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AMR Reaches Deal With Embraer Over AE Fleet  
User currently offlineLAXintl From United States of America, joined May 2000, 24308 posts, RR: 47
Posted (1 year 5 months 2 weeks 5 days 1 hour ago) and read 15834 times:

After one year of negotiation, AMR and Embraer have reached an agreement regarding the status of the 216 strong American Eagle ERJ fleet.

For info the entire fleet was under a mix of capital and operating leases from the manufacturer.

In summary parties agreed to following:

o Return 18 E135 parked aircraft not necessary for current operations, eliminate all cost and obligations related to such aircraft.
o Return 21 E135 aircraft by end of 2013 under revised short term lease terms in exchange for reduction on principle owed.
o Retain 59 E140 aircraft with revised mortgage financing with principle reduction of 49%.
o Retain 68 E145 aircraft with revised mortgage financing with principle reduction of 34%
o Retain 50 E145 aircraft under pre petition existing agreements
o AMR payment of new security deposit and cross collateralize aircraft.
o Allow $650mil bankruptcy claim against AMR by aircraft security trustees as compensation to avoid further litigation.

The restructured E140-145 fleet are under agreements that run through 2017-2021.

Interesting to note also, that much for frame work of this agreement was initially drawn up in August 2011, prior to AMR's BK as the company was seeking the sale of American Eagle.


Court dockets: 4936-4937


From the desert to the sea, to all of Southern California
69 replies: All unread, showing first 25:
 
User currently offlineERJ170 From United States of America, joined Apr 2004, 6729 posts, RR: 18
Reply 1, posted (1 year 5 months 2 weeks 5 days 1 hour ago) and read 15802 times:

Hmmm.. What did Embraer get out of this? No new orders... I must be missing something...


Aiming High and going far..
User currently offlinemilesrich From United States of America, joined Jul 2003, 1940 posts, RR: 6
Reply 2, posted (1 year 5 months 2 weeks 5 days 1 hour ago) and read 15694 times:

Quoting ERJ170 (Reply 1):
Hmmm.. What did Embraer get out of this? No new orders... I must be missing something...

AMR didn't return the 177 E-140 and E-145's they are retaining under the agreement. AMR is returning 39 aircraft, that will not be easy for Embrear to resell or re-lease. But had AMR have dumped all 216 aircraft, the market value, not high now, would have been next to Zero.


User currently offlinemhkansan From United States of America, joined Jan 2010, 618 posts, RR: 1
Reply 3, posted (1 year 5 months 2 weeks 5 days ago) and read 15576 times:

What happens to LGA-XNA? Its 3x daily and I thought the only bird they could do it with was the 135.

User currently offlinebjorn14 From Norway, joined Feb 2010, 3269 posts, RR: 2
Reply 4, posted (1 year 5 months 2 weeks 5 days ago) and read 15554 times:

Quoting LAXintl (Thread starter):
o Return 18 E135 parked aircraft not necessary for current operations, eliminate all cost and obligations related to such aircraft.
o Return 21 E135 aircraft by end of 2013 under revised short term lease terms in exchange for reduction on principle owed

I wonder how this will affect the sales of their Legacy 650 as I'm sure it would be cheaper to buy these and refurbish them then to by brand new 650s.



"I want to know the voice of God the rest is just details" --A. Einstein
User currently offlineFWAERJ From United States of America, joined Jun 2006, 3633 posts, RR: 2
Reply 5, posted (1 year 5 months 2 weeks 5 days ago) and read 15409 times:

Quoting mhkansan (Reply 3):
What happens to LGA-XNA? Its 3x daily and I thought the only bird they could do it with was the 135.

The CRJ-700 (which Eagle has a base for at LGA) can make the trip just fine, if not better. If Eagle can spare a CR7 or two, I could see LGA-XNA going from 3 ER3s to 2 CR7s (gaining F class in the process).

Of course, this is assuming that AA doesn't get more two-class RJs... and trust me, all the Eagle carriers will get more two-class RJs. Whether they are CR7s/CR9s, E-Jets, or maybe even MRJs if AX/G7 gets some Eagle flying is a different story.



I don't work for FWA, their tenants, or their ad agency. But I still love FWA.
User currently offlinemhkansan From United States of America, joined Jan 2010, 618 posts, RR: 1
Reply 6, posted (1 year 5 months 2 weeks 5 days ago) and read 15379 times:

Quoting bjorn14 (Reply 4):
I wonder how this will affect the sales of their Legacy 650 as I'm sure it would be cheaper to buy these and refurbish them then to by brand new 650s.

