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March 28, 2014

American Eagle pilots reject new contract

Ae_crj3American Eagle pilots turned down a new contract on Friday, leaving the future of the regional carrier in jeopardy.

Pilots vote 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. With 92 percent of pilots voting, 70 percent voted against the contract.

"Despite threats from AAG management that they would seek other express carriers to conduct our flying, today’s vote demonstrates that the demands for contract concessions were not acceptable," Eagle union leader Bill Sprague said. "Today’s vote clearly shows that pilots can, and will, vote against any agreement that is not in their best interests."

The proposed contract included additional concessions above the $43 million in cost cuts the pilots agreed to when American Eagle's parent company was in bankruptcy. The union said pilots have not seen "meaningful contractual gains since 2004."

American Airlines Group, which owns the regional carrier, said it will rename it Envoy later this spring as it expands its use of outside carriers to fly routes under the Eagle brand. Since the pilots did not ratify the new contract, American’s management team said it will move larger regional jets to these 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 president Pedro Fabregas.

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

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.

Keep reading for the press release from ALPA announcing the pilot vote and the full letter from Fabregas.

-Andrea Ahles

American Eagle Pilots Reject Concessionary Contract

EULESS, TX—American Eagle pilots, represented by the Air Line Pilots Association, Int’l (ALPA) expressed their collective will and today rejected a concessionary contract proposed by American Airlines Group (AAG). With 92 percent of the eligible pilots casting their ballots, 70 percent voted against ratification of the contract.

“The Eagle pilots made a clear choice today, and it was not an easy one,” said Capt. Bill Sprague, chairman of the Eagle ALPA Master Executive Council. “Despite threats from AAG management that they would seek other express carriers to conduct our flying, today’s vote demonstrates that the demands for contract concessions were not acceptable. Today’s vote clearly shows that pilots can, and will, vote against any agreement that is not in their best interests.”

The proposed contract changes were a combination of pay freezes, reductions in per diem, and increased health-care costs in exchange for a promise to refleet the airline and enhance the existing agreement to transfer pilots to American Airlines. These concessions were in addition to the $43 million the pilots gave the company during bankruptcy last year.

Having previously worked under a 16-year contract that concluded with AMR’s bankruptcy filing, the American Eagle pilots have not seen meaningful contractual gains since 2004. New-hire pilot pay begins at less than $23,000 per year. Had the contract been approved, first officers would have been capped at about $38,000 per year after four years of service.

“Management has said many times to us that this agreement is their ‘bottom line’ offer and believe that they will be able to get the same cost savings from another provider,” Sprague said. “We question whether any regional airline is able to attract and retain pilots by offering poverty-level wages. American Eagle already has a career progression arrangement with American, and yet, due to a lack of pilots, it’s unable to perform the regional flying that American Airlines desires. Other airlines are experiencing the same problem.”

Our Pilots have decided against the Tentative Agreement

Dear Team,

I am disappointed to report our pilots have decided not to ratify our Tentative Agreement (TA) with ALPA. While I made no secret of my view that the TA would have benefited our pilots and everyone at American Eagle Airlines, I respect our pilots’ decision and I’m pleased they had the opportunity to vote on the TA. Without its ratification, we will continue to operate under our current Collective Bargaining Agreement with ALPA.

This is not the outcome many of you or I had wanted, but now is the time for us to collectively accept our pilots’ decision and move forward. We will operate our current fleet in accordance with our business plan, which, to be clear, includes us remaining an airline. Our fleet will downsize as smaller, less-efficient aircraft, such as the Embraer 140s, are scheduled for retirement. We also will need to make appropriate changes to our business to accommodate this and ensure our costs are in line with our reduced fleet.

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.

Even with today’s news, we will continue our work to run a safe and reliable operation that is as competitive as possible. This is a standard to which I will hold all of you and one on which I know we can deliver. We have a strong and growing ground handling business, which has thrived during one of the most dynamic and challenging times in our company’s history. New business and employees continue to be added on the ground handling side of our business at a rapid pace and we will aggressively seek more opportunities to grow this team. This, and your dedication to your responsibilities and our passengers, means there is still a significant role for us to play in our industry.

While the debate regarding the Agreement in Principle and later the TA was at times intense during the past several months, the vast majority of you showed a passion for and commitment to our company I will not soon forget. I want to thank our pilots and all of our employees for how they conducted themselves with the utmost professionalism during both the negotiations and the voting period.

Thank you for all of your work on behalf of our passengers and your commitment to American Eagle Airlines.

Regards,

Pedro

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