January isn’t generally the happiest time of year for people in the Northern Hemisphere. For many, the short cold days are only made worse by the fact that budgets have been blown from the excesses of Christmas and New Year celebrations. But employees at American Airlines and Southwest have definitely got a reason for cheer this month.
Yesterday, both airlines announced they would be paying their employees including flight attendants, a $1,000 cash bonus to “celebrate” recent tax reform legislation introduced by the Trump administration.
In an open letter to 113,000 worldwide staff, American’s chief executive, Doug Parker said the payments would be made “in light of this new tax structure and in recognition of our outstanding team members.” Parker said the bonus would cost American approximately $130 million.
American’s employees are set to receive the bonus in the first quarter of 2018, with Southwest due to make the payout on January 8th. In a statement, Gary Kelly, Southwest’s chief executive said the bonus was a way to celebrate tax reform legislation.
“We applaud Congress and the President for taking this action to pass legislation, which will result in meaningful corporate income tax reform for the transportation sector in general, and for Southwest Airlines, in particular.”
“We are excited about the savings and additional capital, which we intend to put to work in several forms—to reward our hard-working Employees, to reinvest in our business, to reward our Shareholders, and to keep our costs and fares low for our Customers.”
As well as the $1,000 bonus, Southwest announced plans to donate a further $5 million to charitable causes throughout the year and to increase its work with charities throughout the United States.
For customers, Southwest says it will use the tax reforms to increase its fleet investment. The airline has now confirmed a firm order for 15 Boeing 737 MAX 8 aircraft in 2019. A further 25 firm orders have been placed for 2020.
American’s Parker noted that while his airline doesn’t even yet pay taxes – “due to our enormous losses in the past” – he is confident the “country’s new tax structure will have positive long-term benefits.”
But while Parker thanked each and every one of the American team for their “energy and enthusiasm” the airline went on to say that Officers would not be benefiting from the bonus scheme.
The U.S. Senate approved the sweeping tax reform bill on December 20th, allowing tax cuts for large corporations as well as smaller businesses and individuals. Republicans argue the changes will boost economic growth.