jetdeltamsy
Posts: 2688
Joined: Tue Nov 14, 2000 11:51 am

RE: AA Selling American Eagle

Wed Nov 28, 2007 11:19 pm

Quoting EGFCabinCrew (Reply 5):
Looks like American wants somebody cheaper...

Bingo.

The Bain study at Eagle showed that AA could farm out the flying to other contract carriers for between $20 and $150 millioin less per year than it pays to Eagle.

Almost all of the expense disparity comes from wages. Eagle has a huge number of very senior employees at the top of the pay scale. While during the Bain assessment, management tried to make good with the pilots and f/a saying their costs were not uncompetitive. But I think the whole organization is uncompetitive on wages...higher than average. And now that's it's going to be an independent company, I think they will look to slash wages wherever possible.

I wonder how this affects the new flow back agreement AE made with AA pilots...providing Eagle pilots slots so they could eventually work their way to mainline. They agreed on this just a couple of weeks ago.

[Edited 2007-11-28 15:20:36]
Tired of airline bankruptcies....EA/PA/TW and finally DL.
 
MAH4546
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RE: AA Selling American Eagle

Wed Nov 28, 2007 11:21 pm



Quoting Quickmover (Reply 49):
I wonder if this is good news, bad news or no news for cities like STL, that are mostly Eagle?

It's good news, IMO. It will result in more regional flying, especially at MIA and LAX, IMO.

However, St. Louis is not Eagle. There are barely any Eagle flights to St. Louis (I think 4-5 daily). It is operated largely by AmericanConnection carriers.
a.
 
jacobin777
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RE: AA Selling American Eagle

Wed Nov 28, 2007 11:26 pm



Quoting FlyPNS1 (Reply 25):
Quoting Jacobin777 (Reply 16):
I think this might be part of the reason for the potential divestiture...it certainly gives AA more flexibility....

It does give AA more flexibility, but until the renegotiate the scope clause with APA, not much will change.

...I wonder if there is some kind of "work around" with this situation... scratchchin .....regardless, I agree, it will take some negotiating with the APA.

Quoting N1120A (Reply 35):
Quoting ERJ170 (Reply 3):


Does this mean American Eagle can actually buy new aircraft of the size they want? Like some E70? E75?

No, because that is still based on AA's pilot contract.

...maybe you can elaborate a little bit more as I'm (as well as probably others ) quite curious to know.  yes 
"Up the Irons!"
 
Viscount724
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RE: AA Selling American Eagle

Wed Nov 28, 2007 11:30 pm



Quoting MAH4546 (Reply 48):
Quoting RedTailDTW (Reply 47):

My question would be who gets the "American Eagle" name? Would American keep using it for their regional carriers or would Eagle be able to keep it and American would have to use "AmericanConnection" for all regional flights?

The American Eagle brand name is perhaps the strongest and most well-known of any regional airline. I would assume that American's regional flights operated by MQ and OW will keep the American Eagle name.

According to AA's website, the "American Eagle" name is owned by AA (presumably a registered trademark) so it's up to AA who can use it.
 
ATWZW170
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RE: AA Selling American Eagle

Wed Nov 28, 2007 11:35 pm

Of course Mesa is going to be all over it -- AA had better think twice. Republic for sure -- maybe even Express jet. But what about Air Wisconsin? We want to expand and seem to be having a hard time doing that right now.
Success is getting what you want...happiness is liking what you get
 
MAH4546
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RE: AA Selling American Eagle

Wed Nov 28, 2007 11:45 pm



Quoting ATWZW170 (Reply 54):
-- maybe even Express jet.

Perfect opportunity for them, especially since they will have most likely have 42 aircraft freed up by the end of 2008. They need to go somewhere...
a.
 
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STT757
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RE: AA Selling American Eagle

Wed Nov 28, 2007 11:48 pm



Quoting MAH4546 (Reply 55):
Perfect opportunity for them, especially since they will have most likely have 42 aircraft freed up by the end of 2008. They need to go somewhere...

What 42, the ones already removed from COEX flying currently flying under DL Connection and Expressjets own titles?
Eastern Air lines flt # 701, EWR-MCO Boeing 757
 
highliner2
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RE: AA Selling American Eagle

Wed Nov 28, 2007 11:50 pm



Quoting Jetdeltamsy (Reply 50):
I wonder how this affects the new flow back agreement AE made with AA pilots...providing Eagle pilots slots so they could eventually work their way to mainline. They agreed on this just a couple of weeks ago.

I believe that part of the agreement fell apart a few days/weeks ago. It's gone last I heard...can anybody confirm?
Go Cubs!
 
vv701
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RE: AA Selling American Eagle

Wed Nov 28, 2007 11:55 pm



Quoting ERJ170 (Reply 9):
Perhaps AA is getting themselves more in line to make themselves prettier for BA to buy them out? BA doesn't have an owned regional airline (do they), so they could be getting themselves in the same position? Just a thought..

My initial thoughts when reading the thread starter were that AA is going down the same route as BA. To that in my mind I added the recent statement by BA CEO Willie Walsh that BA's future relationship with AA was more important to BA than its future relationship with IB.

What surprises me is that since ERJ170 posted the above we have had 45 other replies but no further comment on the AA/BA relationship. Elsewhere others are talking on a-net of BA being left out in the cold as other alliances and take overs firm up all around them. I am waiting for Open Skies to be implemented and am keen to see what else then develops. It seems to me that a possible BA strategy for a long term future is being overlooked. After all was not BA very keen that the Open Skies agreement included a relaxation of the US laws on American airline ownership and management control? And what would a 50:50 AA:BA partnership look like?
 
MAH4546
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RE: AA Selling American Eagle

Thu Nov 29, 2007 12:01 am



Quoting STT757 (Reply 56):
Quoting MAH4546 (Reply 55):
Perfect opportunity for them, especially since they will have most likely have 42 aircraft freed up by the end of 2008. They need to go somewhere...

What 42, the ones already removed from COEX flying currently flying under DL Connection and Expressjets own titles?

The 42 (I believe that's the number) flying their money bleeding independent operations.
a.
 
CIDFlyer
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RE: AA Selling American Eagle

Thu Nov 29, 2007 12:07 am



Quoting MAH4546 (Reply 48):
I would assume that American's regional flights operated by MQ and OW will keep the American Eagle name.

Would the American Connection flights out of STL by Trans States and Chautaqua be allowed to use the American Eagle name after all is said and done? Could we also see a mixture of routes operated by the different carriers Trans States, Chautaqua and whatever the new name for AE will be out of all the hubs (DFW, STL, ORD, MIA), like DL does now using multiple connection carriers at their hubs?
 
Cubsrule
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RE: AA Selling American Eagle

Thu Nov 29, 2007 12:15 am



Quoting MAH4546 (Reply 51):

However, St. Louis is not Eagle. There are barely any Eagle flights to St. Louis (I think 4-5 daily). It is operated largely by AmericanConnection carriers.

It's 4 (an SGF turn and a BNA turn on a 135... the aircraft overnights at SGF and flies BNA-JFK in there as well).

Does MQ own all of its aircraft?
I can't decide whether I miss the tulip or the bowling shoe more
 
eghansen
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RE: AA Selling American Eagle

Thu Nov 29, 2007 12:18 am



Quoting ERJ170 (Reply 9):
Perhaps AA is getting themselves more in line to make themselves prettier for BA to buy them out? BA doesn't have an owned regional airline (do they), so they could be getting themselves in the same position? Just a thought..

Not possible. Federal law limits foreign ownership to 25% of total outstanding stock. Virgin America's startup was delayed to questions about its foreign ownership.

Quoting ERJ170 (Reply 12):
Would "American Eagle" be the regional name or the airline's name? because "American Eagle" is sort of like "Delta Connection".. would they airline have to get another name (all called Executive or go back to their original name?)

