The leader of the American Airlines flight attendants union hit back at Wall Street for punishing the airline for giving pay raises to its pilots and flight attendants.
“It seems Wall Street is putting pressure on the airline industry to squeeze out more revenue, but they could care less about passengers or front-line workers, ” said Bob Ross, national president of the Association of Professional Flight Attendants.
Ross made his comments after a CitiGroup analyst named Kevin Crissey criticized American for giving its pilots and flight attendants pay raises that brought their salaries up to the same level as their counterparts at Delta and United airlines.
In a note to investors, Crissey griped that the pay raises were “frustrating (because) labor is being paid first again (my emphasis). Shareholders get the leftovers.”
Crissey was not alone. Other Wall Street analyst downgraded their assessment of American causing the price of the airline’s stock to plummet.
In rebuttal, Ross wrote an opinion piece that appeared in Aviation Weekly setting the record straight.
First of all, American has been extremely generous to its shareholders.
Ross points out that between 2014 and 2016, American authorized stock buybacks worth $9 billion to investors, and during the same period, the company paid investors $600 million a year in dividends.
Combined, the stock buybacks and the dividends are substantially more than the $1 billion over three years that the employee raises will cost.
Ross goes on to describe the sacrifices that he and his fellow workers made to keep the company operating after the airline industry downturn following the September 11, 2001 terrorist attack on New York and Washington DC.
Workers gave American $6 billion worth of wage and benefit concessions during the decade that followed 2001.
Those concessions meant that some of his fellow union members lost their homes, cars, and savings.
Finally Ross criticized Wall Street for its short-term thinking. Ross called the employee raises an investment in frontline staff, which American needed to make to remain competitive.
“Underpaying key front-line employees leads to high turnover and low morale, which is not a recipe for quality service. Treating workers fairly is a better long-term strategy,” said Ross.
While Wall Street was punishing American for being too generous to its employees, it continued to support extravagant pay for CEOs.
According to the New York Times, “in advisory votes that S&P 500 companies held for their shareholders on executive pay last year, they received average support of 91 percent.”
Referring the an AFL-CIO Executive Pay Watch report, the Times goes on to report that in 2016, CEO pay raises averaged 6 percent and that the average CEO pay in 2016 was $13.1 million.
The AFL-CIO Executive Pay Watch report shows that the pay gap between CEO’s and workers continues to grow.
The average pay in 2016 for CEOs was 347 times greater than the average pay for workers, that’s up from 335 times greater in 2015.
The fact that Wall Street considers pay increases for CEOs to be just the cost of doing business while it sees pay increases for workers as an aberration that must be contained explains why income equality continues to increase.
“Too often, corporations see workers as costs to be cut, rather than assets to be invested in,” said Richard Trumka, president of the AFL-CIO. “It’s shameful that CEOs can make tens of millions of dollars and still destroy the livelihoods of the hard-working people who make their companies profitable.”