The Embraers are very old and have lots of cycles on them. Some of them are coming up on major engine overhaul work. The next time the fleet goes through major checks, the MQ mntc guy I was talking to said he was almost certain they were going to find larger issues with the airframes for no other reason than their old age. These unprofitable birds are going to need lots of TLC if they're going to be in service with anyone for the long term.


User currently offlineflyby519 From United States of America, joined Jul 2007, 1080 posts, RR: 0
Reply 7, posted (1 year 5 months 2 weeks 4 days 23 hours ago) and read 14820 times:

Quoting mhkansan (Reply 6):
The Embraers are very old and have lots of cycles on them. Some of them are coming up on major engine overhaul work. The next time the fleet goes through major checks, the MQ mntc guy I was talking to said he was almost certain they were going to find larger issues with the airframes for no other reason than their old age. These unprofitable birds are going to need lots of TLC if they're going to be in service with anyone for the long term.

Im not surprised to see all the E135s go away, but I figured there would be a dozen or so E145s sent back to Embraer since they have some very high cycle frames that have been around longer than the E135s.



These postings or comments are not a company-sponsored source of communication.
User currently offlineflyby519 From United States of America, joined Jul 2007, 1080 posts, RR: 0
Reply 8, posted (1 year 5 months 2 weeks 4 days 23 hours ago) and read 14800 times:

Quoting bjorn14 (Reply 4):
I wonder how this will affect the sales of their Legacy 650 as I'm sure it would be cheaper to buy these and refurbish them then to by brand new 650s.

  

I've heard the E135s are somewhat more desirable than the 140/145s since they can be easily converted to bizjet configuration.



These postings or comments are not a company-sponsored source of communication.
User currently offlineKcrwflyer From United States of America, joined May 2004, 3761 posts, RR: 8
Reply 9, posted (1 year 5 months 2 weeks 4 days 22 hours ago) and read 14657 times:

Quoting mhkansan (Reply 3):
What happens to LGA-XNA? Its 3x daily and I thought the only bird they could do it with was the 135.

If it's good enough to run the 135 it's probably good enough to run the 145 with a weight restriction. It could also go 2x on the CR7 as stated above.


User currently offlineodwyerpw From Mexico, joined Dec 2004, 786 posts, RR: 2
Reply 10, posted (1 year 5 months 2 weeks 4 days 22 hours ago) and read 14488 times:
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Pilot scopes aside, is it possible to reclassify a 140 as a 145 just by adding seats and rerating the engines for higher thrust? I was under the impression that the only differences between the two was the amount of seats and then everything was calculated off of a lower pax count to yield the remaining specs.


Quiero una vida simple en Mexico. Nada mas.
User currently offlinefun2fly From United States of America, joined Dec 2006, 1000 posts, RR: 1
Reply 11, posted (1 year 5 months 2 weeks 4 days 22 hours ago) and read 14396 times:

Quoting flyby519 (Reply 8):
I've heard the E135s are somewhat more desirable

Tell that to UA who has had them sitting for sale for years.

Hard to believe that the ERJ's went from prop savior to aluminum cans in just a few years.

What will AA replace the capacity with? Certainly must have some Embraer's in their sights for future years.


User currently offlineUnited1 From United States of America, joined Oct 2003, 5815 posts, RR: 9
Reply 12, posted (1 year 5 months 2 weeks 4 days 21 hours ago) and read 14256 times:

Quoting odwyerpw (Reply 10):
I was under the impression that the only differences between the two was the amount of seats and then everything was calculated off of a lower pax count to yield the remaining specs.

The 140 is ~1.5 meters shorter then the 145 is....you may be thinking of the CRJs some of the 900s and 200s were derated at one point and certified for a lower capacity in order to comply with scope.



Semper Fi - PowerPoint makes us stupid.
User currently offlineIndependence76 From United States of America, joined Jul 2007, 229 posts, RR: 0
Reply 13, posted (1 year 5 months 2 weeks 4 days 21 hours ago) and read 13687 times:

Quoting fun2fly (Reply 11):
What will AA replace the capacity with? Certainly must have some Embraer's in their sights for future years.

I had the privilege to talk with the American Eagle CEO a few weeks ago and he said that Eagle has been looking at the E175's for a while, but was unable to purchase them due to the 1113 APA contract which restricted the purchase of an aircraft of that size to go to AA mainline instead of Eagle.

Because those contract terms are virtually dead at this point, we're probably going to see some E175 orders within the next few years.

