(Adds details throughout, quote from union leader, company
comment paragraphs 5 and 9-10)
March 28 American Eagle Airlines will shrink its
fleet and will lose the opportunity to fly larger regional jets
that its parent American Airlines Group has ordered
after its pilots rejected a concessionary labor contract, the
subsidiary said on Friday.
The move means that other regional carriers that fly under
the American Eagle brand, such as Republic Airways Holdings
, could get more work from the world's largest airline.
The Air Line Pilots Association union, which represents more
than 2,700 pilots at American Eagle, said 92 percent of eligible
pilots cast ballots and that 70 percent voted against
ratification. Voting on the contract ended on Friday.
The union said concessions that included pay freezes and
increased healthcare costs were too much for pilots who had
already made givebacks when American was in bankruptcy last
"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," Capt. Bill Sprague, chairman of ALPA Master
Executive Council at American Eagle, said in a statement.
"Today's vote clearly shows that pilots can, and will, vote
against any agreement that is not in their best interests."
The union's statement said American Eagle pilots had worked
under a 16-year contract that ended when former parent AMR Corp
filed for bankruptcy in late 2011, and it added that pilots had
not had "meaningful contractual gains" since 2004.
American Airlines, which became the world's largest carrier
when it merged with US Airways in December, had agreed to put 60
new Embraer 175 jets it ordered last year in service with
American Eagle Airlines in exchange for the pilots approving the
10-year labor contract that had concessions. The airline had
warned that should pilots reject the labor accord, the new
aircraft would be placed with other regional airlines.
The pilot union's leaders had declined to send a tentative
agreement to the membership for a vote in mid-February, but
later had a change of heart after more talks with the company.
After the vote on Friday, American Eagle President Pedro
Fabregas said the carrier, which plans to change its name to
Envoy, would shrink its fleet and "will need to make appropriate
changes" to bring down costs.
"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," Fabregas said in a letter to
American Eagle, which has more than 14,000 workers, is one
of a number of carriers that operate regional flights for
American. Other carriers that operate regional flights under the
American Eagle and US Airways Express brands include Republic,
Chautauqua, ExpressJet, SkyWest, Mesa, Air Wisconsin and Trans
American Airlines shares were up 2 percent to $36.49 in
Nasdaq trading on Friday.
(Reporting by Karen Jacobs in Atlanta; Editing by Sophie Hares
and Tom Brown)