Excerpt

The following is from the Feb. 14, 2014, edition of The Fort Worth Star-Telegram. Professor Mike Davis of SMU's Cox School of Business, who specializes in the intersection of government and business, provided expertise for this story.

American will look to other regional carriers instead of Eagle

 

February 21, 2014

By Andrea Ahles

American Eagle, the regional subsidiary of Fort Worth-based American Airlines Group, may get smaller after a pilots union rejected a proposed 10-year contract agreement.

American will look for other regional carriers to fly its new aircraft on short-haul flights after the leaders of Eagle’s pilots union decided late Wednesday not to send a proposed contract to members for a vote, a top executive said Thursday. . .

During labor negotiations, it’s difficult to know whether threats by the company or the union are going to come true.

Mike Davis, economics and finance professor at Southern Methodist University, said bluffing sometimes backfires. In 2012, when Hostess Brands told its union workers to agree to concessions or face a shutdown of its Twinkie factories, the bankrupt baker followed through with the threat, and thousands lost their jobs.

Davis said he isn’t sure that an Eagle liquidation is a credible threat.

“It really makes sense for these guys to get it done,” Davis said. “American needs the pilots and they need the regional jet service, and most of the pilots, all things considered, would just as soon stay if they could get a decent raise.”

Read the full story.

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