Southwest Profit Sharing Surges, Union Talks Continue

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On Monday, Southwest Airlines Co. (NYSE: LUV) trumpeted its record $228 million contribution to its profit sharing plan. The payment will be an 88% increase over last year’s contribution, as well as the company’s 40th consecutive profit sharing payment.

CEO and President Gary Kelly of Southwest Airlines said:

The hard work of our People, and the pride and ownership they take in providing outstanding Customer Service, has resulted in four decades of profitability. Our People earned this reward, tirelessly working toward our vision of becoming the World’s Most Loved, Most Flown, and Most Profitable Airline.

The press release also noted that the total contribution to the plan over 40 years of around $2.5 billion “would buy 83 billion bags of Southwest peanuts — enough for 10 roundtrips to the moon if you lined them up end-to-end.”

But as Bloomberg pointed out, Southwest has the highest labor costs in the industry after bankruptcies and mergers allowed larger competitors such as American Airlines Group Inc. (NASDAQ: AAL) and Delta Air Lines Inc. (NYSE: DAL) to restructure contracts and trim compensation. The company is currently in talks with unions representing its flight attendants, pilots, mechanics, ramp workers and others. Airport workers in Chicago are picketing over possible outsourcing. Southwest is seeking greater flexibility to use part-time workers in some markets and to replace fixed-scale increases with pay performance bonuses.

Last week, Southwest revealed that Kelly received $4 million in compensation for 2013, which was unchanged from the year before.

Shares of Southwest were up about 1.5% to $23.09 shortly after the opening bell Monday, before retreating to $22.80 in mid-day trading. The 52-week range is $12.58 to $24.45.

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