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What Is The Latest On American Eagle Sale?  
User currently offlineckfred From United States of America, joined Apr 2001, 5210 posts, RR: 1
Posted (3 years 4 months 4 weeks 13 hours ago) and read 10374 times:

Has anyone heard anything new about AMR trying to sell American Eagle? I know that AMR was trying to shop Eagle before the financial crisis in 2008. Then, Eagle was pulled off the market. I seem to remember reading in the past few months that Eagle is back on the market.

Further, if AMR finds a buyer for Eagle, how does that affect AA? I assume that at some point, Eagle's contract with AA expires, allowing AA to put up RJ flying for competitive bidding.

45 replies: All unread, showing first 25:
 
User currently offlineFRNT787 From United States of America, joined Sep 2007, 1320 posts, RR: 15
Reply 1, posted (3 years 4 months 4 weeks 13 hours ago) and read 10372 times:

Quoting ckfred (Thread starter):
Further, if AMR finds a buyer for Eagle, how does that affect AA? I assume that at some point, Eagle's contract with AA expires, allowing AA to put up RJ flying for competitive bidding.

Im sure anyone who agreed to buy Eagle would require a very long term agreement for the flying. Eagle is way too dependent on E145s, and it makes Eagle a hard investment to make when those are becoming less and less popular. For a while Republic was mentioned as a buyer, but Bryan Bedford (Republic CEO) has quite blatantly refuted that, as it flies in the face of what he wants the company to be.



"We have a right to fail, because failure makes us grow" --Glenn Beck
User currently offlineflyingbronco05 From United States of America, joined May 2002, 3840 posts, RR: 2
Reply 2, posted (3 years 4 months 4 weeks 12 hours ago) and read 10252 times:

As an eagle pilot, we're being told AMR will not sell us since nobody wants us. It is likely to be "divested" in May.


Never Trust Your Fuel Gauge
User currently offlineqqflyboy From United States of America, joined Oct 2003, 2272 posts, RR: 13
Reply 3, posted (3 years 4 months 4 weeks 12 hours ago) and read 10229 times:

AMR has said recently, as flyingbronco05 said, that the far more likely option, if AMR does anything with Eagle, will be to spin it off into it's own company. And to that end, AA sent out an email yesterday to employees stating that "if" Eagle were to be divested, non-rev benefits would remain unchanged for five years from date of divestiture between AA/MQ. The email went on to say no decision had yet been made about Eagle's future.


The views expressed are mine alone and do not necessarily reflect my employer’s views.
User currently offlineLAXtoATL From United States of America, joined Oct 2009, 1590 posts, RR: 2
Reply 4, posted (3 years 4 months 4 weeks 12 hours ago) and read 10198 times:

Quoting ckfred (Thread starter):
Has anyone heard anything new about AMR trying to sell American Eagle?

Nobody wants to buy Eagle, and American hasn't been willing to pay someone to take it off their hands.

Quoting ckfred (Thread starter):
Further, if AMR finds a buyer for Eagle, how does that affect AA? I assume that at some point, Eagle's contract with AA expires, allowing AA to put up RJ flying for competitive bidding.

Any buyer would require AA to sign a long-term contract before closing the deal, but it doesn't seem like that is enough to get anybody interested.

Quoting flyingbronco05 (Reply 2):
As an eagle pilot, we're being told AMR will not sell us since nobody wants us. It is likely to be "divested" in May.

Sounds about right. Although I have heard AMR is having difficulty divesting Eagle.


User currently offlineShawn Patrick From United States of America, joined Jan 2000, 2608 posts, RR: 16
Reply 5, posted (3 years 4 months 4 weeks 3 hours ago) and read 9551 times:

AMR will be bankrupt this year. At that point, it's anyone's guess what happens to the two companies.

User currently offlinecraigpc01 From United States of America, joined Jun 2009, 31 posts, RR: 0
Reply 6, posted (3 years 4 months 4 weeks 2 hours ago) and read 9221 times:

It's odd that Eagle would be hiring 500 pilots this year if things are so bad for them? What makes them such a drag on AA?

