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April 09, 2014

American Eagle president: no plans for furloughs, or to seek flying contracts from other airlines

After announcing his airline's headquarters move to Irving, American Eagle president Pedro Fabregas talked about the future of the carrier, which will change its name to Envoy on April 15.

Fabregas said there are no plans to furlough employees even as American Airlines Group, its parent company, is expected to retire several of the aircraft in the Envoy fleet this year.

He also does not plan to seek flying contracts from other airlines like United Airlines or Delta Airlines and instead is focused on growing the ground business of Envoy.

Here's some of the questions Fabregas was asked by the media on Wednesday.

Q: With the pilots voting down a proposed contract two weeks ago, what are your plans for the future of American Eagle/Envoy?

Fabregas: First of all, I’m very happy that our pilots had the opportunity to vote. I respect their decision. American eagle management, as I mentioned will change its name on April 15, Envoy is a corporation, a company that we fly airplanes but we are also in the ground business. Today, we have 14,000 employees out of the 14,000 employees, 8,000 are dedicated to the ground, we have a lot of opportunity to grow that company from 8,000 employees to 10, 12,000 employees. We are a big company. Currently, we are evaluating our options. I cannot speak for American Airlines and what they’re going to do but I can tell you that already today we are evaluating our options for our future. Today we have 224 airplanes, by the end of the year we are going to finish with around 220. We have the E-140s which are the old airplanes that we need to evaluate how many we’re going to operate in 2015. But most important, the company is not going to shrink or disappear. I have 14,000 employees. When I always talk about the employees, I’m not talking about the pilots, I’m talking about the 14,000 employees we have and we keep growing the ground business. We have employees in 120 airports, probably more than 20 different airlines, and we do have a future in the ground business and I do believe that in the future, something could happen with the future of the flying business. So it’s a lot of expectations but we’re still working on the business plan, you know the vote came two weeks ago so we’re still evaluating what we’re going to do. But our pilots are professionals, very professional people, our flight attendants, all of our employees are professional but we just need to work together for a great future.

Q: Is your fleet going to shrink this year as American recently announced it would retire dozens of E-140s?

Fabregas: The total fleet is 224. But you have airplanes that are parked for painting, you have airplanes parked for heavy maintenance. Right now we have 59 E-140s. Next year we’re planning on operating around 34, so we are going to start parking them probably at the end of the year, probably start around January. But we are still evaluating our options on the 140. So I have 59 and we’re going to operate, we plan for 2015 to operate 34. We have been parking them for the past three or four months. So I would say that 34 will be the number for next year.

Q: Will you need to furlough pilots or flight attendants as you retire the E-140s?

Fabregas: I’m not planning any furloughs. I don’t anticipate. It’s not on my agenda or on my plans to furlough anybody.

Q: How are you managing your pilot staffing?

Fabregas: Right now for example in January, we had a class of 15 to 20 pilots. I would say we hired around 15 pilots, first quarter we hired 52 pilots but we are moving to American, and flow through to American about 20 per month, 20 per month goes to American, but it’s around 22 per month that are leaving or retiring so when you say 20 going to American, 20-24 to retire, you’re losing about 44 per month. So it’s very complicated the hiring process but what we have now are contracts with ten universities and around 6 flying schools what we call the pilot pipeline program which we are hiring pilots from those schools. They get a bonus when they come and work for us, so we’re working on the process of getting these pilots also from these schools. We are losing around 20 to 22 per month going to other airlines or retiring form the company…I would say it’s around 44 per month, we are hiring around 15 so you’ll see the deficit there.

Q: Have you reopened contract talks with the pilots union?

Fabregas: No discussions.

Q: What do you see happening in the economics of the regional carrier industry?

Fabregas: My opinion is you’ll see very soon probably 6 10 months there will be a turnaround in the regional industry. Let me explain why, there is a lot of big RJs, large RJs, coming in. For example if you have a route today being operated by a 50-seater and you have three flights from point A to point B, you’ll be operating that route in the future with one E-175 or one CRJ-900. The airlines are evaluating their 50seaters, they are not economically the best airline to operate today, so you’ll see a lot of large RJs like E-175 or CRj-900 coming in replacing those airlines, and these are not one for one so by default the offset will be different on the hiring process, so you’ll have airplanes coming in but you aren’t going to require the same amount of pilots to operate those routes so you will see a change in the industry over the next 8, 10, 12 months…Many airlines are evaluating their networks. Let me give you an example. American Eagle was alone flying for American, then came SkyWest, then ExpressJet at Dallas and then Republic and Chatauqua in Chicago and now Los Angeles will start SkyWest. American was at one point alone and now all these carriers are there. Very soon Mesa will join the system as American Eagle, flying for the new American from Phoenix also TransState, PSA and Piedmont. So the new American Eagle brand will have ten airlines flying for the new American. So American has the opportunity to evaluate their network and understand their schedules and eliminate duplicity. For example, if you have American Eagle flying from LaGuardia to DCA three flights, you don’t need three PSA flights from LaGuardia to DCA because you have duplicity there. So when American Airlines… American is already working on their network and evaluating their need for their real network, you will see some change. They have already started. There were some routes operated by American Eagle into Miami from DCA or Columbus, I don’t remember now, they were operating 5 to 6 flights a day for American Eagle, now it’s going to be two American flights operating on that route…There is going to be a reset on network planning and when I say reset that means major airlines like American Airlines they are going to evaluate their networks, understand their needs and how they are going to allocate their flying… American Airlines has to make the best decision for the customers, for their stakeholders, shareholders, so every decision American makes has the shareholders and the customers as the no. 1 priority.

Q: American’s previous management team had considered spinning off American Eagle. Is that being discussed currently?

Fabregas: It is not in our business plan to spinoff Envoy or PSA or Piedmont, American is going to keep three wholly owned carriers.

Q: Are you planning on trying to attract flying from other airlines, like United Airlines or Delta Air Lines?

Fabregas: Nope. No intentions. 

-Andrea Ahles

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Comments

Eagle (Envoy) employee

Sorry Pedro, We don't believe a word of of it!
You are nothing but Doug Parker's Cabana boy.

RL

I thought Pedro Fabregas was threatening to outsource a lot of flying for Eagle. A change of heart? It gets tiring listening to BS from one week to another.

Bwayne Robin

I don't understand how he can make the case that the regional industry will turn around. The other carriers are also finding a lack of pilots. What makes him think they can pull pilots and planes from other airlines? I think he's screwed and won't admit it.

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