This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

American Airlines Needs to Deal With Regional Pilot Pay Issues, Says Lee Moak

Stocks in this article: AAL

DALLAS  ( TheStreet) -- American Airlines (AAL) needs to squarely face up to the problems of the regional airline industry, and it needs to start by reopening talks with the Envoy pilot group, said Lee Moak.

"Envoy management needs to come back to the table," said Moak, president of the Air Line Pilots Association, in an interview. "I believe that there is a deal there. I'm confident we can continue to work and get a deal that meets the strategic concerns of Envoy pilots as well as the operational needs of Envoy."

Read More: Delta Is Right on the Ex-Im Bank, Too Bad the Tea Party Is Its Biggest Ally
 
ALPA "is determined," he said. "We never give up."
 
A round of talks between Envoy pilots and the company ended last week, with no new contract agreement, after the pilots sought to forestall American's placement of new 76-seat Embraer E175 regional jets with another regional carrier.

Read More: 5 Most Beloved U.S. Airlines of All Time

American spokesman Casey Norton said Tuesday that "despite repeated efforts, we haven't been able to reach agreement with the Envoy pilots and have had to move on with different plans for our operations. No further contract discussions with the pilots are expected until their current contract becomes amendable in 2016."

The problem with the regional industry, Moak said, is falsely perceived to be a pilot shortage, when in reality it is a pay shortage. Starting annual pay ranges between $14,616 and $21,600 at the 10 regional carriers with the lowest starting salaries (Envoy is not among the 10), according to a recent ALPA survey.

The root cause of the pay shortage is that the mainline carriers don't pay the regional carriers enough to fly for them, Moak said. "The regional carriers -- Republic (RJET) , Mesa, Trans States, the wholly-owneds -- all undercut each other in their air service agreements" with mainline carriers, he said. "They don't have a lot of room in those contracts. (Wholly owned regional carriers are owned by major airlines.)

"What they need to do is to go back to the (mainline) brands and say 'we need to renegotiate these deals,'" Moak said. "The brands need to take ownership."

Moak said regional carriers such as Envoy need to provide two things -- robust flow-through agreements enabling movement to mainline American for all pilots who choose to move, as well as a career path for pilots who wish to remain. "Envoy pilots are flying the same passengers American flies," he said. "A typical customer does not know the difference."

The mainline carriers must come to realize that while many pilots needed work as the airline industry restructured following an economic slowdown that was exacerbated by the Sept. 11, 2001, attacks, "now the regional industry has to compete in the marketplace for those same pilots," Moak said.

Not only are most mainline carriers hiring, but also "foreign airlines from Asia are coming to the U.S. and running summits and saying 'come to us, we will move you to Asia and the Middle East,' and pilots are choosing to go abroad rather than work for wages that are below market," he said.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,452.65 +52.98 0.32%
S&P 500 1,904.01 +17.25 0.91%
NASDAQ 4,316.0740 +57.6360 1.35%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs