AABB777 From United States of America, joined Oct 2007, 449 posts, RR: 0 Posted (5 years 5 months 3 weeks 6 days 2 hours ago) and read 15556 times:
Was just announced. Big news.
FORT WORTH, Texas, Nov. 28 /PRNewswire-FirstCall/ -- AMR Corporation, the parent company of American Airlines, Inc., today announced that it plans to divest American Eagle, its wholly-owned regional carrier. AMR, which has been engaged in an ongoing strategic value review process, believes that a divestiture of American Eagle is in the best interests of AMR and its shareholders and will be beneficial to American, American Eagle, their employees, and other stakeholders.
The divestiture of American Eagle is intended to provide it with the structure, incentives and opportunities to win new business and provide new opportunities for American Eagle's employees. AMR also believes that the divestiture will enable American to focus on its mainline business, while ensuring American's continued access to cost-competitive regional feed. Once the two airlines are separated, it is expected that they will operate pursuant to a mutually beneficial air services agreement under which American Eagle will continue to provide American with regional flying of a scope and quality comparable to that provided prior to the separation and on terms that reflect today's market for those services.
AMR continues to evaluate the form of the divestiture, which may include a spin-off to AMR shareholders, a sale to a third party, or some other form of separation from AMR. The company expects to complete the divestiture in 2008; however, the completion of any transaction and its timing will depend on a number of factors, including general economic, industry and financial market conditions, as well as the ultimate form of the divestiture.
"The decision comes after a careful and deliberate evaluation of the strategy that will best enable us to continue to create value for our shareholders," said AMR Chairman and CEO Gerard Arpey. "We have worked hard over the years to build a regional airline that is fully capable of standing on its own and is well positioned to pursue growth opportunities outside of the AMR corporate structure."
Arpey noted that, in addition to AMR having put in place an independent American Eagle management structure, with a chief executive officer and chief financial officer, American Eagle also has a well-formed operational structure and organization and has produced independently audited financial results for the past several years. Earlier this year, American and American Eagle entered into a new regional flying agreement between the airlines that reflects market-based rates, which ensures that American continues to have access to quality feed on competitive terms. Arpey added that AMR's divestiture of American Eagle and the regional airline's ability to provide quality feed at competitive rates to other carriers, as well as American, will better position American Eagle to compete for new customers and growth opportunities in the future.
American Eagle is a fully developed operating unit providing a full range of regional airline services with excellent employees and a modern fleet. It operates approximately 300 aircraft, with approximately 1,700 daily flights to more than 150 cities throughout the United States, Canada, the Bahamas, the Caribbean and Mexico. In 2007, American Eagle expects to generate annual revenues of approximately $2.3 billion.
The planned divestiture would include both American Eagle Airlines, Inc., which feeds American Airlines hubs throughout North America, and its affiliate, Executive Airlines, Inc., which carries the American Eagle name throughout the Bahamas and the Caribbean from bases in Miami and San Juan, Puerto Rico.
Ctbarnes From United States of America, joined Mar 2000, 3491 posts, RR: 52 Reply 1, posted (5 years 5 months 3 weeks 6 days 2 hours ago) and read 15549 times:
I wonder though, since AA and AE seem, from an outsiders view anyway, to be closely intertwined I wonder how AE will be able to funciton as a stand-alone entitiy. It would also depend on AA continuing to route passengers to AE flights. Would it be a codeshare arrangement? Could a stand-alone AE be profitable now that it has been separated from its parent?
The customer isn't a moron, she is your wife -David Ogilvy
AABB777 From United States of America, joined Oct 2007, 449 posts, RR: 0 Reply 4, posted (5 years 5 months 3 weeks 6 days 2 hours ago) and read 15388 times:
The Associated Press adds: Fort Worth-based AMR said in a statement that it is still studying whether to spin off Eagle to AMR shareholders, sell to a third party or divest the carrier in some other way. Although planned for 2008, the timing of the divestiture could be affected by the economic, industry and financial-market conditions, the company said.
EGFCabinCrew From United States of America, joined Nov 2007, 7 posts, RR: 0 Reply 5, posted (5 years 5 months 3 weeks 6 days 2 hours ago) and read 15367 times:
From our employee website:
In 2006, Eagle made money on the flying it did for American. However, as a regional airline flying under a capacity purchase (or fee for departure) agreement with American, Eagle's profitability is dependent upon its ability to operate regional aircraft at a cost significantly less than what American pays it to perform the operation.
AMR keeps the margin that it pays Eagle, since Eagle is wholly owned. However, as Eagle's cost gap as compared to other regional airlines grows, AMR and American could end up paying more to Eagle than they would for another more cost effective service provider. Furthermore, AMR's shareholders expect to earn a profit on the money invested in Eagle, just like other stockholders expect to earn a profit on their investments. If Eagle's margin declines below an acceptable level, AMR could decide to invest in other areas of its business, and let another company invest in the regional airline business.
Revelation From United States of America, joined Feb 2005, 10466 posts, RR: 20 Reply 8, posted (5 years 5 months 3 weeks 6 days 2 hours ago) and read 15298 times:
Quoting AABB777 (Thread starter): "The decision comes after a careful and deliberate evaluation of the strategy that will best enable us to continue to create value for our shareholders," said AMR Chairman and CEO Gerard Arpey.
