AMR to trim Eagle costs $75 million, 600 cuts
 

AMR to Trim Eagle Costs $75 Million With Up to 600 Job Cuts By Mary Jane Credeur and Mary Schlangenstein -Mar 21, 2012

American Airlines parent AMR Corp. (AMR) said it must cut annual spending by $75 million at regional carrier American Eagle while paring as many as 600 jobs as the company restructures in bankruptcy.

About half of the cost reductions will come from lowering pay and reducing overtime, with the balance achieved through changing unproductive work rules, scheduling restrictions and retirement-account contributions, Eagle Chief Executive Officer Dan Garton said today on a media conference call.

The Eagle plan builds on American’s quest for $1.25 billion in annual labor-cost reductions and 13,000 job cuts. Changes being sought in the larger airline’s pilot contract will shape the amount of flying done by Eagle, which was due to be spun off before AMR’s Nov. 29 bankruptcy filing.

“It is imperative that Eagle reduce its costs to compete aggressively against other regional airlines” and have comparable rates, Garton said. He said Fort Worth, Texas-based AMR wants other carriers to bid for flying now done by Eagle.

Most workforce cuts will come via attrition to minimize furloughs, Garton said. The $75 million in cost savings represents about 13 percent of Eagle’s labor spending, he said. Eagle has 13,500 employees and the number of positions eliminated will be about 500 to 600, said Bruce Hicks, an AMR spokesman.

Parking Planes

Eagle also needs to retire older and less-efficient aircraft and expand the use of larger regional jets to ferry passengers to and from hub airports, AMR said today in a regulatory filing, without detailing the fleet changes or giving specifics on compensation reductions.

Adding regional jets with 70 or more seats at Eagle may be an opportunity for Bombardier Inc. (BBD/B), because the regional unit’s fleet now consists chiefly of smaller Embraer SA (EMBR3) planes, according to Fadi Chamoun, a BMO Capital Markets analyst in Toronto. Eagle has 47 Bombardier 70-seaters, the most the carrier can fly under its current labor contract.

Embraer models with 35 to 50 seats “are uneconomical to operate at current fuel prices and will likely be retired under current Chapter 11 restructuring in favor of a move towards larger RJs,” Chamoun said in a note to clients. He recommends buying shares of Montreal-based Bombardier.

‘Devil in Details’

Management at Eagle met first with unions as a group to go over the broad-cost reduction plan, and planned more sessions today with individual unions to share additional information.

“The devil is always in the details, and that’s what we don’t have yet,” said Jim Little, president of the Eagle chapter of the Transport Workers Union, which represents mechanics and baggage handlers. “We weren’t alarmed by anything we heard this morning. We kind of expected some of these things. Now we’ll see what exactly the specificity is and how deep” the cuts are.

Proposed contract cuts are “outrageous” and “overreaching,” the Association for Flight Attendants, which represents 1,800 Eagle employees, said today in a statement. The union didn’t share specifics on what Eagle management proposed.

Eagle’s chapter of the Air Line Pilots Association will analyze the management plan in the coming weeks and then begin negotiations to reach a deal “that is workable from both sides of the table,” the union said today in a statement.

Eagle generated $2.5 billion in revenue last year, or about 10 percent of AMR’s total.

To contact the reporters on this story: Mary Jane Credeur in Atlanta at [email protected]; Mary Schlangenstein in Dallas at [email protected].

As far as I am concerned, management can take their 'Terms Sheet' and shove it.

Eagle generated 2.5 bill is such a bs number. That is what they got paid via fee for departure. I wonder what ticket sales on Eagle actually generated in revenue.

HAH! Should we start making "CRJ1000 mad dog killer" stickers?

Less than you think.

Well it enables international traffic, which can be very high yield. If you factor a % of that in as well.

I second that shove...


...and while they're shoving they can pound some sand too.

I third that shove! And second the sand pounding!

Doesn't really matter, they are not in the business of selling tickets, they are in the business of providing small aircraft lift for AA.

Selling tickets is AA's business.

If AA wanted AE to get paid a portion of ticket revenue they would be more than capable to change their contract with AE.

All in favor of a shove and a sand pounding, Aye!

Sounds like Eagle is being primed to ease their scope to allow bigger RJs. So goes Eagle, so goes the rest of industry. Anyone who thinks flying is going back to mainline, I'd like to hear reasonable arguments, but I just don't see that happening. Mgt holds the cards, they like cheap labor, RJs will get bigger :(

PS The old line of "We're taking it back to mainline YEAAARGH!" (think Howard Dean) does not count unless backed up by actions steps. I get so tired of regional pilots get ripped on by mainline pilots, but with no real plan of action to change anything.

