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Delta dishes out $1.6B in profit-sharing bonuses for its employees

Thursday, January 23, 2020 by Robinhood Snacks | Disclosures

Basking in that fresh Delta bonus

Sweet Valentine's Day... On February 14th, Delta's 90K employees will get a check for an extra 2 months of salary as a bonus. The generous $1.6B payout represents 33% of Delta's 2019 profits, which were extra strong (largely thanks to Delta's serendipitous lack of Boeing 737 Max planes).

Not just in-flight peanuts... Since 2012, Delta has paid out $1B+ a year in profit-sharing bonuses to employees, but this year is a record. Delta's not the only one sharing wealth — it's a thing in unionized industries like airlines and automakers. Since 2015, GM, Ford and Fiat Chrysler have shared a combined $5B with employees. But Delta's bonus (16% of salary) is big compared to average payouts (5% of salary). Here's what companies usually do with profits:

  1. Reinvest: Use profits to grow the biz — purchase new equipment and buildings, conduct R&D, marketing, kombucha on tap, etc.
  2. Dividends & Stock Buybacks: Reward shareholders with dividend payments and/or buy back your own stock to raise the share price for everyone.
  3. Save & Repay: Save $$$ for future expenses and pay back IOUs.
THE TAKEAWAY

Investing in your people... can sometimes be the best investment. Delta's CEO Ed Bastian said he used to get a lot of heat from Wall Street for using profits for big employee bonuses. But these payouts help make Delta a top-awarded airline. Keeping employees happy (with fat bonus checks) can mean lower employee turnover and higher morale — and that can translate to a better experience for customers (and stronger sales).