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American Eagle Union Blasts AMR Over Republic  
User currently offlinecosyr From United States of America, joined Jul 2012, 389 posts, RR: 0
Posted (1 year 7 months 5 days 7 hours ago) and read 10395 times:

Just came across this, and while I get that he needs to voice his dissappointment, it sounds kind of like a petulant child complaining about the candy bar they didn't get in the grocery store check out.

http://aviationblog.dallasnews.com/2...-flying-to-republic-airlines.html/

I thought it was already known that AMR was going to take some competing Eagle services before this announcement. Why is this so shocking to him?

[Edited 2013-01-25 16:37:47]

51 replies: All unread, showing first 25:
 
User currently offlinejfk777 From United States of America, joined Aug 2006, 8338 posts, RR: 7
Reply 1, posted (1 year 7 months 5 days 7 hours ago) and read 10377 times:
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Isn't the existing "American Eagle" going to get spun-off intoa separate airline from AMR and AA ?

User currently offlineN62NA From United States of America, joined Aug 2003, 4449 posts, RR: 7
Reply 2, posted (1 year 7 months 5 days 7 hours ago) and read 10242 times:

Sometimes the comments posted are as interesting as the story. Here's one:

I guess it is ok for eagle to take flying away from American then right? What goes around comes around.


User currently offlinenorcal From United States of America, joined Mar 2005, 2459 posts, RR: 5
Reply 3, posted (1 year 7 months 5 days 7 hours ago) and read 10226 times:

Quoting cosyr (Thread starter):

Just came across this, and while I get that he needs to voice his dissappointment, it sounds kind of like a petulant child complaining about the candy bar they didn't get in the grocery store check out.

Well considering that they took $43 million per year from the pilots in order to be AMR's primary feed provider it seems rather disingenuous of AMR to keep awarding flying to other regionals. Consider the timeline too:

- Eagle votes in a concessionary contract, the following week AMR announces the closure of LAX crew base and use of SkyWest and ExpressJet for feed

- AMR tells Eagle union leadership that they need to vote in the 8 year concessionary contract to be competitive AND give AMR known and stable labor costs. Then AMR awards a huge amount of flying in Eagle's largest base to a carrier that has pilots that are itching to strike and are in heated contract negotiations. There is nothing stable and known about Republic's labor costs.

- Eagle just put up its best performance numbers last year and AMR decides to reward that hard work by outsourcing.

- AMR management tells Eagle pilots that they can't see the fleet plan because it's all NDA, yet they have no problem telling Republic, SkyWest, and ExpressJet what they will be doing

- AMR spends a ton of energy and time talking to the press about how they are going to spin off Eagle and (before the concessionary contract was voted in) talked publicly about how Eagle isn't cost competitive and how they want to diversify feed. Not only does AMR destroy employee morale at Eagle with their comments in the press but they also destroy Eagle's ability to attract the few remaining qualified pilots out there for new hire classes. As a result Eagle pilots are now being worked much harder in order to cover flying despite the carrier shrinking.


All in all AMR has taken just about opportunity they can screw over Eagle employee's despite all of their sacrifices. The timing of their decisions are all very poor and just speak to the general lack of respect that they have for the people who do work at Eagle.

Employees at Eagle think they are the next Comair. Base on what I've seen I'd have to agree with them Read a pilot forum and see the other side of the story.


User currently offlinekcrwflyer From United States of America, joined May 2004, 3811 posts, RR: 7
Reply 4, posted (1 year 7 months 5 days 6 hours ago) and read 10058 times:

Quoting norcal (Reply 3):
- AMR tells Eagle union leadership that they need to vote in the 8 year concessionary contract to be competitive AND give AMR known and stable labor costs. Then AMR awards a huge amount of flying in Eagle's largest base to a carrier that has pilots that are itching to strike and are in heated contract negotiations. There is nothing stable and known about Republic's labor costs.

But what is the nature of the contract with Republic? AA is probably locked into a price with them, so as far as AA is concerned, what THEY are paying is stable. It's typically the regional carrier that is taking risk when locking in a contract, provided they're in a turbulent labor situation.


User currently offlineLAXintl From United States of America, joined May 2000, 25137 posts, RR: 46
Reply 5, posted (1 year 7 months 5 days 6 hours ago) and read 10019 times:

AE President Garton explained it.

Here is a quote from his employee memo;

Although Eagle received a copy of the RFP, we were not in a position to meet a key requirement of securing and financing large regional jets in the timeframe requested.


