LAXintl
Topic Author
Posts: 20183
Joined: Wed May 24, 2000 12:12 pm

AMR Reaches Deal With Embraer Over AE Fleet

Mon Oct 29, 2012 2:44 pm

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
 
User avatar
ERJ170
Posts: 5466
Joined: Thu Apr 15, 2004 11:15 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Mon Oct 29, 2012 2:49 pm

Hmmm.. What did Embraer get out of this? No new orders... I must be missing something...
Aiming High and going far..
 
milesrich
Posts: 1508
Joined: Sun Jul 06, 2003 2:46 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Mon Oct 29, 2012 2:58 pm

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.
 
mhkansan
Posts: 709
Joined: Sun Jan 17, 2010 9:02 pm

RE: AMR Reaches Deal With Embraer Over AE Fleet

Mon Oct 29, 2012 3:11 pm

What happens to LGA-XNA? Its 3x daily and I thought the only bird they could do it with was the 135.
 
bjorn14
Posts: 3549
Joined: Sat Feb 27, 2010 2:11 pm

RE: AMR Reaches Deal With Embraer Over AE Fleet

Mon Oct 29, 2012 3:13 pm

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
 
FWAERJ
Posts: 2571
Joined: Wed Jun 07, 2006 1:23 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Mon Oct 29, 2012 3:20 pm

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.
"Did he really need the triple bypass? Or was it the miles?"
 
mhkansan
Posts: 709
Joined: Sun Jan 17, 2010 9:02 pm

RE: AMR Reaches Deal With Embraer Over AE Fleet

Mon Oct 29, 2012 3:22 pm

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.
 
flyby519
Posts: 1147
Joined: Tue Jul 24, 2007 3:31 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Mon Oct 29, 2012 4:58 pm

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.
 
flyby519
Posts: 1147
Joined: Tue Jul 24, 2007 3:31 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Mon Oct 29, 2012 5:00 pm

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.
 
kcrwflyer
Posts: 2525
Joined: Tue May 18, 2004 11:57 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Mon Oct 29, 2012 5:16 pm

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 avatar
ODwyerPW
Posts: 942
Joined: Thu Dec 09, 2004 6:30 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Mon Oct 29, 2012 5:40 pm

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.
learning never stops.
 
fun2fly
Posts: 876
Joined: Tue Dec 26, 2006 8:44 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Mon Oct 29, 2012 5:51 pm

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.
 
United1
Posts: 2827
Joined: Wed Oct 08, 2003 9:21 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Mon Oct 29, 2012 6:11 pm

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.
I know the voices in my head aren't real but sometimes their ideas are just awesome!!!
 
Independence76
Posts: 398
Joined: Thu Jul 19, 2007 9:59 pm

RE: AMR Reaches Deal With Embraer Over AE Fleet

Mon Oct 29, 2012 6:49 pm

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]
 
plateman
Posts: 646
Joined: Wed May 23, 2007 9:36 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Mon Oct 29, 2012 7:05 pm

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
 
lhcvg
Posts: 1255
Joined: Mon May 25, 2009 2:53 pm

RE: AMR Reaches Deal With Embraer Over AE Fleet

Mon Oct 29, 2012 7:25 pm

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.
 
doulasc
Posts: 728
Joined: Sat Dec 17, 2011 5:12 pm

RE: AMR Reaches Deal With Embraer Over AE Fleet

Mon Oct 29, 2012 7:32 pm

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.
 
Independence76
Posts: 398
Joined: Thu Jul 19, 2007 9:59 pm

RE: AMR Reaches Deal With Embraer Over AE Fleet

Mon Oct 29, 2012 7:44 pm

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.
 
User avatar
enilria
Posts: 6147
Joined: Fri Feb 22, 2008 7:15 pm

RE: AMR Reaches Deal With Embraer Over AE Fleet

Mon Oct 29, 2012 7:52 pm

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.  
 
neveragain
Posts: 466
Joined: Wed Sep 26, 2012 2:59 pm

RE: AMR Reaches Deal With Embraer Over AE Fleet

Mon Oct 29, 2012 8:15 pm

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

I thought all of the principles left with Arpey?

              
 
User avatar
gdg9
Posts: 734
Joined: Thu Jun 30, 2005 9:42 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Mon Oct 29, 2012 8:28 pm

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?
 
justplanenutz
Posts: 562
Joined: Fri Feb 10, 2006 9:48 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Mon Oct 29, 2012 8:37 pm

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?
 
neveragain
Posts: 466
Joined: Wed Sep 26, 2012 2:59 pm

RE: AMR Reaches Deal With Embraer Over AE Fleet

Mon Oct 29, 2012 8:42 pm

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.
 
