Why don't airlines offer an employee stock purchase plan or a Stock option plan?

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Number30FTO

Well-Known Member
Seems simple enough right? If employees have a stake in the company then there would be an interest in doing a better job. Probably save a bunch of fuel and improve on-time performance at a minimum. The next best thing to an employee owned buisness. So why don't they offer it?
 
You second to last remark said it... employee-owned business.

Southwest does it, but nobody else likes it.

Edit:
Just to clarify. The managers don't want employees in charge of them to any degree, which in a sense is what it would be.
 
Number30FTO said:
Seems simple enough right? If employees have a stake in the company then there would be an interest in doing a better job. Probably save a bunch of fuel and improve on-time performance at a minimum. The next best thing to an employee owned buisness. So why don't they offer it?
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Have you ever followed airline stocks?
 
Because their friends should immediately talk them out of it. :)
 
I'm going to go with Airline stocks are worthless.

Which actually would make sense that they would want employees to buy them. After all, airlines really do hate their employees, so giving them stock in the company would only make sense.
 
Number30FTO said:
Seems simple enough right? If employees have a stake in the company then there would be an interest in doing a better job. Probably save a bunch of fuel and improve on-time performance at a minimum. The next best thing to an employee owned buisness. So why don't they offer it?
Click to expand...

Since your livelihood depends on a successful airline, what more of "an interest" in doing a better job" do you need?
 
Number30FTO said:
Seems simple enough right? If employees have a stake in the company then there would be an interest in doing a better job. Probably save a bunch of fuel and improve on-time performance at a minimum. The next best thing to an employee owned buisness. So why don't they offer it?
Click to expand...

Plenty of companies have this. AirTran had an ESPP that gave us a 10% discount on the share price, and we just had to hold the shares for a year. Pretty good deal. We're on SWA's ESPP plan now, and that's a 10% discount with a requirement to hold the shares for two years. Still a good deal. We're also in the SWA profit sharing plan now, which averages about 5% of your yearly earnings.

That said, I always prefer higher pay rates rather than incentive compensation. We aren't executives, so we don't have enough direct control over the operation to make me comfortable with basing my income on profitability or stock appreciation. But it's nice to have as icing on the cake.
 
ASA/ExpressJet ESPP allows a purchase at a 5% discount with no requirement to hold the stock. You can put in up to 15% of your salary and it is drawn over a 6 month period to make the purchase. Little risk and a quick return.
 
As an investment for the average joe, it's retarded. That said, there are some SWA pilots and F/As who are LOADED from hanging on to their stock options. I wouldn't vest now, but in the 80s? I could buy that army of cut-throat scum I've been wanting for years!
 
Pimp slaps to anyone interested in buying airline stock. Just send me your money, I'll invest it in the ".com" business and "cash for gold."
 
It's not about buying and holding the stock. It's about getting the big discount up front. Even airline stocks are good investments when you're getting a 10% return on your investment from the day you purchase it. Sure, it's possible to lose money, but your odds are pretty good to make a return. I usually don't invest in airline stocks, but I'm a fan of our ESPP.
 
Skywest HAD a ESPP that was really nice.
It was lowest price of the fiscal quarter plus 15% off that.
But that went away.
 
Doug Taylor said:
Sell it for casssssssssssssh...
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My first anniversary I was walking out of a jewelry store at the mall. They of course had given me an absolutely gigantic bag for the necklace that I had gotten. But sure enough I walk by one of those cash for gold stands and the guy asks "have any gold you want to get rid of? I can give you cash right now!"

SA fail
 
Number30FTO said:
If employees have a stake in the company then there would be an interest in doing a better job. Probably save a bunch of fuel and improve on-time performance at a minimum.
Click to expand...

In theory you're 100% right but in reality there are so many dynamics going on that most employees (at least where I work) have no interest in doing a better job for the sake of the company. Even though we have profit sharing, it is still a very vague form of compensation ie "if I work extra hard now, maybe, just maybe if everybody else does so, we'll see a check in a few months."

Unfortunately I think the prevailing mentalities are that one person's contribution alone is too small to effect the greater group, and that I'm not going to inconvenience myself to see some small form of compensation later.

I'm not saying that I agree with those attitudes, but it's the reality.
 
The whole ENRON debacle has made companies VERY skittish on the idea of stock programs to their employees.

Agree with the others. Airline stocks are toxic.

There's been a fundamental shift in the idea of airline "equity". The corporate idea of an airline is not to provide scheduled transportation of people and/or cargo, but rather as a vehicle for cash flow. That cash flow is a source of revenue to all of the auxillary functions of air transporation: Fuel companies, leasing companies, credit card companies, ticket brokers, companies involved with revenue sharing (code share), catering, MROs, airports and all of the myriad other people who make money OFF of the airline. The airline itelf has zero profit motive...and in fact, it is counter productive for any airline to show more than a marginal profit, because that reduces the "upstreamed" revenue (not to mention making the employees restless).

The REAL money in air transportation is in one of these channels. If you dig REALLY deeply into the ownership of these entities, you will find that many of the corporate entities that are part of the overal "ownership group" are the ones making the real cash. Public involvment in these equities is near zero, and most are tightly held. Some taking their slice are nothing more than a PO box or a cubical somewhere.

Richman
 
The XJT ESPP was the worst financial decision of my life. Thankfully it wasn't terribly expensive just a waste of money that could have been invested elsewhere.

Airline ESPP's are kind of like federal income tax return checks. They sound cool until you really stop and think about it for a second.
 
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