No, it won't be Eagle. It'll be rah, Skywest, pinnacle, or a combo.

Off to buy some sand for management!

They used to, then theu went to fee for departure in 2000.

I confirm that they should shove it and pound sand with gravel.

What blows my mind is that; management are the ones that ran this company to the ground, when it was their job to run a company, but all they want to do is blame the work groups for their mistakes and make us pay for their bad choices. Last time I looked we were doing the job that we were hired for and doing a damn good job at that. I agree "pound sand"

Saying that labor, fuel, overhead is too high is a bull&$)! argument when you control the cost of your product.

Yes, management got you into this mess, but it'll be your union that sells you for 30 pieces of silver. This is going to be the most epic screw over-ing of all time. ALPA is nothing more than human resources for the airlines at this point.:mad:

Comair part deux. Good luck fellas. It's not an easy road.

What is your plan to help mainline pilots to change it?

I don't know what I have the power to do.... it is the mainine pilots' decision whether to ease scope or not (in negotiations) not regional pilots, correct? So are we to avoid the regionals and apply directly to mainline? With a whole bunch of what.....piston time, freight doggin', what? At least one forum member who purports to be mainline has done the whole 'you regional guys are stealing our jobs!'. Only to later say to that a young person really ought to go to the shadiest regional with fastest upgrade time. ???

Anecdotally speaking I know of several, for lack of better term, "legacy" children (their parents fly professionally for mainline or FedEx/UPS) and guess what their career path is (each and every one in my experience)? Get to the regionals ASAP and from there make their next career move. So yeah, when I hear mainline pilots sneer at the regionals, offer no *real* solutions-just the usual disdain and hubris, I can't help but say "non-sense!". Sure pilots can avoid individual companies, but to avoid the INDUSTRY? What is the success rate? What is your proposed solution?

Finally, I am not here to argue. I like asking questions, hearing others' points of view. In my original post, I said I am willing to hear reasonable arguments about bringing flying back to mainline. My personal feeling is that the answer so oft comes back as circular reasoning; "We're gonna take the flying back to mainline....because...we are! Yeah! And flying at mainline is awesome! So we're taking it back! Regionals suck!...."

There is no solution. The reality is that more and more of the domestic market will be flown by regionals and most regional pilots will never make it to a mainline carrier.

That is what I am also afraid of....especially seeing what AMR is planning. :( Again, regards to all on the forum. And all reasonable arguments I will gladly listen to :)

First, let me clear. My post was not intended to be divisive. It was simply intended to stir thought. Second, I am a mainline Delta pilot. But I am a product of regional flying. I came from ExpressJet. I do not, nor have I ever looked down on regional pilots. To do so would be hypocritical IMO.

Now, what I intend to do as a Mainline pilot is chew my rep's ear off by letting him know scope relief is simply unacceptable. Then I chew my CA's ear off by doing the same. I go further then just RJ's though. We need to tighten up everything to include code share, joint ventures, turbo props, geared turbo fan aircraft, etc. I'll be diligent in attending road shows once a TA is presented. I will read the TA in full, ask questions, remain educated, and vote NO to further scope relief. What I'd prefer, is to get all ALPA pilots flying back at mainline. The solution to that? I don't know. Seniority integration is the stickiest thing IMO.

What you can do, is remain educated, stay unified, & fight for the profession. Support mainline pilots in their effort to return flying to mainline. I think we all have to ask ourselves how much we are willing to sacrifice to reach that goal.

This might be one of the best posts I've ever read on APC.

Solution
 

One list. Stapled. Fenced. Done.

Johnso, don't take my remarks as snarky. I do ask questions, even if they are simple, because I am leaving room for people to correct me. I know I could be wrong, so I leave that door open. My exasperation about the state of the industry and attitudes also not directed at you. I did, however want to know what your proposed solutions are. I suppose my 'last straw' came as I stated above; a poster from mainline who bags on regionals coming out and saying the best career progression is to go to the shadiest, fastest upgrade regional. Then I could no longer take the hypocrasy. But again, my own thoughts and statements could wrong or idiotic, and I am definitely ok with being challenged *kindly*. I find it necessary to challenge one's own beliefs and also have their beliefs examined by others. Hopefully that will keep my more hare brained ideas at bay! :)

That would work. You would have a hard, permanent, never to be crossed fence between regional and mainline equipment, pay and workrules. But, everyone would be on the same seniority list.

