American to sell wholly owned regionals?
 

A good friend at a wholly owned told me American wants to sell them to reduce the cost that came with the higher pay and that is the only way out of the contracts early. Is that rumor true?

It would have no effect on the labor contracts.

I asked my lawn guy and he said yes.

that is not, generally, how contracts work.

More importantly, it's definitely not how the railway labor act works. The only way they can lower their labor costs is
1) find another airline with the pilots and airplanes to take the WO workload at a lower cost
2) get the WO pilots to accept concessions (which generally comes after one makes a credible threat of #1)

It's not immediately obvious to me what current airline could pull off #1

They tried that years ago. No joy.

It's possible that the FFD contracts (not the labor contracts) can be terminated upon sale.

That could be a useful clause for management, if the purpose of the sake is to reduce labor costs. AA could then hold a gun to the pilot group's head.... concessions or contract terminated, good luck on the openm market.

Rates expire in 2026 don't they? Problem takes care of itself then if so.

That's my understanding. I can see reducing costs by merging Piedmont and Envoy after the last 145 is parked.

The trend seems to be growing the wholly owneds and shrinking the other CPA carriers. I vote BS on this particular rumor.

no, it is not true.

That's a gun they're holding to their own head too unless they can walk away from the terminated capacity or replace it.

Piedmont would presumably be the first target. They get 175's if they drop their rates. Piedmont refuses, AA shuts it down and pays Mainline, Republic or Skywest as much or more money to pick up the lift. At which point they can squeeze the real targets - PSA and Envoy.

But can they really make a credible threat that somebody else will pick up that much lift for less money? Who would do it and with what airplanes? I guess you could stand up a new airline but that's a big production. Are they going to Highlander/hunger games PSA and Envoy against each other?