Actually American Eagle is not like Delta Connection at all. Delta Connection is a catchall name for flights flow by Atlantic Southeast, Skywest, Expressjet and any other operators they contract with.

American Eagle is an actual airline with its own FAA operating certificate. It has its own callsign (Eagle Flight).

Quoting Viscount724 (Reply 53):
According to AA's website, the "American Eagle" name is owned by AA (presumably a registered trademark) so it's up to AA who can use it.

American Airlines and American Eagle are wholly owned subsidiaries of AMR Corporation. American Airlines (AA) does not own American Eagle nor does it own the name trademark. Both are owned by AMR Corporation. Neither American Airlines nor American Eagle trades on any stock exchange. The only company that is listed is AMR Corporation.

If AMR Corporation spins off/divests American Eagle, the name "American Eagle" would most likely be included in the spinoff as part of the assets. To have any real value, the whole airline would have to be spun off including the equipment, FAA certificate and any trademarks/names.

You would not sell an airline without its name, because the name is what everybody knows the airline by.
Nowadays, it is hard to tell when the commercials end and real life begins
 
highliner2
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RE: AA Selling American Eagle

Thu Nov 29, 2007 12:20 am



Quoting VV701 (Reply 58):
My initial thoughts when reading the thread starter were that AA is going down the same route as BA. To that in my mind I added the recent statement by BA CEO Willie Walsh that BA's future relationship with AA was more important to BA than its future relationship with IB.

What surprises me is that since ERJ170 posted the above we have had 45 other replies but no further comment on the AA/BA relationship. Elsewhere others are talking on a-net of BA being left out in the cold as other alliances and take overs firm up all around them. I am waiting for Open Skies to be implemented and am keen to see what else then develops. It seems to me that a possible BA strategy for a long term future is being overlooked. After all was not BA very keen that the Open Skies agreement included a relaxation of the US laws on American airline ownership and management control? And what would a 50:50 AA:BA partnership look like?

The ownership laws regarding foreign companies buying US carriers are not going to change, ever. Anyone who saw the backlash that exploded when the relaxation of the laws was discussed can attest to that. And I'm not talking about we the people of a.net. The general public, labor unions, and many airlines were up in arms and as a result, so was congress. The DOT dropped the proposal. The ownership laws are here to stay. Which of course means, BA and AA cannot merge...
Go Cubs!
 
Super80DFW
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RE: AA Selling American Eagle

Thu Nov 29, 2007 12:25 am

So what does this mean for American Eagle? Will they have their own reservations website? Will they still sell on AA.com? Will American try to get other airline to fly the routes?
EAT'EM UP EAT'EM UP KSU!!
 
Cubsrule
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RE: AA Selling American Eagle

Thu Nov 29, 2007 12:27 am



Quoting Eghansen (Reply 62):
American Eagle is an actual airline with its own FAA operating certificate.

Well, let's be careful here, since EGF has two operating certificates (MQ and OW).
I can't decide whether I miss the tulip or the bowling shoe more
 
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STT757
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RE: AA Selling American Eagle

Thu Nov 29, 2007 12:28 am



Quoting MAH4546 (Reply 59):
The 42 (I believe that's the number) flying their money bleeding independent operations.

Yeah that makes alot of sense, the whole "independent" experiment has already been proven a failure by "Independence". I would also think Express would much rather be providing feed for AA at LAX than DL.
Eastern Air lines flt # 701, EWR-MCO Boeing 757
 
Viscount724
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RE: AA Selling American Eagle

Thu Nov 29, 2007 12:35 am



Quoting Eghansen (Reply 62):
Quoting Viscount724 (Reply 53):
According to AA's website, the "American Eagle" name is owned by AA (presumably a registered trademark) so it's up to AA who can use it.


American Airlines and American Eagle are wholly owned subsidiaries of AMR Corporation. American Airlines (AA) does not own American Eagle nor does it own the name trademark.

I didn't say American Eagle was owned by AA, just the name. If AMR owns the name and not AA, they should correct their website where they list their trademarks and service marks. Paragraph quoted below:

Trademarks / Servicemarks
AACargo, AA.com, AAdvantage, AAdvantage Auto & Recreational Program, AAdvantage Cruise, AAdvantage Dial-In, AAdvantage Dining, AAdvantage Executive Platinum, AAdvantage eShopping, AA First Call, AAdvantage Fund Raising, AAdvantage Gold, AAdvantage Golf, AAdvantage Hotel, AAdvantage Platinum, AAdvantage Program for Mortgages and Real Estate, AAdvantage Retail, AAdvantage Vacation Awards, AAirpass, AAnytime, AAttractions, Admirals Club, Admirals Club Executive Center, Americanair.com, American Airlines, American Airlines Group & Meeting Travel, American Airlines Landing Zone, American AAdvantage Mileage Funds, AmericanAirlines Vacations, American Eagle, American Airlines Interactive Travel, American Flagship Service, American Way, Business ExtrAA, buyAAmiles, Celebrated Living, Corporate AAccess, depositAAmiles, Everyfare, Express Breakfast, Flagship, Fly AAway Cruise Vacations, giftAAmiles, HospitAAlity, In-Flight Café, International Flagship Service, Latitudes, Miles For Kids In Need, Miles for Trails, Net SAAver, Net SAAver Fares, Nexos, orderAAmiles, Personal AAccess, PlanAAhead, redeemAAmiles, Sale AAlert, shareAAmiles, Snack Attack, SpAA in Flight, SpAA-To-Go, transferAAmiles, and We Know Why You Fly are marks owned by American Airlines, Inc., both in the U.S. and many countries around the world. All other product names mentioned herein are the trademarks of their respective owners.
 
commavia
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RE: AA Selling American Eagle

Thu Nov 29, 2007 12:41 am

Many reactions to this unexpected, but not surprising, news:

First and foremost, I think many knew that this was probably where thing were eventually heading. AA has made no secret publicly or internally about wanting to either get Eagle's costs down to where its competitors' are or, failing that, get them off the books. They have gone a long way, but still have a very long way to go, in the first regard, but are still working on the second. Eagle has always been the red headed stepchild of the AMR family: mainline looks down on Eagle as the unwashed and chronically delayed white trash version, which is understandable considering the slave wages and benefits Eagle employees get compared with mainline.

Secondly, if AMR was going to sell Eagle, now is the time to do it. Well, actually the time would have been back in 2002-2003 when lots of regional operators were getting spun off and the market topped out. I doubt AMR will get more than 65-75% today of what they would have gotten then, but the market is only going to go down-hill for a high-cost operator like Eagle that is not positioned well for the future of the regional segment of the market (relatively high costs, 37-, 44-, and 50-seaters, etc.).

Third, it is going to be very interesting to see how AMR manages this break-up. AA has operated Eagle as a stand-alone brand since 1984, and owned most of the Eagle carriers that were amalgamated into AMR Eagle since the late 1980s and early 1990s. Divorcing them from the mainline unit will be difficult, as the two companies' operations overlap in countless ways both at the field and back-office level.

How will they work out slots at LGA and DCA, for example? I am sure that AMR will want to keep those, and then lease them back to whichever vendor is operating Eagle flying. And what about employee travel? What will benefits now look like for AMR employees on contract carriers (like Eagle)? And what about service contracts - in numerous cities across the U.S., AA handles Eagle or visa versa. In the interim, I'm sure, that won't change, but in a few months or years, will AA just dump all the Eagle contracts for an even lower-cost, worse-performing alternative?

But, that being said, AMR has also given Eagle an enormous amount of independence and flexibility all these years, and as such, it is well-positioned (at least from that standpoint) to be a stand-alone airline. It has its own executive team, own accounting and finance departments, own SOC, etc.

