American Eagle


American Eagle’s Future Likely to Be Decided in 2013, CEO Says
By Tim Catts and Mary Schlangenstein
February 15, 2013 12:00 AM EST

AMR Corp.’s $11 billion merger with US Airways Group Inc. will prompt a review of regional airline American Eagle’s fate, with a spinoff possible as soon as this year, the unit’s chief executive officer said.
“That is my hope and anticipation, but I completely understand the need to take a fresh look at it,” American Eagle CEO Dan Garton said of a potential spinoff in a telephone interview yesterday. “We’re going to go through a review of that strategy with our new partners, creating an agreed-upon, unified regional feed strategy.”
American Eagle, which ferries travelers to and from hub airports and provides more than 90 percent of American Airlines’ passenger feed, may also get larger regional jets that are more profitable to fly after the review concludes, Garton said. Even if it isn’t spun off, the carrier could benefit by transporting more passengers into a larger network of hubs under the combined American-US Airways, he said.
The regional carrier’s future hasn’t been decided, US Airways CEO Doug Parker, who will lead the post-merger company, said yesterday. While the combined airline will “need Eagle’s feed” of passengers, Parker said he didn’t know whether the regional carrier will remain a unit or be divested.
US Airways, based in Tempe, Arizona, owns two regional partners, Piedmont Airlines and PSA Airlines, that fly under the US Airways Express name.
AMR, based in Fort Worth, Texas, was close to spinning off Eagle before its Nov. 29, 2011, bankruptcy filing disrupted that process. American wanted to divest its partner so it could secure cheaper rates from other regional carriers.
About 80 percent of Eagle’s fleet is made up of planes with 50 or fewer seats that are costly to fly at high jet-fuel prices and not favored by passengers. Until AMR’s bankruptcy filing, the regional unit was limited to flying 47 jets with more than 65 seats.
“An acquisition of regional jets for Eagle to fly is something I’d see as very much front and center in terms of one of the first priority,” Garton said. “It’s certainly a first priority for Eagle and I hope it’s a first priority for the merged entity.”
Eagle flies a mix of regional jets from Bombardier Inc. and Embraer SA, according to American’s website.
Unions representing Eagle’s pilots, flight attendants, mechanics, baggage handlers and other airport ground workers last week asked the bankruptcy court to block a 12-year contract American announced on Jan. 24 for Republic Airways Holdings Inc. to operate 53 Embraer regional jets with 76 seats each.
AMR CEO Tom Horton said yesterday that he wasn’t sure whether the Republic contract would remain in place under the merged company.
The agreement “would severely divert the flying of large regional jets to a competitor and would needlessly undermine the value of American Eagle, threatening the livelihood of Eagle’s pilots and other employees,” the Air Line Pilots Association said in its court filing.
The larger Republic planes would let American better match aircraft size to market demand and diversify its regional feed, American said. In September, American signed a contract with SkyWest Inc. to operate 23 Bombardier CRJ200 regional jets under the Eagle name.
“As we are looking to do deals with third-party providers and diversify our feed, we absolutely believe Eagle, in whatever form, will be a part of our regional feed going forward as well,” Chuck Schubert, American’s vice president for network and planning, said in an interview before the merger agreement.
To contact the reporters on this story: Tim Catts in New York at [email protected]; Mary Schlangenstein in Dallas at [email protected].
To contact the editor responsible for this story: Ed Dufner at [email protected].

 

All bets are off

 

Alpa vs mainline lawyers? Ill take 1k on the mainline guys.....

 

I think that this has to do more with the value of AMR as a whole rather than just the unions. Some analyst said that this deal (RAH Contract) was done to devalue Eagle and thus devaluing AMR as a whole and possibly trowing a monkey wrench on the merger, complicating things as the current AMR management new that if the merger happened... Actually lets call it what it is, US Airways management is acquiring AMR and most of the current AMR managers will see the door by next summer. But anyhow, I don't have the quotes in front of me but the UCC were not happy about the contract as it diminished the value of the corporation. There is a big difference between value and who can do it cheaper and this merger was an all stock transaction so it will be interesting to see what comes out of it.

