January 3, 2018
Southwest & American Giving $1,000 Bonus to Employees because of Tax Reform

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President Trump signed the Tax Cuts and Jobs Act on December 22, 2017. The legislation makes significant changes to the US code, one of which is a reduction in the corporate tax rate from 35% to 21%. This translates to serious cost savings for US corporations. Southwest and American airlines have both announced $1,000 distributions to employees as a result of the TCJA.

Southwest will pay each fulltime and parttime employee as of December 31, 2017 a $1,000 bonus. CEO Gary Kelly 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.”

American will pay each “team member” a $1,000 bonus in the first quarter of 2018. The bonuses will total about $130 million. CEO Doug Parker said “We will be able to invest even more in aircraft and facilities, and we will be able to do so with even greater confidence about the future.”

This is great for the airline employees. They do an incredibly difficult job and often bear the brunt of customer anger when something inevitably goes wrong. I commend Southwest and American for using some of their tax savings to reward front line employees.