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It is a well-known feature of the commercial passenger airline industry that airlines are not the highest margin businesses, despite billions of dollars flowing through them. Like many other high-grossing industries with millions of annual customers, such as the film or sports industries, the CEOs of the largest companies are very handsomely compensated. According to Skift, CEO compensation for airlines in the United States was uncapped as of April 1, 2023, thanks to the end of the CARES Act, which restricted executive pay. In the same year, United CEO Scott Kirby’s total compensation nearly doubled from $9.8 million to $18.6 million. In 2024, the first full year since the Act ended, his total compensation nearly doubled again, reaching $33.9 million, according to Aviation A2Z. This article investigates US airline CEO compensation in recent years. Was the ending of the CARES Act an April Fool's joke that went too far? What Do The CEOs Of The 'Big Four' Take Home? Placing the question of airline CEO compensation into context, the CARES Act, which restricted CEO take-home pay was a COVID-era restriction, implemented in March 2020. According to EFPR, it was designed to provide pandemic relief to businesses. While the CEOs took a financial hit, the money saved would help keep the workforce intact through staff furloughs until the country had made it through the financial storm. For the duration, airline CEOs could earn at most $3 million, plus 50% of their total compensation that exceeded $3 million in 2019, according to One Mile At A Time. That said, in Scott Kirby’s case, the $9.8 million earned while the Act was in effect is still an unfathomable amount of annual compensation for the average flight attendant, let alone other regular Americans, and the Act provided additional government aid to all US airlines, in any case. With 2024 being the first full year of unrestricted executive earnings since the pandemic began, a breakdown of the total compensation airline CEOs of the four biggest US airlines received in that year is included below. While the base salaries and even bonuses may seem fairly reasonable, the addition of stock awards and non-equity incentives really elevate the total compensation numbers: Factors Influencing Pay In Recent Years Several factors contributed to the differences in CEO compensation for 2024, and each airline structures executive pay differently, combining salary, bonuses, incentive plans, and equity awards. In the case of United Airlines, the airline saw stronger stock growth in 2024 compared to its peers, which has directly influenced executive equity compensation. Delta also maintained consistent profitability and customer satisfaction, resulting in good operational metrics for the airline. In the case of American Airlines, the board of directors adjusted Robert Isom’s compensation downward in 2023 after mixed financial outcomes and shareholder concerns. Thus, a smaller compensation makes sense. Southwest Airlines, known for its conservative corporate governance culture, kept CEO pay lower than competitors despite activist pressure, according to Aviation A2Z, and so, Jordan's pay only increased a little from 2023. According to View From The Wing, Isom's large 2023 compensation was an isolated case. The figure is due to a one-time payout he received to account for not having received a raise while the CARES Act was in effect, as the airline could be seen to be doing so after receiving $10 billion in US taxpayer money. He also received an unusually large stock grant that year, intended to bring him closer to peer CEOs in terms of ownership stake in the airline. Pay Gaps Between CEOs and Average Employees After receiving what was essentially a government bailout during the pandemic, it can be viewed as poor form for both Delta and American Airlines to grant their CEOs larger payouts in 2023 to compensate for perceived personal losses during that time. Ultimately, what it means is that a significant portion of the taxpayer money, taken from both rich and poor citizens across the nation, still ended up in the CEOs' pockets after passing through the financial machinery of the airlines, albeit with a time delay of a few years. Forbes presented the pay gaps between the CEOs of the big four US airlines in comparison to the average employees of the airline, as shown below. When compared to other CEO-to-average worker pay ratios, according to an Equilar Top 100 Pay Gap list, the CEOs of the airlines actually make closer to the average employee than many other big companies. The highest CEO-to-average worker compensation ratio in 2023 involved Brian Niccol, CEO at Starbucks, which was a staggering 6,666-to-1. More than a dozen other CEOs had ratios above 500-to-1. There are some caveats to the ratios, however. In the case of Starbucks, much of the company is made up of low-paid part-time baristas, while the airlines each have thousands of highly paid pilots on their payroll, which certainly skews the numbers somewhat. Forbes also defends high CEO pay by comparison to other CEO peers, and a similar justification was presented regarding the higher 'backdated' 2023 compensation from Delta and American. If just being a CEO qualifies a person for such lofty benefits, perhaps everyone should create a limited company. Customers Would Rather Have Increased Comfort Onboard Regarding the high pay of American Airlines CEO Scott Kirby in 2024, he had proven himself valuable with the return to profitability for the airline in 2023, but the Reddit conversation is fiery to say the least. Many customers have criticized the airline for its tightly packed seating configurations and blame poor service on factors like the very low pay of the flight attendants: "[Kirby’s] got 31.4 million reasons why he couldn’t care less about passengers being packed on the plane like sardines and the fact that service is inconsistent because a quarter of the flight attendant population is making less than minimum wage. I know those top execs are laughing on the way to the bank." Some readers did counter with comments to the effect that customers flying American get what they pay for, and that the other US airlines have similar seat dimensions: "It’s why prices are so cheap for American, they have the same legroom and similar sets width to the other 3 US airlines." Others also pointed out that the large amount of stocks awarded to the CEO is a risky investment, as if the airline were to go down, so would the CEO's assets, and indeed, US airline stock has been going down recently: "He was awarded $19.5m in stock awards. the stock price was 13.74 on the last day of trading of 2023, which would mean he was issued roughly 1,419,214 shares (if they were all issued on that day). The stock closed today at 13.15, which is a decrease of 0.59. That equates to a loss of $837k. If the share price drops $1 he loses $1.4m. he hasnt actually received any of that money, and chances are he can't even actually sell the stocks yet." However, some were unconvinced: "This is the risk you take when your compensation is in stock options. And he also doesn’t lose money. He just doesn’t get all the gains that he possibly could have. If I earned 80K this year instead of 100k, I didn’t 'lose' 20K. I made 80k." Others also blamed Boeing and its lack of consistent and on-schedule aircraft deliveries for the poor performance of the US airlines, but overall, the anti-corporate sentiment is strong: "Very annoying and very typical across the board for corporate America. We've turned these companies into pyramid schemes for a few top execs and major shareholders. Not sure what the solution is but something has to give." US CEOs Are Paid More Than Elsewhere According to Aviation A2Z, the CEOs of the big four US airlines consistently earn significantly more than their global counterparts. While this is partly a result of US corporate governance, investor expectations, and a large emphasis on stock-based compensation, some argue this model leads to excessive executive pay. However, some view the high potential earnings of CEOs in the US as a vital tool to retain talent at the highest level in the industry, which is known as being a low-margin, high-scale and high-stakes industry. Regarding there being a kind of 'special CEO talent' that is uniquely worth such a high payout, there are millions of smart, hard-working and enterprising people out there. Unfortunately, not all can be at the reins of a multi-billion-dollar corporate beast, while many may deserve to. According to One Mile At A Time, Bob Jordan is an example of a CEO who does not effectively demonstrate a vision for the company, as he is accused of making decisions purely in line with investor demands.
