Markets

American shrinking its regional subsidiary

/ AP

FORT WORTH, Texas - Some employees at American Airlines (AAL) subsidiary Envoy Air will likely lose their jobs as American shrinks the regional carrier.

American Airlines said Thursday that it will shift 47 regional jets from Envoy to another of its regional carriers, PSA Airlines.

American Airlines Group Inc. is shrinking Envoy after failing to reach an agreement on a long-term labor contract with pilots at Envoy, which used to be called American Eagle.

American will begin taking Envoy's Bombardier CRJ-700 jets in mid-2015 and complete the transfer by the end of 2016.

Envoy CEO Pedro Fabregas said that with his airline losing the planes, staffing will be reduced through attrition and possibly some layoffs. Fabregas gave no numbers, but Envoy has about 10,700 employees.

An American spokeswoman said that the shift would boost efficiency by letting each regional airline fly a single type of plane -- Embraer at Envoy, and Bombardier at PSA.

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