United Airlines reverses its plans for a lottery bonus program

A United Airlines flight attendant walks through the airlines terminal in Chicago's O'Hare International Airport

A United Airlines flight attendant walks through the airlines terminal in Chicago's O'Hare International Airport

"Our intention was to introduce a better, more exciting program, but we misjudged how these changes would be received by many of you", United President Scott Kirby said in a note to employees.

The previously proposed bonus system would have offered employees lottery drawings for cash prizes, luxury cars and vacation packages instead of the now approved quarterly performance bonuses. The airline would have to meet at least one of four performance goals before holding a quarterly giveaway. The lottery idea was introduced two months later, and it was not received with the kind of enthusiasm that executives of this airline had hoped for.

The backlash and reversal comes while United is negotiating a new union contract with its pilots.

Under the lottery system, just 1,361 employees would receive bonuses, according to the United Airlines memo, and only one would be chosen for the top cash prize of $100,000. Other employees stated that the lottery system does not appeal to them and could thus opt out of participating simply by not doing a good job.

The dust-up over the bonus lottery showed that United is struggling to overcome a legacy of poor labor relations since its 2010 merger with Continental Airlines. The company has been under pressure to keep shareholders happy as budget airlines have been taking away market share. Under this system, quarterly drawings would be held with prizes ranging from thousands of dollars in cash to resort packages and luxury cars, the Chicago Business Journal reported. "We are pressing the pause button", he wrote.

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"We announced a new internal program based on United meeting certain operational and dependability metrics as a way of offering meaningful rewards to our employees", a company spokesman said last week. Bloomberg reports that employees used to be eligible for a quarterly bonus of up to $300, meaning up to $1,200 a year. Instead, reports suggest the program was a move to save the airline millions each year spent on employee bonuses and incentives.

A discussion on the airline's internal forum, obtained by the travel website The Points Guy, included hundreds of comments about the lottery. Chicago-based United employs about 88,000 personnel worldwide.

The lottery system, with about $18 million in rewards per year available for rank-and-file workers, may have cost the company far less. We will be reaching out to workgroups across the company and the changes we make will better reflect your feedback.

How could United have avoided this crisis-and how can you steer clear of similar issues? Employees are said to be pretty displeased with the new approach.

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