[Edited 2012-10-29 11:51:13]


"In general, pride is at the bottom of all great mistakes." - John Ruskin
User currently offlineplateman From United States of America, joined May 2007, 919 posts, RR: 0
Reply 14, posted (1 year 5 months 2 weeks 4 days 20 hours ago) and read 13386 times:

Sorry, does this mean AA Eagle is returning their entire ERJ fleet? And by when?

I fly them often DCA-JFK and love that badboy.



"Explore. Dream. Discover." -Mark Twain
User currently offlineLHCVG From United States of America, joined May 2009, 1445 posts, RR: 1
Reply 15, posted (1 year 5 months 2 weeks 4 days 20 hours ago) and read 13054 times:

Quoting plateman (Reply 14):
Sorry, does this mean AA Eagle is returning their entire ERJ fleet? And by when?

Not at all - quite the contrary. It's basically a situation where Embraer agreed to restructure the financial terms when otherwise most or all would have been dumped flat-out to get rid of that expense. As milesrich points out, 200+ fresh jungle jets on the market would have tanked what remains of the market value - definitely not good for Embraer. That said, most will probably be gone in the next decade or so, just not for a few years yet.


User currently offlinedoulasc From United States of America, joined Dec 2011, 483 posts, RR: 0
Reply 16, posted (1 year 5 months 2 weeks 4 days 20 hours ago) and read 12926 times:

I was hoping that AE would get E-170/175 regional jets. They hold more than 50 but less than 100 passengers. I thought union contracts is that more than a 100 passengers would need to go mainline.

User currently offlineIndependence76 From United States of America, joined Jul 2007, 229 posts, RR: 0
Reply 17, posted (1 year 5 months 2 weeks 4 days 20 hours ago) and read 12741 times:

Quoting doulasc (Reply 16):
I was hoping that AE would get E-170/175 regional jets. They hold more than 50 but less than 100 passengers. I thought union contracts is that more than a 100 passengers would need to go mainline.

That is correct, but the CEO told me that there were specific rules regarding the E-175 in which Eagle was not allowed to purchase them. He described the E-195 as "too much of an aircraft" for the markets Eagle wants to use with larger jets, so the E-195's for Eagle are out of the question.

The union contracts (while I don't have the information right in front of me) probably had some kind of restriction regarding twin-engined jets with wing-mounted engines and who would be to operate them. AA would never buy the E-175 or E-195 because it's too small of an aircraft, but a perfect fit for Eagle.


Now that the 1113 restrictions are down, it's now safe to presume E-175's coming into Eagle's fleet in the near future.



"In general, pride is at the bottom of all great mistakes." - John Ruskin
User currently offlineenilria From Canada, joined Feb 2008, 6835 posts, RR: 14
Reply 18, posted (1 year 5 months 2 weeks 4 days 20 hours ago) and read 12596 times:

Quoting LAXintl (Thread starter):
o Retain 59 E140 aircraft with revised mortgage financing with principle reduction of 49%.
o Retain 68 E145 aircraft with revised mortgage financing with principle reduction of 34%
o Retain 50 E145 aircraft under pre petition existing agreements
o AMR payment of new security deposit and cross collateralize aircraft.
Quoting milesrich (Reply 2):
But had AMR have dumped all 216 aircraft, the market value, not high now, would have been next to Zero.

This is terrible for AA. They are now long-term stuck with a bunch of 50 and less seaters that will be bound for the desert shortly. They aren't going to get the pilot deal they expected or the scope relief that hoped for. I think AMR will emerge in a pretty weak position. I'm shocked. Next thing we'll hear they are keeping the MD80s for 20 years.  


User currently offlineneveragain From , joined Dec 1969, posts, RR:
Reply 19, posted (1 year 5 months 2 weeks 4 days 19 hours ago) and read 12229 times:

Quoting LAXintl (Thread starter):
in exchange for reduction on principle owed.

I thought all of the principles left with Arpey?

              


User currently offlinegdg9 From United States of America, joined Jun 2005, 599 posts, RR: 0
Reply 20, posted (1 year 5 months 2 weeks 4 days 19 hours ago) and read 12032 times:

Quoting mhkansan (Reply 6):
The Embraers are very old and have lots of cycles on them.


What is the expected service life of an E145 in terms of cycles? I have to imagine most of these get 6-10 cycles per day?


User currently offlinejustplanenutz From United States of America, joined Feb 2006, 492 posts, RR: 1
Reply 21, posted (1 year 5 months 2 weeks 4 days 19 hours ago) and read 11901 times:

Quoting enilria (Reply 18):
They are now long-term stuck with a bunch of 50 and less seaters that will be bound for the desert shortly.

Did you miss this?

Quoting LAXintl (Thread starter):
The restructured E140-145 fleet are under agreements that run through 2017-2021.

