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Turbulence Over Executive Pay
United Airlines pilots protested this month at Reagan National Airport. United gave its CEO more than 1.3 million shares of stock and options last year.
(By Win Mcnamee -- Getty Images)
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The bonuses are already resulting in labor disputes.
Last month, United's pilots voted overwhelmingly to reject a deal that would have allowed some pilots to fly extra hours each month during the busy summer and fall travel seasons. A spokesman for the union said the vote reflected anger over executive compensation.
American's pilots last year torpedoed the carrier's high-profile bid to win a lucrative nonstop route to China by refusing to fly longer hours. Union representatives have said in news reports that pilots were upset in part about stock grants to the company's leadership.
Last week, at a rally held by transportation workers on the Mall, airline workers said the bonuses sent a mixed message to employees.
"Management continues to make terrible decisions," said Sara Nelson, a United flight attendant and union representative. "They aren't putting money back into the airline. They are squandering goodwill."
Analysts said that the executive compensation deals are not outrageous compared with those given by other large companies but that they come at a bad time for the airlines. Some contracts are coming up for negotiation, and other labor groups are pressing to reopen talks early.
"The whole idea of the last couple years was to create new cultures at airlines that would keep costs down," said Darryl Jenkins, an aviation consultant. "These very large executive payouts are going to end up costing airlines an enormous amount of money. The employees are going to want their fair share."
Jenkins noted that Delta's chief executive, Gerald Grinstein, turned down pay packages when his carrier exited bankruptcy protection a few weeks ago and that Continental's executives last year turned down $23 million in stock incentives. Those moves helped build goodwill with employees, Jenkins said.
