Republic Air CEO cites hurdles finding pilots

Tue Feb 11, 2014 9:50pm EST

(Reuters) - Republic Airways Holdings Inc (RJET.O) expects to hire 350 pilots in 2014, down from 600 originally planned, as it cuts its planned flying in the wake of U.S. rules requiring more experience for aviators, Chief Executive Bryan Bedford said.

Bedford's comments followed Republic's disclosure on Tuesday that its pre-tax income would be reduced this year because it decided not to extend leases on 27 planes due to a scarcity of qualified pilots.

"What we've seen is a steady decrease in the qualified pilot applicant flow since August of last year," Bedford told Reuters in an interview. "It's become clear that there just aren't going to be enough pilots to satisfy our demand."

U.S. Federal Aviation Administration rules that took effect last summer require U.S. pilots to have 1,500 hours of flight time to operate commercial jets or cargo planes, up from 250 hours previously required for co-pilots. Airlines also must comply with additional rules that took effect this year requiring more rest for U.S. pilots.

Bedford said the beefed-up experience qualifications, which stemmed in part from a Colgan Air crash in February 2009 that killed 49 people on board and one person on the ground, meant that many "technically qualified, very competent" pilot candidates would not be available to the industry.

Thousands of pilots flying for major carriers such as Delta Air Lines (DAL.N) and American Airlines Group (AAL.O) will reach the mandatory retirement age of 65 over the next few years. When that happens, the bigger airlines will hire from regional carriers like Republic to fill the void, Bedford added.

The CEO said he expected pilot wages would rise because carriers would be forced to compete for a smaller pool of qualified applicants.

Indianapolis-based Republic Airways, which owns regional carriers Chautauqua Airlines and Republic Airlines, said it was not seeking to extend leases on 27 of 41 Embraer smaller jets that provide service for United Continental Holdings (UAL.N) and American Airlines. Taking those planes out of service this year will reduce pretax income between $18 million and $22 million.

The company said the change in its business plan would create 750 fewer jobs, including flight attendant and maintenance positions as well as pilots. Shares of the company fell 4 percent to $9.45 on Tuesday.

In a letter sent to staff on Monday obtained by Reuters and verified by Republic Airways, Bedford said the company's Chautauqua subsidiary was having "a very difficult time" finding new pilots.

Bedford's letter also addressed the possibility that not having a new collective bargaining agreement with pilots "isn't helping and certainly may be hurting" Republic's pilot recruitment efforts.

Craig Moffatt, executive board president for the International Brotherhood of Teamsters Airline Local 357 union, said regional carriers as a whole needed to offer better pay and work rules to attract new pilots. The Teamsters represent pilots at Republic units.

"The bankruptcies, the furloughs, the poor quality of life and poor starting pay has literally turned off all these potential people," Moffatt said.

The Teamsters and Republic have been in contract talks under federal mediation since 2011.

An American Airlines spokesman said the carrier did not expect Republic's reduced flying to significantly affect any of the markets that it served.

(Reporting by Karen Jacobs in Atlanta; Editing by Amanda Kwan and Stephen Coates)