American, Southwest Celebrate Corporate Tax Cuts by Giving $1,000 Bonuses to All Employees
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
Tuesday was a good day to be an employee of the US’ largest and third-largest airlines (by passengers carried). Both American Airlines and Southwest Airlines announced $1,000 bonuses to all employees.
Southwest was the first to announce the good news. Airline CEO Gary Kelly “applaud[s] Congress and the President for taking this action to pass legislation,” and announced three ways of reinvesting the anticipated tax savings. The most immediate initiative will be that:
All Fulltime and Parttime Southwest Employees employed with Southwest on Dec. 31, 2017, will receive a $1,000 cash bonus on Jan. 8, 2018.
In addition to these cash bonuses, Southwest announced an additional $5 million in charitable giving “as a result of tax reform.” The airline will “put this money to work in the communities we serve and where our Employees work and live” throughout 2018. Also, Southwest expects to make “further investment in its Boeing fleet.” While citing previously announced 737 MAX orders in its press release, the airline noted its 2018 growth plans remains unchanged.
Thanking “our country’s new tax structure,” American Airlines also announced a $1,000 bonus “to each team member (excluding Officers) at [AA’s] mainline and wholly owned regional carriers,” on Tuesday afternoon. Per the press release, AA’s bonuses will cost the company $130 million and will be paid out it in the first quarter of 2018.
Southwest will reap immediate benefits from the lower corporate tax rate. The airline provisioned $1.3 billion in taxes on $3.5 billion of pre-tax income in 2016. With the federal corporate income tax rate dropping from 35% in 2017 to 21% in 2018, the tax cut will save Southwest approximately $490 million each year at its current $3.5 billion in pre-tax profits.
Comparatively, American Airlines’ tax situation is even more generous. Thanks to accumulated tax losses for previous years, American Airlines hasn’t paid any federal corporate income tax in years. However, the airline is still celebrating this tax rate change as it expects “positive long-term benefits for American” from the 14% drop in corporate tax rates. However, in the short-term, AA’s $538 million in deferred tax assets will be substantially less valuable.
Featured image by FG/Bauer-Griffin / Getty Images
Welcome to The Points Guy!
Earn 90,000 bonus miles and 10,000 Medallion® Qualification Miles (MQMs) after you spend $3,000 in purchases on your new card in the first three months of card membership. Offer ends 11/10/2021.
With Status Boost™, earn 10,000 Medallion Qualification Miles (MQMs) after you spend $25,000 in purchases on your Card in a calendar year, up to two times per year getting you closer to Medallion Status. Earn 3X Miles on Delta purchases and purchases made directly with hotels, 2X Miles at restaurants and at U.S. supermarkets and earn 1X Mile on all other eligible purchases. Terms Apply.
- Limited Time Offer: Earn 90,000 Bonus Miles and 10,000 Medallion® Qualification Miles (MQMs) after you spend $3,000 in purchases on your new Card in your first 3 months. Offer expires 11/10/2021.
- Earn up to 20,000 Medallion® Qualification Miles (MQMs) with Status Boost® per year. After you spend $25,000 in purchases on your Card in a calendar year, you can earn 10,000 MQMs two times per year, getting you closer to Medallion® Status. MQMs are used to determine Medallion® Status and are different than miles you earn toward flights.
- Earn 3X Miles on Delta purchases and purchases made directly with hotels.
- Earn 2X Miles at restaurants worldwide, including takeout and delivery and at U.S. supermarkets.
- Earn 1X Miles on all other eligible purchases.
- Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. *Payment of the government imposed taxes and fees of no more than $75 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
- Enjoy your first checked bag free on Delta flights.
- Fee Credit for Global Entry or TSA Pre✓®.
- Enjoy an exclusive rate of $39 per person per visit to enter the Delta Sky Club® for you and up to two guests when traveling on a Delta flight.
- No Foreign Transaction Fees.
- $250 Annual Fee.
- Terms Apply.
- See Rates & Fees