I think it will also be interesting to watch how AMR handles the split between mainline and Eagle without compromising the overall quality of the product. Say what you will about Eagle - and I am the first to do it, it's not exactly like flying on Emirates, or even AA mainline - but it is a well-integrated product with AMR mainline. Eagle products and services are closely coordinated with the overall AMR brand, and Eagle employees are all proficient at doing their jobs within the context of the AMR operating environment - example: all of Eagle's gate agents are well-trained and knowledgeable with SABRE. How AMR manages to get rid of Eagle and its employees, without compromising the quality and degenerating to, say, a Mesa-level product, should be something to see. Essentially, in order to keep the AMR contract flying after the initial break-up period (probably 2-3 years), Eagle - like so many other regional competitors out there - is going to have to figure out how to deliver SkyWest or ExpressJet level quality, at Mesa CASM. Good luck.

I'll also be interested to see how AMR chooses to actually manage the divestiture. They could do a stock-based simple spin-off, a la SABRE 1999, and just issue shares of SABRE stock to AMR shareholders. However, that may add costly complexity and time to the transaction that AMR doesn't want to deal with, and may open up the possibility that the markets and individual investors - free to do what they want with their new 'American Eagle Corp.' stock, when issued, will value the spun-off firm at less than AMR or its advisers do. On the flip side, they could just sell it to a single party or syndicate of large investors, which would mean a fixed, agreed-upon price up front, but that might be difficult in today's tight financial environment where loose cash isn't just floating around like it was 12-18 months ago.

Of all of the things that have been speculated as possible divestitures or spin-offs: American Eagle, maintenance and engineering, AAdvantage, American Beacon, etc., I always thought Eagle was the most likely. M&E isn't quite ready for primetime yet - they still have to get their house in order and get their costs down to a truly competitive level before AMR truly contemplates selling them off. And even if M&E's costs were in-line, they are much more logistically critical to AMR operations than Eagle. Same with AAdvantage, which is - in my opinion - the least likely of the three to ever get divested, as it is so close to AMR's heart, and (minor detail, cough, cough) a highly profitable revenue stream. And as for American Beacon, I could actually see that being sold, but I'm not sure if it's worth the hassle, as they'd probably only get $200-300 million for it, but it doesn't bring in lots of management fee and investment revenue now as it is.

This Eagle deal may well be a bone being thrown at FL Group and other finicky investors who have seen AMR stock drop by half in the last 18 months and want to show some return on their money to their own investors.

I do see opportunity here for both AMR and Eagle. If Eagle can continue to get their costs down, without further eroding their service levels, they could go on to become a real leader in the regional market segment. They do have some smart people, and Eagle - collectively - probably has some of the deepest corporate experience out there of any regional airline. A good deal of big-airline experience has flowed down to Eagle from Eagle is one of the oldest regional brands in the U.S., and the legacy of its forerunner carriers goes back decades, with lots of collective experience. Beyond that, Eagle also has probably more total experience running an airline than most other regionals, as its been doing its own standalone management and its own books for years, longer than some of its competitors have been in existence.

For AMR, as others have said, I think this is definitely an opportunity to rid themselves of a confining marriage to an uncompetitive partner, and finally open themselves up to cheaper, but hopefully still high-quality, regional feed. While I definitely don't expect AA to drop the 'Eagle' brand as, as MAH said, it is probably one of the most well-known in the U.S., I think it is virtually a foregone conclusion that other operators will be flying under that brand within the next few years. Hopefully, if AMR can get something worked out with their pilots (snowball in hell, I know), they can go out and get some feed using EMB175s or something a bit bigger than what Eagle has now, which would give them access to various new markets too big for Eagle's RJs but too small for mainline, or that - critically - require a First Class cabin to be competitive, but can't support something the size of an MD80.

Should be fun to watch!
 
swissy
Posts: 1481
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RE: AA Selling American Eagle

Thu Nov 29, 2007 12:45 am



Quoting Viscount724 (Reply 53):
According to AA's website, the "American Eagle" name is owned by AA (presumably a registered trademark) so it's up to AA who can use it.

Yep

Quoting Eghansen (Reply 62):
American Airlines and American Eagle are wholly owned subsidiaries of AMR Corporation. American Airlines (AA) does not own American Eagle nor does it own the name trademark. Both are owned by AMR Corporation. Neither American Airlines nor American Eagle trades on any stock exchange. The only company that is listed is AMR Corporation.

Remember how it went over 10 years ago and WFS was born.....

Quoting EGFCabinCrew (Reply 44):
The most important aspect of today's announcement is that American Eagle will continue to be a regional partner of American for years to come.

Yep thats what they announced to all the AMR employees which had no choice other than leave or stay with the "new" WFS and look at them today........

I do hope AE will stay with AA (AMR)

Cheers,
 
commavia
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Joined: Mon Apr 25, 2005 2:30 am

RE: AA Selling American Eagle

Thu Nov 29, 2007 12:47 am



Quoting Eghansen (Reply 62):
If AMR Corporation spins off/divests American Eagle, the name "American Eagle" would most likely be included in the spinoff as part of the assets. To have any real value, the whole airline would have to be spun off including the equipment, FAA certificate and any trademarks/names.

I highly, highly doubt that.

There is - in my opinion - no way that AMR/AA will spin off the American Eagle brand/trademark with this new stand-alone company. Not going to happen.

Because whoever ends up doing flying in a few years will no doubt be using the 'Eagle' name. I suppose it's possible that AA will just switch all its branded flying over to 'American Connection,' like the St. Louis carriers, but I don't see that happening. 'Eagle' is the brand name, and a very well-known one at that, in countless cities big and small across the U.S., Canada and Mexico.

AMR will do exactly what Continental did with ExpressJet: they sold off the operating certificate, fleet, equipment, other assets, etc., but they retained ownership of the 'Continental Express' trademark. As such, Continental now licenses that trademark to not only the stand-alone operator ExpressJet, but also to other RJ vendors like Chautauqua.
 
vv701
Posts: 5895
Joined: Fri Aug 19, 2005 10:54 am

RE: AA Selling American Eagle

Thu Nov 29, 2007 12:49 am



Quoting Highliner2 (Reply 63):
The ownership laws regarding foreign companies buying US carriers are not going to change, ever. Anyone who saw the backlash that exploded when the relaxation of the laws was discussed can attest to that. And I'm not talking about we the people of a.net. The general public, labor unions, and many airlines were up in arms and as a result, so was congress. The DOT dropped the proposal. The ownership laws are here to stay. Which of course means, BA and AA cannot merge...

If you read what I said very carefully you will see that I did not use the word "merger". Instead I used the word "partnership".

There are, of course many different forms of partnership. AA and BA through oneworld and their code share arrangements already have one. And LH and UA in Star Alliance have another which, unlike the AA/BA partnership, is closer with anti-trust immunity.

Of course with so many American airlines so weak that they have had to recently seek Chapter 11 protection I understand why you say what you do. But there are many different ways of addressing legal issues. And it is an unwise man who says 'never ever'.

A successful and close relationship between an American and non-American airline over a number of years that created American jobs and added to American prosperity would show whether Americans are ostriches with their heads buried in the sand - which I believe they are not - or whether they are outward looking and keen to see change that increases employment and general prosperity. Of course it may not happen, but . . .
 
QXatFAT
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RE: AA Selling American Eagle

Thu Nov 29, 2007 12:50 am

Wow this is crazy! At least just from an average joe's perspective.

So how would this have effects on airports like FAT? I mean we have Skywest (United Express) flying lots of flights to LAX every day and also have American Eagle as well doing those with a lot of them connecting to go on internationally as well as domestically. Do you think that then a stand alone American Eagle might pull out of places like FAT?
Don't Tread On Me!
 