"And another opportunity for me to give myself and the rest of the executive team a nice bonus for re-arranging the deck chairs"...
ERJ170 From United States of America, joined Apr 2004, 6626 posts, RR: 19 Reply 9, posted (5 years 5 months 3 weeks 6 days 2 hours ago) and read 15225 times:
Perhaps AA is getting themselves more in line to make themselves prettier for BA to buy them out? BA doesn't have an owned regional airline (do they), so they could be getting themselves in the same position? Just a thought..
MAH4546 From Sweden, joined Jan 2001, 31118 posts, RR: 74 Reply 11, posted (5 years 5 months 3 weeks 6 days 2 hours ago) and read 15200 times:
Awesome news. AA needs this, and it will allow, hopefully, AA to explore more opportunities for regional carriers and expand regional flying. They have been heavily constrained in regional flying out of certain markets, especially Miami.
ERJ170 From United States of America, joined Apr 2004, 6626 posts, RR: 19 Reply 12, posted (5 years 5 months 3 weeks 6 days 2 hours ago) and read 15198 times:
Would "American Eagle" be the regional name or the airline's name? because "American Eagle" is sort of like "Delta Connection".. would they airline have to get another name (all called Executive or go back to their original name?)
MMEPHX From , joined Dec 1969, posts, RR: Reply 13, posted (5 years 5 months 3 weeks 6 days 2 hours ago) and read 15194 times:
If it is sold (note, the article refers to AMR reviewing their divesture options which may include a sale) who are the likely buyers? Management buy out? Mesa Group? Cost of credit at the moment might not be all that attractive to suitors if AMR are looking for a big cash sale.
Mcdu From United States of America, joined Apr 2005, 1278 posts, RR: 17 Reply 14, posted (5 years 5 months 3 weeks 6 days 2 hours ago) and read 15072 times:
AE being spun off does not guarantee that AE will be able to get larger planes for AE flying. The restriction is the scope clause in place by the APA (Allied Pilots Association) that represents the AA pilots. If AE wants bigger planes they would have to fly them outside of the AE code share. The scope clause is a GOOD thing. The more mainline jets the more ability for pilots to move up in the mainline system. Putting a bigger airplane at the regional only caps a pilots progression to that aircraft. Not too many enter the industry seeking to retire on an RJ. The only way to create more mainline jobs and to open up the 777's to the career path is to have pilots retire, add aircraft or add flying by optimizing the aircraft on hand.
The downside to the sell off is that AE could find itself broken up into several different carriers, much like the roots from which it arose. There could be several of the current regional players making bids for certain hub assets. This is just and example but you might see a company like Skywest bidding on the DFW ops. Republic/CHQ bidding on ORD and other companies seeking MIA and JFK. IMHO, I don't think there is any of the current carriers that want the entire operation. To keep it intact it will take a considerable amount of cash and not too sure someone really wants that type of out lay in expenses.
What could be the scariest part is that if you are currently an AE employee you could see AA put up for bid the AE flying. If that is the case then a company like Mesa or Skywest could work its way into the AA system by undercutting the new contract. Just hope this is not a dismantling of the jobs of the AE workers.
Jacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 61 Reply 15, posted (5 years 5 months 3 weeks 6 days 2 hours ago) and read 15044 times:
Quoting Revelation (Reply 9): "And another opportunity for me to give myself and the rest of the executive team a nice bonus for re-arranging the deck chairs"...
...what do you think Arpey will give himself this year? $5 million?
For the umpteenth time, its the AMR board which decides bonuses...Arpey can only negotiate for his salary, stock options and bonuses....
Quoting MAH4546 (Reply 12): Awesome news. AA needs this, and it will allow, hopefully, AA to explore more opportunities for regional carriers and expand regional flying. They have been heavily constrained in regional flying out of certain markets, especially Miami.
...I think this might be part of the reason for the potential divestiture...it certainly gives AA more flexibility....
There's no such thing. AA is not buy more mainline planes for mainline pilots to fly because of the scope clause--it's simply not flying any large regional jets beyond the few CR7s it can have, so instead of creating some jobs at American Eagle flying large regionals, it creates zero. APA effectively sells its regional brethren up river--how is that good for pilots?
Tjwgrr From United States of America, joined Mar 2000, 2297 posts, RR: 3 Reply 19, posted (5 years 5 months 3 weeks 6 days 2 hours ago) and read 14878 times:
Quoting ERJ170 (Reply 13): Would "American Eagle" be the regional name or the airline's name?
I kinda think the "American" would be dropped. They may operate solely as "Eagle" or the name may disappear all together depending on who the new owner is. I see management, Mesa Air Group or Republic Airways Holdings as a possible buyers.
How about Trans States Holdings purchasing American Eagle and incorporating them into GoJet?
Direct KNOBS, maintain 2700' until established on the localizer, cleared ILS runway 26 left approach.
AABB777 From United States of America, joined Oct 2007, 449 posts, RR: 0 Reply 21, posted (5 years 5 months 3 weeks 6 days 1 hour ago) and read 14751 times:
Wonder if regional flights will still be 'operated by American Eagle' or could it change to a potential 'operated by Eagle' (if AE were to shed the 'American' part of the name)? Could AA use other regionals, such as SkyWest, for their regional operation?
Still not sure what I think of all this. Want to get more details on what 'exactly' will happen with AE.