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March 17, 2014

As Eagle pilots begin to vote, dueling messages from union chairman and union vice-chairman

American Eagle pilots began voting on a tentative agreement with the regional carrier last week and tensions are running high.

Union vice chairman Matt Rettig wrote a lengthy letter sent out to pilots last week explaining why he supported the tentative agreement and that pilots should examine all of the issues surrounding the deal.

"It may sound like I am trying to sell you this deal, but I AM NOT. I simply want you to understand why I see this tentative agreement as a legitimate concept that deserves your consideration. It may deserve a “no” vote but that vote should be based on educated thought and not on raw emotion," Rettig said. 

Rettig went on to discuss the recall vote that occurred earlier this month trying to remove him from his position as vice chairman.

On Monday, union chairman Bill Sprague said he plans to stay neutral during the voting process but offered a personal perspective on the situation at American Eagle.

"The elements included in the current tentative agreement were achieved by having a clear understanding of what the pilot group expected and focusing our efforts on moving the company closer to a position that we can accept.  The MEC decided that we are as close to that position as we can get in the current environment, and now it’s time for you to weigh in to decide if it should be ratified," Sprague's letter said.

If it is ratified, the 10-year contract would allow Eagle pilots to fly new larger regional aircraft for American Airlines in exchange for freezing pilot pay scales until 2018 and eliminating profit-sharing.

Voting began on March 13 and will close on March 28.

Keep reading for both letters.

-Andrea Ahles

LETTER FROM UNION VICE CHAIRMAN

Fellow American Eagle pilots:

If you are not aware, the MEC voted to recall me last week, and the only explanation given was that I “associate” with “Team Tony,” whatever that means.

Not surprisingly, the five MEC members attempting to recall me did not conduct any policy research and therefore believed they had recalled me with a five to four vote, rather than the two-thirds required by ALPA’s constitution and bylaws. Therefore I am still the MEC Vice Chairman, and as such I will continue to fulfill the duties I committed to at the time of my election.

The reason for me writing you today is not to bemoan the MEC, but to give you a leadership perspective on the current Tentative Agreement so that you can make an educated decision, rather than cast a vote on the baseless emotion of those MEC members who are working diligently to secure a “no” vote. I have zero faith that the current SPC and Comm committees are either capable of or interested in providing you with a factual basis upon which to make your decision. With that in mind, the following is an attempt to cut through the emotions and games, and to take a sober and thoughtful look at the circumstances around this decision.

There is a much larger battle occurring than what exists on Eagle property. There is a difference in opinion among managements on which solution is better. That contrast is no better drawn than by looking at what is occurring between Republic Airways and American Eagle. Republic CEO Brian Bedford has publicly stated that he can no longer staff all of his 50-seat and Q-400 fleets and that the solution lies in a combination of relaxed legislation and bettering the economics of pilot contracts to attract new pilot applicants. In contrast, AAL management believes that the cost of operating regional aircraft must remain low, lest feed operators become unviable. Rather than enhance the economics of regional contracts, they are trying to offer guaranteed job protection in the form of minimum fleet counts and guaranteed mainline jobs.

Truthfully, both of these concepts are legitimate and both deserve a fair look.

Today, American Eagle has no fleet protection at all. AAL has already determined a provider to assume our current CRJ-700 flying, has placed 30 of its large RJ orders at PSA, and allegedly has a provider ready to assume the first set of EMB-175 orders. I’ve heard it argued that that’s a lie, and that no other carrier is waiting in the wings to operate these airplanes. I happen to know that it is true, but even if you don’t choose to believe this, management would be completely negligent if it didn’t have a contingency plan for a major unit of its business. Of course it has a “Plan B” in case we do not come to terms. It has also been argued that this is all a bluff, that we’re going to receive those airplanes anyway. Even if that’s true–and that’s a big “if”–that process would take months and months to play out as management shops the airplanes around, maybe doling out some of them to other carriers. During this time, our current airplanes, and the jobs that come with them, will steadily disappear. The longer Eagle pilots delay coming to a ratifiable agreement, the smaller our piece of the pie becomes, even in this best-case they’re-gonna-come-back-to-us scenario.