They purge the 37-seaters immediately (or nearly), get 34-49% haircuts on most of the remaining 44-50 seaters, which are replaced beginning in 5 years.

Could they really have done much better/quicker than that?


User currently offlineneveragain From , joined Dec 1969, posts, RR:
Reply 22, posted (1 year 5 months 2 weeks 4 days 19 hours ago) and read 11819 times:

Quoting justplanenutz (Reply 21):
Could they really have done much better/quicker than that?

Rejecting all of the leases would've been quicker.

In all seriousness, though, that's probably not a bad number through 2021. Does anyone have any idea of how many 50-seat RJs DL will be left with even with the new pilot agreement? (I don't.) I bet it'd surprise people.


User currently offlinePSU.DTW.SCE From United States of America, joined Jan 2002, 7341 posts, RR: 28
Reply 23, posted (1 year 5 months 2 weeks 4 days 19 hours ago) and read 11711 times:

Quoting enilria (Reply 18):
This is terrible for AA. They are now long-term stuck with a bunch of 50 and less seaters that will be bound for the desert shortly. They aren't going to get the pilot deal they expected or the scope relief that hoped for. I think AMR will emerge in a pretty weak position. I'm shocked. Next thing we'll hear they are keeping the MD80s for 20 years
Quoting justplanenutz (Reply 21):
They purge the 37-seaters immediately (or nearly), get 34-49% haircuts on most of the remaining 44-50 seaters, which are replaced beginning in 5 years.

Could they really have done much better/quicker than that?

Agreed, this is really about the best they could do as they ERJ fleet still makes up a significant amount of lift for the airlines. On one hand yes they would like to dump them quicker/faster but they would need something to replace lost capacity. Reduced rates and more favorable terms help make the business case a little better.

AE's ERJs span from 1998-2005. Most of the newer 145s still have a lot of life left in them. The goal is going to be be to keep them on shorter routes.

As much as it sounds nice to "dump" 50 seaters, everyone is doing an orderly wind-down and transition. DL is leading the pack over a 3-5 year timeframe, but still plans to keep ~125 50 seat RJs in the fleet.

Quoting gdg9 (Reply 20):
What is the expected service life of an E145 in terms of cycles? I have to imagine most of these get 6-10 cycles per day?

The majority fly 5-8 cycles per day.


User currently offlineDeltaMD90 From United States of America, joined Apr 2008, 7255 posts, RR: 52
Reply 24, posted (1 year 5 months 2 weeks 4 days 18 hours ago) and read 11445 times:

Would it even be possible to pick up that much flying if AA dumped all the ERJs? Sure they're probably the worst jets out there, but they've gotta keep some of them


