If you wonder why Ford is in such big trouble—besides its bloated workforce, gigantic union-driven legacy costs and inability to make cars anyone really wants to buy—look no further than today’s news that every Ford worker will be getting a bonus despite the company’s $12.7 billion loss last year.

The bonuses are relatively modest—$500 for UAW members, $300 to $800 for non-management salaried workers and slightly higher amount for managers, according to the Detroit Free-Press—but it still begs the question: How can a company that lost billions of dollars afford to give bonuses to the entire workforce?

Ford’s reorganization attempt, called the “Way Forward,” clearly is not working. New CEO Alan Mulally, who did such a great job at Boeing, is doing all that he can to keep the workforce engaged and motivated while reorganizing the company.

But how do bonuses to every single person in Ford’s workforce square with a more than $12 billion dollar loss? Mullay sent an e-mail to Ford workers telling them, “Because we did not accomplish all of our objectives last year, the awards will be modest. Still, we want to recognize and reward your accomplishments, because you made vital contributions to our future.” UAW president Ron Gettelfinger was equally delusional in his statement to his membership, saying, “With today’s announcement of bonuses for all Ford workers, the company has recognized the hard work and dedication of UAW-represented hourly and salaried workers.”

To be fair, I do believe that Ford’s workforce is dedicated and hardworking. I also don’t doubt the vital contributions they are making to Ford. But clearly, workforce bonuses to every single worker in the face of billions of dollars in losses is a failed and bankrupt strategy in any business environment. The statements by CEO Mulally and UAW president Gettelfinger are not only delusional, but as futile as bailing water from the Titanic. No wonder Toyota is cleaning Ford’s clock.