Southwest Profit Sharing Surges, Union Talks Continue

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By Trey Thoelcke Published
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On Monday, Southwest Airlines Co. (NYSE: LUV) trumpeted its record $228 million contribution to its profit sharing plan. The payment will be an 88% increase over last year’s contribution, as well as the company’s 40th consecutive profit sharing payment.

CEO and President Gary Kelly of Southwest Airlines said:

The hard work of our People, and the pride and ownership they take in providing outstanding Customer Service, has resulted in four decades of profitability. Our People earned this reward, tirelessly working toward our vision of becoming the World’s Most Loved, Most Flown, and Most Profitable Airline.

The press release also noted that the total contribution to the plan over 40 years of around $2.5 billion “would buy 83 billion bags of Southwest peanuts — enough for 10 roundtrips to the moon if you lined them up end-to-end.”

But as Bloomberg pointed out, Southwest has the highest labor costs in the industry after bankruptcies and mergers allowed larger competitors such as American Airlines Group Inc. (NASDAQ: AAL) and Delta Air Lines Inc. (NYSE: DAL) to restructure contracts and trim compensation. The company is currently in talks with unions representing its flight attendants, pilots, mechanics, ramp workers and others. Airport workers in Chicago are picketing over possible outsourcing. Southwest is seeking greater flexibility to use part-time workers in some markets and to replace fixed-scale increases with pay performance bonuses.

Last week, Southwest revealed that Kelly received $4 million in compensation for 2013, which was unchanged from the year before.

Shares of Southwest were up about 1.5% to $23.09 shortly after the opening bell Monday, before retreating to $22.80 in mid-day trading. The 52-week range is $12.58 to $24.45.

ALSO READ: Spirit Airlines Receives Lowest Scores Among Consumers

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About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.

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