American Pulls Trigger on Big Regional Jet Orders
American Airlines has signed a pair of firm orders covering a total of 90 new Embraer and Bombardier regional jets for placement with its American Eagle regional affiliates, the airline announced Thursday. The deals involve 30 seventy-six-seat Bombardier CRJ900s and 60 Embraer E175s. The value of the Bombardier order, not including options placed for another 40 airplanes, amounts to $1.42 billion, while Embraer values its firm order at $2.5 billion. American has reserved options on another 90 of the Embraer jets.
American has agreed to place the Bombardier jets with current CRJ900 operator PSA Airlines. It expects deliveries to start during next year’s second quarter. It said it would announce which airline would fly the Embraer jets at a later date.
PSA ratified a letter of agreement in late September that granted them the right to fly the CRJ900s in return for several concessions in their Air Line Pilots Association collective bargaining agreement. The ratification came as a severe blow to American Airlines regional subsidiary American Eagle, which rejected a similar offer for the right to the 76-seat jets in return for a so-called B-scale pay formula for new-pilot hires.
“It is with profound disappointment that we learn of the ratification of the concessionary [tentative agreement] at PSA,” wrote American Eagle Master Executive Council chairman Bill Sprague and MEC vice chairman Matt Rettig in a letter to Eagle’s pilots. “While we respect the right of the PSA pilots to determine what is best for them and their families, we believe it was a colossal mistake to unnecessarily drive the industry standard to such a miserable level.”
In return for the promise of the 30 jets, PSA’s pilots have agreed to limits on their captain pay scales to the 12th year after date of hire and limits on first-officer pay scales to the fourth year. The agreement also extends the existing contract for another five years, until 2023, with no interim contract amendments. It allows for no pay raises other than cost-of-living adjustments for the duration of the contract, and by the third year calls for an increase in medical benefit contributions from 27 percent to 35 percent.
Apart from the promise of the 30 new jets, the PSA pilots will receive an “enhancement” to the guarantees for interviews at US Airways stipulated in the old contract, namely a requirement that the mainline must hire four PSA pilots per month rather than three. Under the terms of the new contract, the parent company would offer interviews to PSA pilots in seniority order. Pilots who do not receive an offer of employment from US Airways can interview again, but if they fail to gain a position for a second time, their longevity at PSA freezes for the remainder of their careers.
“This deal in some ways mimics what was negotiated by Endeavor Air (formerly Pinnacle Airlines), a wholly owned subsidiary of Delta Air Lines, during their effort to avoid liquidation in bankruptcy,” said the Eagle MEC in a recent “Newsblast” to members. “One significant difference is that the Endeavor pilots were compensated for many of the concessions they provided. The only potential gain for the PSA pilots in this deal is the possibility of new aircraft.”