Money Matters: Retention Bonuses Don't

In our ongoing negotiations for a fair contract, there's a crucial financial aspect that needs our attention — the so-called "retention bonus" that Allegiant Air promises to pay upon signing a new contract. While this bonus might seem like a future windfall, it's essential to understand the real value of this money in today's terms, especially considering our wages are almost 50% less than our industry peers. Additionally, this "retention bonus" is based on rates that are well below any acceptable rates for industry parity, resulting in an even greater loss for our pilots each day.

Let's break it down in simple terms. For a Captain, we'll assume a mimimum of $100 difference per hour between our current rate and industry parity, and for a First Officer, it's around $70. Considering a monthly guarantee of 70 hours over a year, and then over four years (which is how long it might take to get a new contract at the current pace), we will see a substantial figure. However, this is the nominal value, not accounting for the time value of money (TVM).

TVM is a financial concept that emphasizes that money available now is worth more than the same amount in the future due to its potential earning capacity. This is crucial because while we wait for the bonus, its value diminishes over time.

For a Captain, the nominal value of higher pay rates over four years is approximately $336,000. But, when we calculate its present value (how much its worth to you today), considering a 5% discount rate, it's about $276,428. For a First Officer, the nominal value is around $235,200, while the present value is approximately $193,500. This difference is not just numbers on a spreadsheet; it represents a real and significant loss. Everyday without a new contract means less money, both in nominal and real terms, that could have been in your pocket, earning interest, paying down debt, or contributing to your family's well-being.

Every day that passes without a new contract is a day where the company benefits from the interest on the money that they aren't paying us, including this "bonus" money, while we lose out to opportunity costs and inflation. The longer we wait, the less valuable this pretend bonus and our future pay rates will become due to inflation and lost opportunities for that money to grow.

In essence, while the promise of a retention bonus and higher rates in the future might seem appealing, we must understand the actual cost of delayed negotiations. Every day, every month, and every year without a new contract not only impacts our current financial well-being but also reduces the real value of what we're promised in the future. At some point, no amount of "industry standard" will make up for the losses over time.

Our goal is clear: secure an industry parity deal now, not just for a better wage today but to ensure the future value of our hard-earned money is not eroded by time. We deserve better than what we've received. It's time we stood up and demanded it.

In Unity,

Your Candidates for 2118