AA7295
Posts: 461
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RE: AA Selling American Eagle

Thu Nov 29, 2007 12:58 am

What effect will this have on oneworld.. Isn't AE and affiliate member of oneworld?
 
rfields5421
Posts: 5943
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RE: AA Selling American Eagle

Thu Nov 29, 2007 1:02 am



Quoting Jacobin777 (Reply 15):
For the umpteenth time, its the AMR board which decides bonuses...Arpey can only negotiate for his salary, stock options and bonuses....

Yes, but the board does not operate independent of the CEO's input - from company direction to compensation.

It's a dirty little secret in corporate America how CEO's work to pick board members for the compensation committee and pad their salaries with so called competitive comparisons.

AAL/AMR's recent history has clearly shown that the board is only rubber stamping the management team recommendations on senior executive compensation and bonuses.

The only way to change such an incestuous system is for independent investors to gain a significant majority of the company shares and force their own directors onto the board.

I'm sure Arpey and his team have poison pill contracts like most CEO's which will guarantee them very large separation awards if board members they do not like gain power.

Though you have to be careful about looking at the amount of separation money paid to CEO's and such. Such as the company I work for - our CEO would get about $65 million if he leaves for any reason - including being fired - today.

That isn't an award or bonus - but for the past 11 years he has taken no yearly bonus payments (well 8 of 11 years - he didn't get a bonus for 3 years). He has deferred those bonus payments and put them into company stock - which has done very well.

Quite often major level executives are allowed to defer their bonus payments so that the IRS doesn't get their 40% immediately - more in states with a state income tax.

If the rumors and an eventual sale raise the AAL/AMR stock price - Arpey and his team will get hefty bonuses - because I'm sure their scorecard is based more on stock performance - not airline operations performance.
 
eghansen
Posts: 281
Joined: Wed Nov 14, 2007 7:33 pm

RE: AA Selling American Eagle

Thu Nov 29, 2007 1:03 am



Quoting Cubsrule (Reply 65):
Well, let's be careful here, since EGF has two operating certificates (MQ and OW).

Whether there is one or two operating certificate is not really material. Executive Airlines is a wholly owned subsidiary of American Eagle Holdings (which is a wholly owned subsidiary of AMR Corporation).

The point that I was trying to make is that if you go into Delta reservations and look up flights between SAN and SLC, for example, the tagline on the Delta Connection flights says "operated by Skywest Airlines". Skywest is the actual airline with the operating certificate. There is no "Delta Connection" airline.

But if you go into the American website and look up flights between SAN and SJC, the tagline says "operated by American Eagle". American Eagle is the actual airline with the operating certificate.

Thus the comparison between Delta Connection and American Eagle is not valid. Delta Airlines cannot divest Delta Connection because it is nothing more than a set of contracts and agreements between Delta and Skywest, Atlantic Southeast, et al.

AMR Corpoation can divest American Eagle because it is a complete airline (or two airlines including Executive) with its own planes, spare parts inventory, pilots, procedures manuals and operating certificate.

If AMR Corporation wants to divest American Eagle for the maximum amount of money possible, they will include in the divesture all trademarks and names related to American Eagle, because that is much of the value of an airline.

Quoting Super80DFW (Reply 64):
So what does this mean for American Eagle? Will they have their own reservations website? Will they still sell on AA.com? Will American try to get other airline to fly the routes?

Since AMR Corporation announced that they were thinking of "divesting" and not "selling" American Eagle outright, I would expect that the relationship would continue. Remember that if AMR Corporation divests American Eagle, they do not have to sell all of the company. AMR Corporation could possibly sell 70% of the company to the general public and retain ownership of 30% of the stock.

Many airlines (Skywest, Atlantic Southeast, Comair, Air Wisconsin, Mesaba) do not have reservation websites.
Nowadays, it is hard to tell when the commercials end and real life begins
 
Cubsrule
Posts: 14232
Joined: Sat May 15, 2004 12:13 pm

RE: AA Selling American Eagle

Thu Nov 29, 2007 1:05 am



Quoting Eghansen (Reply 75):

Whether there is one or two operating certificate is not really material. Executive Airlines is a wholly owned subsidiary of American Eagle Holdings (which is a wholly owned subsidiary of AMR Corporation).

I agree with you... I was just trying to be 100% clear since it's a bit of a confusing area for a lot of people.
I can't decide whether I miss the tulip or the bowling shoe more
 
OBSMGR
Posts: 45
Joined: Tue Aug 28, 2007 4:40 am

RE: AA Selling American Eagle

Thu Nov 29, 2007 1:07 am



Quoting Mcdu (Reply 14):
Skywest bidding on the DFW ops. Republic/CHQ bidding on ORD and other companies seeking MIA and JFK. IMHO, I don't think there is any of the current carriers that want the entire operation.

What would Republic gain by bidding on anything from Eagle?

They have publicly stated their growth model is in the 70+ seat aircraft, which Eagle can not operate (beyond those specifically allowed under the amendment to the APA agreement). Remember, CHQ already flies for AA, and operated the E170 for UA, UNTIL a mediation board ruled with the APA and CHQ had to move the flying over to the hastily purchases Shuttle America.

In my opinion, Eagle is in a very tough position. The only real way for them to grow into larger aircraft would be to form a holding company, and buy another regional airline without an existing connection to AA.... one with a depressed stock price right now.... preferably one with multiple partnerships.... maybe one who's management has indicated they would be open to dicussions on ownership changes....... hmmmmm......


(EXPRESSJET)
I just Googled your Yahoo :)
 
rfields5421
Posts: 5943
Joined: Thu Jul 19, 2007 12:45 am

RE: AA Selling American Eagle

Thu Nov 29, 2007 1:08 am



Quoting Eghansen (Reply 75):
Quoting Super80DFW (Reply 64):
So what does this mean for American Eagle? Will they have their own reservations website? Will they still sell on AA.com? Will American try to get other airline to fly the routes?

Many airlines (Skywest, Atlantic Southeast, Comair, Air Wisconsin, Mesaba) do not have reservation websites.

Isn't American / AA.com just a front-end portal to Sabre ?
 
commavia
Posts: 11489
Joined: Mon Apr 25, 2005 2:30 am

RE: AA Selling American Eagle

Thu Nov 29, 2007 1:09 am



Quoting Eghansen (Reply 75):
If AMR Corporation wants to divest American Eagle for the maximum amount of money possible, they will include in the divesture all trademarks and names related to American Eagle, because that is much of the value of an airline.

Not really. The actual trademark of the 'American Eagle' brand are pretty much worthless to American Eagle unless they are still flying for AA 10 or 20 years from now. Beyond that, they have no value, except to AMR, which is why I highly, highly doubt that AMR will give up the 'American Eagle' trademarks: they don't want another company coming around in 5 years, scooping up what's left of the stand-alone Eagle, and then starting a competing airline under the brand name 'American Eagle.' That would just be stupid.

Again - AMR/AA will do exactly what Continental did: sell all of the meat and potatoes of the regional, but retain the brand name and trademarks for their own use with contract carriers, including the spun-off, former wholly-owned subsidiary.
 
highliner2
Posts: 637
Joined: Mon Nov 20, 2000 1:26 pm

RE: AA Selling American Eagle

Thu Nov 29, 2007 1:10 am



Quoting VV701 (Reply 71):
If you read what I said very carefully you will see that I did not use the word "merger". Instead I used the word "partnership".

There are, of course many different forms of partnership. AA and BA through oneworld and their code share arrangements already have one. And LH and UA in Star Alliance have another which, unlike the AA/BA partnership, is closer with anti-trust immunity.

Of course with so many American airlines so weak that they have had to recently seek Chapter 11 protection I understand why you say what you do. But there are many different ways of addressing legal issues. And it is an unwise man who says 'never ever'.

