Latest news with #ScottKirby
Forbes
6 days ago
- Business
- Forbes
Are Big Airlines' CEOs Overpaid Or Underpaid?
Scott Kirby, United Airlines' CEO (Photo by Hyoung Chang/The Denver Post) High and wildly fluctuating fuel prices. Enormously expensive assets that must be bought and maintained in near-perfect condition. Tens of thousands of (mostly) well-paid employees and their powerful, sometimes contentious unions. Extraordinarily powerful, often opinionated and sometimes down-right pushy shareholders and other financial backers. Uptight domestic and foreign regulators and a constantly changing cast of politicians whose motivations rarely support the idea of making big profits. Given all that, one must ask whether it's worth it to even want to be the chief executive of a U.S. airline? Well, at least it is for the CEOs of the nation's four largest carriers who, according to reports filed by the carriers with the Securities & Exchange Commission, earned more than $87.5 million, combined, for their troubles in 2024. That number includes the actual value and/or estimated current value of shares and options to buy shares, plus other forms of non-salary compensation, that they received last year. So, are they paid too much?The answer to that question depends on one's ethical, moral, philosophical, political or maybe even theological views regarding the value of an individual's work - or on one's view of the relative fairness of a CEO's compensation vis-à-vis what their average employee earns. But in any practical evaluation there's no disputing that running a big airline, however tough a job that might be, is a sweet gig financially. TOP PAID AIRLINE BOSSES And the sweetest gig, at least in 2024, was Scott Kirby's at United Airlines. His total pay (including bonuses, the actual and/or estimated value of shares and options granted to him last year, and all other non-salary compensation) was just over $33.9 million. That was a big jump from 2023, when Kirby's total take was a mere $18.6 million. As calculated by an airlines-focused news website, that produced a CEO-to-worker ratio of 380-to-1. That means Kirby earned $380 for every $1 earned by the average United employee in 2024. Their average pay was $89,197. Ed Bastian, Delta Airlines COE (Photo by: Nathan Congleton/NBC via Getty Images) Ed Bastian at Delta last year took home just over $27.1 million, down from $34. 2 million in 2023. calculated the Delta's CEO-to-worker pay ratio to be 258-to-1 in 2024, based on Delta's average employee pay of $105,269. American Airlines boss Robert Isom's pay in 2024 was considerably lower at $15.6 million. But in 2023 he took home more than $31.4 million. His 2024 pay ratio vs. the average American employee's pay ($81,744) was 191-to-1. Bob Jordan, who became Southwest's CEO early 2022, received total compensation of $10.6 million in 2024, which resulted in a ratio of $115.5-to-1 vs. the average Southwest worker pay of $91,442. That, too, is per In 2023, Jordan's first full year as CEO, his total compensation was $9.3 million. However one looks at it, all four of those airline chiefs are well-compensated, as are pretty much all airline CEOs around the world. DO SHAKY FINANCIAL TRACK RECORDS JUSTIFY BIG CEO PAY? But according to FORBES and FORTUNE rankings of corporate leaders' compensation a strong argument can be made that the top bosses at the three biggest U.S. airlines – Delta, United and American – are being paid more than their companies' annual revenues warrant. Of the 100 biggest publicly owned companies in America based on revenues, Delta's $54 billion in 2024 revenues ranks 70th, while United ($53.7 billion) ranks 83rd and American ($52.8 billion) comes in No. 86. Southwest's $27.5 billion does place it among the top 100 U.S. companies by revenue. Yet the CEOs of the nation's three largest airlines all rank among the top 50 U.S. CEOs in compensation. Delta's Bastian's $34.2 million was the 31st highest CEO pay in America in 2023. That's according to Equilar, a corporate data tracking and analysis firm. Not all U.S. companies have filed their 2024 CEO compensation data yet, so 2023 is the latest year for which such data is complete. Robert Isom, American Airlines CEO. (Photo by Nathan Posner/Anadolu via Getty Images) Meanwhile, Isom's $31.4 million in compensation from American in 2023 was good enough to land him at No. 40 on that list. And though Kirby's 2023 compensation of $18.6 million from United wasn't enough to place his name on that same list, his $33.9 million earned in 2024 