PSU.DTW.SCE
Posts: 6089
Joined: Mon Jan 28, 2002 11:45 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Mon Oct 29, 2012 8:49 pm

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 avatar
DeltaMD90
Posts: 8245
Joined: Tue Apr 15, 2008 11:25 pm

RE: AMR Reaches Deal With Embraer Over AE Fleet

Mon Oct 29, 2012 9:10 pm

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 :)
 
User avatar
ERJ170
Posts: 5466
Joined: Thu Apr 15, 2004 11:15 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Mon Oct 29, 2012 9:46 pm

Could American Eagle do some at risk flying with some? I'm sure they can get some for cheap from Embraer..
Aiming High and going far..
 
rangercarp
Posts: 80
Joined: Sat Nov 14, 2009 12:54 pm

RE: AMR Reaches Deal With Embraer Over AE Fleet

Mon Oct 29, 2012 10:42 pm

Quoting Independence76 (Reply 17):
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.

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 number of CR7's MQ flys.
iwgbtp!
 
commavia
Posts: 9629
Joined: Mon Apr 25, 2005 2:30 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Tue Oct 30, 2012 12:00 am

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

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 around 175 that will be phased out over the next 5-10 years. These jets obviously have suboptimal economics in isolation, although as has been said before, there are still markets where - because of a variety of competitive or financial reasons - these jets can still be operated profitably. Specifically - there are a lot of markets AA serves in and out of DFW and MIA where they have a near or complete monopoly and fares/yields are high. I suspect these are some of the places where these ERJs will continue to fly until being retired. In addition, the substantial reduction in the capital cost of these jets will also, of course, improve their relative economics, even in spite of the rising maintenance costs.
 
User avatar
ODwyerPW
Posts: 942
Joined: Thu Dec 09, 2004 6:30 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Tue Oct 30, 2012 4:14 am

Quoting United1 (Reply 12):
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.

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 meters. So to answer my own question: you just have to install a 1.5 meter fuselage plug. :P
learning never stops.
 
TSS
Posts: 2479
Joined: Fri Dec 29, 2006 3:52 pm

RE: AMR Reaches Deal With Embraer Over AE Fleet

Tue Oct 30, 2012 6:04 am

Quoting DeltaMD90 (Reply 24):
Sure they're probably the worst jets out there, but they've gotta keep some of them

In what way do you mean "worst"?

Quoting odwyerpw (Reply 28):
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 meters. So to answer my own question: you just have to install a 1.5 meter fuselage plug. :P

More likely two plugs: A 1 meter plug ahead of the wings and a 1/2 meter plug aft of the wings.
Able to kill active threads stone dead with a single post!
 
neveragain
Posts: 466
Joined: Wed Sep 26, 2012 2:59 pm

RE: AMR Reaches Deal With Embraer Over AE Fleet

Tue Oct 30, 2012 6:19 am

Quoting Independence76 (Reply 13):
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.

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!"?

Quoting Independence76 (Reply 13):
Because those contract terms are virtually dead at this point, we're probably going to see some E175 orders within the next few years.

More like the next few months.

Quoting commavia (Reply 27):
I think this was probably a "best-case scenario" for AMR.

Every action AA management takes seems to be a "best-case scenario" for you.

Quoting PSU.DTW.SCE (Reply 23):
DL is leading the pack over a 3-5 year timeframe, but still plans to keep ~125 50 seat RJs in the fleet.

So AA has 177 50-seat RJs through 2017. DL will have approximately 125 according to PSU's post. I would be surprised if UA had fewer than AA. The 50-seat jet is supposedly "dead," but I guess it'll be around for much longer.
 
aaway
Posts: 1236
Joined: Tue Oct 21, 2003 2:07 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Tue Oct 30, 2012 6:50 am

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 suspect that some portion of the remaining fleet will become bargaining chips well before 2017.

This is a very systematic process that factors the considerations of many stakeholders.
"The greatest mistake you can make in life is to continually be afraid you will make one." - Elbert Hubbard
 
tommytoyz
Posts: 1195
Joined: Thu Jan 18, 2007 9:08 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Tue Oct 30, 2012 9:46 am

Embraer gets $650 Million.

They also get new security deposits and additional security through cross collateralized airframes.

