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American Eagle, Pilots Stalled in Contract Talks, Union Says

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Oct. 9 (Bloomberg) -- American Eagle and its pilots union have hit an impasse in efforts to agree on a new contract before Eagle is spun off from AMR Corp., also the parent of American Airlines, the union said.

The contract would, among other things, have set terms for Eagle to provide regional flights for American. If approved by its members, the plan would have replaced one spelled out in regulatory documents filed by AMR that would allow American to begin pulling some planes from Eagle as soon as 2012 and contracting them to other regional carriers.

The pilots union had hoped for an agreement that would keep more American service at Eagle longer, giving the carrier a better chance to survive after being spun off. The spinoff is part of an effort to trim operating costs at American and help stem annual losses at AMR. It also may allow for expansion at Eagle, where growth has been constrained by flying limits set in American’s contract with its pilots.

Union leaders “concluded after much deliberation that the company’s last counter-proposal was unworkable, specifically with reference to the flexibility management was seeking” in future amendments to terms for Eagle flying, the union said in a message to members yesterday. “At this point, there are no further conversations scheduled between ALPA and management.”

“Although disappointed in the news that the ALPA MEC has voted against our most recent proposal, we remain open to further discussions,” American Eagle said in an e-mailed statement.

Counter-Proposal

The union last month proposed contract and other changes that would cut Eagle’s costs if it is spun off and allow the unit to retain more regional flying for American. The talks stalled during negotiations on a counter-proposal submitted by Eagle.

The plan laid out in documents filed for Eagle’s spinoff “is expected to result in the new company being separated with very little cash and very little fleet stability,” the union told members. That plan didn’t specify a date for the spinoff or the distribution ratio of Eagle shares to holders of AMR stock.

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net.

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