A successful and close relationship between an American and non-American airline over a number of years that created American jobs and added to American prosperity would show whether Americans are ostriches with their heads buried in the sand - which I believe they are not - or whether they are outward looking and keen to see change that increases employment and general prosperity. Of course it may not happen, but . . .

Your original post asked why no one had responded to the post by ERJ170 which stated:

Quoting ERJ170 (Reply 9):
Perhaps AA is getting themselves more in line to make themselves prettier for BA to buy them out? BA doesn't have an owned regional airline (do they), so they could be getting themselves in the same position? Just a thought..

Buyout, merger, aquisition, whatever. Perhaps the reason no one responded is for better or worse, there's nothing to discuss. That was the source of my previous comment. Also, would someone please direct me to the evidence that foreign ownership would automatically equate to "increased employment and general prospoerity?" I'm not necessarily against the idea, but I do tire of the assumption that foreign investment will fix all the evils in the industry. And there's zero evidence that it would equate to more jobs or better wages for American workers.

As for increasing the partnership between AA and BA, I have no problems with an increase there, as you stated UA and LH have anti-trust immunity, it is somewhat curious as to why they do, and BA/AA are barred from a similiar agreement.

Cheers,
Go Cubs!
 
Cubsrule
Posts: 14232
Joined: Sat May 15, 2004 12:13 pm

RE: AA Selling American Eagle

Thu Nov 29, 2007 1:13 am



Quoting Highliner2 (Reply 80):
it is somewhat curious as to why they do, and BA/AA are barred from a similiar agreement.

It's not really curious at all... the answer to it all is LHR. ATI for AA and BA would be unfair, considering the size of their combined operations at LHR.
I can't decide whether I miss the tulip or the bowling shoe more
 
whatusaid
Posts: 576
Joined: Mon Feb 05, 2007 1:11 pm

RE: AA Selling American Eagle

Thu Nov 29, 2007 1:13 am



Quoting QXatFAT (Reply 72):

Eagle's LF out of FAT, even with the multiple code-shares, isn't that great - usually in the bottom 1/3 of the carriers in the market (right FATFlyer?) When they moved the ERJ 140's, the loads picked up, but yield wasn't sufficient to maintain the RJ's. My guess, (uh, my hope, sadly) is that the SAAB operation at LAX simply goes into the history books. With US and UA opening up more mid-sized CA markets to DEN or PHX, AA hasn't kept up with the times. And, as UAX pulls back on the EMB 120 flying, Eagle's SAAB operation just doesn't fit the needs of the market.
 
MAH4546
Posts: 25995
Joined: Wed Jan 24, 2001 1:44 pm

RE: AA Selling American Eagle

Thu Nov 29, 2007 1:16 am



Quoting AA7295 (Reply 73):
What effect will this have on oneworld.. Isn't AE and affiliate member of oneworld?

Zero effect. Consumers will never notice the changes, just like they didn't notice the changes when ExpressJet was spun off from Continental.
a.
 
eghansen
Posts: 281
Joined: Wed Nov 14, 2007 7:33 pm

RE: AA Selling American Eagle

Thu Nov 29, 2007 1:21 am



Quoting Commavia (Reply 79):
Not really. The actual trademark of the 'American Eagle' brand are pretty much worthless to American Eagle unless they are still flying for AA 10 or 20 years from now. Beyond that, they have no value, except to AMR, which is why I highly, highly doubt that AMR will give up the 'American Eagle' trademarks: they don't want another company coming around in 5 years, scooping up what's left of the stand-alone Eagle, and then starting a competing airline under the brand name 'American Eagle.' That would just be stupid.

I think that you miss the purpose of the divestiture. American has 298 MD-80s with average age of 17.8 years. These MD-80s use something like 40% more fuel per pax/mile than 737NG or A320 series. American also has 33 A300s with an average age of 18.1 years. For that matter, AA has 73 767s with an average age of 15 years. These aircraft have to be replaced or AA will simply end up shrinking dramatically in size. The cost of replacement is enormous.

AMR does not have the luxury of picking and choosing what they sell. They have to sell the parts of AMR Corporation that they can for as much money as they can possibly get. This includes trademarks. There is also talk of AMR selling the Oneworld franchise.

AMR Corporation has a very desperate future. Their pilots are demanding raises and their fleet is very old and fuel-inefficient. They need cash soon to survive.
Nowadays, it is hard to tell when the commercials end and real life begins
 
MAH4546
Posts: 25995
Joined: Wed Jan 24, 2001 1:44 pm

RE: AA Selling American Eagle

Thu Nov 29, 2007 1:23 am



Quoting Eghansen (Reply 84):

I think that you miss the purpose of the divestiture. American has 298 MD-80s with average age of 17.8 years. These MD-80s use something like 40% more fuel per pax/mile than 737NG or A320 series. American also has 33 A300s with an average age of 18.1 years. For that matter, AA has 73 767s with an average age of 15 years. These aircraft have to be replaced or AA will simply end up shrinking dramatically in size. The cost of replacement is enormous.

AMR does not have the luxury of picking and choosing what they sell. They have to sell the parts of AMR Corporation that they can for as much money as they can possibly get. This includes trademarks. There is also talk of AMR selling the Oneworld franchise.

AMR Corporation has a very desperate future. Their pilots are demanding raises and their fleet is very old and fuel-inefficient. They need cash soon to survive.

You are sounding like an AA pilot. Talk about over-exaggeration! AMR has problems to fix, but they aren't that bad.
a.
 
OBSMGR
Posts: 45
Joined: Tue Aug 28, 2007 4:40 am

RE: AA Selling American Eagle

Thu Nov 29, 2007 1:30 am



Quoting Eghansen (Reply 84):
think that you miss the purpose of the divestiture. American has 298 MD-80s with average age of 17.8 years.

Paid For.

Quoting Eghansen (Reply 84):
American also has 33 A300s with an average age of 18.1 years.

Paid For.

Quoting Eghansen (Reply 84):
AA has 73 767s with an average age of 15 years

and... Paid For.


It seems I can think of at least one other carrier in the US that operates an older fleet of PAID FOR aircraft with decent financial results on the routes they are flown on, because the ownership costs are nil.

AA also has a large fleet of 737 and 757s, which are still considered very economic aircraft to operate, (which you somehow forgot to mention) and a considerable number of 777s. Lets not be overdramatic about AA's fleet problems.
I just Googled your Yahoo :)
 
commavia
Posts: 11489
Joined: Mon Apr 25, 2005 2:30 am

RE: AA Selling American Eagle

Thu Nov 29, 2007 1:56 am



Quoting Eghansen (Reply 84):
I think that you miss the purpose of the divestiture.

No, I got the purpose just fine, trust me.

Quoting Eghansen (Reply 84):
AMR does not have the luxury of picking and choosing what they sell.

Um, yes, they do have precisely that luxury. That's what happens when you own something. You can pick and choose exactly what you want to sell based on what you can get for them.

Quoting Eghansen (Reply 84):
They have to sell the parts of AMR Corporation that they can for as much money as they can possibly get. This includes trademarks.

I guess you're still missing my point: the trademarks aren't really that valuable. You seem to think that without the 'American Eagle' trademark, the entire AMR Eagle company is worthless. That is the exact opposite of reality. 99.99% of the value of Eagle is its assets - aircraft, equipment, employees, etc. The name 'American Eagle' has virtually no value unless its attached to American Airlines, as it is closely associated with mainline as the regional feeder brand. It has been for 23 years, and that's not changing anytime soon.

As such, again, there is absolutely no way AMR will sell the 'American Eagle' brand with this spun-off company, as they'll want to keep the brand and trademarks to use in the future for the contract flying with not only the newly independent AMR Eagle, but also with future regional vendors who will also operate 'American Eagle' flights.

Quoting Eghansen (Reply 84):
There is also talk of AMR selling the Oneworld franchise.