User currently offlineTSS From United States of America, joined Dec 2006, 3068 posts, RR: 5
Reply 7, posted (3 years 4 months 4 weeks 1 hour ago) and read 9141 times:

Quoting craigpc01 (Reply 6):
It's odd that Eagle would be hiring 500 pilots this year if things are so bad for them?

At a guess, I'd say they're getting ready to competitively bid for new contracts with other carriers and/or add more planes (probably of larger types than E-145s) to their fleet. That is, however, just a guess.

Quoting craigpc01 (Reply 6):
What makes them such a drag on AA?

I'd like to know that too. In various threads on this subject, I've never read a concise explanation as to why Eagle is costing AMR money and should be sold or divested.



Able to kill active threads stone dead with a single post!
User currently offlineFRNT787 From United States of America, joined Sep 2007, 1320 posts, RR: 15
Reply 8, posted (3 years 4 months 4 weeks 1 hour ago) and read 9100 times:

Quoting TSS (Reply 7):
At a guess, I'd say they're getting ready to competitively bid for new contracts with other carriers and/or add more planes (probably of larger types than E-145s) to their fleet. That is, however, just a guess.

Eagle would need another subsidiary to operate larger airplanes. That is why Republic, for example, has other airlines fly the 70 seaters, because Chautauqua, who flies for AA, cannot have anything over 50 seats under AA's pilots contract.



"We have a right to fail, because failure makes us grow" --Glenn Beck
User currently offlineShawn Patrick From United States of America, joined Jan 2000, 2608 posts, RR: 16
Reply 9, posted (3 years 4 months 4 weeks 1 hour ago) and read 9074 times:

Quoting craigpc01 (Reply 6):
It's odd that Eagle would be hiring 500 pilots this year if things are so bad for them?

200+ pilots will have transferred from Eagle to AA by the summertime, this is the main reason for the hiring, as well as deliveries of the new CRJ-700s.


User currently offlinedeltaflyertoo From United States of America, joined Nov 2000, 1647 posts, RR: 1
Reply 10, posted (3 years 4 months 4 weeks 1 hour ago) and read 9074 times:

I don't have numbers or sources on why its a "drag" on AA however I have a good guess. The regional industry in general is a difficult one because the flights often operate into lower demand airports. Also RJ costs are high in relation to number of seats so fares have to be set at a higher level (i.e. now WN type fares). Other airlines who don't own the regional (like UA and SKywest for example) pay the regional on a flight by flight basis an agreed upon flat fee. Say like $3,000 per flight for like ORD to IND. Its up to the regional to find a way to make that work. For an airline like United, its a fairly efficient deal, they pay the flat fees, no maintenance costs, fuel costs, labor issues, etc , they just manage the revenue side.

For AA, they don't have this with Eagle. Its all in one. So I'm GUESSING many of the flights go out half full and because AA owns the operation they are taking the losses on it as well. Going back to what we've talked about in other threads, AA is trying to be the biggest and best right now, esp in face of mergers so its not going to pull down say the DFW to Tyler, TX or DFW to Waco of fear of alienating the biz traveler in Tokyo who once in a blue moon needs to get to one of those communities.


User currently offlinerfields5421 From United States of America, joined Jul 2007, 7607 posts, RR: 32
Reply 11, posted (3 years 4 months 4 weeks 1 hour ago) and read 8934 times:

Quoting TSS (Reply 7):
I've never read a concise explanation as to why Eagle is costing AMR money and should be sold or divested.



I'm not so much that it is how much Eagle is costing AMR, as the pressure on AMR to get a large amount of cash for Eagle - pushed by various investors. Either by the sale of Eagle, or divestiture and sale of stock of the newly independent company - the AMR main corporation should convert Eagle into up to $1 billion cash. According to the investors group. I'd be surprised to see it realize AMR $100 million, probably less than half that.

