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American Airlines and Envoy Pilots Try Again on Contract Talks

Stocks in this article: AAL

Dallas (TheStreet) -- Once again, pilots at American Airlines’ (AAL) regional carrier are talking with management, hoping to avoid the doomsday scenario in which Envoy becomes largely a ground handling company with a fleet of aging aircraft -- which would make it an unlikely choice for a major airline seeking a regional partner.

In an email to pilots on Tuesday, Bill Sprague, chairman of the Envoy chapter of the Air Line Pilots Association, wrote that chapter leaders had met with the company.

“The company approached us in recent weeks with the desire to construct an acceptable deal,” Sprague wrote. “The negotiating committee presented a proposal based on pilots’ ideas and expectations and we continue to work on ideas and concepts to keep discussions moving forward.

Read More: Note to JetBlue: Please Don't Change, Just Drop Money-Losing Flights

“Core issues still requiring favorable solutions for our pilots include the fleet plan, the nature of any longevity pay step caps and the bankruptcy amendment round credit,” Sprague said. Pilots negotiated a $36 million credit that becomes payable if the carrier meets certain goals.

American emerged from bankruptcy in November 2013 with $40 million in concessions, primarily work rule changes and reduced benefits, at Eagle, now called Envoy. Nine days after emerging, American proposed a new Eagle contract, one that pilots overwhelmingly rejected in a March vote.

Envoy has the disadvantage that its pilots are relatively highly paid for the regional industry, since they had been at Envoy for a long time, which was not what most envisioned when they joined the carrier. But because American had been shrinking for years, the Envoy pilots stayed put rather than moving on to generally higher paying jobs on bigger aircraft.

On the plus side, at least Envoy has pilots, at a time when regional pilots are hard to find given the low starting pay.

Read More: Boeing, Airbus Gets Nods at China Southern: Chinese-Built C919 Gets a Maybe

American spokesman Casey Norton said Wednesday, “American would like to place some of its large regional aircraft with Envoy, but the economics of the current contract are not competitive. There were informal discussions with Envoy ALPA to see what could be done to remedy this.

“American must have competitive costs for its regional feed and Envoy’s current economics are higher than those at other regional carriers,” Norton said.

Last week, American Eagle pilots staged a demonstration at New York LaGuardia Airport, The goal “was to inform the public and government officials (that) the 'pilot shortage' is a pay shortage, not a pilot shortage,” said Ray Igou, captain representative to the union’s New York local.

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