American Eagle may struggle to grow without Embraer jets: CEO

SAO PAULO Mon Mar 31, 2014 4:59pm EDT

American Eagle planes sit at their gate at O'Hare International airport in Chicago November 29, 2011. REUTERS/Frank Polich

American Eagle planes sit at their gate at O'Hare International airport in Chicago November 29, 2011.

Credit: Reuters/Frank Polich

SAO PAULO (Reuters) - Without new planes from Brazilian planemaker Embraer SA (EMBR3.SA), regional airline American Eagle will have a harder time growing, the top executive of the carrier's parent company, American Airlines Group Inc (AAL.O), said on Monday.

American had hoped to make Eagle more competitive by expanding its fleet with larger, more efficient E175 regional aircraft, said Doug Parker, American Airlines' chief executive. But American Eagle pilots rejected a labor deal that would have allowed the bigger planes in the regional carrier's fleet.

"Other regional airlines have been able to bring in new aircraft at lower costs," Parker said at an industry event in São Paulo. "Without those new planes, it's going to be hard for American Eagle to grow competitively."

Parker reiterated that American is seeking out several other regional carriers to receive the 60 new Embraer jets, ordered for the Eagle fleet in December. Deliveries from that order, worth $2.5 billion at list prices, are set to begin in the first quarter of 2015.

The Air Line Pilots Association union, which represents more than 2,700 pilots at American Eagle, said pay and healthcare concessions under the company's latest proposed labor deal were too much for pilots, who had already made compromises when American was in bankruptcy last year.

(Reporting by Brad Haynes; Additional reporting by Guillermo Parra-Bernal; Editing by Diane Craft)

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