Those investors presumption is that Eagle keeps AA from focusing on making the mainline airline as profitable as possible.

There are a few other 'negatives' with Eagle as far as the investors who want it sold are concerned. One is that the presumption is that the regional operation would cost the mainline less when it comes to revenue sharing. Another is that the scope clause of the AA pilot contract could be broken / circumvented.

Another is that Eagle needs to invest a good bit of money in the aircraft. Both refurbishment and maintenance of the existing fleet of turboprops operating under the OW certificate, and the ERJs. And frankly AMR does not have the cash to do that.

From everything I've read over the past couple years, it is not AMR or AA executive management which is so intent upon getting rid of Eagle. The pressure comes from some of the largest stock holders.


User currently offlineckfred From United States of America, joined Apr 2001, 5210 posts, RR: 1
Reply 12, posted (3 years 4 months 4 weeks ago) and read 8886 times:

Quoting craigpc01 (Reply 6):
What makes them such a drag on AA?

What's interesting is that if you look at past AMR annual reports, the CASM for mainline is published, but the CASM for Eagle isn't.

My guess is that CASM for Eagle is higher than AA, although it's anyone's guess as to how much.


User currently offlinejfklganyc From United States of America, joined Jan 2004, 3431 posts, RR: 5
Reply 13, posted (3 years 4 months 3 weeks 6 days 14 hours ago) and read 7253 times:

From what I have heard, divesting seems the only option.

Eagle is a regional design from the late 90s . . . old planes, wrong types, senior workforce, AMR corporate structure which is expensive.

They are too big to be bought, and too outdated to be valuable. I really feel for all the employees there.

The good thing is, nothing is going to happen tomorrow, everything moves very sloooooooow at AMR.


User currently offlineN62NA From United States of America, joined Aug 2003, 4447 posts, RR: 6
Reply 14, posted (3 years 4 months 3 weeks 6 days 14 hours ago) and read 7160 times:

Quoting jfklganyc (Reply 13):
old planes, wrong types

Just curious.... is the ATR the wrong type for all the MIA-Florida/Bahamas flying?


User currently offlineLoneStarMike From United States of America, joined Jul 2000, 3811 posts, RR: 34
Reply 15, posted (3 years 4 months 3 weeks 5 days 19 hours ago) and read 6603 times:

Quoting qqflyboy (Reply 3):
AMR has said recently, as flyingbronco05 said, that the far more likely option, if AMR does anything with Eagle, will be to spin it off into it's own company.

The same thing was mentioned in the Dallas Morning News the other day.

ALPA expects decision on American Eagle divestiture as early as May

LoneStarMike


User currently offlinecommavia From United States of America, joined Apr 2005, 11522 posts, RR: 61
Reply 16, posted (3 years 4 months 3 weeks 5 days 7 hours ago) and read 6287 times:

Apologies - just got back into town and onto A.net and didn't realize another thread on this topic was already ongoing. So I'll paste here my comment from the other thread:

***

This is to be expected. The writing has been on the wall on this for several years, going back to when AA switched its agreement with Eagle over to a more industry-standard capacity purchase arrangement. It was obvious then that AMR was preparing to get rid of Eagle. The oil spike, financial meltdown, etc. just dragged the process out a few years.

Eagle is bloated and expensive by regional airline standards (although still dramatically lower-cost on a unit basis than mainline AA). As such, nobody wants Eagle and its high costs, expensive fleet of unattractive 37-50-seat regional jets, etc. The prize in all of this is definitely the flying for AMR, which is, of course, one of the largest single regional flying operations in the world. Nonetheless, no company has been willing to take on the Eagle burden in order to get that prize.

Thus, the only option available to AMR is essentially to "force" Eagle onto AMR shareholders by spinning the company off into a separate company with AMR shareholders owning the new shares. I agree with Eagle ALPA that this is inevitable and likely to happen quite soon - the shareholders meeting on 18 May seems like a perfect time to announce this.

