AMR sells Executive Airlines

[Bluestreak]

American Eagle Announces Sale of Executive Airlines
Wednesday November 6, 8:03 am ET
FORT WORTH, Texas, Nov. 6 /PRNewswire-FirstCall/ -- American Eagle Airlines today announced that it has signed a letter of intent to proceed with the sale of Executive Airlines. Executive currently operates as American Eagle out of its hubs in Miami and San Juan, providing service to destinations throughout Florida, the Caribbean and the Bahamas. The sale is expected to close near the end of first quarter 2003.
ADVERTISEMENT

American Eagle is taking this step to ensure that American Airlines stays in compliance with its contract with the Allied Pilots Association (APA). That contract limits the amount of flying which can be done on the American code.
"Although I am disappointed that we have had to take this step, this transaction achieves a number of objectives," said Peter M. Bowler, President of American Eagle. "First, it keeps American in compliance with the 'scope clause' imposed in the contract between American and APA. Second, it preserves jobs at both Executive and Eagle by avoiding the necessity of grounding additional aircraft, which would have been the alternative to the sale. And finally, the sale will provide American with valuable and profitable feed traffic."
Eagle has entered the agreement with Joaquin Bolivar, a Puerto Rican businessperson and Chairman and CEO of the Water Club Hotel and the Excelsior Hotel, both in San Juan. Mr. Bolivar also founded Executive Air Charter in 1979, and owned Puerto Rico's largest chain of travel agencies, Bithorn Travel, from 1990 to 1999.
The transaction will include a marketing partnership under which Executive will continue to provide feed traffic to American -- but using its own designator code, rather than American's -- to and from San Juan and the American Airlines hub in Miami. Its operations will use the AmericanConnection(SM) service mark, a service mark licensed by American to independent regionals that provide American with feed. Financial details regarding the sale were not released.
"An ongoing relationship with Executive was very important in evaluating the sale," commented Bowler. "Executive really has an outstanding group of employees. They've done a terrific job of providing safe and reliable service to Eagle customers in Florida, the Bahamas and the Caribbean.
"While we're sorry that we have to take this step, we are pleased to be able to sell this airline to the man who founded it over 20 years ago," concluded Bowler.
Gary Ellmer, Executive Airline's current president, will remain at Executive after the sale. Ellmer joined American Eagle in 1999 as regional vice president of its Northeast region, after Eagle acquired Business Express Airlines, where Ellmer served as president and chief operating officer.

 

[chperplt]

So what's the deal with the flight crews?? Are they "sold" to executive as well? If so, when they were based down there, were they employees of executive or AE?

 

[eaglefly]

The AE pilots agreement specifically states that both the affected pilots and the AE pilot contract go with the sale to the new (old) owner.

The AE pilots union will request a "system flush", but AMR will balk due to the cost. From what I see, there is no language requiring a flush in the event of sale.

The NEW Executive pilots will be free to negotiate a new contract in 2004 (Can you say strike ?).

This will trim the Eagle pilot ranks from approx. 2400 down to 2000. If they sell the SF3 operation in the fall of 2003 (VERY likely as this is less profitable and valuable than the Carribean operation), than look for Eagle to be a all RJ operator by the end of 2003 with about 170 RJ's and 1700 pilots.

 

[azpilot]

I just spoke with a friend down there who thinks this might be a good thing.

Per the agreement pilots can bid back to Eagle for up to five years but it must be in higher paying aircraft. AE is now getting more jets based on the sale of Executive. This could then allow folks in the ATR to bid back to the jet. i.e. they couldn't bid back to the Saab.

I am sure everyone has an opinion on either side of the issue. I don't know what happens if you are able to bid back to a jet. Will you still get a number with American if you are a captain on the jet?

- AZPilot

 

[chperplt]

That's all very interesting. How do the pilots down there feel about being sold with the team??

I can see the future... A highly paid Delta Captain is called in the CPs office. John, I hate to tell you this, but you've been traded. America West has offered 3 junior first officers and a couple cases of peanuts for you. With the economy the way it is and your contract not having a no trade clause, the company couldn't say no. I'm sorry John.

 

[FlyingSig]

That's all very interesting. How do the pilots down there feel about being sold with the team??

Just a guess, but I'd say it beats an announcement of 400 more furloughs and these folks competing to get hired into their own seat (that is, if Executive doesn't require senority resignation)....

