American to look beyond Envoy for an E-175 operator

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American Airlines Group will begin searching for a regional carrier to operate the 60 Embraer 175s that it has on order, following the rejection of an agreement in principle to operate the aircraft by the pilot’s union at its regional subsidiary Envoy.

The Air Line Pilots Association (ALPA) American Eagle – soon to be renamed Envoy – master executive council rejected the 10-year agreement in a vote late on 12 February, according to a statement. The agreement included 90 E-175s, a minimum operating fleet of 170 aircraft and improved flow through options to mainline in exchange for a pilot pay freeze through 2018 at the regional carrier.

“The vote today was about the future of our pilots’ pay and working conditions,” says captain William Sprague, chairman of the American Eagle master executive council, in a statement. “Our elected representatives agreed that this new round of concessions was asking too much of a pilot group that has already given up previously agreed-to contractual work rules and benefits in order to ensure American Eagle’s solvency.”

He adds that the pilots union agreed to concessions with Envoy during American’s Chapter 11 bankruptcy reorganisation.

American exited bankruptcy and merged with US Airways on 9 December 2013.

Pedro Fábregas, president and chief executive Envoy, says he is “extremely disappointed” with ALPA’s decision, in a letter to employees today.

“American has now informed us they have no choice but to begin looking for another regional carrier or carriers to operate their E-175s,” he says. “American can’t wait any longer and will begin these efforts immediately.”

The Fort Worth, Texas-based carrier has a firm order for 60 E-175s and options for 30 more, with deliveries scheduled to begin in the first quarter of 2015.

American will begin to shrink Envoy’s fleet and staff as a result of the rejection by ALPA, says Fábregas. Initially, this will involve the removal of the airline’s smaller aircraft.

The smallest aircraft in Envoy’s fleet is the 44-seat Embraer ERJ-140. It operates 59 of the type, Flightglobal’s Ascend Online database shows.

American disclosed plans to remove at least 10 of these aircraft in 2014, in a January investor update.

The mainline carrier could also seek a new operator for the 47 Bombardier CRJ700s in the Envoy fleet, says Fábregas.

“I have no reason to believe American will offer us new large regional jet flying after these unsuccessful negotiations,” he says.

Envoy's ground handling business will continue to grow even as its fleet shrinks, adds Fabregas.

American-subsidiary PSA Airlines agreed to a lower pay scale in exchange for at least 30 Bombardier CRJ900 aircraft in September 2013. The aircraft were first offered to Envoy but union leaders rejected that offer, citing an unacceptable B scale, as well.

The decision by the ALPA American Eagle master executive committee comes as there is increasing concern in the USA about pilot staffing at regional carriers and the pay rates that these airlines offer them.