Economic News

Delta Announces Major Profit-Sharing Bonuses for Employees

As the United States economy has continued to expand and executive compensation has expanded with it, income inequality has become a more high-profile topic. While that’s partially because of the latest election cycle and the controversial 2017 tax bill, grassroots minimum wage hike efforts and the like have also played a role. Given the current climate then, it may be surprising to hear about a major corporation surprising its employees with additional compensation — yet that’s exactly what Delta is doing. This week the Atlanta-based airline is making headlines for the bonuses it plans to pay its employees in the coming weeks.

Delta has announced that it will be cutting bonus checks to eligible employees for 16.6% of their annual salary. That’s about equal to two months of their pay. In total these bonuses will add up to $1.6 billion.

Writing in response to a LinkedIn post about the bonuses, Delta CEO Ed Bastian noted, “Delta would be nothing without our 90,000 people. They deserve all the credit.” Interestingly, at a recent event, Bastian also stated that investors are now more receptive to such profit-sharing offerings, explaining “For years, I would get beaten up by Wall Street. They thought the profits were theirs, and ‘Why are you giving the profits away to the employees?’ Wall Street has actually come full circle, and they realize that Delta is the most awarded airline in the world because of its employees.”

In terms of what kind of year Delta has had, the airline’s stock started off 2019 trading at less than $48 a share but ended the year up above $58 per share. Staying true to their “Keep Climbing” tagline, shares of $DAL are currently going for more than $62. Bastian’s bonus announcement also comes shortly after Delta was named the best major U.S. airline by The Wall Street Journal for the third year in a row. That ranking was due in part to Delta improving its on-time arrival rate to 83.4% in 2019 from 82.9% the year prior, while also canceling just 0.7% of their scheduled flights. Of course it hasn’t been all entirely good press for the airline lately as reports show that one of the company’s pilots dumped excess fuel onto an elementary school playground before turning for an emergency landing at LAX. Four teachers affected by the incident have now filed a lawsuit against the airline.

Obviously Delta’s profit-sharing intuitive is great news for its employees who will surely make use of their bonuses. At the same time it seems that this strategy is also paying dividends for Delta as they’ve become one of the most respected companies in an often hated field. Could this generosity and philosophy inspire other companies to follow suit? We’ll see.