American and Southwest will give each employee a $1,000 bonus as a result of the corporate income tax rate reduction that was part of the recently enacted tax reform bill.

American said the bonuses, which will be distributed to all non-officers of the company during the first quarter, will add up to $130 million.

Southwest plans to distribute its bonuses on Jan. 8 at a cost of $70 million to the company. Southwest also said it would donate $5 million to charity.

Under the tax reform, the corporate income tax rate has dropped from 35% to 21%. American doesn't currently pay income taxes due to losses carried forward from previous years. But CEO Doug Parker said that rewarding employees is a move that will benefit all stakeholders in the airline, including investors. 

"In short, it doesn't feel right to receive the positive impacts of this historic tax reform without making sure, in the clearest most direct way possible, that those benefits are shared with the very people who matter the most to our customers and shareholders," he said.

"We are excited about the savings and additional capital, which we intend to put to work in several forms -- to reward our hard-working employees, to reinvest in our business, to reward our shareholders, and to keep our costs and fares low for our customers," CEO Gary Kelly said.

Comments
JDS Travel News JDS Viewpoints JDS Africa/MI