Newhires from the military or civilians with substantial experience in international ops and/or large aircraft (over 100,000 lbs) would go directly to the mainline and those from other regionals or from puppy mill aviation universities or flight schools would go to the regional side. That way career expectation would be maintained.

hopefully APA can take this to the court next week, make a case for one list, industry average pay for all sized airplane at AMR/AA/AE. One list, stapled, 5% under industry for each seat type. Then AE can vote out ALPA and bring in APA once the ball is in that court. Call it a day. Have AA pilots fly all AE airplanes, let everything up to the 319 be AE works for all other aspects, which is a huge savings.

No offense taken. I didn't want to seem condescending, but rather unified.

There really isn't a solution to the regional problem of low pay, and lack of work rules, for as long as there is a fresh influx of pilots willing to work for those wages.

The dream continues to be "put your time in at the regional to move up to the mainline job", and is still sold as such. We, currently in the industry, know this to be BS. Pilots are stuck at regionals for more years, even life, and regional airplanes are getting bigger thanks to bankruptcy laws, and people not very familiar with how the industry functions allowing scope and work rules to be eroded from major airlines.

The solution is multi faceted. Educating the future generation of pilots about what the industry is truly like is the first, and probably most important step. Without pilots willing to work for peanuts, the way business is done today has to change. Once regionals can't fill classes, they will have to increase pay, work rules, benefits, etc. Once this happens it won't be as lucrative for major airlines to outsource the flying, ergo flying returns to majors. The 1500 time requirement is an important step in this direction, as it makes it much more expensive to get into the industry. This will force new prospects to educate themselves a bit better, which will ultimately mean that will not be joining the ranks of future pilots.

+1 Good Post

^^+2 but it will still take a few more years for that to happen, and with supply/demand something new will come along to prevent a shortage. The US dollar crumbling would be one way.

I agree with unity. We need to stand together. If we are all divided and serving our own interests all the time then management wins. None of us are going to agree to completely with the other - that's life - we all have different backgrounds, different opinions, different ways of thinking and different expectations. We need to find our common ground and stand together. We can't let fear and worry divide us any longer. We can't allow management here pit us against a pilot group over there. This is not "us and them", this is "we". We are in this all together. We need to fight to put this industry back where we want it to be.

I don't want to be stuck at a regional the rest of my life. I want my career to progress. I don't want to see pay and benefits eroded every few years because the airlines claim they "aren't competitive". This cycle is ridiculous and it needs to stop. I sense every day that the anger is growing and sooner or later the cork is going to blow. I'd rather see the change before we get to that point.

I suggest we start wearing our wings upside down in a similar manner to the flag being flown upside down, for the following 3 reasons. 1) as a sign of this profession being in distress. 2) as a symbol of unity with ALL airline pilots - Regional and Mainline. 3) as a token of our willingness to turn things around and stand up for change.

Once regionals start to struggle to fill classes they will lobby the FAA for MPL in conjunction with accredited aviation universities ensure a steady flow of future pilots.

This will ensure that starting pay remains low while providing a bright future low time pilots who will be mentored by seasoned regional captains in how to handle the ever increasing size of the RJ.

A system of self funded ab-initio training for accredited aviation university graduates would help alleviate the situation. They would be mentored and taught by veteran, career regional pilots on how to become airline pilots.

Honestly, what are you all going to do? walk off the job and quit? You all love to fly too much and you would be blackballed from ever working in the industry, especially the majors, again. Face it, you guys are like drug addicts.
Flying is the drug and management is the drug pusher.

I'd like to see things from your point of view, but I can't get my head that far up my ass.

:eek:

I don't see many regional pilots voting with their feet and leaving to find greener pastures in other fields of endeavor.

Guys it is time to start showing some balls, at both AA and AE. Everyone should do this come Monday, and put something Orange on your kitbag. We need to stand super united, AE and AA. It will help get through all this big time.

How about some 80 for 80 bag stickers for AE to show unity with AA?

Quitting isn't the answer. Standing up and saying "Hell NO" is the only way we're going to get the message across.

Its time for civil disobedience, standing up to management and making our voices heard.
Its only effective if we do it together.

We control this industry, and I think that is something we've forgotten over the past 80 years when the first pilots union was formed. Somewhere along the line we've lost our collective spines. We've allowed ourselves to be backed into the corner and we cower in fear at management and the government. We do what we're told. That needs to change.

If we all stand together there is nothing they can do to us but submit to our will.
Their only other choice is to go out of business.

That's how you bring about change. Not by quitting and walking away. Quitting is the move of a coward.