The Canadian Press - ONLINE EDITION

Fate of regional airline American Eagle in doubt after pilots' union rejects contract offer

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FORT WORTH, Texas - The CEO of American Eagle says the American Airlines regional affiliate will be a different outfit that does less flying after leaders of the pilots' union rejected a contract offer.

Eagle wanted the pilots to make labour cost concessions in exchange for letting them fly new, larger planes. Leaders of the local Air Line Pilots Association chapter rejected the offer without sending it to members for a vote. The union said management demanded cuts that would lock in lower wages than pilots earn at other regional airlines.

Union officials said company negotiators warned repeatedly that without a deal, they would keep shrinking the airline until it's small enough to liquidate.

CEO Pedro Fabregas told employees Thursday that the airline would not shut down but would shift more to performing ground operations for other airlines.

Fabregas said American Airlines Group Inc. will begin looking for other airlines to fly 60 Embraer jets that it ordered in December, and the company might take away the largest planes already in Eagle's fleet. The 76-seat Embraers would have replaced some of Eagle's fleet of mostly 44- and 50-seat planes, which have been falling out of favour at current high fuel prices.

American has tried unsuccessfully to sell Eagle in recent years, and it began outsourcing some of its regional flying to other companies such as SkyWest Inc. to reduce costs.

As of December, Eagle had about 12,600 full-time and part-time employees, compared to about 63,000 at American.

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