Regional Carrier Announced Plans To Purchase Larger Embraer Jets In January

The Air Line Pilots Association, Int’l. (ALPA), the union that represents the American Eagle pilots, has filed a formal objection to the capacity purchase agreement recently announced between American Airlines and Republic Airways. The objection was filed in the United States Bankruptcy Court for the Southern District of New York.

According to the filing, the pilots hold that the proposed agreement between American and Republic would severely divert the flying of large regional jets to a competitor and would needlessly undermine the value of American Eagle, threatening the livelihood of Eagle’s pilots and other employees at the airline. American Eagle, a wholly owned subsidiary of AMR, has provided the substantial majority of regional flying for American Airlines, which is also an AMR subsidiary.

“The Eagle pilots negotiated and approved a labor agreement that provides Eagle with market-competitive labor rates for the next eight years,” said Tony Gutierrez, chairman of the Eagle unit of ALPA. “This potential deal signifies AMR’s huge and unnecessary commitment to a third-party company at the expense of its own employees. If this transaction is approved, it is unclear whether a viable number of large regional jet opportunities for American would remain available to Eagle.”

In December, the bankruptcy court approved a long-term collective bargaining agreement between ALPA and Eagle that met cost-savings targets that Eagle management and AMR represented as necessary for Eagle to position itself as competitive in the regional airline industry. In the pilots’ collective bargaining agreement, Eagle management has committed to “aggressively seek to increase flying opportunities when it is economical, practical and feasible to do so, including, but not limited to, bidding on opportunities to provide additional feed to American Airlines.”

Under the proposed agreement, Republic would operate large regional jets (53 Embraer E175 aircraft) under the American Eagle brand with service to start in June 2013 and continue to increase through 2015. The agreement will then extend through 2027, as it will run for 12 years from each of the covered aircraft’s entry into service.

“Given the lack of disclosure of the economic considerations that led to this contract, the relationship of this agreement to AMR’s strategic choices, and the lack of consideration for Eagle’s interests, we believe that the Court should decline to approve the Republic motion,” states the objection submitted by ALPA.

(Artist's rendering of E175 in American Eagle livery)

FMI: www.alpa.org