American Airlines

March 28, 2014

American Eagle pilots vote no on a new contract

By rejecting the contract offer, American Eagle will not be given newer larger planes to fly for American Airlines, the company said.

American Eagle first officer Brandon Almanza didn’t want to have his annual pay of $39,000 frozen for the next few years after having already given up a week of vacation and a cut in his per diem expenses.

So Almanza, who lives in San Antonio and is based out of DFW Airport, joined other members of the pilots union to overwhelmingly reject a new 10-year contract offered by the company.

“I don’t feel like the pilots at American Eagle, who are in the middle of an eight-year contract, should give even more when times are good,” said the seven-year Eagle pilot, pointing to the financial success of his carrier’s parent company, American Airlines Group, since it was formed by the merger with US Airways in December.

On Friday, American Eagle’s pilots, who are represented by the Air Line Pilots Association, formally turned down the contract offer, leaving the future of the regional carrier in jeopardy. With the rejection, American has said it will take new, larger regional aircraft it has on order and give them to other third-party regional airlines to fly.

With 92 percent of the 2,700 pilots voting, 70 percent voted against the 10-year contract, which would have allowed Eagle pilots to fly new, larger regional aircraft in exchange for freezing pilot pay scales until 2018 and eliminating profit-sharing.

The proposed contract would also have increased the number of pilots at Eagle that would be hired by American Airlines. Under the deal, Eagle pilots would have made up at least 50 percent of each hiring class at American Airlines and in some cases up to 100 percent.

But, “[Eagle pilots] have a lot of options,” said Bill Sprague, the union’s top officer. “They didn’t need to agree to concessions on this level to have the ability to move over to American.”

Several pilots who voted against the contract suggested that management would not keep their promise. Their current contract calls for 25 to 30 pilots a month to move to American, but the carrier recently capped it at 20 as they have been unable to find new hires at Eagle to replace those leaving.

“I would have voted yes, but we just don’t trust them to follow through,” Almanza said.

The proposed deal also included additional concessions above the $43 million in cost cuts the pilots agreed to when American’s parent company was in bankruptcy. The Air Line Pilots Association said pilots have not seen contractual gains since 2004.

“We’re not ready to agree to concessions in this environment,” said Rich Krutenat, a DFW-based captain who has worked at American Eagle for 16 years. “The opportunities are far too abundant for Eagle pilots elsewhere for them to sit around and wait for something that might happen.”

The airline industry is facing a pilot shortage as more pilots reach the mandatory retirement age of 65. The government recently implemented new requirements for commercial pilots that require more hours of training before they can fly a commercial aircraft. As a result, several airlines including Delta Air Lines, Spirit Airlines and JetBlue Airways are hiring pilots.

Fort Worth-based American Airlines Group, which owns the regional carrier, plans to rename it Envoy later this spring as it expands its use of outside carriers to fly routes under the American Eagle brand. Because the pilots did not ratify the new contract, American’s management team said it will move larger regional jets to other third-party carriers.

“American has informed us it will award the flying of the Embraer 175s to another regional carrier or several other carriers in the near future. The opportunity for us to fly these aircraft has passed, and we need to focus on doing our best with the aircraft we have,” said American Eagle’s president, Pedro Fabregas.

The union said American management plans to shrink the regional carrier as its older planes become less cost-efficient and are retired. However, no timeline has been given on when the older aircraft will be parked.

“As far as them actually shutting us down, the word from [management] is they don’t intend to do that,” Sprague said. “But they do intend to shrink us as we move forward.”

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. The deal included options for 90 other aircraft to be operated by the regional carrier. Initially, the pilots union leaders chose not to send the contract out for a vote but then reversed their decision in early March.

The union said new-hire pilot pay begins at less than $23,000 per year and if the contract had been approved, first officers would have been capped at $38,000 per year after four years of service.

Under the rejected contract, pilots would have received 1 percent pay increases starting in 2018 but the captain pay scale would be capped at 12 years of service, and the first-officer pay scale capped at four years of service.

At American Eagle, a new hire makes $26 an hour. Based on a guarantee of 72 hours a month, the first officer would make about $22,464 a year. Eagle is offering $5,000 signing bonuses to new pilots who agree to stay for two years. Captains, however, can earn significantly more, with pay rates of $67 to $104 an hour.

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