Pilots Pay American Airlines, headquartered in Fort Worth, Texas, is the world's largest airline when measured by fleet size, scheduled passengers carried, and revenue passenger mile. It operates an extensive international and domestic network, with almost 6,700 nights per day to nearly 350 destinations in more than 50 countries. Delta, headquartered in Atlanta, Georgia, is another major airline of the United States. It provides service to more than 1,000 destinations in 60 countries on six continents. American Airlines and Delta both make information about base wages and profit sharing available. The pilot is the number-one authority in the cockpit of an airplane Mistakes and/or any heroic good decisions are likely to be attributed to the pilot in most circumstances. The following table shows the annual salaries of their pilots by plane type and years of experience Page 241 Pilot Annual Salaries by Plane Type and Years of Experience Plane Type Boeing 777 Boeing 767 Airbus 320 Pilot Annual Salaries by Plane Type and Years of Experience Plane Type Boeing 777 Boeing 767 Airbus 320 American 12 years of experience US$132.000 US$284.000 US$270,000 2 years of experience US$307000 US $261000 US$250,000 Delta 12 years of experience US$353,000 US$296.000 US $274,000 2 years of experience US$330,000 US$277,000 US$255,000 Aa In addition, American's profit sharing in recent years has produced a payout that is about 2% of salary for its pilots, whereas Delta's profit sharing payout has been about 15% of pilot salary Air Canada, headquartered in Montreal, Quebec, is Canada's largest airline by fleet size and passengers carried. It operates on average 1,550 scheduled flights each day and offers services to 1,300 airports in 195 countries. Pilots' pay at Air Canada starts at $52,000 and goes up to $62,000 after 4 years. In addition to base pay, pilots also received Flying Pay, consisting of Hourly Flight Pay, Hourly Mileage Pay and Hourly Weight Pay in accordance with the following: Plane Type Boeing 777 Boeing 767 Airbus 320 Hourly Flight Pay-Day C5 96.09 C$ 91.56 C5 84 89 C$ 119.03 C$ 124.92 C$ 110.36 Hourly Flight Pay-Night C$ 56.02 C$ 54.13 CS 5101 Hourly Mileage Pay C$ 80.39 C$ 4284 C$ 2136 Hourly Weight Pay ohtrate is 13 times the day rate A Nightrate is 13 times the day rate Air Canada also has profit sharing and incentive plans. The amount available to be paid to pilots will be established annually, based on the calendar year. Pilots will only receive payments from one or the other of Profit Sharing and the Incentive Plan in any given calendar year, whichever yields the greatest payout. Profit sharing is based on 7.5% of adjusted profits. The Incentive plan payout can be 4% of the pilots' total payroll if the airline reaches its target of achieving 15% EBITDAR (earnings before interest, taxes, depreciation, amortization and airplane rent) and up to 8% of the pilots' total payroll if the airline achieves 110% of its target. For example, if revenue is $15 billion, the average payout ranges from $6,000 to $12,000. An Air Canada Boeing 777 captain with 12 years experience can earn up to nearly $300,000 a year. Based on the above, what can you deduce what these airlines believe about: The importance of base wages relative to variable pay (profit sharing) . The likely behavioural impact of profit sharing, assuming all payouts are based on overall net revenue of the organization. Some impacts might be positive or negative. What is your assessment of the use of profit sharing, given the discussion in this chapter about it as a compensation tool? . Do airlines pay for skill acquisition? What information do you have to support your position? Should skill acquisition be rewarded? Do you have any predictions about the attraction and retention of pilots for each airline? . . plot sharing, assuming all payouts are based on overall net revenue of th Some impacts might be positive or negative. What is your assessment of the use of profit sharing, given the this chapter about it as a compensation tool? Do airlines pay for skill acquisition? What information do you have to support your position? Should skill acq rewarded? Do you have any predictions about the attraction and retention of pilots for each airline? Does the external environment influence any of your