Southwest Airlines will pay Employees more than $138 million in profitsharing—a record-setting contribution—based on 1999 financial results, the Company reported today. Its Employee sharing plan plays a significant part in making Employees true participants in Southwest’s success, while simultaneously increasing profitability and shareholder value.
The contributions will be distributed to the 25,119 Southwest Employees currently eligible for the plan.
“The Employees of Southwest continue to be truly outstanding,” said Herb Kelleher, Southwest`s chairman, president, and CEO. “Their excellence has direct correlation to improving Southwest`s profitability and to providing value to our shareholders. It`s an unbeatable model when our Employees and shareholders are aligned with the same objectives.”
Kelleher added, “Announcing the profitsharing contribution each year is one of my most cherished moments. The Employees work hard each year to ensure Southwest`s success, and this is a great way to reward them for their efforts.”
The contributions, which are based on Southwest`s pre-tax profits for 1999, are the largest profitsharing contributions ever made by the carrier. The plan has grown significantly since its inception and has had a direct, positive impact on improving corporate profitability, Kelleher said. The 1999 profitsharing contribution of $138,336,916 represents 14.1 percent of eligible salaries. From 1992 through 1999, each Southwest Employee received an average of 10.6 percent of their eligible salary as additional compensation in the form of profitsharing contributions.
As a leader in the industry, Southwest has reported annual profits for 27 consecutive years as a result of its dedication to a low cost, high Customer satisfaction strategy, Kelleher said. The profitsharing plan is just one of the many reasons why Southwest is a highly sought-after workplace for professionals.
The Company contributes Employees’ profitsharing funds to the tax-deferred Southwest Airlines Profitsharing Plan, where Employees may self-direct their accounts among several investment options. Although not required to invest anything in Company stock, Employees presently elect to have about 72 percent of their profitsharing accounts invested in Southwest Airlines stock, reflecting their confidence in the future of the airline.
Southwest Airlines, the nation`s premier shorthaul, point-to-point, low-fare carrier, was named the Most Admired Airline in FORTUNE magazine`s 2000 list of Most Admired Companies. Southwest operates nearly 2,600 flights a day with a jet fleet of 312 Boeing 737s.