...what an industry... even the surprises don't really surprise me anymore....

 

[eaglefly]

There are NO stipulations regarding "higher paying aircraft". In fact you may even take a pay CUT.

Example :

You are an ATR F/O when sale closes. Due to attrition you upgrade to ATR captain 2 years later. One year after that, you have the opportunity to bid back to Eagle. Although you kept your Eagle DOH , that only buys you into a jet F/O seat.

Which pays less than your current ATR captains seat. But you MAY be more than halfway up the F/O list and could look forward to upgrade in 5 years or so (remember,this is EAGLE !).

 

[Publishers]

Another

I have been saying all along that the relationship with regionals is changing right in front of our eyes. The carriers will continue to distance themselves from the regional carriers.

You can say strike in 2004, but, remember, you are now talking about a small regional carrier, not American. You shut down and they will have someone else there the next day.

 

[FlyComAirJets]

Along the lines of Publisher's logic, just who might be that "someone else there the next day" that you have in mind?

In the event of a strike, all Executive flying would promptly be branded as struck work.

The ownership shell game would be irrelevant to that simple fact.

 

[eaglefly]

Yes, but in the case of most majors, they are placing multiple feeders in each hub or could always route traffic to other hubs, blunting any job action.

The word of the future :

WHIPSAW.

...and who perfected it in the '90's.

AMR.

 

[FlyComAirJets]

Is that a big concern for Executive since they are based primarily in Puerto Rico? They have some flying in Miami too, I know, but I thought that they had a pretty exclusive operation out there in the eastern Carribbean.

It would take a considerable amount of money to set up a whipsaw carrier out there. American, for one, could ill afford that.
How 'bout Mesa/Freedumb perhaps? Oops, Mesa is ALPA.

 

[eaglefly]

Yes, it would be more difficult (not impossible) to set up a whipsaw operation in SJU. MIA would be easier.

But It'll be at least 2006 before they'll have to worry. The Executive pilots will be free to negotiate a new contract starting in 2004. Add 18 months or so to reach self help.


....unless of course Baseball-style arbitration is in force.

 

[FlyComAirJets]

Indeed, it wont be soon. With all the changes in the industry, it is difficult to project what will be happening in three or four years.

One of the legacies from the Comair strike was the message to management that regional airline pilots have the fortitude to sustain a lengthy job action. The responding tactic of spreading the whipsaw carriers over multiple hubs ensures that a strike would not only affect the carriers primary hub, but all the mainline carrier's hubs.

Prior to last year, regional airline strikes were few, short, and far between. I get the impression now that suddenly the unthinkable is a lot more thinkable. Oh, and by the way, I seem to recall that the Executive pilots did strike some years ago albeit a rather short one.

I am constantly amazed at the apparent lack of respect that some groups have for the resolve of regional pilots.

 

[FlyDeltasJets]

FCJ,

Perhaps that attitude is left over from the days of PFT. As many regional airlines were PFT, one can hardly blame mgt for not respecting their pilots. After all, those pilots had already paid them big bucks to work for them, hardly a practice that would lead mgt to respect them.

On the other hand, I think what you guys during the strike went a very long way towards changing that attitude. I could not have been more impressed with your group's courage and resolve. You have changed a lot of people's perceptions, especially mgt's.

I've said it many times in the past, and I'll say it again...Great job.

 

[FlyComAirJets]

Wow, so now we are discussing Pay For Training? Truly, all these topics are interconnected. I would only counter your point by saying that Pay(ing) For Training only affected a relatively small number of pilots at a limited number of airlines but you might be on to something.

That said, however, we can expect irresistable (to management, that is) economic forces to allow for PFT to raise its butt-ugly head. And that might be the ruse that management might use to keep from hiring very worthy furloughed airline pilots.

Now, if we can work the RJDC into it, we shall have touched on all the hot buttons.

 

[FlyDeltasJets]

No, my intention was not to start a PFT debate (I have my hands full with the rjdc!) bit to attempt to illustrate on possible reason for the lack of respect you mentioned. That being said, I agree that PFT might again be on the horizon.

It would be a real shame if people buy into the scam again. However, it would not be much of a surprise.

Back to Eagle. I might have hijacked another thread, but I am trying to surrender!

 

[JohnDoe]

Publishers stated:

"You can say strike in 2004, but, remember, you are now talking about a small regional carrier, not American. You shut down and they will have someone else there the next day."


