Enhancements Part III: Is This The One True Enhancement?

Management has stated they are offering an industry leading profit sharing plan, but as shown in a previous posting, their proposal is not industry leading at all. But is it at least an enhancement?

Management’s profit sharing proposal is below:

1. Current profit sharing plan and the Annual Incentive Plan (AIP) would be eliminated.
2. Beginning at the first dollar of pre-tax income, the new profit sharing plan would pay awards equal to fifteen (15%) percent of all pre-tax income, prorated to take into account any groups of frontline employees who do not participate in the plan. Pre-tax income for the purposes of these awards will be calculated prior to the effects on income of any special, unusual, and non-recurring items and inventive pay. 
3. The Enhanced Fund would be distributed equitably to all employees based on each employee’s earnings. Profit sharing is not considered compensation for purposes of determining Company contributions or other benefits under any retirement plans.
4. Individual Enhanced Awards will be distributed no later than March 15 of the following year for employees who meet the eligibility requirements as long as minimum funding requirements are met. 
5. The implementation of the Enhanced Profit Sharing Plan is contingent on reaching a consensual agreement. 

As discussed with Enhancements Part I, Sequence Protection, and Part II, Pay Increases, Enhancements Part III, Profit Sharing, is contingent on the pilots reaching a consensual deal. No consensual agreement? No profit sharing.

But is this an enhancement? Under the current profit sharing plan, employees would receive 15% of all net income above the first $500 million. With management’s 1113 proposal that would change to 15% of all net income starting with the first dollar of net income.

Under their business plan, management anticipates lowering current employee salary, wages and benefits from about $6.2 billion to approximately $5 billion annually through the bankruptcy process.

With the new first dollar profit sharing proposal, employees would receive $75 million more than they would under their current profit sharing plan (15% of the first $500 million). With an annual payroll of approximately $5 billion, that would equate to 1.5% of an employee’s annual wages being distributed to them as profit sharing.

Is this an enhancement? Yes it is, if the pilots agree to the other 67 onerous items that will result in drastic compensation reductions - higher medical costs, loss of sick leave pay, pay banding, less than annual CPI pay increases, loss of international override pay, loss of night pay, elimination of E, F and G time (duty rigs), pay for sequences on a trip basis not on a leg basis, loss of military guarantee and finally the loss of the pilots defined benefit plan, just to name a few. For all of that, the pilots can anticipate the one enhancement in management’s 1113 proposal, a 1.5% profit sharing plan increase if AMR makes $500 million annually.

Fair and Equitable? You decide.