AMR faced losing all planes, so they were not really in the driver's seat. Both Embraer and AMR need each other and I assume it is a compromise that hurts both companies not neither likes, but workable and better than the extreme.
 
commavia
Posts: 9629
Joined: Mon Apr 25, 2005 2:30 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Tue Oct 30, 2012 10:37 am

Quoting aaway (Reply 31):
There'll be more action with regard to the AE fleet once an AMR-APA agreement is in place.

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 AMR and USAirways end up merging, given that Parker did agree to some scope clause, of course, with the APA. I'm not sure what he agreed to - does he get to buy additional large RJs beyond the 100+ USAirways already gets to fly and the 47 AMR has, or did he actually agree to cut that flying back, etc.?

Quoting aaway (Reply 31):
While the length of the term with Embraer seems ominous, I suspect that some portion of the remaining fleet will become bargaining chips well before 2017.

  

As will be the case at Delta and United, I suspect, who are also managing a soft-landing for the 50-seaters but will likely keep trying to offload them when feasible as their economics continue to worsen.

Quoting tommytoyz (Reply 32):

Embraer gets $650 Million.

They also get new security deposits and additional security through cross collateralized airframes.

AMR faced losing all planes, so they were not really in the driver's seat. Both Embraer and AMR need each other and I assume it is a compromise that hurts both companies not neither likes, but workable and better than the extreme.

Exactly. Sure AMR "had" Embraer in the sense that AMR trying to offload all those jets would have sent the market price for them through the floor, but of course Embraer also "had" AMR in the sense that AMR needed those jets to operate 75% of their regional flying at the moment. You can't just park and get rid of that much capacity overnight.
 
PSU.DTW.SCE
Posts: 6089
Joined: Mon Jan 28, 2002 11:45 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Tue Oct 30, 2012 12:04 pm

Quoting commavia (Reply 33):
Exactly. Sure AMR "had" Embraer in the sense that AMR trying to offload all those jets would have sent the market price for them through the floor, but of course Embraer also "had" AMR in the sense that AMR needed those jets to operate 75% of their regional flying at the moment. You can't just park and get rid of that much capacity overnight.

Additionally, had AMR just whole-sale dumped the ERJs, it would've effectively ended any sort of future relationship between Embraer and AMR. AMR needs Embraer as a future supplier of aircraft. Dumping the fleet would've likely led to a lot of litigation and soured any attempt to negotiate on future aircraft.
 
commavia
Posts: 9629
Joined: Mon Apr 25, 2005 2:30 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Tue Oct 30, 2012 12:19 pm

Quoting PSU.DTW.SCE (Reply 34):
Additionally, had AMR just whole-sale dumped the ERJs, it would've effectively ended any sort of future relationship between Embraer and AMR. AMR needs Embraer as a future supplier of aircraft. Dumping the fleet would've likely led to a lot of litigation and soured any attempt to negotiate on future aircraft.

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 forward, and billions worth of business tend to help two parties bury any proverbial hatchets. Exhibit A: AMR and Airbus. Nonetheless, I do generally agree that it would have hurt the relationship - and not just with Embraer, but also with the Brazilian government, which has a close relationship with Embraer and which financed many of the jets in question. With Brazil becoming an ever-more-important market for AA, maintaining a healthy relationship with the Brazilian government may also have been a factor.
 
United727
Posts: 351
Joined: Sat Nov 13, 2010 1:26 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Tue Oct 30, 2012 1:37 pm

Quoting Independence76 (Reply 17):
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 195's are out of the question strictly for Eagle, Correct? Does anyone foresee AA purchasing a large number of 195's for mainline?
 
User avatar
enilria
Posts: 6147
Joined: Fri Feb 22, 2008 7:15 pm

RE: AMR Reaches Deal With Embraer Over AE Fleet

Tue Oct 30, 2012 1:59 pm

Quoting justplanenutz (Reply 21):
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?

Miss what?

Quoting PSU.DTW.SCE (Reply 23):
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.

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 E140s. AA will be back in Ch11 if fuel goes up.

Quoting DeltaMD90 (Reply 24):
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

They could have made a big order with Embraer for 70 seaters and exited almost all the existing Embraers via short-term leases over the delivery period. The problem came in because the pilots haven't agreed to a contract specifying a number of RJs outside CH11. That crewed AA because it killed their plan to ditch the Embraers for larger jets. While the pilots are doing what is best for them in the short-term, they probably doomed AA to a second Ch11 by forcing AA into extending those uneconomic airplanes.

Quoting commavia (Reply 27):
and keeping around 175 that will be phased out over the next 5-10 years.