would have been enough to rank 32nd on the 2023 list. It also likely will put him at or near No. 32 on the 2024 list from Equilar once all companies have reported their 2024 CEO compensation data. Furthermore, airlines today – as they have historically – generally represent a poor investment for those who invest in their stock because of their weak-to-non-existent returns on investment over time. Thus, the case can be aruged that these airline bosses shouldn't be quite so handsomely rewarded, especially considering their companies have failed over the last 65 years to fix their financially ramshackle houses. Conversely, given the many complex financial, legal, regulatory, technical, labor, economic, macro-economic and political challenges they face just as compelling an argument can be made in the opposite direction: that the CEOs of America's biggest airlines are compensated appropriately - or maybe even that they're not paid enough. The gist of that argument is that without the great work of those CEOs and their management teams their respective airlines' would be in much worse shape, financially. MIND THE PAY GAP Regardless of what side one takes in that debate, analysis of the gap between what the big carriers' CEOs earn annually and what the average employees at their respective companies earn can be used to support both sides of the overpaid/underpaid argument. Compared with the CEO-to-average employee ratios of the 100 highest-paid CEOs in the nation, Bastian's 258-to-1 ratio at Delta, and Isom's 191-to-1 ratio at American in 2024 are middle-of-the-pack numbers. Kirby's 380-to-1 ratio is slightly elevated over the Delta and American pay gaps, but certainly not extreme vis-à-vis most other large companies' pay gaps. (Jordan's 115.5-to-1 ratio at Southwest is way below the average among the top 100 paid CEOs in the U.S.) The highest CEO-to-average worker compensation ratio in 2023, according to Equilar, involved Brian Niccol, CEO at Starbucks. That ratio (impacted heavily by the presence of a huge percentage of lower-paid part time baristas in the employee population) was an eye-popping 6,666-to-1. More than a dozen other CEOS on the Top 100 Pay Gap list had ratios above 500-to-1. Meanwhile, the lowest such ratio was just 74-to-1 at data storage giant Snowflake Inc., where the CEO, Frank Slootman, earned $21.2 million in total compensation. But the large majority of companies and CEOs on the list had boss-to-worker pay gap ratios in the 200- to 500-to-1 range. On that basis, the case that airline CEOs are paid about right, or maybe not even enough is strengthened. Still, just as lots of part time baristas on the payroll inflates Starbucks' CEO-to-worker pay ratio, airlines' CEO-to-average worker pay ratios are skewed in the opposite direction by the thousands of highly-paid pilots on their payrolls. U.S. News and World Report currently ranks piloting as the highest-paying non-medical profession in terms of total annual compensation. Bob Jordan, Southwest Airlines CEO (Photo by Sam Hodde for The Washington Post via Getty Images) Kit Darby, an airline labor analyst and consultant to piloting job-seekers at Kit Darby Aviation Consulting says that senior captains of the largest planes in each of the Big Four carriers' fleets 2024 earned on average about $364,500 at Delta, $372,850 at American, $384,000 at United and $386,700 at Southwest. And Darby, himself a retired airline captain, notes that even the lowest-paid, newly hired aviators working as co-pilots on their major carriers' smallest planes earn way more than the average U.S. worker's pay (which is just over $62,000 a year). The most junior pilot at American earns about $115,600 a year; $117,800 at Delta; $123,800 at United; and $141,900 at Southwest. Even at such relatively low, entry-level payrates, new pilots still help to narrow the CEO-to-average worker pay gap at the big airlines. And the much higher pay of senior captains – plus the handsome compensation earned by mid-career pilots – greatly narrows that pay gap. Indeed, pilot pay at the big airlines effectively smothers the impact that the carriers' tens of thousands of lower-paid workers like flight attendants, airport ground workers and office employees have on the CEO-to-worker pay gaps at their respective carriers. In other words, if pilots weren't so numerous, and if they didn't earn such high wages, airline CEO-to-average worker pay gaps would be significantly larger. And that suggests, again, that maybe airlines' top executives are overpaid after all.
