In a letter sent to American Eagle pilots on Monday, union chair Tony Gutierrez told members they may need to consider more contract concessions to keep the regional carrier from shrinking into oblivion.
Gutierrez said the regional airline industry is in "disarray" as Delta Air Lines has previously announced it will be able to cut its regional feed costs dramatically by 2017 with clauses that allow it to reset rates at its regional feeders to match the second lowest contract it has.
"US Airways management advised us that in light of that development, it is not willing to place the next “large” RJ order at Eagle or any other regional airline that does not have a plan in place to trend toward Pinnacle’s cost structure. And that is where we find ourselves today," Gutierrez wrote.
The Air Line Pilots Association, which represents Eagle pilots, is meeting this week with American management to discuss possible contract options.
Keep reading for the full letter from Gutierrez.
Fellow American Eagle pilots:
I realize that my letters to you often begin by stating that the following is incredibly important, please read it carefully. But in reality, we have been through extremely challenging times at American Eagle beginning with AMR’s proposed divestiture of Eagle in 2011, the bankruptcy in 2012, and now the AA-US Airways merger in 2013. Therefore, once again, I ask for your undivided attention as we discuss our current situation.
Depending on which domicile you are in, you may also be receiving emails from your local council representatives explaining their thoughts on our current situation. I ask that you read all of these publications and formulate your own opinion regarding our current situation and your preferred outcome.
Despite what you may feel about our bankruptcy agreement, there is no question that it is significantly better than the outcome at Pinnacle and Comair. Near the end of the bankruptcy negotiations, we were aware of and in contact with our brothers and sisters at Pinnacle and ended our negotiations with full awareness of their negotiations. Despite the direction that Pinnacle was heading, ALPA, American Eagle, and AMR agreed that the Eagle pilots had met AMR’s cost savings targets and that was sufficient for AMR’s plan of reorganization. Although we knew at that time that Pinnacle would be less expensive than Eagle, it was believed to be an outlier and not a likely industry trend.
What was not public knowledge at the time was that Delta Air Lines has clauses in its regional capacity purchase agreements that essentially allow it to reset the block hour rates that it pays its other regionals to match the second lowest of any of its regional carriers. As a result, Delta’s announcement made public its ability to drive all of its regional feed costs near Pinnacle by the end of 2017. Because nearly fifty percent of all mainline departures are flown by regional partners, the competitive advantage that Delta is threatening to realize is massive.
When Delta’s CEO elected to make this public over a month ago, US Airways management advised us that in light of that development, it is not willing to place the next “large” RJ order at Eagle or any other regional airline that does not have a plan in place to trend toward Pinnacle’s cost structure. And that is where we find ourselves today.
Every EMB at Eagle is on a return/retirement schedule, resulting in a year-over-year reduction in the size of Eagle, beginning last year. Some pilots have opined that a shrinking Eagle will help move pilots to the mainline more quickly. This is not a foregone conclusion since training constraints remain a factor in whether or not Eagle meters, despite the fact that it may have less need for new pilots. In addition, a shrinking airline means that first officers will be inhibited from upgrading and will therefore be challenged to obtain the required Part 121 PIC time necessary for employment eligibility at mainline carriers. In addition, we all witnessed that Delta did not keep Comair’s flight operation open until it had retired all of its aircraft, it shut Comair down when Comair no longer had enough aircraft to justify the flight operation, which in that case was approximately 70 aircraft.
For these reasons and many others, eight of our nine MEC members gave specific direction to the MEC Negotiating Committee to engage with management to look for possible solutions that may be brought to the pilots for your consideration. Even the MEC members who publicly opposed negotiations in their blast emails to you voted in favor of continuing negotiations to see whether any acceptable solution could be found.
This is the right course of action. It is not uncommon for me to hear pilots state, “Tell the company that we’re done negotiating with them,” or “Tell the company we already have a bankruptcy agreement.” Although these statements may sound simple and even correct, they are not. It is not the job of your elected representatives (the MEC) to decide whether to shrink Eagle’s flight operation into non-existence. It is their job to fight vigorously to bring pilots as many viable options as possible so that you can decide the fate of your own career.
The regional industry is in disarray, with Republic, SkyWest, ASA, and ExpressJet pilots all being told that any new contract agreements must result in cost reductions. Delta Airlines has already arranged its capacity purchase agreements to drive down its regional pricing, regardless of the impact to those regional pilots. Your MEC and its negotiating committee are using every resource available to it to find creative ways to address the current industry instability to ensure that we maintain career stability at EGL while allowing those interested in flowing with as much time as possible to do so.
Clearly, if no acceptable solution is available, then no option will ever be presented to the pilot group. On the other hand, if through intensive negotiations under the supervision of your elected representatives, our efforts produce a legitimate option, we will present it to you.
My request of you is that you continue to provide your local representatives, negotiators, and other volunteers the same support and unity that was so prevalent during the bankruptcy negotiations. This negotiation is challenging enough as it is. Please don’t give the company more leverage by succumbing to crewroom rumor that breeds disunity and distrust.
We are engaged with management this week and will report to you as soon as we have something substantial to share.