Atlanta-based Delta Air Lines announced Wednesday it will boost many of its employees’ base pay by 14.5 percent, while reducing profit sharing.
The move comes as Delta’s billions of dollars in profit reach new heights.
Delta said the new pay increase for flight attendants, ground workers and merit employees takes effect Dec. 1, and will give most Delta employees a combined 18 percent increase pay hike for 2015, including raises in April. The airline is also increasing its 401(k) match by 1 percentage point.
Meanwhile, the company will change the formula for profit sharing. Delta has been paying out 10 percent of profits until profitability reaches a trigger for a 20 percent rate of profits.
The trigger starting in 2016 will now be the prior year’s pre-tax profit, instead of a straight $2.5 billion. Delta’s adjusted pre-tax profit in 2014, for example, was $4.5 billion.
Delta paid employees a record $1.1 billion in profit sharing bonuses for 2014 performance, amounting to more than 16 percent of Delta employees’ pay.
The change to the formula means as Delta’s profits continue to grow, Delta pays out less in profit sharing than it would under the old system.
On the other hand, employees could benefit from the new formula if profits fall well below $2.5 billion and the company recovers.
The shift of some compensation from profit sharing to base pay is similar to what Delta negotiated with leaders of its pilots union earlier this year. However, the pilots voted against the proposed deal. Some pilots said the pay increases, including an immediate 8 percent hike, were not high enough to reflect the company’s increased profits and to make up for concessions made by pilots during Delta’s financially-challenged past when it went through bankruptcy restructuring.