Huh? First off, even if they wanted to, AMR couldn't sell the "oneworld franchise" as there isn't one to sell. It's not an asset to be bought, sold or traded. It's a loosely-defined alliance among various airlines around the world, all of which own a share in the little bits of firm assets the overall alliance owns through its legal unit, the oneworld Management Company. AMR owns a stake in this company, the largest of any member airline - as the stakes are determined based on the relative size of the airlines - but they couldn't just sell the company. Sure, they could sell their stake, theoretically, but why on earth would they want to do that?

Quoting Eghansen (Reply 84):
AMR Corporation has a very desperate future. Their pilots are demanding raises and their fleet is very old and fuel-inefficient. They need cash soon to survive.

Let's not be overly dramatic or anything.
 
eghansen
Posts: 281
Joined: Wed Nov 14, 2007 7:33 pm

RE: AA Selling American Eagle

Thu Nov 29, 2007 2:06 am

What follows are direct quotes from AMR Corporation's 2006 Annual report on file with the SEC. You can read this filing at http://www.sec.gov/Archives/edgar/da...13407004261/d43808ae10vkza.htm#001

As a result of significant losses in recent years, our financial condition has been materially weakened.

Although we earned a profit in 2006, we incurred significant losses in recent prior years: $892 million in 2005, $821 million in 2004, $1.3 billion in 2003, $3.5 billion in 2002 and $1.6 billion in 2001. As a result, our financial condition was materially weakened, and we remain vulnerable both to unexpected events (such as additional terrorist attacks or a sudden spike in jet fuel prices) and to general declines in the operating environment (such as that resulting from a recession or significant increased competition).

Our indebtedness and other obligations are substantial and could adversely affect our business and liquidity.

We have and will continue to have a significant amount of indebtedness and obligations to make future payments on aircraft equipment and property leases, and a high proportion of debt to equity capital. We may incur substantial additional debt, including secured debt, and lease obligations in the future. We also have substantial pension funding obligations. Our substantial indebtedness and other obligations could have important consequences. For example, they could:

- limit our ability to obtain additional financing for working capital, capital expenditures, acquisitions and general corporate purposes, or adversely affect the terms on which such financing could be obtained;

- require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness and other obligations, thereby reducing the funds available for other purposes;

- make us more vulnerable to economic downturns;

- limit our ability to withstand competitive pressures and reduce our flexibility in responding to changing business and economic conditions; or

- limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate.

We may be unable to comply with our financial covenants.

American has a fully drawn $740 million Credit Facility, which consists of a $295 million Revolving Facility with a final maturity on June 17, 2009 and a $445 million Term Loan Facility with a final maturity on December 17, 2010. The Credit Facility contains a liquidity covenant and a ratio of cash flow to fixed charges covenant. We complied with these covenants as of December 31, 2006 and expect to be able to continue to comply with these covenants. However, given fuel prices that are high by historical standards and the volatility of fuel prices and revenues, it is difficult to assess whether we will, in fact, be able to continue to comply with these covenants, and there are no assurances that we will be able to do so. Failure to comply with these covenants would result in a default under the Credit Facility which if we did not take steps to obtain a waiver of, or otherwise mitigate, the default could result in a default under a significant amount of our other debt and lease obligations, and otherwise have a material adverse impact on us.

We may need to raise additional funds to maintain sufficient liquidity, but we may be unable to do so on acceptable terms.

To maintain sufficient liquidity as we continue to implement our restructuring and cost reduction initiatives, and because we have significant debt, lease, pension and other obligations in the next several years, we may need continued access to additional funding.

Our ability to obtain future financing has been reduced because we have fewer unencumbered assets available than in years past. A very large majority of our aircraft assets (including virtually all of our aircraft eligible for the benefits of Section 1110 of the U.S. Bankruptcy Code) have been encumbered. Also, the market value of our aircraft assets has declined in recent years and those assets may not maintain their current market value.

Since the terrorist attacks of September 2001, which we refer to as the Terrorist Attacks, our credit ratings have been lowered to significantly below investment grade. These reductions have increased our borrowing costs and otherwise adversely affected borrowing terms, and limited borrowing options. Additional reductions in our credit ratings could further increase borrowing or other costs and further restrict the availability of future financing.

A number of other factors, including our financial results in recent years, our substantial indebtedness, the difficult revenue environment we face, our reduced credit ratings, high fuel prices, and the financial difficulties experienced in the airline industry, adversely affect the availability and terms of financing for us. As a result, there can be no assurance that financing will be available to us on acceptable terms, if at all. An inability to obtain additional financing on acceptable terms could have a material adverse impact on us and on our ability to sustain our operations over the long term.

******* (End of 2006 Annual Report)

To summarize:

American's "ability to obtain future financing has been reduced because we have fewer unencumbered assets available than in years past. ... A very large majority of our aircraft assets have been encumbered." ("encumbered" means mortgaged)

American's credit rating is "significantly below investment grade"

American's total assets (as of 30-jun-07) is $30,410,000,000. Total liabilities (debt) $29,800,000,000. Total stockholder equity $610,000,000. Total net tangible assets ($560,000,000). Parentheses means negative territory.

To translate for those who do not have a BS in Accounting (as I do), AMR Corporation has mortgaged everything it has, is currently not in good enough shape to obtain future credit, its stock is trading at a PE ratio of 10.48 versus about 17 for the S&P 500.

American needs money badly or it does not have much of a future.
Nowadays, it is hard to tell when the commercials end and real life begins
 
commavia
Posts: 11489
Joined: Mon Apr 25, 2005 2:30 am

RE: AA Selling American Eagle

Thu Nov 29, 2007 2:15 am



Quoting Eghansen (Reply 88):
American's "ability to obtain future financing has been reduced because we have fewer unencumbered assets available than in years past. ... A very large majority of our aircraft assets have been encumbered."

AMR has just secured a financial transaction to bring back some of its planes that were previously encumbered after refinancing and prepaying a major debt facility. This has been happening frequently over the last 18-24 months: AMR has been paying down debt, proactively, and reducing its interest expenses.

Quoting Eghansen (Reply 88):
("encumbered" means mortgaged)

Thanks for clearing that up.  sarcastic 

Quoting Eghansen (Reply 88):
American needs money badly or it does not have much of a future.

Have you ever heard of "conservatism?" It is one of the underlying principles of modern financial accounting, and it holds that accountants should always be conservative with their financial and operational assessments of a corporation's financial outlook so as not to materially mislead any potential investor. In other words, accountants are trained to under-promise and over-deliver, or put another way: to under-value and over-perform.

Of course AMR says that it needs money, it's debt is below investment-grade, etc. That is all true. And it is the fiduciary responsibility of AMR, its leadership and its accountants to say as much as so as to give the most conservative "worst case" picture to potential investors. However, AMR is hardly going bankrupt tomorrow. They are steadily reducing debt - it has dropped by one third in less than four years - and they are getting more and more aircraft back from encumbered financing and credit facilities that were issued after 9/11.
 
vv701
Posts: 5895
Joined: Fri Aug 19, 2005 10:54 am

RE: AA Selling American Eagle

Thu Nov 29, 2007 2:18 am



Quoting Highliner2 (Reply 80):
Buyout, merger, aquisition, whatever. Perhaps the reason no one responded is for better or worse, there's nothing to discuss. That was the source of my previous comment. Also, would someone please direct me to the evidence that foreign ownership would automatically equate to "increased employment and general prospoerity?" I'm not necessarily against the idea, but I do tire of the assumption that foreign investment will fix all the evils in the industry. And there's zero evidence that it would equate to more jobs or better wages for American workers.

Foreign ownership no more automatically equates to increased employment and general prosperity than does domestic ownership. However foreign ownership in this case would require inward investment into the American economy. This is particularly valuable for a country that is running a large balance of trade deficit.

