Originally Posted by
Rightseat Ballast
My opinion:
AE will be spun off to the stockholders. No one can afford to buy them outright, nor would anyone want to inherit such a large and expensive labor pool or a large fleet of aircraft with diminishing economics.
AE will strike a deal with AMR to maintain the current work load for 3-5 years. AE will be compensated per block hour or per departure at a reduced rate. This rate will be higher than the rate other regionals could fly at, but it will be a savings to AMR. Also, this will protect the continuity and quality of service for AMR. No one or even combination of regional carriers could assume the workload AE currently flies for years to come. That is a lot of aircraft and infrastructure to pull out of nowhere. After the 3-5 year period, AE will have the flying put out for bidding, but even then AMR can only afford to give away so much AE flying at a time. Just look at the cluster CAL created by spinning 44 aircraft lines from Xjet to CHQ. Any reduction in flying at Eagle will be slow and measured.
Some possible hiccups as far as the Eagle pilot group that I could forsee:
AE (once on its own) could sell off some assets, such as the Executive certificate, as a fund raiser. This is a clean way to offload aircraft and pilots at the same time. Or, AE could sell off a few aircraft at a time. Other nations are still trying RJs and used props. In all, I see eagle slowly becoming a pre-CHQ Xjet... a stand-alone company that eats off of one plate, just for a little less than before. Over time, it may see some of its flying auctioned off, but that is years down the road. As long as AMR gets the same Eagle product for a reduced cost (which can still be profitable for Eagle), then things will be pretty stable and unremarkable.
BINGO,we have a winner.... I was going to post some long and rambling thoughts, on this scenario myself, but you pretty much took the words out of my mouth.
Like us here at XJT, AE will either adapt, or slowly atrophy and die. However any major changes will likely be gradual. Nobody will win if AMR chops Eagle off at the knees, and brings in a handfull of various low bidders, overnight; not Eagle, Not American, not AMR shareholders, not the employees.
The jury is still out for another 3-5 years on how this thing will really pan out for Express Jet. There are lots of risks. The status quo is no longer a viable option, if we are going to suceed long term. That being said, I think we have a good team over here. We still have significant resources, and no one is going to roll over and play dead. The burning question/concern in my mind is, what are the true break even economics of 50 seat Regional Jets in stand alone service, with $100/barrel oil, even for a well run operation?
Diversification of revenue streams is critical. Branded service is a huge part of this. Hopefully, with big risks will come big rewards. History has not been kind to start up airlines since deregulation, but this spin off of existing, fairly well capitalized operations, is pretty much uncharted territory. Stay tuned...