Telegraph
23-06-2025
- Business
- Telegraph
This is a sector to buy when the news is bad
Questor is The Telegraph's stock-picking column, helping you decode the markets and offering insights on where to invest. It has proved a turbulent year so far for United Airlines, the world's biggest airline by available seat miles. Such is the economic uncertainty created by Trump's tariffs that when the company's forthright chief executive, Scott Kirby, released earnings guidance earlier this year, he made the unusual decision of presenting two scenarios. On a stable economic outlook, he reckoned New York-listed United could deliver earnings per share (EPS) of between $11.50 and $13.50. However, if the big policy moves from the White House triggered a recession, he told shareholders to expect something more like $7 to $9. It's not only economic policy that has been causing Kirby planning headaches this year. United is the biggest operator at Newark Liberty International Airport, which it uses as its New York base for flights, but the airport has been experiencing problems with air traffic control, including a high-profile outage in late April. Not only have the issues caused delays and cancellations of flights, safety concerns are also hitting demand. United has said the problems will weigh on financial performance this year, although, it has not quantified this. And then there's the oil price. While oil has been weak for some time, heightened tensions in the Middle East raise concerns United, along with its peers, could face higher fuel prices, which represents a key cost for airlines. It is the propensity for airlines to frequently encounter highly consequential and extremely unpredictable events, coupled with their high fixed costs, which makes the sector uninvestible for many. However, for those who dare, this is a sector to buy when the news is bad. Indeed, the valuation of United shares at 6.6 times next-year forecast earnings illustrates the lure of this strategy, given its valuation looks much more attractive than its closest peers – which are Delta Airlines valued at 7.8 times, American Airlines on 7.3, and Southwest on 17.5. Many of the world's best fund managers see merit in the stock at the current price. Financial publisher, Citywire, which rates stocks based on their ownership by the top 3pc of equity managers globally, has raised United's Elite Companies rating from A to a top AAA this month on increased backing by the elite investors it follows. A total of nine hold the shares. Beyond the negative recent news flow, there are reasons to be optimistic about United's prospects. For one thing, United is one of the most profitable companies in its sector. Despite weak demand felt across the industry in the first quarter, United was one of only two airlines to report a profit for the period, and its 3.6pc pre-tax profit margin was its best result for the traditionally softer quarter since before the pandemic. The response to weak demand from across the industry should help shore up profitability. United has announced a capacity cut of 4pc and many rivals are taking similar measures. Fewer seats in the sky generally means fuller planes and higher ticket prices. The problems at Newark could soon start to ease, too. Some of the issues have been associated with the construction of a new runway, which was completed at the start of June. Kirby has said that with the runway open and planned flight limits implemented, he expects Newark to be the most reliable airport in the New York area from this summer. From a longer-term perspective, United is aiming to boost the efficiency of its fleet while attracting high-value passengers. Key to efficiency gains are plans to take delivery of 660 new aircraft by 2033, with a strategic switch from Boeing to Airbus planes, and the new fleet will help to differentiate between its offerings. Differentiating services is key to boosting higher-margin premium travel. Already efforts such as the roll out of Starlink powered WiFi on flights are helping. Premium revenue was up 9.2pc in the first quarter, and the group is also broadening its offering of international flights, which are more profitable. While we certainly live in uncertain times, for now brokers forecast EPS that's closer to United's 'stable' than 'recession' guidance. Airlines are always a risky bet, but many of the world's best fund managers like the odds offered by United's shares. United's shares can be bought though all major UK dealing platforms, but Brits should check for any extra charges, and while United does not pay a dividend, documents to minimise withholding tax should be completed.
CNN
18-06-2025
- Business
- CNN
United CEO Weighs in on Recent Issues at Newark
"It's indicative of the need to get back to full staffing and to upgrade the infrastructure and the technology and the facilities at the FAA." United CEO Scott Kirby weighs in on recent issues at Newark.