On the contrary, AAL is willing to offer Eagle pilots a minimum of 170 aircraft for the duration of the agreement (twice the size of the only other fleet guarantee in the entire industry) and enhance the flow through (already far-and-away the best flow program in the industry) such that Eagle pilots will receive the FIRST THIRTY new hire positions at AA every month. In other words, if AA hires only 20, they will all be Eagle pilots. If AA hires 30, they will all be Eagle pilots. If AA hires 40, 30 will be Eagle pilots and 10 will be street hires. This is a huge improvement over today’s program where if AA hires 20, only 10 would be Eagle pilots, and if they hire 50, only 20 are from Eagle.

We have performed the analysis and given AA’s known Age 65 attrition alone, and putting aside any growth, no newly hired pilot will ever be capped at step 4 on the F/O scale, nor will any newly-hired pilot be capped at step 12 on the CA scale, unless they elect not to flow. Very few of us already here will ever reach the caps, and those who do would only be capped for a portion of a year. Naturally, this all assumes the flow is working like it should, like it currently is working. There exists this concern that the flow will stop or slow and all these rosy projections about how quickly we’ll all be at AA will be out the window. Those of us who were FOs for 8+ years are well aware of what happens when the music stops. And we also know that the industry is cyclical, that yes things are moving now but it doesn’t take much to make it stop. And this is all true. Because of this experience, we tried and tried to get the company to tie the pay step reductions in the TA to some kind of flow performance, thus putting the liability for the flow working correctly on the company. We were able to delay the reduction of the FO scales, but ultimately the liability for the flow stopping rests with us–there are no two ways about it. If the flow stops, our Captains will still be capped at Step 12. But here’s the thing: if the flow stops, it’s because something terrible happened in the world–some major geopolitical event, warfare, fuel supplies cut off, some major catastrophe. And if this happens, God forbid, merely standing pat with our current contract isn’t going to help us either. Sure, we might earn a few more dollars for a few months as our company and industry are breaking down, but whether we ratify this TA and the music stops, or we stay with our current contract and the music stops, our situation will be dire and the company will be seeking relief either through the courts or liquidation. This new management will not simply let another “lost decade” happen, where over a third of its Captains are at 18- year pay. They will act. Regardless, there is no protection, either in the TA or in our current agreement, against a major geopolitical event harming our careers. And short of a major geopolitical event, based on Age-65 retirements alone at the mainline, there is no scenario where the flow stops for an appreciable length of time.

Some pilots have claimed that the pilot shortage will rescue us. Two things you should consider: first, the entire regional industry is trading in an average of two 50-seat aircraft for one large RJ, thus greatly reducing the size of the required regional pilot population. This does not negate the pilot shortage situation we find ourselves in, but it does elongate it and soften it. Second, AAL is the only mainline carrier that currently enjoys overcapacity in its regional feed. As it consolidates AA and US Airways, it will need less overall feed. What a tragedy it would be if Eagle becomes the carrier from which it decides to “right size.” A shortage of supply is great for suppliers, unless the shortened supply actually reduces demand, and that’s exactly the situation we could be facing. Also, if we find ourselves with a true shortage, wouldn’t we rather have a minimum of 170 hulls that the company must fly? Or be in the middle of a massive shortage with no fleet plan, where they can just shrink us to deal with the problem. If this TA is ratified and a shortage does happen, we will have significant leverage due to our min 170 aircraft.

It may sound like I am trying to sell you this deal, but I AM NOT. I simply want you to understand why I see this tentative agreement as a legitimate concept that deserves your consideration. It may deserve a “no” vote but that vote should be based on educated thought and not on raw emotion.

Some believe that if we say “no” to this agreement that AAL management will have to come back to Eagle again. I share this belief but not in the same manner as many. AAL will likely come back again, eventually, but to an Eagle that has lost its CRJ-700 fleet, lost a couple dozen of its 50-seat jets, and the offer next time, should there be one, will be substantially smaller since many of the 150 EMB-175s will already be placed elsewhere. Also, many of the new hire positions we are being offered in AA’s new hire classes will be promised to another carrier willing to adopt these concepts, so any enhanced flow in a future offer will either be diminished or nonexistent.

