ZWZWUnited From United States, joined Jun 2008, 197 posts, RR: 0 Posted (1 year 1 week 7 hours ago) and read 1003 times:
So what has become of this sell-off that was announced nearly a year ago? I know they put things on hold when the economy and oil prices started getting out of whack earlier this year, but has there been any news on this lately? Seems very quiet....what does the future hold for this adventurous regional carrier?
QQflyboy From United States, joined Oct 2003, 1764 posts, RR: 14 Reply 1, posted (1 year 6 days 7 hours ago) and read 804 times:
The sale has indefinitely been put on hold.
Here's what AA had to say in their 2Q08 earnings report on July 17:
"Given the current industry environment, AMR has decided to place on hold its planned divestiture of American Eagle, its regional affiliate, until industry conditions are more stable and favorable. AMR continues to believe that a divestiture makes sense in the long term for AMR, American, American Eagle, and their stakeholders, but AMR also believes that a divestiture is not sensible amid current conditions."
That is still the situation. I would not be surprised if we don't hear more about a sale for a year or more.
ElmoTheHobo From United States, joined Aug 2006, 1141 posts, RR: 1 Reply 3, posted (1 year 6 days 4 hours ago) and read 676 times:
Quoting ZWZWUnited (Reply 2): Fair enough. I don't know why American would want to fix what isn't broken. Now those Trans States planes operating on Connection side....yikes! lol
Eagle has high costs. With the connection carriers they can change their contract and ask for multiple bids on contracts, not to mention that spinning off Eagle may make it possible to have more 70+ seat regional jets, something that severely restricts American's regional growth and competitiveness with other carriers.
A10WARTHOG From United States, joined Jul 2004, 304 posts, RR: 0 Reply 4, posted (1 year 6 days 3 hours ago) and read 656 times:
Quoting ElmoTheHobo (Reply 3): not to mention that spinning off Eagle may make it possible to have more 70+ seat regional jets,
If I recall correctly that number of 70 seat aircraft is controlled by the AA pilots contract. It also is why Eagle is the only one that can fly anything lager than a 50 seat aircraft.
Commavia From United States, joined Apr 2005, 6767 posts, RR: 59 Reply 5, posted (1 year 6 days 3 hours ago) and read 641 times:
Quoting ZWZWUnited (Reply 2): Fair enough. I don't know why American would want to fix what isn't broken.
I hope you're not talking about Eagle as not being "broken," since financially, Eagle is beyond broken. It's costs are way out of line with the bottom-feeder competition it is now up against (Mesa comes to mind) and the less-than-bottom-feeder competitors in the regional segment that still have lower operating costs (SkyWest, ExpressJet, etc.) and offer better service and more reliability.
AMR should have gotten rid of Eagle back around 2002, when Continental took ExpressJet public. That was at the peak of the cycle when everyone was going gaga over RJs, and before astronomical oil prices put this entire segment of the industry into a tailspin. Today, AMR can never get for Eagle a relatively equivalent value that Continental got for ExpressJet.
Quoting ElmoTheHobo (Reply 3): not to mention that spinning off Eagle may make it possible to have more 70+ seat regional jets
The number of 70-seaters is capped at 25 per the mainline pilot contract, and that does not distinguish between 70-seaters flown by Eagle or contract carriers.
Quoting ElmoTheHobo (Reply 3): something that severely restricts American's regional growth and competitiveness with other carriers.
You can say that again.
AA desperately needs a 75-seat aircraft to fill the void between the 1-class CR7s (70 seats) and the 2-class MD80s (140 seats). Unfortunately, it won't be happening anytime soon, since the mainline pilots will never allow it to unless they get the flying, which would never be profitable at mainline rates.
Par13del From Bahamas, joined Dec 2005, 2377 posts, RR: 3 Reply 6, posted (1 year 6 days 2 hours ago) and read 607 times:
Quoting Commavia (Reply 5): AA desperately needs a 75-seat aircraft to fill the void between the 1-class CR7s (70 seats) and the 2-class MD80s (140 seats). Unfortunately, it won't be happening anytime soon, since the mainline pilots will never allow it to unless they get the flying, which would never be profitable at mainline rates.
So Eagle with its high cost cannot now be sold, AA pilots union will not allow 75 seat a/c so AA does the next best thing, nothing?
Eagle is broken so if you are keeping it for whatever reason, why not try to fix it? There are various companies within the Eagle group, not sure how much control each has in relation to AA management, but how hard is it to attempt to fix, if you are stuck with it may as well attempt to correct the faulty issues. The best that AA can do cannot be the bottom feeders that you mention, how well are they working out elsewhere and do the mainline customers who get to use the carriers say they are pleased?
ZWZWUnited From United States, joined Jun 2008, 197 posts, RR: 0 Reply 7, posted (1 year 5 days 23 hours ago) and read 505 times:
Quoting Commavia (Reply 5): I hope you're not talking about Eagle as not being "broken," since financially, Eagle is beyond broken. It's costs are way out of line with the bottom-feeder competition it is now up against (Mesa comes to mind) and the less-than-bottom-feeder competitors in the regional segment that still have lower operating costs (SkyWest, ExpressJet, etc.) and offer better service and more reliability.
Also keep in mind that SkyWest has issues with their product quality, and Mesa...well everyone knows about Mesa so that doesn't even need discussing. Yeah, American Eagle's costs are high, but they are delivering a product that goes above and beyond most other regional carriers. Also, American Eagle is earning so much in annual revenue, it would be considered a major carrier if it flew aircraft over 100 seats. Add to that, MQ has been taking over other airline's ground handling at stations left and right. Other than slightly higher costs and the fact that AA's pilots union shot their airline in the foot with that ridiculous contract clause, I don't see how AA cannot be profiting off of MQ's success. If AA can only lose money over selling them, why not invest in them and make things work?
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