Originally Posted by cf105

First of all, Envoy/PSA/Piedmont profits don't go into AA'a profit. They are independent companies that belong to the same financial group.
They most certainly do. It is part of what makes having a WO regional so alluring.

If there was a very distinct advantage resulting in more profit making making results for AAG, they would not still be using 6 non-wholly-owned in 2018, and they are. They wouldn't be shifting flying back and forth between some of their WOs and non-WOs, and they still do.
They can’t instantaeously wind down non-WO regional carriers. The way the market is now we are seeing unprecedented moves made by many of the LCCs and ACMI carriers to secure pilot feed. Look at Kalitta and the ExpressJet pilots for reference. The second it is announced that they are transferring/shifting flying the regional losing said flying will implode rapidly. It is a pilot’s market and there are plenty of jobs out there. Just because it hasn’t happened yet doesn’t mean it won’t. AA has been following through on just about everything they’ve stated they want to do in the past 5 years. They have stated that they want 3 WO carriers and 2 contract carriers. Why would that magically change just because the full timeline for this reduction in contract carriers hasn’t been completed yet? In regards to the shifting in flying, most of what you’re seeing is CRJ700s to PSA so they can operate an all-CRJ fleet and Envoy can operate an all-ERJ fleet. And Piedmont is getting 145s to replace the D8s and pickup the 50-seat flying all along the smaller but lucrative east coast markets.
Contracting airlines has a huge benefit: keep your profit making structure while not having to deal with all the hassle/problems that comes with operational cost, payroll and HR.
This isn’t a wrong point, but it isn’t entirely accurate. The downside to using contract carriers comes from 2 big things: 1) You have far less control over your product and the woes that may or may not affect the contract regional and 2) you must now split any profits with the contract carrier as opposed to keeping all the profits for yourself. Here is the upside to having a couple of larger contract regionals: You don’t have to pay for and maintain the certification and training standards for specific flight ops. And by that I mean Aspen flying and over-water Caribbean flying. Why spend the money to have your WOs trained and certified when you can pay a marginal fee to have your contract carrier who already happens to maintain those training and certification standards to do it?