American Airlines became the latest company to join the tax cut bonus bandwagon this week, with an announcement from chief executive Doug Parker that all employees will receive a $1,000 payment.
The one-time payout will be in the first quarter of 2018, Parker said, and will apply to all employees at both mainline American Airlines and wholly owned regional carriers such as American Eagle. Company officers are excepted.
The payments will cost the company $130 million, Parker wrote. American Airlines employs more than 11,000 workers based out of Charlotte, the company’s second-busiest hub.
“This is not an action we take lightly when balanced against the returns our shareholders/owners demand and deserve,” wrote Parker. “But we believe it is the right thing to do for our team, which ultimately benefits our shareholders too.”
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American Airlines’ profits for the first three quarters of 2017 totaled almost $1.7 billion, down from $2.4 billion the previous year.
Parker pointed to the tax cut bill passed in December, slashing the corporate tax rate from 35 percent to 21 percent, which he said will positively impact American Airlines’ bottom line. The company doesn’t pay cash taxes, because it is still able to carry forward losses from previous years, when the company and its predecessors hemorrhaged billions of dollars during an airline industry-wide crisis.
“While the company does not yet pay cash taxes due to our enormous losses in the past, there is no doubt that our country’s new tax structure will have positive long-term benefits for American,” Parker wrote.
Other companies such as Bank of America, PNC, AT&T and Comcast have also announced $1,000 bonuses to employees tied to the new tax law.