answers? Pilots Pay American Airlines, headquartered in Fort Worth, Texas, is the world's largest airline when measured by fleet size, scheduled passengers carried, and revenue passenger mile. It operates an extensive international and domestic network, with almost 6,700 nights per day to nearly 350 destinations in more than 50 countries. Delta, headquartered in Atlanta, Georgia, is another major airline of the United States. It provides service to more than 1,000 destinations in 60 countries on six continents. American Airlines and Delta both make information about base wages and profit sharing available. The pilot is the number-one authority in the cockpit of an airplane Mistakes and/or any heroic good decisions are likely to be attributed to the pilot in most circumstances. The following table shows the annual salaries of their pilots by plane type and years of experience Page 241 Pilot Annual Salaries by Plane Type and Years of Experience Plane Type Boeing 777 Boeing 767 Airbus 320 Pilot Annual Salaries by Plane Type and Years of Experience Plane Type Boeing 777 Boeing 767 Airbus 320 American 12 years of experience US$132.000 US$284.000 US$270,000 2 years of experience US$307000 US $261000 US$250,000 Delta 12 years of experience US$353,000 US$296.000 US $274,000 2 years of experience US$330,000 US$277,000 US$255,000 Aa In addition, American's profit sharing in recent years has produced a payout that is about 2% of salary for its pilots, whereas Delta's profit sharing payout has been about 15% of pilot salary Air Canada, headquartered in Montreal, Quebec, is Canada's largest airline by fleet size and passengers carried. It operates on average 1,550 scheduled flights each day and offers services to 1,300 airports in 195 countries. Pilots' pay at Air Canada starts at $52,000 and goes up to $62,000 after 4 years. In addition to base pay, pilots also received Flying Pay, consisting of Hourly Flight Pay, Hourly Mileage Pay and Hourly Weight Pay in accordance with the following: Plane Type Boeing 777 Boeing 767 Airbus 320 Hourly Flight Pay-Day C5 96.09 C$ 91.56 C5 84 89 C$ 119.03 C$ 124.92 C$ 110.36 Hourly Flight Pay-Night C$ 56.02 C$ 54.13 CS 5101 Hourly Mileage Pay C$ 80.39 C$ 4284 C$ 2136 Hourly Weight Pay ohtrate is 13 times the day rate A Nightrate is 13 times the day rate Air Canada also has profit sharing and incentive plans. The amount available to be paid to pilots will be established annually, based on the calendar year. Pilots will only receive payments from one or the other of Profit Sharing and the Incentive Plan in any given calendar year, whichever yields the greatest payout. Profit sharing is based on 7.5% of adjusted profits. The Incentive plan payout can be 4% of the pilots' total payroll if the airline reaches its target of achieving 15% EBITDAR (earnings before interest, taxes, depreciation, amortization and airplane rent) and up to 8% of the pilots' total payroll if the airline achieves 110% of its target. For example, if revenue is $15 billion, the average payout ranges from $6,000 to $12,000. An Air Canada Boeing 777 captain with 12 years experience can earn up to nearly $300,000 a year. Based on the above, what can you deduce what these airlines believe about: The importance of base wages relative to variable pay (profit sharing) . The likely behavioural impact of profit sharing, assuming all payouts are based on overall net revenue of the organization. Some impacts might be positive or negative. What is your assessment of the use of profit sharing, given the discussion in this chapter about it as a compensation tool? . Do airlines pay for skill acquisition? What information do you have to support your position? Should skill acquisition be rewarded? Do you have any predictions about the attraction and retention of pilots for each airline? . . plot sharing, assuming all payouts are based on overall net revenue of th Some impacts might be positive or negative. What is your assessment of the use of profit sharing, given the this chapter about it as a compensation tool? Do airlines pay for skill acquisition? What information do you have to support your position? Should skill acq rewarded? Do you have any predictions about the attraction and retention of pilots for each airline? Does the external environment influence any of your answers