delta—the second-largest U.S. airline after American Airlines—that’s represented by a union. They’re currently bargaining with the airline over a new collective bargaining contract, along with other employees at the top four U.S. airlines.

Wave of the Future?

Unions—particularly those representing workers in the airline and auto industries—are starting to focus more on profit sharing as a way to boost compensation for their members, said Joseph Blasi, director of Rutgers University’s Institute for the Study of Employee Ownership and Profit Sharing.

Airline companies and auto manufacturers have been receptive, Blasi said.

“For airlines, it’s wanting to have a personnel system that will encourage better customer service. In the auto industry, it’s about creating a work system that will help drive productivity and innovation,” he said.

Looking broadly at U.S. companies, profit sharing is more prevalent in nonunion environments than in unionized workplaces, Blasi said. In 2018, only 17.4% of union members were eligible for profit sharing, compared with 39.6% of nonunion members, he said, citing the most recent General Social Survey figures from the University of Chicago’s National Opinion Research Center.

But when unions bargain for profit sharing, they can bargain for a larger share of the pie, Blasi said. Only a “thin layer” of total profits generated in the U.S. is shared with employees, and unions are in a position to boost that amount, he said.

About 16.4 million workers in the U.S. are covered by union contracts out of a total workforce of 140.1 million, according to the latest figures from the federal Bureau of Labor Statistics.

To contact the reporter on this story: Louis C. LaBrecque in Washington at llabrecque@bloomberglaw.com

To contact the editors responsible for this story: Martha Mueller Neff at mmuellerneff@bloomberglaw.com; Karl Hardy at khardy@bloomberglaw.com

To read more articles log in. To learn more about a subscription click here.