This week’s TWO featured links:
Southwest Airlines Rings In The New Year Under Tax Reform With Employee Bonus, Charitable Contribution, And Further Investment In Its Boeing Fleet – Southwest Newsroom
American Airlines to Distribute $1,000 to Each Team Member – American Airlines Newsroom
With the new tax plan lowering tax rates on corporations, it seems companies feel the need to publicly bow down and show their thanks to the administration. So far, it’s Southwest and American doing the fawning.
For American, there are no actual savings yet, but the airline is giving money away. American hasn’t paid taxes in years thanks to all the losses it rolled up before bankruptcy. Those losses continue to carry over, so American won’t have to pay tax until there are no more losses available to offset profits. But that won’t stop the airline from giving a $1,000 bonus to celebrate the lower tax rate that will, presumably, have an impact on the airline when it does eventually start paying taxes again. But since it’s a one-time bonus, it’s more about optics than sharing actual cash savings.
Over at Southwest, the airline definitely pays taxes, so the savings are real. Employees will get a $1,000 bonus to celebrate that. But Southwest also took the opportunity to claim that tax reform allowed it to order more airplanes. In reality, Southwest is really spinning what is mostly an order modification that pushes the 737 MAX 7 one step closer to its grave. See, Southwest exercised an option for 40 737 MAX 8 aircraft to come in 2019 and 2020. But that move was partially offset by the airline’s decision to defer 23 MAX 7 aircraft all the way out until 2023/2024. That’s not good news for the MAX 7 which has very few orders as is. I can’t help but assume this deal would have happened anyway regardless of tax reform.
Delta, for what it’s worth, appears to be bucking the trend and won’t be giving bonuses. It does mention, however, that if profits go up, then profit-sharing goes up. That’s the right way to do this.
And now JetBlue appears to be joining the trend of paying up. I hear Alaska is doing the same.
One for the road:
Midair vows: Pilot marries flight attendant on last Delta 747 flight to Marana, Arizona – Arizona Republic
Did I say I was done with 747 tributes. I lied. On Wednesday, Delta finished up its football charter work and flew the last 747 to the desert for good. A couple journalists were onboard to document it, and they were able to witness a wedding in the process.