My prediction is that Eagle will pretty much follow the path of ExpressJet (sans, probably, the whole independent branded flying foray). AMR will spin it off with a commitment to continue purchasing capacity for a certain period of time, at the end of which AMR will compete the feed, Eagle will fight over cost but ultimately lose, and then Eagle will get swallowed up by some larger regional conglomerate or just cease to exist.

Eagle is never going to be sustainable independently - I give it five years or less.

Two interesting things I will be interested to see:

1. I wonder if AMR will retain the 'American Eagle' logo and brand, and allow any regional operator it contracts with to use that brand, or if it will continue to brand any other non-Eagle regional flying as 'American Connection.' I sincerely hope - and suspect - that AMR will retain the Eagle brand and let all its regional operators use it, as I see the brand - if not necessarily the operator - is fairly core. Not to mention, this would basically just be returning to the arrangement that AMR had with all its Eagle operators for many years, where various small airlines all operated regional flying for AMR, and all under the 'Eagle' brand, even before any of them were actually owned by AMR.

2. I would be interested to see if this perhaps presages another spinoff - probably still several years off - of the maintenance & engineering operation.

Quoting LAXintl ():
Interesting that one of the more likely scenarios would be to split off AE into its own company while still remaining an AMR subsidiary.

No - that's actually what Eagle is now. It is a separate subsidiary (two actually), all owned by a holding company, which is owned - alongside American (mainline) - by AMR.

Quoting LAXintl ():
Either way, I think the move is positive and will shed some much needed light on the true financial picture of Eagle and how it effects AA and stands up compared to its regional peers.

Eagle is no stellar performer, but from what I've seen, it is also no enormous financial drag on AMR. It may be a bit of a financial drag - not necessarily in the sense that it loses tons of money (in fact I believe it is actually marginally profitable) bur more in the sense that AMR could get the same regional capacity at a lower cost if openly competed. Nonetheless, of all of the financial problems at AMR, Eagle is a tiny portion of them.

Quoting N62NA (Reply 14):
Just curious.... is the ATR the wrong type for all the MIA-Florida/Bahamas flying?

Yes, it is.

The ATRs have low ownership cost since they are all so old, but that also means that they are ... so old. And crappy. Those planes are run down and show it - badly. The 'right' type of high-performance, 70-seat turboprop that would be ideal for Eagle in the Florida/Caribbean markets, and even in several DFW markets and in and out of several LAX markets on the West Coast, is probably the Q400, or if nothing else the newer (and substantially-upgraded) ATR72 variant.


User currently offlineDeltaMD90 From United States of America, joined Apr 2008, 7867 posts, RR: 52
Reply 17, posted (3 years 4 months 3 weeks 5 days 6 hours ago) and read 6225 times:

Any chance of Eagle flying for another carrier? From what I understand, they have to fly small planes because of AA's scope clause, but if they break off they can certainly fly larger planes, even if it's for other airlines, right? If not, I don't see them lasting


Ironically I have never flown a Delta MD-90 :)
User currently offlinecommavia From United States of America, joined Apr 2005, 11522 posts, RR: 61
Reply 18, posted (3 years 4 months 3 weeks 5 days 6 hours ago) and read 6216 times:

Quoting DeltaMD90 (Reply 17):
Any chance of Eagle flying for another carrier?

Long-term, no - not that I can see.

Quoting DeltaMD90 (Reply 17):
From what I understand, they have to fly small planes because of AA's scope clause, but if they break off they can certainly fly larger planes, even if it's for other airlines, right?

I doubt Eagle would be able to capture any substantial flying from other carriers, regardless of any AA mainline pilot SCOPE language. Eagle's costs are just to high, and they are simply not cost-competitive with other regional operators.

Quoting DeltaMD90 (Reply 17):
If not, I don't see them lasting

Nope, I don't either - either way.


