American Airlines and Envoy Pilots Try Again on Contract Talks

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.

“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.

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.

"American is demanding work and wage concessions from pilots,” Igou said. “At a time when they are posting record profits and we should be discussing raises, they are demanding more concessions beyond what we negotiated in bankruptcy.”

In June, American announced that instead of sending 20 new Embraer E175 regional jets to Envoy, it would send them to competitor Compass Airlines.

Norton said Envoy has a contract with Compass regarding the 20 aircraft. Now “we’re evaluating our options for a cost-competitive regional carrier to operate the remaining 40 E175s” included in an order for 60 aircraft, he said. “We also have the option to add future E175 deliveries to our Compass agreement.”

Envoy spokesman James Magee said Wednesday, “We’re in the middle of talks with the company, looking at it from the perspective of how can we reach an agreement that is ratifiable and also meets the company’s objectives.” The union’s master executive committee met Tuesday to review the concepts that emerged in the talks, Magee said.

“The biggest issue is the necessity to have a commitment of a certain number of aircraft,” he said. “That sends a message to new pilots that this is where you want to work.”

Additionally, the airline wants to reduce the number of pay steps, while the union wants to ensure that current pilots don’t lose the salary levels they have already attained. Currently, a 15-year Envoy pilot earns $98 an hour. But pilot scheduling systems mean the average number of flight hours annually is around 700, fewer than at other airlines.

A key area is the flow through agreement that provides Envoy pilots a path to American’s main line. American currently includes 20 Envoy pilots in each of its pilot classes. “We’ve always believed that a very natural way to solve any kind of longevity problem is for more pilots to flow through to American,” Magee said. “That is an area that is under discussion.”

Norton said Envoy offered an “industry leading” flow through agreement in the tentative contract agreement that Envoy pilots overwhelmingly rejected in March. “Each month, American’s first 30 pilot hires would have been Envoy flow through pilots,” he said. “If American hired between 360 and 720 pilots a year, at least 50 percent of these hires would have been Envoy flow-through pilots.”

Written by Ted Reed in Charlotte, N.C.
To contact this writer, click here.

Follow @tedreednc

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