Management was quoted as saying we have to start from a blank sheet when it comes to regional feed, this can mean whatever as it was so vague. The RAH contract hearing was pushed two weeks, it was originally scheduled for yesterday and we know that was a big day for AMR so it could mean they wanted all hands on deck for the merger or they wanted sometime to re arrange pieces.

RAH is willing to do it cheaper and absorb all the risk, so I can't blame management. I am not getting my hope up for this not happening as they have said they want to diversify the feed but US already has that. It will be interesting on what happens moving forward but this is one of the reason making lateral moves in the regional industry is not a good idea.

**Update

The key players when it comes to court where in NY because the 14 Feb hearing went on as initially scheduled but the RAH contract was pushed two weeks. Upper AMR management, top attorneys and representatives from AMR and UCC where in attendance. Later most of the people involved with AMR got on a flight to be in DFW by the 1 pm employees Q&A. So maybe there are legs to this whole RAH Contract and devaluing of AMR, I mean soon to be called American Airlines Group!

 

Well that doesn't mean much considering he won't be CEO for long. Parker is for the Republic deal.

 

This deal was made with the merger in mind. If republic loses the contract, it will not be due to the merger. Someone will have to convince the judge it will have a negative impact on the restructuring.

 

This has to do with the creditors not the judge!

 

Lol..

Message filler for required length.

 

Not just the creditors. The landscape has changed now that both BOD's and the creditors have green lighted the merger and previous to that many members of the AMR BOD were still behind Horton. Now a new BOD is being formed and a new leader is charting the course. Previously, the U board had no real say in what AA should do and neither did Parker for the most part as the merger could have fallen through. Now that's changed and a re-evaluation is prudent for all parties going forward as one POR is shelved and another becomes the future.

It will be Parker and his team that will determine how the regionals play in AA's future and that includes Eagle. The most important and perhaps only true statement right now is that they will concentrate initially on the core mainlines future makeup and then only can they determine the role of the regionals as an group and then from there individually as part of that group.

"American Airlines Group" is AA and the American Eagle BRAND, not necessarily the current American Eagle carrier or any one or more of the US Airways Express carriers. The regional decisions will have to come later, however I would assume a commitment needs to be made for RAH or not considering what they have to do to secure those aircraft and ramp up staff (if they can). Remember that Parker already has the E-190 in operation and it is VERY likely that aircraft will play a MAJOR role in AA's future especially considering its negotiated labor cost structure. Hortons plan may not have figured that aircraft as much and had a larger role for the regionals and now that may be reversed to some degree.

First things first.

Still, what IS an almost certainty coming forward for the future AA regionals is a very competitive labor cost structure, espcially pilots. I think it certain that the days of the $100-140,000/year captain flying 64-76 seat jets will come to a fast close. Considering they can put a $110,000/year captain and a $40-60/hour F/O in an E-190 at AA and spread that equal or in many cases cheaper pilot cost over and additional 25-30 seats of revenue, that will be a big deal. Yes, there will be markets and frequencies that 64-76/seat RJ's will serve in the future (along with even smaller aircraft) that are not right for 100-110 seat E-190/195 type aircraft, but the economics may favor more expansion of the bottom end aircraft at mainline vs. top end at regionals.

Additionally, it's always nice to pocket ALL the profit instead of having to carve some of that away for the feed provider's profits. I'm sure there is a lot of work to be done over the next 6 months on the POR, both mainline and regional.

 

I agree, but the American Eagle Airlines (soon to be renamed) PSA and Piedmont as of today will be part of the American Airlines Group as they will be subsidiaries of AAG or of AA. Currently American Airlines and American Eagle Airlines are both subsidiaries of AMR Corp, but we will see how they structure it moving foreword. I am not sure if you meant to say the brand was part of AAG and not the regionals, if this was is not correct as the regionals fall under the umbrella somehow, everyone else in the game is a outside contract. And yes I know in all scheme of things all regionals are contractors but I hope you get my point. But I do agree with you!