From a personal perspective I am now retired. During my working life I was always based in the UK. But my lifetime employment was for two large, blue chip American corporations both of whom had and still have both manufacturing facilities and R&D facilities in the UK. These facilities created and still create wealth for their British employees and the British population as a whole. The inward investment by these corporations over many years has directly benefited the British economy.

In terms of commercial aviation, BA is the world's most profitable airline. Its current and most recent CEOs were Irish and Australian nationals. Clearly they have as individuals contributed substantially to the success of BA. This has been to the benefit of the UK economy in terms of employment and in terms of taxation. This could not happen in the USA because of American law. Further BA is more than 40 per cent foreign owned, mainly by American institutions and individuals. This inward investment benefits the British economy and offsets some of our balance of payments deficit.

The other major scheduled British airlines are VS, 49 per cent owned by Singapore Airlines, and BD, 20 per cent owned by SK and 30 per cent owned by LH. This inward investment has contributed to their success and to the prosperity of their employees. Further these airlines are profitable and so contribute taxes to the British exchequer to the benefit of the British economy.

BAA is 100 per cent Spanish owned. Again the inward investment is valuable to the British economy.

All these British companies are subject to British commercial and aviation law. Their activities are supervised and effectively controlled by the CAA just as the equivalent American companies activities are overseen by the FAA.

So in America the commercial aviation industry is managed by the best American managers in the industry while here in the UK we can choose from the best in the world. In America your airline industry is limited in its sources of investment. Here in the UK our industry is not. So in times like the present when there is a shortage of available funding in the USA an airline looking to expand and requiring equity investment might find it has to postpone its expansion until liquidity in the American market improves. With a change in airline investment laws this would not be the case. New jobs could be created or existing jobs saved with equity raised in alternative markets. But this cannot happen in the USA and the financial problems caused by falling local real estate prices and the sub-prime mortgage market could wash through to jobs lost in the American airline industry particularly as it can be expected that many Americans will be less inclined to travel.

In the USA one of the most global industries in an increasingly globalised world - commercial aviation - has a parochial approach so everyone from unions to senators gets upset if any foreigner comes along and says that that airline looks like a good airline and offers to invest in it or manage it.

No foreign ownership or foreign management is certainly not a panacea for all ills. But neither is artificially restricting your investment sources and your choice of management a guaranteed road to success.
 
aal0616
Posts: 217
Joined: Thu Jul 13, 2006 1:16 am

RE: AA Selling American Eagle

Thu Nov 29, 2007 2:30 am

Quoting Eghansen (Reply 84):
AMR Corporation has a very desperate future. Their pilots are demanding raises and their fleet is very old and fuel-inefficient. They need cash soon to survive.



Quoting MAH4546 (Reply 85):
You are sounding like an AA pilot. Talk about over-exaggeration! AMR has problems to fix, but they aren't that bad.

The position of the company relative to its competitors is not desperate at all. Divesting Eagle is a logical strategic decision. As Mark points out, if this occurs, customers will indeed see something akin to Continental and Express Jet. Everyone is speculating which regional vendors will fly larger aircraft for AMR into its hubs and/or LAX. You might see, rather, a model more like Continental, with essentially one dedicated regional partner, or perhaps Delta, with a dominant formerly-owned partner and several smaller, market targeted participants, However, not the "quilt" of partners you see at United or US Airways.

You would be correct to surmise that both the RJ USA certificate and the ATR SJU-MIA certificate are proposed to go with the divestiture. It would be premature to guess if or when larger lift with E-170, E-190, etc. equipment is arranged for MIA and elsewhere. It is conceivable that the independent Eagle would be able to obtain these in any deal for a divestiture, contingent upon and tied to a mainline AAL pilot contract (but don't hold your breath). Any perceived transfer of flying to the larger "RJs" is of course despised by AAL flyers. However, given the dynamics of the company, its current equipment, route structure and needs, additional Eagle or other regional services or enhanced aircraft really would be an expansion rather than contraction. So many mainline routes today suffer from lack of capacity, that is, MD-80s flying what can easily can be, or actually were, B-757-sized runs.

Not everyone at AAL is irrevocably angry or embittered. Skeptical, or been-there-done-that, you can't fool me, yes, of course. A pilot with a B. S. degree, who has some knowledge of finance and investments thanks to the good fortune of having a nice income to invest, even if their pay has been diminished by givebacks the past years, can logically ascertain what are sound, constructive moves for AMR as the corporation moves forward. Folks do want AAL to prosper and grow, and of course themselves with it, in what they perceive is a fair deal. It is good to have a great job. Who wants to be a latter-day Charlie Bryan-led EAL brother or sister?

There is a method and plan to what AMR is doing. Nurturing and growing the MIA hub is one of the priorities. Just wait and see. The gas guzzlers will be phased out on a logical and already projected basis. Also, AMR has cash on hand. It will work to satisfy the credit markets, make labor peace and plunge ahead. Perhaps with BA. We will see.

Barring a domestic legacy merger, which is highly unlikely to zero possibility for AMR, floating the idea of an Eagle divestiture does open up for discussion what next steps will be taken and strategies followed. One might still expect with some cause for optimism that by their sixtieth birthday, they might be happily seated in the left seat on the flight deck of a 787 (although there is nothing at all bad about a 777). Well, one can dream.

There may be much to look forward to soon, for both AAL customers and employees.

[Edited 2007-11-28 18:39:22]
 
aaway
Posts: 1400
Joined: Tue Oct 21, 2003 2:07 am

RE: AA Selling American Eagle

Thu Nov 29, 2007 2:49 am



Quoting Mcdu (Reply 14):
The downside to the sell off is that AE could find itself broken up into several different carriers, much like the roots from which it arose. There could be several of the current regional players making bids for certain hub assets. This is just and example but you might see a company like Skywest bidding on the DFW ops. Republic/CHQ bidding on ORD and other companies seeking MIA and JFK. IMHO, I don't think there is any of the current carriers that want the entire operation. To keep it intact it will take a considerable amount of cash and not too sure someone really wants that type of out lay in expenses.

Tend to agree here, which is why I believe this transaction, if consummated, is more than just a response to shareholders. Of the 284 AMR-owned Eagle planes, 206 are marginal performers based upon their unit costs, and another 53 (props) occupy a strata that AMR stated back in '03/'04 it wanted to exit.

Essentially, AMR was looking down the holes of a double-barrelled shotgun. Most of the AMR related discussions on this board revolve around AA's need for fleet upgrade. AE is in the same position.

The capital expenditure necessary to upgrade both AA and AE would be immense, even If the contracts - particularly APA - were settled amicably, and favored AMR economically and operationally.
"The greatest mistake you can make in life is to continually be afraid you will make one." - Elbert Hubbard
 
aaway
Posts: 1400
Joined: Tue Oct 21, 2003 2:07 am

RE: AA Selling American Eagle

Thu Nov 29, 2007 3:09 am



Quoting WhatUsaid (Reply 82):
Eagle's LF out of FAT, even with the multiple code-shares, isn't that great - usually in the bottom 1/3 of the carriers in the market (right FATFlyer?) When they moved the ERJ 140's, the loads picked up, but yield wasn't sufficient to maintain the RJ's. My guess, (uh, my hope, sadly) is that the SAAB operation at LAX simply goes into the history books. With US and UA opening up more mid-sized CA markets to DEN or PHX, AA hasn't kept up with the times. And, as UAX pulls back on the EMB 120 flying, Eagle's SAAB operation just doesn't fit the needs of the market.