Simply put AE has no money to go and compete for the business.
In otherwords since AE itself is in BK, and is constrained with what it can do at the moment until it fully manages restructures itself.

=



From the desert to the sea, to all of Southern California
User currently offlinenorcal From United States of America, joined Mar 2005, 2459 posts, RR: 5
Reply 6, posted (1 year 7 months 5 days 6 hours ago) and read 9887 times:

Quoting kcrwflyer (Reply 4):
But what is the nature of the contract with Republic? AA is probably locked into a price with them, so as far as AA is concerned, what THEY are paying is stable. It's typically the regional carrier that is taking risk when locking in a contract, provided they're in a turbulent labor situation.


If Republic gets released for strike or starts operating slowly that could drastically affect AMR. Furthermore, part of the Eagle contract is that their longevity will be adjusted to match the two lowest regionals in 4 years. That provides incredibly stable and low costs by ensuring that Eagle is amongst the lowest compensated pilots in the industry.

Furthermore the vast majority of super senior Eagle guys will have the opportunity to flow very shortly.

Finally every dollar that AMR sends to RAH is lost forever, all of Eagle's "profits" stay in house since they are wholly owned subsidiary.

Quoting LAXintl (Reply 5):
Simply put AE has no money to go and compete for the business.
In otherwords since AE itself is in BK, and is constrained with what it can do at the moment until it fully manages restructures itself.

AE = AMR and AMR has a ton of cash in the bank plus the ability to gain financing. They managed to increase the AA order book during bankruptcy.


User currently offlinecommavia From United States of America, joined Apr 2005, 11557 posts, RR: 61
Reply 7, posted (1 year 7 months 5 days 6 hours ago) and read 9836 times:

Quoting N62NA (Reply 2):
I guess it is ok for eagle to take flying away from American then right? What goes around comes around.

Well I guess that comment is interesting, if misguided. No, Eagle can't "take flying away" from AA until they are contractually freed to do so. Eagle is bound by legally-enforceable contracts to provide a specific amount of capacity to AA over a specific amount of time. Until Eagle and AA formally renegotiate that contract, or Eagle successfully rejects it in bankruptcy (which of course won't happen because it's still owned by AMR), Eagle can't "take flying away" from AA. In this case AA is the customer, and Eagle the vendor.

Quoting norcal (Reply 3):
Well considering that they took $43 million per year from the pilots in order to be AMR's primary feed provider it seems rather disingenuous of AMR to keep awarding flying to other regionals.

Why is that disingenuous?

First off, nobody ever told Eagle employees that taking concessions was a guarantee that they would continue to maintain a near-monopoly over AMR regional feed. In fact, quite the opposite. AMR has been quite clear - both in public and apparently in private, too - about their desire to use competitive bidding to reduce the cost of regional feed, just as Delta, United and USAirways have been doing for years.

Second, it doesn't appear - based on Garton's comments to Eagle employees - that the major issue here may even have been cost. It seemed to largely center on the fact that Eagle simply couldn't satisfy a key RFP requirement relating to financing new aircraft. Hardly surprising considering that Eagle is bankrupt. But once Eagle is no longer in Chapter 11, how do we know it won't be cost-competitive, and be able to successfully compete for additional large RJ AMR feed? Who's to say?

If AMR/Eagle management had told the pilots that all they had to do was vote yes on concessions, and AMR would keep steering all AA regional feed to them, then this would be a case of disingenuous dishonesty. But that didn't happen here.

While ALPA may not like this, everyone on all sides acknowledges that this was not a surprise to anyone.

Quoting norcal (Reply 3):
Eagle votes in a concessionary contract, the following week AMR announces the closure of LAX crew base and use of SkyWest and ExpressJet for feed

... which, while painful, is not supposed to lead to a single layoff among Eagle pilots. Displacements and lots of commuting and deadheading? Sure. But no layoffs. It's unfortunate and disruptive to a lot of good Eagle pilots, but that is the difficult reality of the U.S. regional airline industry these days.

Quoting norcal (Reply 3):
AMR tells Eagle union leadership that they need to vote in the 8 year concessionary contract to be competitive AND give AMR known and stable labor costs.

Right ... and that was untrue somehow? Eagle does need to be cost competitive and AMR - which still owns Eagle for now - does need known and stable labor costs. You can argue over the length of the contract or the concessions demanded, but the mere statement that Eagle needs competitive and stable costs is hardly earth-shattering.

