United Replaces Employee Bonuses With a Lottery, Significantly Cutting Payouts

Mar 3, 2018

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.

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
$100,000 cash 1
Mercedes-Benz C-Class or $40,000 10
Platinum United Vacations package or $20,000 20
Gold United Vacations package or $10,000 30
$5,000 cash 300
$2,000 cash 1,000

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.

Chase Sapphire Preferred® Card

WELCOME OFFER: 80,000 Points

TPG'S BONUS VALUATION*: $1,650

CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners

*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.

Apply Now
More Things to Know
  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,000 when you redeem through Chase Ultimate Rewards®. Plus earn up to $50 in statement credits towards grocery store purchases within your first year of account opening.
  • Earn 2X points on dining including eligible delivery services, takeout and dining out and travel. Plus, earn 1 point per dollar spent on all other purchases.
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,000 toward travel.
  • With Pay Yourself Back℠, your points are worth 25% more during the current offer when you redeem them for statement credits against existing purchases in select, rotating categories.
  • Get unlimited deliveries with a $0 delivery fee and reduced service fees on eligible orders over $12 for a minimum of one year with DashPass, DoorDash's subscription service. Activate by 12/31/21.
  • Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more.
  • Get up to $60 back on an eligible Peloton Digital or All-Access Membership through 12/31/2021, and get full access to their workout library through the Peloton app, including cardio, running, strength, yoga, and more. Take classes using a phone, tablet, or TV. No fitness equipment is required.
Regular APR
15.99%-22.99% Variable
Annual Fee
$95
Balance Transfer Fee
Either $5 or 5% of the amount of each transfer, whichever is greater.
Recommended Credit
Excellent/Good

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.