Employee Ownership in the Airline Industry Flies Again

It might seem in the post-United era that the last thing that employees in the airline industry would want is ownership, except, of course, in Southwest and JetBlue (both of which do have significant employee ownership plans). Not so, it turns out. USAir employees will collectively own about 38% of the company and have four seats on the board. The ownership is primarily through stock options. Now employees at American are likely to be joining them. Proposed wage concession agreements would give employees options and profit sharing in return for cuts in pay. While there is still some disagreement about various terms of the proposals, the options piece seems very likely to remain. Perhaps most surprising is that United pilots have also negotiated for options in return for the concessions they are making. Other UAL employee groups are not currently getting options, however. Other airlines, such as Delta, Continental, and Northwest, may be negotiating concession agreements in the future, and ownership may resurface in these carriers too. The airline experience suggests that ownership, despite all its inherent risks, remains one of the few ways companies struggling to conserve cash can compensate employees for their concessions.