In 10 years they will probably be the only U.S. operator of the E145. In fact, in 5 years they may be.
 
User avatar
coronado
Posts: 1131
Joined: Sat Jun 26, 1999 9:42 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Tue Oct 30, 2012 2:03 pm

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 Eagle, but worse would have made AA existing hub operations in DFW (and to a lesser extent MIA) completely unprofitable until such time as AA could have completely rearranged, re-timed and reconfigured their hub operations. While it would hurt Embraer, Embraer probably could have unloaded the small jets at a discount into a market such as China due to their good ties there. Without the ERJ lift, this probably would force AA at DFW to drop at least 2 full connecting banks per day. Without the ERJ feed there would have been an awful lot of S80's and 738's leaving DFW with empty seats. Just take one simple little example, Amarillo AMA would have lost all feed into American at DFW and AA would be turning over the entire market AMA market to United and Southwest, until such time as they could figure out how to service AMA with mainline equipment or sign up alternate regional carriers.
The Original Coronado: First CV jet flights RG CV 990 July 1965; DL CV 880 July 1965; Spantax CV990 Feb 1973
 
WA707atMSP
Posts: 1471
Joined: Sun Oct 08, 2006 8:16 pm

RE: AMR Reaches Deal With Embraer Over AE Fleet

Tue Oct 30, 2012 2:05 pm

Quoting TSS (Reply 29):
Quoting DeltaMD90 (Reply 24):
Sure they're probably the worst jets out there, but they've gotta keep some of them

In what way do you mean "worst"?

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 without contorting my neck!
Seaholm Maples are #1!
 
PSU.DTW.SCE
Posts: 6089
Joined: Mon Jan 28, 2002 11:45 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Tue Oct 30, 2012 2:38 pm

Quoting enilria (Reply 37):
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 E140s. AA will be back in Ch11 if fuel goes up.

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 E140s. AA also apparently has set a schedule for an orderly transition out of these aircraft over the next several years.

The majority of AA's ERJ fleet is not that old, an another 5 years puts most of them out as they start to require more significant maintenance costs.

Quoting enilria (Reply 37):
They could have made a big order with Embraer for 70 seaters and exited almost all the existing Embraers via short-term leases over the delivery period. The problem came in because the pilots haven't agreed to a contract specifying a number of RJs outside CH11. That crewed AA because it killed their plan to ditch the Embraers for larger jets. While the pilots are doing what is best for them in the short-term, they probably doomed AA to a second Ch11 by forcing AA into extending those uneconomic airplanes.

Yes, but they could easily revisit that in the future once the contract and merger issues are settled.
They could easily go back and negotiate a trade once the future of the 70+ seaters becomes more clear.

Quoting Coronado (Reply 38):
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 Eagle, but worse would have made AA existing hub operations in DFW (and to a lesser extent MIA) completely unprofitable until such time as AA could have completely rearranged, re-timed and reconfigured their hub operations. While it would hurt Embraer, Embraer probably could have unloaded the small jets at a discount into a market such as China due to their good ties there.

The scenario of just walking away from 200+ ERJs, just was not plausable and is unprescendented in the industry (excluding situation of a complete shutdown)
It would've hurt AA, it would've hurt Embraer, it would've hurt the financial houses that own the paper.
In any case, there would need to be an orderly transition. For now that is what they have.

A.net is very quick to say the 50 seat RJ is unprofitable. However, it may be less unprofitable that other options (e.g., dumping the whole fleet ASAP and either a.- not replacing them or b.- ordering a ton of expensive new jets that can't be paid for). The draw-down of 50 seaters is here, it just takes some time. Again, as was mentioned by DL last week, the 50 seaters economics do not make sense on longer stage lengths. If AA and others can keep them on sub-500 mile routes (and there are lot of routes in the 200-400 mile range in the network) they are still the best alternative in the interim.
 
LAXintl
Topic Author
Posts: 20183
Joined: Wed May 24, 2000 12:12 pm

RE: AMR Reaches Deal With Embraer Over AE Fleet

Tue Oct 30, 2012 2:49 pm

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 full proud owner of the aircraft.

See the bulk of 140-145's are on Capital leases which means the the lessee (AMR) gains ownership at the end of the lease period. So once Embraer and its finance partners are fully paid off, the keys and aircraft belong to AMR.
From the desert to the sea, to all of Southern California
 
commavia
Posts: 9629
Joined: Mon Apr 25, 2005 2:30 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Tue Oct 30, 2012 2:55 pm

Quoting LAXintl (Reply 41):
are on Capital leases which means the the lessee (AMR) gains ownership at the end of the lease period

That's not necessarily what a capital lease means.  
 
