American Airlines

February 12, 2014

American may shift Eagle flights to other carriers after union deal nixed

A proposed 10-year contract with Eagle pilots would have given the regional carrier 60 new Embraer 175 jets in exchange for freezing pay rates until 2018.

American Airlines will start looking to other regional carriers to handle short-haul flights after leaders of American Eagle’s pilots union voted to reject a new contract agreement late Wednesday.

In a letter sent to all Eagle employees today, American Eagle president Pedro Fabregas said the mainline carrier has “no choice but to begin looking for another regional carrier.”

“I have no reason to believe American will offer us new large regional jet flying after these unsuccessful negotiations,” Fabregas wrote.

During a meeting at Dallas/Fort Worth Airport’s Grand Hyatt hotel on Wednesday, the union’s master executive council voted against the 10-year deal, which would have given the regional carrier, owned by American Airlines Group, new Embraer 175 jets in return for concessions. As a result, the 3,000 Eagle pilots represented by the Air Line Pilots Association will not vote on the contract.

“The pilots negotiated and signed a concessionary agreement during the recent bankruptcy, and management asked us soon after AAG exited bankruptcy for additional, significant concessions,” union Chairman William Sprague said in a memo sent to pilots Wednesday evening. “Our pilots decided they were not willing to work for less than the company is already paying our peers.”

The union said it will help pilots find placement at other airlines and will ask management for the timetable for the possible liquidation of American Eagle.

Fort Worth-based American Airlines Group is scheduled to rename the Eagle subsidiary Envoy this spring as it moves forward with a strategy to use other third-party airlines to operate short-haul flights under the American Eagle brand.

In January, the union’s negotiating committee and management reached an agreement guaranteeing that 60 of the new Embraer 175 aircraft that American Airlines Group ordered in December would be used with Eagle. In exchange for the aircraft, the pilots’ pay scales would be frozen until 2018 and profit-sharing would be eliminated.

The deal included options for 90 other aircraft to be operated by the regional carrier. The company also agreed to hire more Eagle pilots at American Airlines’ mainline operations, with up to 50 percent of each pilot hiring class consisting of Eagle pilots.

Although pilots would receive 1 percent pay increases starting in 2018, the captain pay scale would be capped at 12 years of service, and the first-officer pay scale capped at four years of service.

The employee contribution for medical insurance would also increase from 30 to 35 percent by 2017.

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