Republic’s deal is also legitimate. It has across-the-board raises, significant enhancements in trip and duty rigs, and may other smaller items. Though it is not clear if even their TA will be ratified by their membership, it is the kind of contract that regional pilots have become used to in the post-9/11 era, when we fought to make regional airlines a career option out of necessity. However, there is a dirty little secret about Republic’s TA: Republic Airways cannot afford this contract without winning additional flying. It isn’t going to win that from Delta, who has already got rate-resets built into its existing feed contracts that will result in underpricing Republic. It also is unlikely to win any new feed from AAG, because we have already seen what AAG management is willing to pay. That leaves a limited market in United, who has recently been contracting with feed providers with cost structures like Mesa. Not only that, but the more mainline new-hire seats are committed to flow-through pilots, the fewer there are available to pilots from elsewhere. This means that carriers like Republic with no flow-through agreements will stagnate. Pilots who go there thinking they’ll take the higher wages and then just go interview at a mainline may find themselves locked out. Delta will likely start a robust flow program with Endeavor, maybe even restart its flow with Compass, so there may be very few Delta hirees off the street. AAG already has an obligation to us, and the enhanced flow currently being offered to us will almost certainly go to PSA or Piedmont pilots, so there will be very few seats available to “off the street” hires at AA. This leaves very few mainline seats for pilots from other regionals to compete, and it’s why I believe that a robust flow-through model for pilot recruitment, such as the one being offered us, is a better and more sustainable one than what Republic is attempting.

I know we all like what we’ve seen of Republic’s new TA but if Republic is unable to sustain it, all gains could quickly be lost in Chapter 11.

Some pilots claim that we need to “hold the bar” on the regional industry. But let’s consider this question: which is a better bar to set? A 30 per month guaranteed flow through without expiration, a minimum fleet guarantee of 170 hulls, and an enforceable guarantee that Eagle’s inability to staff will NOT allow it to reduce the flow, with the cost being capping pay steps at 12 and 4 with some exceptions? Or, is it better to have no job progression to a mainline, no fleet protection, and yet fight to keep the regional airline a top peer career from which one can retire? I know the Comair pilots had a great career contract, but it lacked a minimum fleet count or a flow-through that does more to reduce costs than any possible concession.

Even if we think the 12/4 caps are disgusting, and that first year pay is too low to attract any new hires especially if Republic ratifies, then aren’t we in the driver’s seat? The company has staked its whole recruitment model on the flowthrough. If that doesn’t work and they find that new applicants are going to, say, Republic for better starting wages, then the first thing Eagle will have to do is come back to us and beg us to raise wages. Meanwhile, we’ve already secured the fleet guarantee and the flow program that no one in the industry can approach let alone match.

At the end of the day, you have to decide which paradigm is better: the concept of a regional airline becoming the entry point to a mainline carrier with the tradeoff being that the regional will no longer be a retirement option for future pilots. Or is the better concept to hang on to what we have gained since 9/11, where regional airlines provide retirement opportunities for willing pilots, but the tradeoff is the constant whipsaw that exists when there is no fleet guarantee and no flow through to keep longevity costs down?

One concluding thought. Over the years, I have heard pilots state that we shouldn’t vote for anything because management is only going to violate it. And I know that when you’re flying the line and crew scheduling makes you fly what you believe to be an illegal trip, the feeling of frustration and helplessness is hard to shake. But it is not an accurate picture of the full story. Please recall that the only reason we have the 824 agreement or the Protected Pilot agreement is because management did violate our contract and these two crucial programs resulted from the company being held responsible for those violations. So, while you may not want to better an agreement for fear that management will simply violate it, our clear and consistent history has been that we are better off arbitrating over language we believe benefits us than not to have that language at all.

No one likes concessions, I get it. This pilot group has been beaten down by management going on four years now, first over divestiture, then of course bankruptcy, and now this negotiation. We’re all sick and tired of having our jobs threatened while upper management brags about how much money it has. No doubt the company’s PR has been horrible, which only puts it in line with damn near every other company in the world. While we’re all weary of this nonsense and while we all agree it has to stop somewhere, upper management doesn’t get it and they never will. Voting no on this TA is not going to wise them up or teach them any lessons. So our choice is either to lament what’s become of corporate ethics in our time and make an emotional and self-sabotaging vote based solely on that, or we can think about what’s best for us and our futures. We can’t just say no to everything forever. At some point we have to create a vision for the future and embrace it. To me, cradle-to-grave career progression, along with fleet and pay protections for pilots already here who wish to retire is that future, and that’s what this deal achieves. Nothing is guaranteed of course, but in this industry, this TA is as close as it gets.