User currently offlineRising From United States of America, joined May 2010, 269 posts, RR: 1
Reply 19, posted (3 years 4 months 3 weeks 5 days 4 hours ago) and read 6090 times:

Quoting jfklganyc (Reply 13):

Eagle is a regional design from the late 90s . . . old planes, wrong types, senior workforce, AMR corporate structure which is expensive.

They are too big to be bought, and too outdated to be valuable. I really feel for all the employees there.

Exactly why a split would be good for both AMR and Eagle. Eagle, by design, is not able to build its business outside of American Airlines. This would give it some capital, along with the freedom to compete for other business. It also gives AMR the ability to have other options for its American Airlines unit, and to focus on its core business.

I think this is good news if you work for Eagle. If executed properly, this could, at last, be their chance to throw away the shackles and grow into a successful business.

Quoting jfklganyc (Reply 13):

The good thing is, nothing is going to happen tomorrow, everything moves very sloooooooow at AMR.

The one thing you don't want to do is pull a "Delta Simplifares," basically make a knee-jerk reaction to the sentiment of the Street or consultants at the time, only to end-up setting your business up to self-destruct. You have to evaluate all your options, and think long-term. While I am not a big fan AMR's management, choices like these require due diligence.



If it doesn't make sense, it's because it's not true.
User currently offlineN62NA From United States of America, joined Aug 2003, 4447 posts, RR: 6
Reply 20, posted (3 years 4 months 3 weeks 5 days 4 hours ago) and read 6059 times:

Quoting commavia (Reply 16):
The ATRs have low ownership cost since they are all so old, but that also means that they are ... so old. And crappy. Those planes are run down and show it - badly. The 'right' type of high-performance, 70-seat turboprop that would be ideal for Eagle in the Florida/Caribbean markets, and even in several DFW markets and in and out of several LAX markets on the West Coast, is probably the Q400, or if nothing else the newer (and substantially-upgraded) ATR72 variant.

Those planes aren't *that* old!

But yes, they aren't luxury liners either, but for the typical 1 hour flight out of MIA, they seem adequate (despite the usual MX delays, but that happens frequently on the 757s too).

Would seem more cost effective if the interiors were just refurbished, as I'm sure those planes still have a lot of life left in them.

(For the record, I've flown on them a bit, from my home in MIA over to NAS, so I do have some firsthand experience.)


User currently offlinecraigpc01 From United States of America, joined Jun 2009, 31 posts, RR: 0
Reply 21, posted (3 years 4 months 3 weeks 5 days 3 hours ago) and read 5990 times:

I understood that Eagle was retiring the ATR fleet in the very near future? Any truth to this?

User currently offlinesilentbob From United States of America, joined Aug 2006, 2070 posts, RR: 1
Reply 22, posted (3 years 4 months 3 weeks 5 days ago) and read 5871 times:

Quoting rfields5421 (Reply 11):
Either by the sale of Eagle, or divestiture and sale of stock of the newly independent company - the AMR main corporation should convert Eagle into up to $1 billion cash. According to the investors group. I'd be surprised to see it realize AMR $100 million, probably less than half that.

Those investors presumption is that Eagle keeps AA from focusing on making the mainline airline as profitable as possible.

The investors see it as a cash infusion right now, they don't care about the long term impact.

Quoting commavia (Reply 16):
Nonetheless, no company has been willing to take on the Eagle burden in order to get that prize.

Especially because of the fears of an AA bankruptcy and the ability to modify, or cancel, contracts during bankruptcy. In addition to the negatives you listed, someone could end up buying eagle and then have their contract cut a few months later.


User currently offlinecommavia From United States of America, joined Apr 2005, 11522 posts, RR: 61
Reply 23, posted (3 years 4 months 3 weeks 4 days 20 hours ago) and read 5777 times:

Quoting silentbob (Reply 22):
Especially because of the fears of an AA bankruptcy and the ability to modify, or cancel, contracts during bankruptcy.

I'm not so sure that fears of an impending AMR bankruptcy are quite so rampant in the real world as they are here on A.net.

