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. For an explanation of our Advertising Policy, visit this page.
In recent years, United Airlines has rewarded eligible employees with a quarterly cash bonus of up to $300 if the airline hit certain on-time operational measurements. Now, that bonus is being replaced with a quarterly lottery, with one lucky employee scoring a $100,000 bonus and another 10 employees getting their choice of $40,000 cash or a Mercedes-Benz C-Class, along with a number of other prizes.
United Airlines President Scott Kirby tried to sell the new program on Friday in an internal memo to employees:
The reason for this change goes to the heart of our strategy: offering meaningful rewards will build excitement and a sense of accomplishment with more bang for the buck.
We want every United team member to picture themselves walking home with a grand prize, or driving home in a beautiful car that announces for all to see that you are committed to your success and ours.
Some employees might like the idea of trading a $300 bonus for a chance at $100,000 or one of the 1,360 smaller prizes. However, there are two groups that definitely love this new bonus plan: United’s management and shareholders. The new system will serve to cut employee bonuses overall by tens of millions of dollars each year.
A United Airlines spokesperson confirmed that the new system will include the following quarterly prizes:
|Prizes||Winners per Quarter|
|Mercedes-Benz C-Class or $40,000||10|
|Platinum United Vacations package or $20,000||20|
|Gold United Vacations package or $10,000||30|
At first blush, this might seem like a rather generous giveaway. However, it turns out be much less than what the airline is currently paying out with its $300 quarterly bonus.
These 1,361 prizes add up to $4.7 million in giveaways each quarter. That’s equivalent to about 15,667 employees receiving $300 quarterly bonuses. But per United’s 2017 annual SEC filing, the airline employs 89,800 employees. While it’s unclear how many of those employees are eligible for the $300 quarterly bonus, it’s surely more than 17.4%.
But let’s assume that just unionized employees who work as flight attendants (22,676 employees), in passenger service (13,299) and pilots (9,535) are the only ones eligible. Those 45,510 employees would have been eligible to earn a total of up to $54.6 million in bonuses per year under the old $300/quarter system. The new system caps the airline’s quarterly bonus costs at $18.8 million per year. That’s tens of millions less in employee bonuses.
But wait, there’s more. In order for an individual employee to be eligible for the lottery, he or she needs to record perfect attendance. Employees who’ve had their $300 per quarter bonus eliminated are now incentivized to show up sick for flights in order to get a chance at a prize.
A United spokesperson responded to a TPG request for comment saying that the airline believes “that this new program will build excitement and a sense of accomplishment as we continue to set all-time operational records that result in an experience that our customers value.”
However, the reaction is shaping up to be a very different sense of “excitement” than what the airline hoped for. The announcement of this new bonus system has “ignited a firestorm” among front-line employees, according to the Chicago Business Journal. And for good reason.
This article has been updated with information received from a United Airlines spokesperson after publishing.
With great travel benefits, 2x points on travel & dining and a 50,000 point sign up bonus, the Chase Sapphire Preferred is a great card for those looking to get into the points and miles game. Here are the top 5 reasons it should be in your wallet, or read our definitive review for more details.
- Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $625 toward travel when you redeem through Chase Ultimate Rewards®
- Chase Sapphire Preferred® named a 'Best Travel Credit Card' by MONEY® Magazine, 2016-2017
- 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
- No foreign transaction fees
- 1:1 point transfer to leading airline and hotel loyalty programs
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 50,000 points are worth $625 toward travel
- No blackout dates or travel restrictions - as long as there's a seat on the flight, you can book it through Chase Ultimate Rewards