2013 Profit Sharing Payout

1. Who is eligible to participate in American Airlines’ 2013 Profit Sharing plan?

All American Airlines U.S.-based represented employees, Agents, Representatives and Planners, Support Staff and Managers levels 5 and below are eligible for 2013 profit sharing. The profit-sharing structure varies among employee groups as a result of the trade-offs made during restructuring:

• The plan for U.S.-based represented employees, Agents, Representatives and Planners and Support Staff is based on sharing 5 percent of American’s pre-tax profits.
• The plan for U.S.-based Management employees up to and including level 5 are in a plan based on sharing 10 percent of American’s pre-tax profits.

For international employees, all non-management employees and managers levels 1 – 5 are also eligible. The plan for eligible international employees is based on sharing 5 percent of American’s pre-tax profits for non-management employees and 10 percent for Management levels 1 – 5.

All payouts are subject to Board approval, and metrics and payouts will be calculated based on the terms of the plan.

2. How will the payouts be determined for those sharing 5 percent of American’s pre-tax profits?

 

The revised profit sharing plan implemented for the majority of eligible U.S.-based and international employees during restructuring is based on sharing a percentage of American’s pre-tax income after the first dollar of profits into a fund. Those profits will then be equitably distributed to employees based on each individual’s eligible earnings.

 

Please note that most international locations will use the approach illustrated below for distribution, however the methodology may vary by country.

 

While all payouts are subject to Board approval, and metrics and payouts will be calculated based on the terms of the plan, for illustrative purposes, the profit sharing plan formula works as follows:

3. Does the 2013 profit sharing plan end if/when the merger closes?

For the majority of our people, yes. When the merger closes, profit sharing will no longer be in place for American’s U.S.-based represented employee groups and Agents, Representatives and Planners. For these employees, that money will be used to fund other enhancements to compensation included in the union Memoranda of Understanding (MOUs), and as communicated to our ARP employees based on the survey we conducted in spring 2013.

Support Staff, Managers levels 1 – 5 and International employees will continue to participate in their respective profit sharing plans after the merger closes.

4. What if the merger closes in 2013? Will we still receive our 2013 payout?

Yes. If the merger closes before the end of the year and American is profitable in 2013, the profit sharing plan will pay out. However, the payout will be prorated for workgroups no longer participating in profit sharing based on the date that the merger closes.

 

5. If American is profitable in 2013, when will we receive our profit sharing payments?

We expect to make 2013 profit sharing payments in March 2014.

 

6. When was the last year profit sharing paid out?

The last time profit sharing paid out was March 2001 for performance in 2000.

 

7. When we began restructuring, employees were going to get a 15 percent payout for profit sharing. Why did it decrease?

The company initially outlined profit sharing based on 15 percent of pre-tax earnings for all employees during our restructuring. However, to address the concerns and priorities that matter most to our Pilots, Flight Attendants, TWU-represented employees and Agents, Reps and Planners, we reallocated some of the profit sharing income to provide other pay, benefit and work rule improvements. As a result of these trade-offs, the profit sharing plan for non-management employees is now based on sharing 5 percent of pre-tax earnings.

 

8. Are American Eagle employees eligible for the 2013 American Airlines profit sharing plan?

American Eagle employees participate in a separate profit sharing plan. Non-management and Management employees will also share in American Eagle’s future success through the American Eagle 2013 profit sharing plan. This is a tiered plan that provides for a profit sharing pool that increases as American Eagle’s profits increase and with payments prorated, based on the eligible earnings of the people covered by the plan. This new profit sharing plan will pay as long as American Eagle earns a profit in 2013. Awards under the Eagle 2013 profit sharing plan would also be paid in March 2014, if the company is profitable in 2013.

9. What if I am an Eagle employee and move to American mainline between now and the end of the year?

To the extent an employee moves between organizations and meets the eligibility of each plan, they will be able to participate in both, on a pro-rata basis.