You must not have ever worked in San Juan before. That would be easier said than done. The workers there would make every attempt to shut down the entire airport......

While I was down there, they literally had an island-wide strike in support of one of the utility unions (I think it was the phone company). Now, not every entity took part in it, but I do remember seeing ALOT of businesses closed that day. They even had the main entrance to the airport covered.........

 

[FlyComAirJets]

Right on. I flew with a former Executive pilot awhile back and he said pretty much the same thing.

They do not like gringos down there. Imagine the welcome a SCAB gringo would recieve!

 

[Publishers]

Comair

The legacy of the Comair strike was that majors need not be held hostage by their regionals and most of what has happened since is the longer term reaction to that.

You may or may not be correct about SJU but remember that if things hold true to form, American will not be beholden to Executive forever and regardless of what you think, there is always someone else coming down the path.

 

[FlyComAirJets]

With all due respect Publishers, you have made an erroneous premise which, of course, leads to your faulty conclusion. The Comair strike did quite effectively hamstring Delta to the tune of $680 million dollars, a figure derived from their annual report. That management will seek a way around future similar situations by spreading the flying around amortizes the risk is an as yet, unproven tactic. More airlines whipsawed against each other in more hubs only increases the chance of a debilitating job action, not lessens it.

Kind of like the old twin Apache I used to fly. Really a split single if there ever was one. Two engines did not make it any safer, my chances of an engine failure followed by a forced landing were twice as great!

The good pilots of Executive do not intend to be stationairy targets. Management is making their move and so will they at the proper time.

 

[Publishers]

Error

And just what was the error? and what is the faulty conclusion.

Continental Express and Pinnacle and Freedom and Executive are all the examples. Look at CVG.

 

[surplus1]

Re: Error

And just what was the error? and what is the faulty conclusion.

The error is the concept that a major airline can protect itself from the effects of a strike at a subsidiary like Comair by simply spreading the flying to a "portfolio" of different carriers. The faulty conclusion is that regional airline strikes will be ineffective in the future, because of this so-called diversification.

Continental Express and Pinnacle and Freedom and Executive are all the examples. Look at CVG.

All the examples of what? Comair's flying is still about 23% of the CVG hub. ASA's flying is about 11% of the ATL hub. COEX flying is an even higher percentage of CAL flying. The existing aircraft are all "committed" to their present services. In the event of a work stoppage you can move the airplanes, but that would only be robbing Peter to pay Paul. There is NO major carrier currently operating a regional subsidiary that could afford to lose that traffic. Particularly in the current environment. The idea that they could be "replaced overnight" is a fantasy that suits your purpose but ignores the true logistics.

Another thing that you seem to ignore totally is that the major airline itself has not announced that strike prevention is the reason for their redistribution of the traffic. That is mereley an assumption that folks with your perspective have been trying to sell. Perhaps you are right but there is a 50/50 chance that you are not. Just because you perceive something does not make it so. Especially when your perspective could be held to be clearly slanted in favor of management.

Further to that, the Comair strike was not as effective as it could have been because the International union chose not to fully support it. Some, especially the union, will say that's hog wash but a good look at reality should prove it isn't.

Just think of the EAL strike. That was a sympathy strike in support of a different labor union (the IAM). In the Comair strike, the union could have conducted a sympathy strike of both the Delta and ASA pilots and shut down the entire system. It chose NOT to do that because it did not want a potential PEB (which only delays matters for 60 days) and it really wasn't interested in the Comair pilots. It's focus was on the Delta pilot's contract.

In turn, the Delta pilots had no interest in supporting the causes of Comair pilots let alone to the extent of a strike at Delta. They were far too busy trying to transfer the regional flying to themselves and their intersts were in direct conflict with those of Comair pilots. Besides, many would argue that group would not even strike on its own behalf, let alone in support of a Comair or ASA (which they would prefer did not exist).

There is some question as to whether even the ASA pilots had that level of support. I seriously doubt anyone could have conviced them to put their own jobs on the line in support of Comair. In other words, there is no real will among the pilot groups to support each other (unless it is painless). What support they do give is in the form of rhetoric and some money, plus they don't fly whatever is defined as "struck work" (a definition that carries a lot more politics than meets the eye). For example, do you have any idea at all of the internal pressures attempted to get Comair pilots to change their definition of struck work?

