American offers profit sharing & severance during transition to retain employees

In an effort to keep lower-level managers with American Airlines as it transitions out of bankruptcy and through its proposed merger with US Airways, the Fort Worth-based carrier announced changes to severance and profit-sharing plans.

About 4,600 management employees are now guaranteed six months severance, regardless of their seniority, if they are laid off from American at any point in the next two years. The company will also offer a 10 percent profit-sharing plan if American makes any income in 2013, according to a letter sent to managers Thursday by American’s senior vice president of people, Denise Lynn.

The changes were approved by the bankruptcy court last week when U.S. Bankruptcy Judge Sean Lane approved the merger agreement between American and US Airways.

“Our overall approach to management compensation as we plan for the merger is to align American’s and US Airways’ compensation programs as much as possible, and continue to move our management pay to market levels over the next few years,” Lynn said in the letter.

This group of managers, which includes passenger service airport managers, maintenance shift managers and managers at the corporate headquarters, also received a 3 percent raise in January.

Previously, American offered two weeks of severance pay for every year of service up to a maximum of 13 years, a payment equal to up to 6 months of salary. The new severance policy, which will take effect only if the bankruptcy court approves American’s reorganization plan and the merger closes, gives all managers a minimum severance of 6 months salary.

American’s profit-sharing plan used to pay managers after the carrier earned $500 million. The new plan is similar to US Airways’ profit-sharing plan which pays out at pretax margins.

Several of American’s union groups negotiated 5 percent profit-sharing plans in their new contracts, but then chose to eliminate the profit-sharing programs in exchange for raises over the life of the contract. The mechanics union, for example, dropped the profit-sharing plan in order to receive a 4.3 percent raise.

Andrea Ahles, 817-390-7631

Twitter: @Sky_Talk ___