LAXintl
Topic Author
Posts: 20183
Joined: Wed May 24, 2000 12:12 pm

RE: AMR Reaches Deal With Embraer Over AE Fleet

Tue Oct 30, 2012 3:04 pm

Capital lease =

Definition of 'Capital Lease'
A lease considered to have the economic characteristics of asset ownership. A capital lease would be considered a purchased asset for accounting purposes. An operating lease, on the other hand, would be handled as a true lease, or rental, for accounting purposes.


Read more: http://www.investopedia.com/terms/c/capitallease.asp#ixzz2AnLcOFxs


You can also dig through the court documents and see and see the revised agreements are about mortgage payment terms, not ownership. At the end of the revised term, the applicable assets are AMRs free and clear.
From the desert to the sea, to all of Southern California
 
commavia
Posts: 9629
Joined: Mon Apr 25, 2005 2:30 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Tue Oct 30, 2012 3:10 pm

Quoting LAXintl (Reply 43):
Capital lease =

Definition of 'Capital Lease'
A lease considered to have the economic characteristics of asset ownership. A capital lease would be considered a purchased asset for accounting purposes. An operating lease, on the other hand, would be handled as a true lease, or rental, for accounting purposes.

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 lease. It can, but it doesn't have to. There are other situations in which ownership of a leased asset does not change hands at the end of a lease, and yet it is still classified as a capital lease.
 
konrad
Posts: 462
Joined: Fri Mar 15, 2002 3:54 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Tue Oct 30, 2012 3:18 pm

Quoting fun2fly (Reply 11):
Hard to believe that the ERJ's went from prop savior to aluminum cans in just a few years.

It took about 10 years. The decade of the regional jet.
 
justplanenutz
Posts: 562
Joined: Fri Feb 10, 2006 9:48 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Tue Oct 30, 2012 3:34 pm

Quoting commavia (Reply 33):
Will be interesting to see what AMR does if/when they get an APA deal - E175, E190, CRJ900?

And whether they replace the ATR lift in MIA with other turboprops too!

Quoting LAXintl (Reply 41):
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 full proud owner of the aircraft.

Does this mean that the 50 E145's that were not restructured are either paid for or nearly so? And, do you know if this agreement affects the 15 E140's flying for RP that AMR is contingently liable for if they terminate that contract?
 
TSS
Posts: 2479
Joined: Fri Dec 29, 2006 3:52 pm

RE: AMR Reaches Deal With Embraer Over AE Fleet

Tue Oct 30, 2012 3:57 pm

Quoting WA707atMSP (Reply 39):
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 without contorting my neck!

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 my opinion where the ERJs beat the CRJs all to heck and back is in the basic seating layout of 1-2 versus 2-2... at least when I'm in the single seat that is both an aisle and a window seat.
Able to kill active threads stone dead with a single post!
 
User avatar
ODwyerPW
Posts: 942
Joined: Thu Dec 09, 2004 6:30 am

RE: AMR Reaches Deal With Embraer Over AE Fleet

Tue Oct 30, 2012 6:01 pm

Quoting TSS (Reply 29):
More likely two plugs: A 1 meter plug ahead of the wings and a 1/2 meter plug aft of the wings.

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 foul upstateNY weather. Absence of the 135 is a good thing from the AE fleet, as I still travel there to visit my mama and my inlaws.
learning never stops.
 
LAXintl
Topic Author
Posts: 20183
Joined: Wed May 24, 2000 12:12 pm

RE: AMR Reaches Deal With Embraer Over AE Fleet

Tue Oct 30, 2012 6:42 pm

Quoting justplanenutz (Reply 46):
Does this mean that the 50 E145's that were not restructured are either paid for or nearly so?

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 short time away from being paid for.

Quoting justplanenutz (Reply 46):
And, do you know if this agreement affects the 15 E140's flying for RP that AMR is contingently liable for if they terminate that contract?

If you give me some tail number I can look it up to see if they are applicable to this restructured agreement.
From the desert to the sea, to all of Southern California

Who is online

Users browsing this forum: adamh8297, atypical, Baidu [Spider], BoeingVista, dubaiamman243, georgiabill, Google [Bot], IndianicWorld, LeCoqFrancais, lightsaber, OzarkD9S, pualani, Revelation, teahan and 285 guests