CrustyFE

CAL did but XJT kept the aircraft.

Mason32

American Eagle exists in large part as a wholly owned airline as a vehicle by which AMR may shuffle money around to/from AA and AE as needed. If Eagle were to be divested with just a CPA there would be no way to continue shuffling money around... it woudl all be one way only, from AA to Eagle. By moving the equipment to AA/AMR and leasing it back to Eagle, they will be able to keep their money shuffle alive with perpetual renegotiation of leases...

The Eagle ATR's were sold well over a year and a half ago to an outside company for leaseback...

No real news here.

swaayze

A divested Eagle would simply be a flight crew staffing company. Airplanes retained by AMR and put up for bid as the flying comes up for bid. Not a big deal really, as owning the airplanes has its own set of problems (see XJT when CAL cut a huge portion of their flying).

Jetlinker

Guys, this is exactly what happened to us at XJT back in '02. After the spinoff, CAL still held the leases on all the ERJ's, and they still do to this very day. My concern for you is that after you are divested, AMR may try to do the same thing that CAL did to us. They may say you guys are too expensive, threaten to pull the aircraft that they hold the leases to, put flying out for bid, and jam a cut rate CPA down your throat that will leave Eagle running on a shoestring budget. It sucks, and I truly hope you guys can avoid that path.

buddies8

thats what they are trying before the divestitue.

Nevets

Yes, CAL wrote a cost plus CPA with many restrictions and then XJT was IPOd. XJT sub-leased the aircraft from CAL.

CAL leases those aircraft and sub-leases them to XJT. The CPA governs who operates those aircraft.

PurdueFlyer

AMR isn't going to spin off Eagle to AMR shareholders and then put Eagle in a position to be liquidated. The shareholders would be livid as their stock of little value would become zero.

AMR is doing the same thing CAL did to XJet. By controlling the leases on the aircraft they can continue to squeeze money out of Eagle and use the threat of whipsaw against the company by threatening to give the planes to someone else. Although the ERJs and ATRs don't have much value (CRJs are a different story), they are still worth more than 0 and AMR will get every last penny out of them that they can.

The divestiture, if it happens, is going to be very vanilla. Probably a 3-5 year CPA with the current fleet or close to the current fleet size followed by the flying being put up to bid. Then Eagle will have to compete with RAH inc., SkyWest Inc., TSH, etc. for remaining 50 seat feed that AMR decides to rebid. It'll probably be less than what they have today.

Like every regional, Eagle will have to compete for a greatly reduced demand for 50 seater with other carriers desperate to keep aircraft flying. It is going to be an absolute blood bath for the regionals and mainline management's wet dream. These aircraft will be flown close to cost because all these regional carriers saw what happened to Mesa when they couldn't keep aircraft flying. They will of course come to us and demand pay cuts but in the end it won't make much of a difference because the economics of the 50 seat jet have been destroyed by the high cost of oil. There are simply too few routes that these things now work on and way too many aircraft in the market. The bubble is ready to pop.

Just pray to god that our mainline brothers and sisters don't relax scope anymore or don't have it taken away anymore then that way we'll all have a shot at having a career.

swaayze

Got it, but wasn't that part of the big problem leading to the branded flying: that XJT was on the hook (perhaps not owned but under lease) for a bunch of airplanes for a period of time but with CAL flying pulled from them?

I would hope Eagle would not sign leases for them for a period of time exceeding any CPA they're associated with.

buddies8

AE mgt will sign any CPA AA mgt tell them. Why because AE senior mgt are AA mgt and work, get paid, retirement from and bonuses come from AA for the senior AE mgt. So I do expect a bs CPA if divested. The divestiture is a squeeze also on the ALPA MEC at AE. Being the fact that they (MEC) have shown that they will sell there sole for almost nothing in return. I expect the mec to try some more maneuvering to get PBS and some enhanced efficiencies ( pay cuts and more watered down contract) to make mgt happy.

blastoff

That's not how the leases work.

When CAL pulled the 69 A/C from the XJT CPA, XJT had the option to return the A/C to CAL and terminate the leases. CAL had planned on XJT giving the 69 airframes back and was going to turn around and sub-lease them to CHQ. XJT said "screw that" and started Branded and later Delta Connection flying in LAX. This is why CHQ started its CAL contract with CRJ-200's pulled from the boneyard, they were expecting former XJT ERJ's.

No matter what, our fate was sealed after the Comair strike, as CAL made it a point to not have all of its regional operations under one carrier as a result. I imagine AMR has the same ideas about Eagle.