Ironically I have never flown a Delta MD-90 :)
25 ERJ170 : Could American Eagle do some at risk flying with some? I'm sure they can get some for cheap from Embraer..
26 rangercarp : AA's scope clause allows Eagle to operate a limited number of 70 seaters. I do not know the exact number, but I am guessing it is 47, as that is the
27 commavia : Good point. I think this was probably a "best-case scenario" for AMR. Eagle is offloading the most uneconomic of the jets - the 135s - and keeping ar
28 odwyerpw : Thank you for the correction. I truly thought for the last 10 years that an ERJ140 was only a derated ERJ145. I didn't know it was cutdown by 1.5 met
29 TSS : In what way do you mean "worst"? More likely two plugs: A 1 meter plug ahead of the wings and a 1/2 meter plug aft of the wings.
30 neveragain : So the CEO of MQ was kicking the tires at Sao Jose dos Campos and then someone reminded him that he couldn't buy the aircraft and he said, "Aw shucks
31 aaway : There'll be more action with regard to the AE fleet once an AMR-APA agreement is in place. While the length of the term with Embraer seems ominous, I
32 tommytoyz : Embraer gets $650 Million. They also get new security deposits and additional security through cross collateralized airframes. AMR faced losing all pl
33 Post contains images commavia : Agreed. Will be interesting to see what AMR does if/when they get an APA deal - E175, E190, CRJ900? Will also be interesting to see what happens if A
34 PSU.DTW.SCE : Additionally, had AMR just whole-sale dumped the ERJs, it would've effectively ended any sort of future relationship between Embraer and AMR. AMR nee
35 commavia : True, although I'm not sure it would have entirely ended their relationship - AMR is still going to be a huge purchaser of commercial aircraft going
36 United727 : The 195's are out of the question strictly for Eagle, Correct? Does anyone foresee AA purchasing a large number of 195's for mainline?
37 enilria : Miss what? Delta started with more than anybody, so that's not a fair comparison. DL's % reduction is much sharper. I can't believe they kept the E14
38 Coronado : If Embraer and AA had not reached agreement and Embraer has merely taken back the entire E135, 140 and 145 fleet, it would have basically shut down Ea
39 WA707atMSP : I will choose an AA Eagle Embraer 140 / 145 any day over anyone's Canadair RJ 100. At least on an AA Eagle 140 or 145, I can look out the window with
40 PSU.DTW.SCE : DL also had some of the oldest 50 seat RJs too. We are not privy to the exact numbers, but we do know they got 49% reduction in principle on the E140
41 LAXintl : I think some of you are mistaking my comment about the revised agreements running through 2017-2021. What happens at that point, is AMR becomes the fu
42 Post contains images commavia : That's not necessarily what a capital lease means.
43 Post contains links LAXintl : Capital lease = Definition of 'Capital Lease' A lease considered to have the economic characteristics of asset ownership. A capital lease would be con
44 commavia : My point was just that a capital lease does not - by definition - necessarily mean the title to the asset actually changes hands at the end of the le
45 konrad : It took about 10 years. The decade of the regional jet.
46 justplanenutz : And whether they replace the ATR lift in MIA with other turboprops too! Does this mean that the 50 E145's that were not restructured are either paid
47 TSS : True, although I usually want to look down at stuff on the ground rather than out at the horizon when I'm flying so that's a lesser concern to me. In
48 odwyerpw : Got it. COG thing. Personally, I'm not that fond of the ERJ family. Too many memories of flying in and out of ALB on an ERJ being bouncing around in
49 LAXintl : Possibly. For whatever reason AMR and Embraer agreed to retain their existing financing terms on those 50-tails. Could be they are indeed only a shor
50 SJUSXM : Supposedly the RP contract will not be renewed when the contract is up in February. This is also the time that OO/EV takes over some flying in DFW.
51 enilria : As you know the problem is really fuel burn/seat. That can't be fixed. This helps only marginally. Great, but they still have to pay for them. They a
52 DeltaMD90 : Economics. I could be wrong, this site has led me astray more than a few times. But I thought they were just as gas guzzling as CRJs but with less se
53 PSU.DTW.SCE : Everyone operating ERJs as the same issue with fuel burn/seat. AA was a bigger disadvantage because they were paying above market rates on the ERJs i
54 WROORD : That's the reason they need to order some CS100s. They definately lack 100 seat aircraft in their fleet after getting rid off all Fokker 100s.
55 EMBQA : Tell that to UA who has had them sitting for sale for years. There are no United Express carriers that operate E135s The cost would be astronomical...
56 United1 : ExpressJet operates 7 135's for UAX and has a further 23 stored.
57 EMBQA : Dang...that I did not know
58 United1 : No worries...They were part of the backfill that UA did when Colgan grounded the SF340's. I think they only fly out of IAH at this point. The hulls a
59 neveragain : Has UA made any public statements about plans to retire its 50-seat jet fleet, other than to state that it would like to fly larger RJs? I know AA, D
60 United1 : Not yet...SMI/J said on the Q3 earnings call last week that they expect to announce a finalized joint contract with ALPA fairly soon. I would guess a
61 RyanairGuru : That's a good point. While there is probably a bat's chance in hell of it happening, ALPA could walk away with CO's scope. At that point 50 seaters m
62 neveragain : I'd just like someone to explain to me how flying around a 50-seat ERJ-145/CRJ-200 is so much more inefficient than a 66-seat CRJ-700 or a 76-seat CR
63 Antoniemey : ExpressJet has more than 200 of the things... those won't go away quickly unless a LOT of capacity is being shed or shifted to mainline.
64 neveragain : Rough calculation from someone who is not an aeronautical engineer Aircraft/Operating empty weight/Pct chg from smaller aircraft/Seating capacity on
65 PSU.DTW.SCE : One aspect issue that impares 50 seaters is fixed costs, as the 66/70/76 seater have more seats to spread fixed costs per aircraft over more seats. Ye
66 PPVRA : Not so sure about that. At the price ERJs and CRJs must be going for now, it's gonna be hard to beat them in terms of fixed costs.
67 LHCVG : At least until recently with all the renegotiated deals, the lease rates for the CRJs were pretty close to the CR7s and CR9s, so those costs would ha
68 DeltaMD90 : Ugh I'm some 22 year old on a forum... close enough. "ERJs are not economically desirable" is what I meant. Think that is a safe choice of words
69 LHCVG : I think we got your drift. I would add that gas guzzler is a relative term that relates to size, age/generation, performance parameters, etc. so yes
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