American Eagle Proposes Slashing $75M In Labor Costs
NORTH TEXAS (CBSDFW.COM) - American Eagle Airlines is proposing a slash of $75 million in yearly employee costs. It's all part of the regional airlines' restructuring plan outlined Wednesday morning.
American Eagle CEO Dan Garton is outlining his proposal to the three main unions: The Airline Pilots Association, the Transport Workers' Union, and the Association of Flight Attendants-CWA.
In a letter to employees, Garton said, "We are committed to ensuring that all of Eagle's workgroups will share fairly and equitably in this restructuring effort."
While it didn't announce layoffs, the company's restructuring plan includes freezing pay for veteran employees and cutting benefits to part-time employees.
According to the airline, the restructuring plan also proposes to make a "substantial transformation" of the fleets of the mainline, American Airlines, and the regional carrier.
American Eagle says it will retire older, less fuel efficient aircraft, and replace them with larger, more fuel-efficient jets.
The goal of the plan is reportedly to more appropriately match the size of the plane to the demand in each market.
American Eagle is seeking to reduce contractual restrictions on flying larger regional jets.
Because American Airlines has proposed boosting flights by 20-percent at its key hubs, including Dallas-Fort Worth International Airport, American Eagle says that will boost the need for more of their flights. The airline has said more details will be released later.
Garton told employees. "There is no denying these changes will be difficult. But achieving competitive costs is absolutely necessary in order for us to justify American's investment in new aircraft for Eagle to operate on its behalf. If we miss this opportunity to demonstrate that Eagle has fully competitive costs, it would provide American and AMR another reason to select other regional carriers to assume this responsibility..."
AMR had sought to spin-off American Eagle, but that changed after American filed for Chapter 11 bankruptcy.
Last month, American Airlines proposed slashing 13,000 jobs in its restructuring plan, along with having retired union members pay for their health insurance premiums.
The airline has agreed to freeze pensions for American Airlines employees instead of transferring them to the government.
The International President of the Transport Workers Union, James Little emerged from the meeting with American Eagle to respond to its restructuring plan. Little told reporters that American Eagle's plan again falls on the backs of union employees and that he's waiting for more details from the airline.
The $75 million in annual labor cost savings will include pay, overtime, vacations, company 401k contributions, vacations, scheduling restrictions, and unproductive work rules.
Little did say he's encouraged that American Eagle does want to grow and possibly become its own independent regional airline.
When asked how negotiations are proceeding between his union and American Airlines, Little said by the end of the month, he fully expects AMR to tell a judge that the airline can't come to an agreement with its main unions, and ask the judge to accept American's restructuring plan.
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