After all, AMR just financed $1B of new debt at 7.5%.


User currently offlineNorthwest727 From United States of America, joined Jul 2005, 491 posts, RR: 0
Reply 24, posted (3 years 4 months 3 weeks 4 days 18 hours ago) and read 5713 times:

Quoting deltaflyertoo (Reply 10):

At some regionals, the "parent" airline simply buys the seats. That is why some regionals are getting bigger aircraft; bigger aircraft means more seats which can be bought. UA might pay RP $150/seat. UA may in turn sell the seat via their website for $400. It is up to RP to make that $7500 work ($150/seat * 50 seats). If RP decides to get larger aircraft like 9L, C5, RW, etc, then a 80 seat E-170 ($150/seat * 80 seats) would be an income of $12000.


25 LAXtoATL : Capital from where? Cash infusion from where? Nobody was/is interested in Eagle. AA is no longer trying to sell it (as they were likely going to end
26 Post contains links commavia : Relative to other debt offerings by other legacy carriers in the last 18 months, it ain't bad. They had an opportunity to increase liquidity at a bea
27 JA : If Eagle were to be able to simply codeshare with AA and control its own capacity and plane sizes, it could be bought tomorrow.
28 LDVAviation : Cash is cheap at the moment. Home Depot is about to borrow $2 Billion for much the same reasons. This topic made the rounds of all the financial news
29 apodino : Just wondering how long the AA/Eagle agreement is for? Because if it isn't long, you could be looking at a situation where AA puts out an RFP, more th
30 Post contains links Rising : That is according to a poster in this thread, not AMR, and while everyone is entitled to their own opinion or speculation, the fact is Eagle is a "se
31 Post contains links flyby519 : AMR Eagle asks DOT for blanket authority to fly to openskies countries http://tinyurl.com/62db85f By Doug Cameron Of DOW JONES NEWSWIRES The parent of
32 Post contains links LAXintl : Another sign an Eagle spin-off is almost certain - Arpey: Eagle spin-off would be good for regional, mainline http://www.bizjournals.com/dallas/ne...-
33 0NEWAIR0 : Care to guess who's going to give business to the worst regional airline currently in existence... who's costs are nearly 75% more (17.60 compared to
34 commavia : Depends on how you define "worst." I wouldn't argue that Eagle is the best, but I can definitely think of a few regional operators that I would say a
35 Post contains links 0NEWAIR0 : This is how I define worst...2011 AQR Report...since it's been talked about so much recently. I know... it was more of a rhetorical question... We al
36 commavia : Like I said, it depends on how you define "worst." There are various definitions of service beyond a statistical score tabulated based purely on bagg
37 LAXintl : Well with a spun off AE, it will be a sink or swim opportunity for the new airline. With some blood letting they might be able to whip themselves into
38 flyby519 : Even with some blood letting and Eagle getting competitive costs, will there really be lots of new regional feed contracts to bid for from UAL/CAL, DA
39 DeltaMD90 : Who knows, maybe for FL/WN. WN is a changing airline, and with some FL dynamic, MQ may get lucky. Or they might go out of business, who knows. Good lu
40 LAXintl : Interesting that yesterdays AMR earnings call had no reference or discussions about Eagle.
41 0NEWAIR0 : ...Everyone's holding off on pissing off the pilots until the last possible moment. haha.
42 commavia : Given the financial implications and compettiive sensitivities for AMR/mainline, and the "New Eagle," I suspect they won't say much of anything speci
43 rfields5421 : I am pretty sure such a move as spinning off Eagle could not be done without a vote of approval of the stockholders. Have they given such approval fo
44 commavia : Not sure if it would require shareholder approval. Board approval, definitely, but not sure about voting among all shareholders. They've already anno
45 Post contains links LAXintl : Eagle's ALPA union feels a divestiture might be delayed. It appears whatever happens, Eagle is a strain on AMRs performance. Decision on spinning off
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