Quoting norcal (Reply 3):
Then AMR awards a huge amount of flying in Eagle's largest base to a carrier that has pilots that are itching to strike and are in heated contract negotiations. There is nothing stable and known about Republic's labor costs.

Again - welcome to the U.S. regional airline industry, circa the last decade. Mesa, GoJet, Colgan, Mesaba, Pinnacle, Comair, and on and on. Uncertainty and instability are nothing new, and that doesn't seem to be slowing the mainline operators down one bit in setting this carriers off against one another to get the lowest price, no matter the "cost." It may be unfortunate and painful for employees, and may well even be short-sighted in terms of long-term economic impact, but cost reduction of regional feed rules the day. It's "worked" to date at United and USAirways, and Delta has played its regionals off against each other masterfully time and again - AA has no choice but to compete with that.

Quoting norcal (Reply 3):
Eagle just put up its best performance numbers last year and AMR decides to reward that hard work by outsourcing.

It's business. Eagle is now going to have to compete with other regional operators for this feed for the first time, and unfortunately for Eagle, the basis of competition is in virtually every case going to be cost. Again - welcome to regional airline America 2013. Eagle's recent performance has been impressive, and indeed as I've said I really do think Eagle generally does quite a good job operationally and as a customer relative to other regionals.

Quoting norcal (Reply 3):
AMR management tells Eagle pilots that they can't see the fleet plan because it's all NDA, yet they have no problem telling Republic, SkyWest, and ExpressJet what they will be doing

First off, how do you know AMR shared its regional fleet plan with Republic, SkyWest and ExpressJet? They issued an RFP publicly, but how do you know it contained AMR's regional fleet plan? And how do you know AMR didn't make those other carriers sign an NDA, too? (Indeed, I'm sure AMR did make all those carriers sign NDAs before getting into serious negotiations, whether they saw the fleet plan or not.)


User currently offlinerfields5421 From United States of America, joined Jul 2007, 7607 posts, RR: 32
Reply 8, posted (1 year 7 months 5 days 6 hours ago) and read 9832 times:

Quoting jfk777 (Reply 1):
Isn't the existing "American Eagle" going to get spun-off intoa separate airline from AMR and AA ?

AMR tried to sell AE - and nobody wanted it. Wrong aircraft mix, bad potential contract terms. AA would refuse to guarantee a minimum contract term with AE to anyone who might buy the subsidary airline.

The AMR board considered spinning off AE into a separate company, but the financials didn't work out. The AMR major stockholders didn't like the 'loss of value' of AMR if AE was spun off for stock only in the new airline - i.e. no cash paid to AMR.

AE is pretty much destined to a much reduced role, or possible closure - the likely option in my personal opinion.

Quoting norcal (Reply 3):
Employees at Eagle think they are the next Comair. Base on what I've seen I'd have to agree with them

I fully agree.


User currently offlinecommavia From United States of America, joined Apr 2005, 11557 posts, RR: 61
Reply 9, posted (1 year 7 months 5 days 6 hours ago) and read 9813 times:

Quoting norcal (Reply 6):
If Republic gets released for strike or starts operating slowly that could drastically affect AMR.

True. Again - uncertainty and instability. Welcome to regional airline America 2013.

Quoting norcal (Reply 6):
Furthermore the vast majority of super senior Eagle guys will have the opportunity to flow very shortly.

True. That alone is going to make a huge difference for Eagle's costs. At least a few hundred Eagle pilots are probably going to have rights to flow up to mainline in the next few years.

Quoting norcal (Reply 6):
Finally every dollar that AMR sends to RAH is lost forever, all of Eagle's "profits" stay in house since they are wholly owned subsidiary.

Right, but if Eagle is less cost-competitive overall than Republic, the economic value overall is destroyed, and that's a less attractive proposition for AMR. Put another way, if Republic can provide the regional feed at a lower cost - including a lower capital cost from lower borrowing costs on these jets - AMR will expect to see some of those savings passed to it through a lower cost charged by Republic, and that lower expense outweighs any benefit from "keeping in the house" Eagle's higher-cost feed.

Quoting norcal (Reply 6):
AE = AMR and AMR has a ton of cash in the bank plus the ability to gain financing. They managed to increase the AA order book during bankruptcy.

But perhaps AMR feels it has better places to deploy cash than financing more jets for Eagle? Plus in this case apparently AMR's RFP indicated AMR's preference for the regional - not AMR - to finance these assets and hold them on their books. It appears as though AMR didn't want to finance these planes with its own cash - for Eagle or anyone else.


