Cuts at American raise stakes of Eagle dispute

 - May 6, 2008, 5:33 AM

American Airlines’ decision last month to retire 74 more Fokker 100s and nine Boeing 767-300s will mean continued capacity stagnation at its wholly owned American Eagle subsidiary, as long as the Allied Pilots Association has its way. APA– the collective-bargaining representative for American’s mainline pilots–negotiated a scope clause in its last labor contract that forced an ASM freeze at American Eagle when the major airline furloughed hundreds of pilots as a result of September 11-related capacity cuts. The latest plans by American to reduce its pilot roster by as many as 550 would likely extend the freeze, perhaps leading to further controversial maneuvers by Eagle to open room for more capacity within the constraints of its scope clause.

Earlier this year American responded to the contractual ASM limits at its regional affiliates first by removing seats from Eagle’s Saab 340s and ATR turboprops, then by stripping the “AA” designator code from St. Louis-based flights operated by American Connection partners Chautauqua, Trans States and Corporate Airlines. Meanwhile, speculation over the sale of Eagle’s San Juan, Puerto Rico-based Executive Airlines subsidiary continues to breed consternation among Eagle pilots based in Miami and the Caribbean. Although talks with would-be Executive owner Caribbean Star broke down this spring, American continues “to evaluate its options” on its Caribbean unit, and has not dismissed the possibility of a sale to open more room for ASM growth.

Of course, the plan to remove the code from Connection flights predictably drew cries of foul from both APA and ALPA–the collective-bargaining representative for the Eagle pilots. But not until mid-July, when American Eagle announced that it would sell 14 Embraer ERJ-145 regional jets to American Connection partner Trans States Airlines, did the tenor of the so-called outsourcing issue reach such a fever pitch.

“Our collective-bargaining agreement requires that if American Eagle transfers all or part of the airline’s operation, our pilots and contract will be transferred with the aircraft,” said Eagle ALPA chairman Capt. Herb Mark. “Unless American Eagle management plans to comply with these provisions, their announcement amounts to a declaration of war.”

American’s decision to sell the airplanes to Trans States stems from scope-clause language that limits regional code-share partners to 67 jets certified to hold more than 44 passenger seats. Eagle estimates that, under its current delivery schedule for 70-seat Bombardier CRJ700s, it would reach that cap by January. American plans to transfer the first of the 14 fifty-seat jets to Trans States in November, and continue deliveries at a rate of roughly one airplane a month until early 2004. Planning to fly the airplanes �under its new “AX” code, Trans States said it will announce its deployment plans later this year, although American acknowledged that the first phase will certainly center on St. Louis-based hub feed for American Airlines.

On August 19 ALPA announced that it asked the National Mediation Board to intervene in the dispute with hopes of forcing negotiations for a new collective-bargaining agreement. Perhaps most significantly, ALPA called for the participation of APA in the talks and broached the possibility of American mainline and Eagle pilots sharing the jobs saved as a result of any agreement to keep the 14 regional jets.

Planning a 9-percent schedule reduction this fall, compared with the 4-percent seasonal cut it typically institutes, American has announced plans to furlough 100 more St. Louis-based pilots on September 13, followed by another 100 on October 1. Although it recalled 208 pilots as part of a seniority-integration agreement reached with TWA in the spring, American still counts 695 pilots among its list of furloughees.

Another 15 pilots have transferred to American Eagle under the terms of a so-called “flow through” agreement that opened a limited number of positions at the regional subsidiary, while the company continues to pay RJ captain’s rates to 127 out-of-work American pilots eligible to fly for Eagle but who remain idle. Because the American- TWA integration agreement placed some 1,200 TWA pilots on the bottom of the seniority list, 916 of which remain on active duty, all of the upcoming furloughs will involve St. Louis-based ex-TWA pilots. And because the TWA pilots’ contract does not include a flow-through provision, none of the upcoming furloughs will result in further displacement of Eagle pilots.

Beyond the furlough provisions and the numerical limits on regional jets, Eagle must also comply with a clause in the APA contract that restricts ASMs at its regional affiliates to 5 percent of total company capacity, except to open nonstop routes unserved by the company since March 1993 and for airline affiliates whose revenue passenger miles under the American code account for less than 50 percent of their total RPMs. Eagle’s ASMs have recently reached 4 percent of the company’s total. If American follows through with its plans to reduce capacity by 9 percent at the mainline, Eagle could face a situation in which it must actually reduce its ASM levels, regardless of furloughs at the mainline.

“We always hoped that American and APA would reach agreement on increasing the number of RJs that we can fly,” remarked American Eagle president Peter Bowler. “But in the absence of such an agreement, we must dispose of these airplanes. We are at least pleased that these airplanes will be flown by airlines connecting passengers to American rather than one of American’s competitors.”

An APA spokesman said the company’s lamentations over the scope restrictions ring hollow, however, considering the union’s offers to combine the mainline and regional operations into a single entity in an effort to resolve the issue. “The frustrating part about this is [American CEO] Don Carty talks about reinventing the industry, and we’ve given them a couple of concrete proposals, but they’re not interested in even talking about it,” said the spokesman. “It makes you wonder how serious they really are.”