The good news and the bad news…
The Profitability Bonus (aka Cost of Living Adjustment, or “COLA”) will be paid out to eligible flight attendants tomorrow, Friday, February 13th. The COLA is usually paid on April 20th but at the request of AFA the Company has been kind enough to pay early this year. The good news is that it will be early. The bad news is the COLA is lower than years past despite very high profitability. This is due to an extremely low change in the Consumer Price Index for Urban Wage Earners and Clerical Workers’ (CPI-U) between December 2013 and December 2014.
COLA formula and contractual language
The formula for the COLA is found in 21.P of the former Collective Bargaining Agreement:
21.P. Any Flight Attendant who is at the highest step of the pay scale as of January 1 will be eligible for a profitability bonus, based on the profitability of Alaska Airlines during the ensuing calendar year as follows:
Operating Profit Margin Bonus Percentage
Less than 3%: 0
3.0 – 6.0%: 20% of COLA
6.01 – 8.0%: 30% of COLA
8.01 – 10.0%: 50% of COLA
10.01 – 12.0%: 70% of COLA
Over 12.01%: 100% of COLA
As used herein:
- COLA shall be the percentage change (of not less than zero) in the Consumer Price Index for Urban Wage Earners and Clerical Workers’, U.S., published by the Bureau of Labor Statistics, U.S. Department of Labor, comparing statistics for December in the year for which the profitability bonus is earned with statistics for December in the previous year.
- The Company’s operating Profit Margin shall be defined as Operating Profits divided by Operating Revenues. All figures shall be audited figures of Alaska Airlines, Inc., which are publicly reported pursuant to S.E.C. reporting requirements, for the calendar year for which the profitability bonus is earned. The Association shall have the right to verify such numbers to the extent that any such information would be available to shareholders of the Company. Calculations shall be based on the operating results of Alaska Airlines only, excluding the results from any subsidiary, parent, or affiliated company. The profitability bonus will be based on all TFP flown or credited during the calendar year, multiplied by the step rate in Section 21 A, multiplied by the Bonus Percentage described above.
The profitability bonus will be paid in April of the following year.
Operating profit margin was high but change in CPI-U was low
Operating profit margin was 18.6% but the change in CPI-U December 2013 to December 2014 was only 0.32%. Falling fuel prices largely drove this statistic lower than in past years. Based on the contractual calculation, eligible flight attendants will receive 100% of the COLA: 0.32% of $46.48 (the old top of scale Step rate) or approximately $0.15 (15 cents) per TFP flown or credited in 2014. Only flight attendants who were at the top of scale Step 17 on January 1, 2014, are eligible for the COLA.
Longevity Premium replaces COLA in the new Contract
Longevity Premium in the new Contract replaces the COLA. Longevity Premium is a minimum of $1 per Worked TFP (exclusive of sick leave and vacation/Longevity PTO) for flight attendants who have completed at least 16 years of occupational service. Because Longevity Premium is not dependent on the Company’s profitability or the federal CPI-U statistics, AFA strongly believes this is a more consistently favorable provision than the COLA.