User currently offlineLAXintl From United States of America, joined May 2000, 25137 posts, RR: 46
Reply 10, posted (1 year 7 months 5 days 6 hours ago) and read 9789 times:

Quoting norcal (Reply 6):
AE = AMR and AMR has a ton of cash in the bank plus the ability to gain financing. They managed to increase the AA order book during bankruptcy.

AE going forward needs to stand on its own two feet. That is the point here.

Papa AMR need not place chain around its neck for $4.0bil in aircraft financing.

Soon enough AE will need to learn to prosper or fail on its own merit and not rely on a AMR automatic backstop.



From the desert to the sea, to all of Southern California
User currently offlineKcrwflyer From United States of America, joined May 2004, 3811 posts, RR: 7
Reply 11, posted (1 year 7 months 5 days 5 hours ago) and read 9742 times:

Quoting norcal (Reply 6):
Finally every dollar that AMR sends to RAH is lost forever, all of Eagle's "profits" stay in house since they are wholly owned subsidiary.

You're over thinking this.

Quoting commavia (Reply 9):
Right, but if Eagle is less cost-competitive overall than Republic, the economic value overall is destroyed, and that's a less attractive proposition for AMR. Put another way, if Republic can provide the regional feed at a lower cost - including a lower capital cost from lower borrowing costs on these jets - AMR will expect to see some of those savings passed to it through a lower cost charged by Republic, and that lower expense outweighs any benefit from "keeping in the house" Eagle's higher-cost feed.

Yes, but lets break this down to its most basic level.


Norcal,

lets say AA is going to bring 60 passengers OKC-DFW, all connecting to the same places and bringing the same amount of revenue. If it costs AA $4,000 to bring them into their network on Eagle, and $3,800 to bring them into the network on republic, republic is a better carrier for them on the route (financially).Owning eagle doesn't mean that they're "paying themselves" to fly an eagle flight. The operating costs of the route are being spent regardless.

And yes... there are dozens of other variables that you could drag into this if you were a glutton for punishment, but at the end of the day it boils down to the overall cost to provide feed.


User currently offlineouboy79 From United States of America, joined Nov 2001, 4588 posts, RR: 23
Reply 12, posted (1 year 7 months 5 days 4 hours ago) and read 9483 times:

Quoting Kcrwflyer (Reply 11):
lets say AA is going to bring 60 passengers OKC-DFW, all connecting to the same places and bringing the same amount of revenue. If it costs AA $4,000 to bring them into their network on Eagle, and $3,800 to bring them into the network on republic, republic is a better carrier for them on the route (financially).Owning eagle doesn't mean that they're "paying themselves" to fly an eagle flight. The operating costs of the route are being spent regardless.

Except OKC-DFW is all mainline, but I get what you are saying.  


User currently offlineinfiniti329 From United States of America, joined Jul 2012, 652 posts, RR: 0
Reply 13, posted (1 year 7 months 4 days 18 hours ago) and read 8831 times:

I personally believe this undercutting will eventually blow up in mainline carriers faces. In this industry at this point in time it not like airlines have an unlimited supply of pilots, the things you need to actually fly these routes. Reality will soon set in once the mainline gobble up the vast majority of regional pilots to replace their own who must retire... thats when things will get interesting.

User currently offlineItalianFlyer From United States of America, joined Nov 2007, 1099 posts, RR: 2
Reply 14, posted (1 year 7 months 4 days 17 hours ago) and read 8719 times:

Question for you all: On the surface, so you think AMR is realigning its relationship with MQ along the lines of the AS/QX model? Here is a link to a CAPA article from 2010.....take a look at the narrative focusing on the QX reorganization, there are some interesting parallels.

http://centreforaviation.com/analysi...ations-to-drive-efficiencies-31729

" Horizon reorganisation
Newly installed Horizon President Glenn Johnson reported on his vision for the regional carrier, saying that, although the company has many strengths, its weakness lies in its inability to deliver on profitability. “While we are making progress, we can and must achieve a 10% margin,” he said. “For the 12 months ended 30 Jun our margin was 5.1%. To continue closing the gap and accelerating the pace of improvement, the Horizon leadership team is evaluating the current business model to determine how best to go about making Horizon a financial success and what changes may be necessary to accomplish this.”


