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And executives with stock options benefit from buybacks but not from dividends, a problem that he said can be fixed by giving the executives restricted stock units instead of options.Ĭharles Tharp, a Boston University management professor who advises corporate boards on compensation, said that raising employee pay and buying back stock are separate decisions. Companies might pay too much for the stock, wasting money. It just gives shareholders a return on their investment,” said Charles Elson, founding director of a corporate-governance center at the University of Delaware.Įlson, however, said there are pitfalls. “There is nothing inherently wrong with a buyback. If buybacks boost a stock’s value, investors who hold the shares long enough pay a lower capital-gains tax on the profit when they sell - no more than 20%. Investors often prefer them over dividends, which are treated as ordinary income and taxed at up to 37%. The climate, health care and tax bill that President Joe Biden signed this week includes a new 1% excise tax on them beginning next year.Ĭorporations view buybacks as a way to reward shareholders by reducing the number of shares and making the remaining ones more valuable. Stock buybacks are a favorite target of unions and Democratic lawmakers, who often see them as widening inequality between workers and wealthier investors. airlines reported second-quarter profits, however, and revenue is surging on strong ticket sales. The Arca index of airline stocks is down 21% this year and 41% since the start of 2020. “Our highest financial priorities right now are restoring our balance sheet and investing in our employees and customers,” a spokeswoman said.Īsked about share repurchases last month, Delta Air Lines CEO Ed Bastian did not answer directly because of the prohibition, but he said the airline has a responsibility to customers, employees, “and importantly to our owners.” A Delta spokesman said Thursday that the company has raised base pay 4% and made profit-sharing payments to employees.Ī Southwest Airlines spokesman said only that the airline has not announced any plans for buybacks.Īirlines could be tempted to repurchase stock because the shares might appear cheap. United Airlines said that it is not currently seeking buybacks. A spokesman said Thursday that is still American’s position.
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All of our excess liquidity will go to pay off debt,” Kerr said. “There is no plan to do any share repurchases. The chief financial officer of American Airlines, Derek Kerr, said in a recent interview that buybacks are not on the table. The unions asked airlines to pledge to forgo buybacks until until airlines fix their “operational meltdowns” and reach new labor contracts - unions are seeking substantial wage increases.Ī union representative said Thursday that none of the airlines immediately agreed to the pledge. She blamed “greed that ran rampant before COVID” with leaving airlines understaffed. “We paused the greed in aviation for a little while,” said Sara Nelson, president of the Association of Flight Attendants.
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In this executive briefing, agency and industry experts will discuss the top priorities. Insight by Recorded Future: As agencies across Defense work to achieve the right mix of on-premise and cloud hosting, IT leaders says they must balance multiple demands. The unions, which represent pilots, flight attendants, mechanics, baggage handlers and other workers, launched a campaign and petition drive that portrays buyouts as a giveaway to Wall Street and a tool for airline executives to boost their own stock-based compensation. airlines have returned to profitability after huge losses in 20. Union officials worry that buybacks will come back now that most U.S. The airlines are currently barred from buying back their own shares as a condition of $54 billion in federal pandemic aid, but that prohibition ends after Sept. The airlines are currently barred from buying. airlines spent more than $39 billion on stock buybacks from 2014 through 2019 rather than making investments to help employees and passengers. The unions said Thursday that the four largest U.S. airlines not to buy back their own stock but instead spend the money on hiring more workers and fixing problems that caused widespread flight delays and cancellations this summer. DALLAS (AP) - Labor unions are pressuring U.S.