American to sell American Eagle

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11-28-2007, 03:10 PM
T-Bird76

American to sell American Eagle

What looks to be a very Expressjet type of move American is planning on divesting itself of Eagle.

Quote:

AP
AMR Plans to Divest American Eagle
Wednesday November 28, 2:19 pm ET
AMR Plans to Divest American Eagle Via Sale or Spin-Off in 2008, Supporting Street Speculation

FORT WORTH, Texas (AP) -- AMR Corp. said Wednesday it plans to divest its American Eagle regional carrier in a sale or spinoff next year, supporting Wall Street speculation that major airlines will sell assets to streamline their businesses and gain capital.
AMR said the divestiture will allow it to focus on its mainline American Airlines business while ensuring access to a cost-competitive regional carrier. It expects to enter a "mutually beneficial" air services agreement under which American Eagle will continue to operate flights for AMR.

American Eagle operates about 300 aircraft, with approximately 1,700 daily flights to more than 150 cities in North America and the Caribbean. In 2007, American Eagle expects to generate annual revenues of about $2.3 billion.

"We have worked hard over the years to build a regional airline that is fully capable of standing on its own and is well positioned to pursue growth opportunities outside of the AMR corporate structure," AMR Chief Executive Gerald Arpey said in a statement.

In October, Chief Financial Officer Tom Horton listed several assets that the company was considering divestitures for in a conference call. The list included American Eagle, AMR's American Beacon Advisors investment arm, its maintenance and repair business and its AAdvantage frequent-flyer program, each of which have been valued at several billion dollars by analysts.

AMR shares rose $1.09, or 5.3 percent, to $21.65 in afternoon trading.
11-28-2007, 04:49 PM
JetBlueAirwaysFan

Re: AA to sell AE

I heard about this, but didn't know they were this serious.
11-28-2007, 04:49 PM
adam613

Re: AA to sell AE

Independence Air, Take 2...
11-28-2007, 05:05 PM
T-Bird76

Re: AA to sell AE

Quote:

Originally Posted by adam613

Independence Air, Take 2...

I doubt it very much, not even the same situation. Indy was already a stand alone carrier named ACA, they operated as a regional carrier for UAL. When UAL filed Chap 11 they wanted to change the ACA contract and ACA took a gamble that UAL would go under and that Indy Air could take over IAD using CRJs....we saw how that went. AA still needs AE as its regional feed. However that doesn't mean AA won't look at its connection partner Trans States to expand outside of STL and begin more flights out of DFW. AA can also look at other regional airlines now to fulfill its lift requirements from Republic, Skywest, Mesa...and the list of others. This is exactly what CO did with Expressjet, they divested it and began using other regional players beside Expressjet.

Expressjet did sort of an Indyescpe type of thing where they began flying under their own brand basically to use the 60 extra jets they had. However Expressjet still does fly for CO and now they also fly for DAL, so they didn't totally do an Indy thing. AE more then likely will remain the dominant regional airline for AA. When you start contracting out lift you run into customer service issues and controls that get overlooked. AA knows it can't allow that to happen.