User currently offlinexdlx From United States of America, joined Aug 2008, 638 posts, RR: 1
Reply 15, posted (1 year 7 months 4 days 15 hours ago) and read 8261 times:

Writing is in the wall...

User currently offlineRevelation From United States of America, joined Feb 2005, 12448 posts, RR: 25
Reply 16, posted (1 year 7 months 4 days 14 hours ago) and read 7819 times:

Quoting commavia (Reply 9):
Quoting norcal (Reply 6):
AE = AMR and AMR has a ton of cash in the bank plus the ability to gain financing. They managed to increase the AA order book during bankruptcy.

But perhaps AMR feels it has better places to deploy cash than financing more jets for Eagle? Plus in this case apparently AMR's RFP indicated AMR's preference for the regional - not AMR - to finance these assets and hold them on their books. It appears as though AMR didn't want to finance these planes with its own cash - for Eagle or anyone else.

I'm not sure which orders happened during BK, but I have read the big thing AA got from the MAX+NEO deals was financing from the vendor cheaper than the debt-burdened AA could get from the banks. AA called that out as a big reason why they were doing a wholesale swap-out of the MDs after holding on to them for so long.

Quoting infiniti329 (Reply 13):
Reality will soon set in once the mainline gobble up the vast majority of regional pilots to replace their own who must retire... thats when things will get interesting.

One can argue that "reality" is what AA management has been after, which means extracting as much as it can out of the current state of play in the regional industry. Indeed that may bite them later, but that's tomorrow's problem, and tomorrow there may be other totally unforeseen variables at play.

There definitely are macro-economic factors at play. The US and world economy still isn't healthy, air fares are continuously rising which continuously makes air travel less attractive, the US airline industry is still largely shielded from international capital and competition domestically, etc.



Inspiration, move me brightly!
User currently offlineapodino From United States of America, joined Apr 2005, 4263 posts, RR: 6
Reply 17, posted (1 year 7 months 4 days 14 hours ago) and read 7644 times:

Quoting norcal (Reply 6):


If Republic gets released for strike or starts operating slowly that could drastically affect AMR. Furthermore, part of the Eagle contract is that their longevity will be adjusted to match the two lowest regionals in 4 years. That provides incredibly stable and low costs by ensuring that Eagle is amongst the lowest compensated pilots in the industry.

AMR isn't going to be the only ones drastically affected. A huge portion of the US operation at both PHL and DCA is Republic 170's. If there is a strike, US does not have a bunch of extra 70 seat lift in those places, and the only other comporable planes with that capacity at US are the YV 900's and the JI 700's, but those numbers are so limited that US's route structure is going to take a serious hit.

UA and DL both have the Shuttle America lift that would also be affected by this, and because their structure is more spread out, they won't be impacted as much, but they will still be impacted. UA at ORD will certainly take a hit, and I believe Shuttle has a good amount of LGA feed in their network. This will affect everyone in this country, save for Alaska, and the three LCCs that don't codeshare, WN, B6, and NK.


User currently offlinelightsaber From United States of America, joined Jan 2005, 13008 posts, RR: 100
Reply 18, posted (1 year 7 months 4 days 13 hours ago) and read 7408 times:
Support Airliners.net - become a First Class Member!

Quoting LAXintl (Reply 5):
Simply put AE has no money to go and compete for the business.
In otherwords since AE itself is in BK, and is constrained with what it can do at the moment until it fully manages restructures itself.

It is sad when a company has to be managed for cash flow #1, but at some point that must be a consideration.

Quoting norcal (Reply 3):
Employees at Eagle think they are the next Comair. Base on what I've seen I'd have to agree with them

I do too. Where else will AMR be able to come up with the money to buy new planes? I suspect MRJs would be available for financing, but the competitors might have a better chance.

Quoting LAXintl (Reply 10):
AE going forward needs to stand on its own two feet. That is the point here.

That is almost impossible in this environment when the competition is being managed to be the 'last man standing' in a market where there are several players too many and AE has far too many 50-seaters in their portfolio.

Quoting Revelation (Reply 16):
I'm not sure which orders happened during BK, but I have read the big thing AA got from the MAX+NEO deals was financing from the vendor cheaper than the debt-burdened AA could get from the banks.

But it is not all dark. AE would be a very interesting deal, but only for a vendor willing to take 50-seaters as a 'down payment.'

