LAXintl From United States of America, joined May 2000, 29169 posts, RR: 50 Posted (5 years 2 months 2 hours ago) and read 3231 times:
Long talked about move might finally becoming reality.
Interesting that one of the more likely scenarios would be to split off AE into its own company while still remaining an AMR subsidiary.
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.
Quote: ALPA expects decision on American Eagle divestiture as early as May
In an update to members, the American Eagle unit of the Air Line Pilots Association is advising members that the AMR board of directors could make a decision to divest the regional carrier in the next two months.
"Although the Board has yet to authorize the divestiture of American Eagle, we believe they will be in a position to do so shortly. The MEC is now operating with the expectation that a decision to divest could come as early as May," the union said in a hotline update to member.
commavia From United States of America, joined Apr 2005, 13500 posts, RR: 62
Reply 1, posted (5 years 2 months 2 hours ago) and read 3162 times:
It 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 (Thread starter): 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 (Thread starter): 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.