Yes, its unfortunate that both AA and UA have priced the point-to-point intra-California prop flying into oblivion - that's what kills the yields. However, I believe there still is a place for AA branded prop flying within California. It will just take the form of a different (more economical) model to maintain the presence.
"The greatest mistake you can make in life is to continually be afraid you will make one." - Elbert Hubbard
 
commavia
Posts: 11489
Joined: Mon Apr 25, 2005 2:30 am

RE: AA Selling American Eagle

Thu Nov 29, 2007 3:11 am



Quoting Aaway (Reply 93):
Yes, its unfortunate that both AA and UA have priced the point-to-point intra-California prop flying into oblivion - that's what kills the yields. However, I believe there still is a place for AA branded prop flying within California. It will just take the form of a different (more economical) model to maintain the presence.

I think Horizon might be the answer. There were rumors a few months back about AA maybe shifting all of their LAX feed over the Horizon turboprops and jets, which would probably have lower operating costs, and certainly deliver a nicer overall flying experience than, say, the SAABs.
 
aaway
Posts: 1400
Joined: Tue Oct 21, 2003 2:07 am

RE: AA Selling American Eagle

Thu Nov 29, 2007 3:36 am



Quoting Commavia (Reply 94):
I think Horizon might be the answer. There were rumors a few months back about AA maybe shifting all of their LAX feed over the Horizon turboprops and jets, which would probably have lower operating costs, and certainly deliver a nicer overall flying experience than, say, the SAABs.

I had been planning on starting an AE/LAX rumors thread, but the news of a possible divestiture is more encompassing. Regarding QX, apparently QX staffers from SEA were at the AE satellite recently measuring the facility. Of course, one rumor is the possible intra-CA service transition of AE to QX. The other rumor was that AE had submitted a bid to perform QX ground handling at LAX. QX is supposedly having issues with AS and Menzies - will try to get more info.

Two problems I have with QX assuming AE service x-LAX: (1) Will have to confirm, but supposedly QX's operating costs are on par with Eagle. (2) Q-400 capacity is too large for intra-CA. QX is retiring the Q-200, and I don't really see them having an interest in an aged subfleet of SAABs.
"The greatest mistake you can make in life is to continually be afraid you will make one." - Elbert Hubbard
 
commavia
Posts: 11489
Joined: Mon Apr 25, 2005 2:30 am

RE: AA Selling American Eagle

Thu Nov 29, 2007 3:41 am



Quoting Aaway (Reply 95):
(1) Will have to confirm, but supposedly QX's operating costs are on par with Eagle

Wouldn't be surprised, although, given the same costs - would you rather be putting passengers on brand new Q400s or 15-year-old SAABs?

Quoting Aaway (Reply 95):
Q-400 capacity is too large for intra-CA. QX is retiring the Q-200, and I don't really see them having an interest in an aged subfleet of SAABs

A fair point. No, I doubt they'd take the SAABs either. And they could just cut frequency to make up the capacity difference, but that would me making some stations so small they likely wouldn't be worth it anymore - MRY from 4 dailies down to 2, or SBP from 5 to 3, etc.

It sure would be awful weird to not see Eagle SAABs at LAX anymore - they've been a staple there for as long as I can remember.
 
jacobin777
Posts: 12262
Joined: Sat Sep 11, 2004 6:29 pm

RE: AA Selling American Eagle

Thu Nov 29, 2007 4:41 am



Quoting RFields5421 (Reply 74):
Quoting Jacobin777 (Reply 15):
For the umpteenth time, its the AMR board which decides bonuses...Arpey can only negotiate for his salary, stock options and bonuses....

Yes, but the board does not operate independent of the CEO's input - from company direction to compensation.

It's a dirty little secret in corporate America how CEO's work to pick board members for the compensation committee and pad their salaries with so called competitive comparisons.

...its common knowledge that many of the board members are in co-hoots with management...however, to say that Arpey is going to cut a bonus check to himself and his management is a bunch of baloney.....

The board still allow won't Arpey do that... no 

Quoting RFields5421 (Reply 74):
The only way to change such an incestuous system is for independent investors to gain a significant majority of the company shares and force their own directors onto the board.

....according to Yahoo Finance, approximately 67% of AMR stock is held by funds, ect...which means they do indeed have the power to have board members removed.....

Quoting RFields5421 (Reply 74):

I'm sure Arpey and his team have poison pill contracts like most CEO's which will guarantee them very large separation awards if board members they do not like gain power.

....the airline industry never really had "poison pill", termination, etc. contracts...though IIRC, Tilton got a pretty good deal recently...

Quoting Eghansen (Reply 88):
American's "ability to obtain future financing has been reduced because we have fewer unencumbered assets available than in years past. ... A very large majority of our aircraft assets have been encumbered." ("encumbered" means mortgaged)

.... confused 

Quoting Eghansen (Reply 88):
American's credit rating is "significantly below investment grade"

.. whistleblower ...first of all AMR's bonds were upgraded by S&P (ok, not investment grade)...and AMR's bonds are doing better than bonds for other air carriers...

Even if AMR's bonds are below investment grade...so what? It was that way back in 1990,1993, ect. Premium basis points are more for the bonds but as long as AMR isn't defaulting then there isn't a problem.. no 

Quoting Eghansen (Reply 88):
American's total assets (as of 30-jun-07) is $30,410,000,000. Total liabilities (debt) $29,800,000,000. Total stockholder equity $610,000,000. Total net tangible assets ($560,000,000). Parentheses means negative territory.

..so what? A lot of companies are leveraged to the hilt....the bottom line is is AMR cash-flow positive, pay its bills and have cash at hand...last I recall, AMR has gets a  checkmark  on all three.
"Up the Irons!"
 
apodino
Posts: 3652
Joined: Mon Apr 04, 2005 2:11 am

RE: AA Selling American Eagle

Thu Nov 29, 2007 5:01 am

The timing of this is very interesting. I have read lots of posts stating something about bigger jets and pilots relaxing scope clause. I find it very interesting that this announcement comes right when the Pilot Contract negotiations are heating up. I don't know exactly what this means, but look for AA to seek scope relief in the new contract, which would allow whatever airline acquires eagle to add 70 seaters, which would make me think that AA wants the players in such a deal to be Republic Air Group, SkyWest, Mesa, and the usual suspects. If they don't get scope relief, look for Eastshore Aviation to become a player. They are affiliated with Air Wisconsin, and may even be the parent company but no one knows the ownership structure, and Air Wisconsin has been unable to grow. Yes this would be a lot of extra 50 seat flying, and most of it would be ERJ's, but given the companies position, I think they would be one of the few parties that would be interested in taking on a bunch of 50 seaters, if nothing else than to grow the company, where no one else wants to grow on the 50 seat side much anymore. Also, if this were to happen, look for Eastshore to dump some ERJ's, on possibly Chautauqua, and move US 50 seaters to AA and then replace them on US with bigger airplanes. In fact, I could see Chautauqua going back to an all ERJ fleet, and Air Wisconsin taking all the 50 seaters from them, and it would help both companies a lot.

But still, I can't help but think this announcement coming now is not unrelated to pilot negotiations.
 
aaway
Posts: 1400
Joined: Tue Oct 21, 2003 2:07 am

RE: AA Selling American Eagle

Thu Nov 29, 2007 5:21 am



Quoting Commavia (Reply 96):
A fair point. No, I doubt they'd take the SAABs either. And they could just cut frequency to make up the capacity difference, but that would me making some stations so small they likely wouldn't be worth it anymore - MRY from 4 dailies down to 2, or SBP from 5 to 3, etc.

Certainly wouldn't be viable from an AA marketing perspective...business oriented, high frequency, etc, etc. Then again, it appears that current SAAB markets are already under threat - 14 SAABS off lease this year, and 8 more next year. There hasn't been any news of lease renewals - the remaining fleet of operating SAABs will number 14 by y/e 2008.

Being 300 odd miles from Vegas, I'm betting on a carve out of the SAAB operation (DFW and LAX), with Colgan assuming that portion of the business.
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