Lightsaber



Societies that achieve a critical mass of ideas achieve self sustaining growth; others stagnate.
User currently offlineB727FA From United States of America, joined Jun 2011, 758 posts, RR: 0
Reply 19, posted (1 year 7 months 4 days 12 hours ago) and read 7123 times:

I'm sorry--I just had to laugh at the indignant charge that AMR is "outsourcing regional flying." What does he think Eagle is?


My comments/opinions are my own and are not to be construed as the opinion(s) of my employer.
User currently offlineAerowrench From United States of America, joined Jan 2006, 52 posts, RR: 0
Reply 20, posted (1 year 7 months 4 days 12 hours ago) and read 6984 times:

Quoting norcal (Reply 3):

- Eagle votes in a concessionary contract, the following week AMR announces the closure of LAX crew base and use of SkyWest and ExpressJet for feed

I believe the Eagle vote was of very little significance regarding the AMR CPA with SkyWest Inc. It just so happened to coincide with the BK judge dissolving the AA pilot collective agreement which allowed for much greater leeway in regional flying. The LAX base closure was simply to consolidate operations.


User currently offlineripcordd From United States of America, joined Apr 2000, 1160 posts, RR: 1
Reply 21, posted (1 year 7 months 4 days 12 hours ago) and read 6909 times:

When BK is done AE will be on its own and if they dont lower their costs they will be out of business. AE has been a huge drain on AMR for years yes officially AE always made money and AA never did but this was done with creative accounting to keep AA employees in line when it came to contracts we cant we are not making money bs many years AE was getting profit sharing when AA did not.

User currently offlinenorcal From United States of America, joined Mar 2005, 2459 posts, RR: 5
Reply 22, posted (1 year 7 months 3 days 19 hours ago) and read 5079 times:

Quoting commavia (Reply 7):
First off, nobody ever told Eagle employees that taking concessions was a guarantee that they would continue to maintain a near-monopoly over AMR regional feed. In fact, quite the opposite.

Check my choice of words, I said primary feed provider not monopoly. According to their new concessionary contract AMR must furlough protect at least 2000 Eagle pilots, climbing to 2300 in coming years. That's 200-230 aircraft based on historic staffing numbers.

Furthermore if/when a merger with US does occur, 95% of the Eagle pilot list is guaranteed job protections. At the rate that AMR is giving away flying it looks likely that they plan on breaking that portion of the contract.

Quoting commavia (Reply 7):
Second, it doesn't appear - based on Garton's comments to Eagle employees - that the major issue here may even have been cost. It seemed to largely center on the fact that Eagle simply couldn't satisfy a key RFP requirement relating to financing new aircraft.

How can Eagle get financing on its own when its still owned by AMR? How will AMR meet the employment obligations it promised Eagle employees when they signed concessionary deals?

Quoting commavia (Reply 7):
Right ... and that was untrue somehow? Eagle does need to be cost competitive and AMR - which still owns Eagle for now - does need known and stable labor costs. You can argue over the length of the contract or the concessions demanded, but the mere statement that Eagle needs competitive and stable costs is hardly earth-shattering.

Prior to bankruptcy when AMR was planning to spin off Eagle they wrote in SEC filings that they pay "market rate" for Eagle feed and that Eagle had generated a profit for AMR most years. That was before the concessionary contracts signed by all the labor groups that not only made immediate improvements (the pilot's alone gave $43 million a year ) but also guaranteed long term stable costs that reset to match the lowest carriers in the industry every few years.

Quoting commavia (Reply 7):
First off, how do you know AMR shared its regional fleet plan with Republic, SkyWest and ExpressJet? They issued an RFP publicly, but how do you know it contained AMR's regional fleet plan? And how do you know AMR didn't make those other carriers sign an NDA, too? (Indeed, I'm sure AMR did make all those carriers sign NDAs before getting into serious negotiations, whether they saw the fleet plan or not.)

I didn't say they showed those carriers the entire plan, merely that they told them what they'd be doing. AMR knows the plan and they've gone so much as share it with Eagle ALPA leadership but they are refusing to allow them to pass on what Eagle will be doing.

My guess is that they are planning on breaching the employment guarantee section of the contract or they are purposefully keeping morale as low as possible to entice people to leave.

If they do know the plan, why wait and create a ton on uncertainty in the lives of their employees? Why release all the bad news at the worst possible moments, like the SkyWest flying after Eagle voted in concessions.

They did make RAH sign an NDA, but they nearly spilled the beans in December when they released a press release saying, They'd be doing large RJ flying for AMR," that quickly got corrected to "We'll be in a competitive position to bid for AMR flying."