I appreciate you taking the time to read this long letter. I hope that doing so has helped you to understand why both of these concepts, while vastly different, are both deserving of your thoughtful consideration, and I trust you can tune out (as I will) the political and viciously ad hominem attacks which will no doubt be headed my way for this, and consider the ideas I’ve presented and either accept or reject them with clarity and honesty.

Fraternally,

Matt Rettig

MEC Vice-Chairman

LETTER FROM UNION CHAIRMAN

March 17, 2014

Message from the Chairman

Fellow Eagle Pilots:

I've made a number of commitments to you both during my campaign and since my election last August.  I sought this position to return the direction of our pilot group back into the hands of the membership and away from a cabal of individuals who staunchly believed that they knew what was best for everyone, whether you agreed with them or not.  A cornerstone of that effort has been to re-establish a line of communication between the line pilots and their local representatives.  Another key component has been returning authority to the MEC by including them in every significant area of our direction.  The result has been a bargaining effort that represents the perspective provided by our membership.  I also committed to force any agreement to live or die by its merits alone.  We won't sell it, nor will we sabotage it.  This is an extremely difficult line to walk, but we've managed to stick to that commitment.

This week, our Vice-Chairman decided to deviate from that effort.  Matt attempted to send, without my knowledge a letter that outlines his personal opinion of the TA.  I read the letter once the attempt was discovered and decided that it was not consistent with our commitment to stay neutral.  As a result, I chose not to send it.  The letter then surfaced online and was distributed by management in every domicile via the chief pilots’ offices.  Despite my concern over biased content, the letter includes a very valid viewpoint related to the tentative agreement.  If you look past the political diatribe and get to the substance of his perspective, you will find a well thought out position that is shared by many of our pilots.  I encourage everyone to read it from that standpoint and consider his arguments.

The elements included in the current tentative agreement were achieved by having a clear understanding of what the pilot group expected and focusing our efforts on moving the company closer to a position that we can accept.  The MEC decided that we are as close to that position as we can get in the current environment, and now it’s time for you to weigh in to decide if it should be ratified.

I'm often asked for my personal opinion regarding where we are.  In the spirit of staying neutral, I normally decline to answer that question and stick to the facts.  I will take a moment here to point out some of my personal perspective: 

-  I personally believe that AAG's assertion that pilots entering our profession will be willing to work for food stamp wages on the promise of a career at the mainline will prove to be false.  Soon, American will not be the only carrier offering this type of career progression.  We will initially see recruiting pick up until Delta or United adopt a similar model.  Any concept that will succeed in attracting and retaining qualified pilots will require a compensation package that justifies the long road it takes to get here and recognizes the product we provide.

-  I believe that Pedro Fábregas is genuinely committed to making our carrier the largest and most successful airline in the regional industry.  He has a level of motivation, loyalty, and energy never before seen at the helm of Eagle.  The effort he makes is both visible and behind-the-scenes and I have confidence in his intentions.

-   I believe that the company may initially try and place some 175's at another carrier.  I also believe that there is an equal chance that they won't be able to find a carrier that will ultimately be capable of staffing them.  We have heard several versions of the company's "plan B".  Each different version included a host of carriers that are all making public their challenges in finding qualified pilots to staff what they are currently flying.  The idea that they could reliably add several thousand block hours to their already strained schedules seems unlikely.  Even so, there are ways around those challenges.  Make no mistake, the possibility that AAG decides to place the 175's elsewhere cannot be ignored.

-  I believe the language supporting the TA is nothing like the weak language we've fought in the past.  There is no such thing as bulletproof language, but we have closed many loopholes that experience has taught us to identify.  The proposed flow provisions are not Letter 3.  Letter 3 no longer exists.

-  I believe that ALPA National has worked hard to aid our efforts.  We benefit from a host of resources - everything from helping our negotiators verify the credibility of company financial claims, to access to extensive communication tools.  Despite any perceived disconnect with Captain Moak's perspective on our profession, we are in complete agreement on how to achieve success in bargaining with AAG.  Using his access and influence, Lee has managed to impact the process in a way that has allowed us to improve the agreement.  We all owe him a debt of gratitude.

The MEC is ready to move forward beyond the vote regardless of the outcome.  Read the agreement, ask questions, talk with your peers, and vote accordingly.

Bill Sprague

MEC Chairman

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