Business Insider
11-06-2025
- Business
- Business Insider
Qantas is pulling the plug on Jetstar Asia — and 500 jobs
Qantas is shutting down Jetstar Asia, its Singapore-based budget carrier, blaming rising operating costs and a crowded market. The budget airline will cease operations on July 31 after more than two decades. Jetstar Asia will continue flights until then on a "progressively reduced schedule," Qantas said in a statement on Wednesday. "Despite delivering exceptional customer service and operational reliability, Jetstar Asia has been impacted by rising supplier costs, high airport fees, and intensified competition in the region," the Australian company said. Jetstar Asia flies 16 routes from Singapore to destinations in Malaysia, Thailand, Indonesia, Japan, the Philippines, China, Sri Lanka, and Australia. Jetstar operations in Australia, New Zealand and Japan will not be affected. Customers booked on canceled flights will be offered full refunds, and Qantas will try to move them to other airlines where possible. The shutdown will also result in the loss of more than 500 jobs, a Jetstar Asia spokesperson told Business Insider. Affected employees will be given redundancy benefits and assistance with other roles within Qantas and other airlines. Qantas added that 13 Jetstar Asia Airbus A320 aircraft will be progressively redirected to Australia and New Zealand. Qantas did not immediately respond to a request for comment. Competition among budget carriers in Southeast Asia was "brutal," Alan Tan, a professor specializing in aviation law at the National University of Singapore's Law School, told Business Insider. "The departure is a great loss from the viewpoint of price and service competition for travellers," he said. Virgin Australia IPO The closure comes on the same day that Virgin Australia announced its intention to list on the stock market in Sydney on June 24. The shares will be priced at A$2.90, raising A$685 million and valuing the company at A$2.3 billion. The IPO will allow some existing investors, including Bain Capital, Qatar Airways Group, and the Virgin Group, to realize part of their holdings. Investors participating in the offer are expected to hold about 30% of shares on issue, with the remainder being held by existing investors. Virgin carries about 20 million passengers a year on more than 100 aircraft. It operates 76 routes to 38 destinations across its domestic and short-haul international airline business. From next week it will start long-haul international services between Australia and Doha in partnership with Qatar Airways, which has a 25% stake in Virgin. Budget model is 'dead' United Airlines CEO Scott Kirby earlier this month criticized the budget airline model and called it "crappy." He told the "Future of Everything" event that the low-cost carrier model was "dead." "The model was screw the customer," he said. "It was like trick people, get them to buy, and get them to come, and then charge them a whole bunch of fees that they aren't expecting … disclosures buried in legalese," he continued. "Their problem is they got big enough that they needed repeat customers. They don't get them." His comments came the same day that United announced a new partnership with JetBlue, which some consider to be a budget carrier.
Skift
09-06-2025
- Business
- Skift
Breeze CEO on Low-Cost Carriers' Future and 'The Piss-Off Factor' Keeping Tourists Away
The drop in interest in traveling to the U.S. is real, and it very well may fade as Breeze's CEO says. But repairing the brand damage will take time. As the U.S. airline industry faces growing economic uncertainty and negative travel sentiment, serial airline entrepreneur David Neeleman thinks the phase will pass. The Breeze Airways CEO also has thoughts on reforming the ultra-low-cost model, one that United Airlines CEO Scott Kirby recently declared was 'dead.' Skift spoke with Neeleman in a wide-ranging interview about the state of ultra-low-cost carriers, tariffs, and the Trump administration's travel policies. Here are four takeaways: Is the Ultra-Low-Cost Model Actually Dead? Kirby commented on the state of ultra-low-cost carriers during a Wall Street Journal event in May, also saying that 'the model was screwed.' Neeleman said he thought Kirby 'makes a really good point.' 'I don't think they're gone for good, but I do think they got really big,' he said. 'And not only from the number of planes, but the size of their planes, which kind of force them into hubs and force them to compete wing tip-to-wing tip with the big incumbent carriers.' He added that the rise of basic economy allowed legacy carriers like American, Delta, and United to compete more effectively with ultra-low-cos