Quoting LAXintl (Reply 10):
AE going forward needs to stand on its own two feet. That is the point here.

Papa AMR need not place chain around its neck for $4.0bil in aircraft financing.

Soon enough AE will need to learn to prosper or fail on its own merit and not rely on a AMR automatic backstop.

According to the SEC filings that AMR posted when they were trying to spin Eagle off they said Eagle was profitable most years and that AMR paid market rate for Eagle's feed. That was before concessions were taken by every Eagle group with stipulations that pegs Eagle's costs to the lowest regionals out there every few years. Eagle can and does stand on its own and isn't a drain on AMR.

Furthermore how can Eagle get it's own financing when it's a part of AMR? It can't hold on to Eagle and then use that line when RFPs come up for bid. They are contractually obligated to employ a certain number of Eagle pilots unless they plan on breaking that contract.

Quoting infiniti329 (Reply 13):
I personally believe this undercutting will eventually blow up in mainline carriers faces. In this industry at this point in time it not like airlines have an unlimited supply of pilots, the things you need to actually fly these routes. Reality will soon set in once the mainline gobble up the vast majority of regional pilots to replace their own who must retire... thats when things will get interesting.

Agreed, in their shortsightedness they are creating their own pilot shortage by driving down wages while training costs are going up. They also make life incredibly miserable for the regional employees in order to squeeze a few more pennies out of them every few years.

People, particularly pilots, are figuring it out and doing other things. There are a ton of internet forums out there for pilots that people are reading and now learning that the career isn't what they thought it was based on that fancy flight school brochure.

In the coming years the regionals are going to struggle to staff these planes placing the entire feeder system in harms way. They'll be temporary relief in the form of 50 seat reduction but that won't last, particularly when the majors will need a 1,000 pilots a year to staff their current flying. That'll have drastic effects on the mainline carriers looking to fill their widebodies for profitable international flying. However as is typically the case in corporate America, next quarter is all that matters and the long term effects mean nothing.

I honestly can't wait to see the Delta, United, American, and US CEOs freak out when their precious cheap labor systems implode. It'll be hilarious to watch and poetic justice for all the years of chapter 11 and RLA abuse.

And if you think the Eagle pilots are the only upset ones check out AMR's new darling RAH

http://www.rahcontractnow.org


User currently offlinecommavia From United States of America, joined Apr 2005, 11557 posts, RR: 61
Reply 23, posted (1 year 7 months 3 days 18 hours ago) and read 5019 times:

Quoting norcal (Reply 22):
Check my choice of words, I said primary feed provider not monopoly.

Then let me revise my choice of words. Nobody ever told AA employees that if they gave concessions that would guarantee that Eagle remains the "primary feed provider" for AMR. Actually, it was quite the opposite. Everyone involved has known for quite some time that feed diversification was coming. It was no secret.

Quoting norcal (Reply 22):
How can Eagle get financing on its own when its still owned by AMR?

AMR Eagle is a legal entity that can enter into financing agreements, but only when AMR - its owner - wants Eagle to. Nonetheless, that's not what happened here. The reason Eagle didn't bid for this flying wasn't because AMR didn't want Eagle to get financing for new jets. It was because Eagle, and AMR, are in bankruptcy, and thus it would be more difficult for both of them to get financing right now compared to a solvent concern such as Republic.

Quoting norcal (Reply 22):
At the rate that AMR is giving away flying it looks likely that they plan on breaking that portion of the contract.

So does that furlough protection overlap with the guys who have flow-up rights? And either way, why don't we wait until AMR actually breaches a legally-enforceable contract? Right now you're guessing and assuming - let's see if AMR really does plan on breaking a contract it just signed.

Quoting norcal (Reply 22):
Prior to bankruptcy when AMR was planning to spin off Eagle they wrote in SEC filings that they pay "market rate" for Eagle feed and that Eagle had generated a profit for AMR most years.

Both of which may be true. The key, though, is Eagle's profit margin. If Eagle is less profitable than its peer competitors, then AMR's regional subsidiary is not as efficient as it needs to be.

Quoting norcal (Reply 22):
I didn't say they showed those carriers the entire plan, merely that they told them what they'd be doing.

Well they've told the Eagle pilots "what they'll be doing" - cutting costs and diversifying regional feed. They haven't however, shared the fleet plan with the Eagle pilots, true. But again, we don't know if they did or didn't share it with the carriers responding to the RFP, either. All we know for sure is that they showed them a need for 53 airplanes. Beyond that, again, you're simply speculating about what they did or didn't show Republic.