If we had a real labor union, any pilots that walked out (legally) at any subsidiary of the same Company, would immediately result in the sympathy withdrawal of ALL services by union pilots to that Company. In addition, the union (if it was a real union) would solicit the aid of ALL AFLCIO union people and encourage them not to cross the picket lines. That would disrupt a lot more than 100 regional jets.

For example, if the MESA pilots are forced to withdraw their services do you really think the America West pilots will strike in sympathy with their efforts? Hel1, the focus at AWA is already directed at limiting MESA flying ... why on earth would they support a group they are busily trying to eliminate, with the "union's" full support? Granted AWA is a bad example because MESA is not owned by AWA, but if it were, do you think that would happen? Would the U pilots ever have supported the PDT and ALG pilots in a job action? Will the NWA pilots support Mesaba or Pinnacle in that way? Don't hold your breath.

In other words, there are ways to deal with "portfolios". The only real question is whether or not the union has the guts to do so. In the case of the Comair strike, the International union didn't. They did only what they had to do and not one dam*ed thing more. Like it or not, it was a strike by Comair pilots for Comair pilots. The only thing that ALPA did was throw some money at it. Throughout the entire strike, the truth is that the union made every effort to end the strike by coerceing Comair pilots to accept inferior agreements. Only the will of the Comair pilots prevented that from happening, on more than one occasion.

Every true unionist knows that you can't "buy" a strike. When and until ALPA figures that out (I won't hold my breath) an ALPA strike will always be less than fully effective. Comair wasn't the first example and it won't be the last. ALPA pilots have always "flown through" other ALPA pilots on strike. If that continues and I fully expect that it will, ALPA won't "win" any strikes. An objective review of past ALPA strikes will show you how many have really been "won". This (ALPA) is an imaginery "brotherhood" that seldom extends beyond self interest when it comes to labor disputes.

Your theories may come to pass but it won't be because of an effective management counter with "portfolios". It will be because we all belong to an Association, not a labor union. Not only that but it is an "association" that readily and openly discriminates against some of its members in favor of others of its members. Management's knowledge of that discrimination will continue to work against the causes of regional pilots as long as the ALPA maintains that flawed policy. Management hasn't reivented the wheel with portfolios, we (the union) have given them the means to defeat us ourselves; on a silver platter.

The usefulness of such an association is highly questionable in the context of being a labor union.

 

[Publishers]

Agree

One thing that we do agree on is that ALPA basically did not care about and just wanted the strike settled at Comair.

I think that the issues here go well beyond strike aversion. The gradual but nevertheless separation of wholly owned carriers does a number of things that the carrier finds important. A non pilot issue one is raise cash. This is critical to them during this time. Scope will eventually be killed in this program as well which is a pilot issue.

As these regionals become more independant, they will have to end up being competitive with each other on a direct basis. Some of that has to come from flying for more than your carrier.

Another issue will be the diminishing of flow through, either way. It is a pain in the butt and will go.

Major carriers thought that they needed to own and control their regionals and have found out that they do not.

Frankly I do not see now or in the future any interest by the major pilots in the regionals problems and in the future, their will likely be even less togetherness of regional pilots.

 

[csmith]

clarification

As more shots have been taken at the Delta pilot group, I will simply clarify the following:

--Comair got exactly the level of support which they requested via joint venture with the Delta pilots and the ASA pilots, in remarkable cooperation with the front forces of the company

--Delta pretty much set up and ran the Comair strike center in MCO, dunno about CVG

--it is more than likely that the company's figure of loss due to the Comair strike is as inflated as they can get it

--ALPA allows the carriage of pax through a striking carrier's operation because it is not the passengers which are to be affected--it is the company

--yours truly walked side by side with the Comair pilots during the strike as well as contributed financially outside of a mandated assessment. Not exactly "painless".

 

[FlyComAirJets]

Csmith's thread drift post essentially boils down to one more clarification, if the pilots of Executive choose to strike, they can count on little more support from their counterparts at American mainline than window dressing.

 

[AAflyer]

Which brings in the main difference with Executive, geography. You can't simply fly in and pick up some pax and redistribute them.

San Juan is isolated, and gives the Executive pilots another layer of protection. Unlike ASA flying into cities that Comair flew into and redistributing PAX through ATL over CVG.

AAflyer