Back in July, Robert Isom was seeing nothing but blue skies.
The American Airlines (AAL) -) CEO was speaking to analysts during the air carrier's second-quarter earnings call on July 20, and he was sharing some good news.
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"The summer is well underway, and the American Airlines team is firing on all cylinders," he said, according to a transcript of the call. "We continue to build on the strong foundation we have laid over the past year and remain focused on reliability, profitability, accountability and strengthening our balance sheet."
That focus, Isom added, was showing up in the company's results, which beat Wall Street's expectations.
"Everything we have said we would do at the start of the year, we have done," he said.
This was a pretty tough year for flying, given record high passenger volume, weather delays and cancellations and a pilot shortage.
Now Isom, who took the top position in March 2022, is getting something back for his efforts, as the Fort Worth, TX-based company is giving him a bonus following American's “successful post-pandemic transformation."
Executive compensation increasing
Isom is getting a $2.75 million bonus and $8.25 million worth of restricted stock grants, according to a Sept. 20 regulatory filing. He makes a base salary of $1.3 million along with a $2.6 million potential bonus and a long-term incentive grant of $11.25 million.
In addition, Stephen Johnson, vice chair and chief strategy officer, will also receive a pay boost.
He will get a base salary of $850,000, a target cash incentive opportunity of $1.2 million and a long-term incentive grant of $3.68 million.
Johnson, who previously had a base salary of $500,000, is also getting a one-time grant of 181,554 restricted stock units.
Isom, Johnson and David Seymour, the airline's chief operating officer, all entered restrictive covenant agreements and severance agreements as of Sept. 20, as well.
Johnson made $3.49 million last year, while Seymour made $3.17 million in total compensation in 2022.
Earlier this month, American joined other airlines in warning that higher costs will have an impact on the summer quarter.
The company said it expects adjusted earnings per share to come in between 20 cents and 30 cents in the third quarter, down from a prior range of about 85 cents to 95 cents a share, due to more expensive fuel and a new pilot labor agreement.
"Fuel prices have increased considerably since the Company’s initial third-quarter guidance issued on July 20, 2023," American said in a Sept. 13 filing.
The pilot agreement resulted in retroactive pay expense of about $230 million to be recognized in the third quarter, American said, and its expected to affect third-quarter adjusted earnings per diluted share by 23 cents.
Airlines face labor issues
Some people weren't too pleased about Isom's pay. The Association of Professional Flight Attendants tweeted an image of the Dallas Morning News story about the CEO's pay hike.
"Post pandemic travel surge made possible by @AmericanAir Flight Attendants who are asking for wage increases they have not seen since 2019. #1u #SolidaritySeason #readytostrike," the caption stated.
"I sincerely hope @americanair realizes how serious their flight attendants are about demanding an industry leading contract and nothing less," one person responded.
"Disgusting!" another tweet read.
American is one of four major air carriers--along with United (AAL) -), Alaska (ALK) -) and Southwest (LUV) -)--that have been unable to reach labor deals with their flight attendants.
Southwest has yet to reach a new contract with its pilots and hundreds of flight attendants and pilots picked in Denver, chanting phrases like "make it right" and "Denver is a union town!”, Denver7 reported.
Southwest CEO Robert Jordan reportedly said that he is confident pilots will not strike and that he hopes to see contracts in place with pilots and flight attendants as early as the end of this year.
Jordan's total compensation almost doubled to $5.3 million last year, which ended with a holiday meltdown last December, caused by a perfect storm of weather problems, technology crashes and poor choices in communicating with its customers.
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