User currently offlineripcordd From United States of America, joined Apr 2000, 1160 posts, RR: 1
Reply 24, posted (1 year 7 months 3 days 16 hours ago) and read 4847 times:

Sure Eagle was profitiable NORCAL and AA was paying market rate but I'm sure they hide a lot of costs that was charged to AA at least in hubs FUEL/Employee bus/Catering/Equipment they proped AE up for many many years and AA has paid the price for it.

25 N766UA : I don't understand why Eagle is being painted as the "bad guy" here for doing all of American's regional flying. Competitive bidding, effectively who
26 ripcordd : Exec's if they cared about who flew for them they would have done away with Eagle at ORD along long long time ago. Try landing at ORD on AE and waitin
27 commavia : No costs were "hidden." The contractual relationship between AA mainline and Eagle was shifted several years ago to more closely align with the way t
28 LAXintl : Same way AA can get its own financing. However being in BK AMR clearly does not want the books to be saddled with additional long term debt. Eagle pe
29 norcal : Eagle has to be the primary feed provider based on the new scope language and the promised furlough protection to Eagle pilots. The numbers don't add
30 commavia : Please provide specifics. I'm not entirely sure if you are referring to the mainline APA or Eagle ALPA contracts, but either way, what in the "new sc
31 norcal : If you want proof of what AMR has been telling Eagle ALPA leadership about Eagle's roll as the primary feeder, check out this from Docket #6339 (RAH
32 commavia : Okay - so there you go. Assuming that statement was legally-binding, then Eagle will continue to "provide the majority of regional feed." If AMR says
33 Acey559 : I posted this on another thread but I guess nobody read it. In a nutshell, what we're hearing is that the divestiture is off so we'll remain wholly ow
34 jfklganyc : Truth is, many of us see what we want to see in a situation...not what is really going on. I was at ACA doing an internship and we were waiting for U
35 Acey559 : I guess I should have been more clear, what I posted is what we're being told, not what I think will happen. I don't think the 824 will flow. Maybe a
36 N766UA : I don't think that's true, or at least it doesn't need to be. If AMR maintained 100% ownership of Eagle, they could absolutely keep it "lean and hone
37 LAXintl : Very simple --- the market beats itself up to gain your business. Having a company inhouse brings all types of added inefficiency - from billions in
38 Maverick623 : In other words, all it does is pass the issues onto someone else, creating a whole new set of issues in the process. It is precisely that business mi
39 lightsaber : That is at the heart of it. If AMR exits BK with too much debt, there will be negative talk and inhibitions to floating the new stock. I'm sorry for
40 Post contains links LAXintl : AE ALPA filed objections in BK court to the AA-Republic deal saying it undermine the value of American Eagle and goes against the just recently court
41 ckfred : Is all of this really that new? When AA decided to close the STL hub, American Connection (Chatauqua) flying was shifted to ORD. Eagle pilots at the O
42 commavia : Seems ridiculously frivolous, and without any legal basis. Eagle employees are essentially trying to block the deal in court because they say it hurt
43 LAXintl : Its an interesting argument, which I actually do think has some merit. What ALPA is saying is, AA going off making a deal with RAH very much hurts AE
44 jfklganyc : There is no case. This is Tony's version of pissing into the wind. Here's the reality for Eagle guys: you are at a regional that got pulled into BK by
45 rfields5421 : That is factually incorrect. AMR Corporation is in bankruptcy. American Airlines is one subsidiary of AMR, and American Eagle Holdings is another sub
46 commavia : Huh? The bankruptcy is about maximizing the return for stakeholders in AMR in general, not AA or Eagle specifically. Correct? AMR is acting in the gr
47 LAXintl : As we know each subsidiary is an independent business entity and has its own unique BK issues. If you actually look at the docket - AA BK matters and
48 antoniemey : All of which will presumably show that AE does not have the personnel, aircraft, or available financing to take on a deal like the one AA brokered wi
49 LAXintl : Both AFA and TWU have joined ALPA going against the Republic deal. In their objections they question the need for the 15-year agreement and also state
50 GentFromAlaska : As it relates to the subject matter; can we use MQ IATA designator to identify American Eagle in lieu of AE please. Just as some might affiliate AE wi
51 B727FA : TWA/APFA anyone?
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