Amr A Top Airline Pick

[eolesen]

Arpey himself has said that they are considering an eagle sale.

[post="199564"][/post]​

I think the wording was a lot more along the lines that AMR is continuing to look at it. There's a huge difference between looking at the economics and actually entertaining a bit or spinning it off in an IPO.

Personally, I don't see it happening with Eagle as a whole. Perhaps Executive gets spun off as planned a few years back, but that's the most I'd expect to see.

Then again, I still think we should have kept an ownership stake in Sabre. It generated a lot of cash for us when they were spun off, but we could really use some of that diversified revenue right now....

 

[Oneflyer]

Arpey himself has said that they are considering an eagle sale.

I was referencing Wing's claim that AA was going to sell Eagle by the end of the quarter so that Arpey could get some sort of bonus.

 

[aafsc]

I think the wording was a lot more along the lines that AMR is continuing to look at it. There's a huge difference between looking at the economics and actually entertaining a bit or spinning it off in an IPO.

Personally, I don't see it happening with Eagle as a whole. Perhaps Executive gets spun off as planned a few years back, but that's the most I'd expect to see.

Then again, I still think we should have kept an ownership stake in Sabre. It generated a lot of cash for us when they were spun off, but we could really use some of that diversified revenue right now....

[post="199610"][/post]​

Looking at doing something and considering to do something sounds like the same to me. We will just have to wait and see what happens. About how much cash did sabre generate for AMR? Would not it have been better for AMR to just sell sabre for cash? I know that they probably did it as a spinoff for tax reasons but if they had sold it for cold hard cash, could they have offset the taxable gains from the sale with the huge losses we are now incurring? I would think that they would have gotten a good size chunk of cash for it.

 

[WorldTraveler]

If a legacy carrier or two folds, the value of regional airlines will fall as well since the vast majority of RJ flying in the US is to feed the hubs of legacy carriers and many of the hubs will be eliminated as the industry consolidates. Selling profitable subsidiaries doesn't make sense if they are all that is making money but most of the legacy industry that had restructured costs could have made money in the past year were it not for fuel. Translation: if AMR wants to sell Eagle (and DL has the same opportunity with Delta Connection), it has to happen soon - like before legacy carriers start failing. Also, the proceeds that come from owned RJ operations will go a long way to shoring up the balance sheets at AMR and DAL and potentially provide the cash to accelerate consolidation in the industry. A significant amount of debt on AMR and DAL's balance sheets is related to acquiring regional jets in recent years.

 

[Oneflyer]

About how much cash did sabre generate for AMR? Would not it have been better for AMR to just sell sabre for cash?

Sabre was sold not just for cash but also because it was a conflict of interest because it sold services to other airlines that AA competed with. AMR eventually did sell Sabre for cash to EDS.

The problem with selling Eagle is that you're really not going to raise that much cash. Eagle is worth about $1 billion, roughly. A spin-off gets you 100 million minus fees, so net 90 million. 90 million doesn't solve anything. No one is going to pay all cash for Eagle there just isn't a buyer, why buy it? A spin-off would relieve a lot of debt burden, so it may still be worth while, not sure, but I'm sure someone in corporate development has is figured out. My guess is that AMR missed the boat on the regional spin-off about 2 years ago, but Carty was in love with Eagle because he put it together so now AMR is stuck, either keep it or sell it for below its true value.

 

[AAmech]

Looking at doing something and considering to do something sounds like the same to me. We will just have to wait and see what happens. About how much cash did sabre generate for AMR? Would not it have been better for AMR to just sell sabre for cash? I know that they probably did it as a spinoff for tax reasons but if they had sold it for cold hard cash, could they have offset the taxable gains from the sale with the huge losses we are now incurring? I would think that they would have gotten a good size chunk of cash for it.

[post="199622"][/post]​

Actually AMR did receive a substantial amount of CASH for the Saber sale. What they did is have the Sabre BOD issue a HUGE dividen right before AA sold off their Sabre stock.

 

[eolesen]

Looking at doing something and considering to do something sounds like the same to me. We will just have to wait and see what happens.

Having been around HDQ for 12 years, and watching a lot of good and bad ideas go thru the due dilligence process, here are a few of my favorites which got very serious consideration but were never acted on:

* Buying America West about 12 years ago, and operating it as a single class airline within an airline

* Buying Pan Am's intra-German routes before reunification

* Operating an intra-Asian hub at SEL (similar to UA and NW's hubs at NRT)

* Merging with US Airways

Hopefully, that will show there's a huge difference between considering an idea, and actually executing it.

About how much cash did sabre generate for AMR? Would not it have been better for AMR to just sell sabre for cash? I know that they probably did it as a spinoff for tax reasons but if they had sold it for cold hard cash, could they have offset the taxable gains from the sale with the huge losses we are now incurring? I would think that they would have gotten a good size chunk of cash for it.

[post="199622"][/post]​

There really wasn't a single buyer interested in Sabre at the time if I recall.

Sabre was IPO'd in 1996, with 17% going into the open market. The remaining 82% was sold in 2000 for around $560M. Today, their market cap is $3B, or almost 3x AMR's market cap.

Yes, we probably made more off the sale of the stock than we'd be getting back in net profits today. But we still spend a lot of money with Sabre (and now EDS) that prior to 1996 was considered internal spending. The money we made off the stock has probably gone back to Sabre twice over with their 20% markups.

Aside from the cash, some of our best IT development was done in those days because many of the Sabre people were former airline people and knew our business. People could flow back and forth between airline jobs and Sabre jobs without losing benefits, pay, seniority, etc. So we got a lot more for our money back then because we didn't have to worry about their domain knowledge.

Today, Sabre can't attract airline people into these jobs, so we have to explain every little nuance of what an airline does, and every process we're trying to automate. That costs us money in the long run, because we have to pay for their learning time, and the extra time it take to get products to market means that we're not getting the cost savings benefit from having those products in place.

Some of those issues aren't as big of a deal with Eagle, but several are. Eagle's management folks can flow back and forth to AA, and that works to both carrier's advantage. Take away that ability to cross-promote people, and Eagle's ability to attract quality managers is diminished. They also have some pricing power for health benefits, hull insurance, fuel, etc. which come thru their association with AMR. Take that away, and their costs go up, which is eventually passed on to us as a customer.

 

[NewHampshire Black Bears]

I expect to see Eagle put on the block before the end of the month, certainly before the end of the year. The fat cats are hinging on bonus time and a nice big profitable sale will fatten the coffers for it. Eagle may be AMR's only profitable arm right now but that doesn't mean it isn't vulnerable in these lean, yet still greedy times. Before the end of Q1/05, I'll be watching for three, possibly four of AMR's top dogs to cash in all the incentives in their contracts in exchange for their resignations.

[post="199475"][/post]​

+++++++++++++++++==========================++++++++

WNP;
IMHO, you will NEVER see A/E sold by AMR !!!!!!!!!!!

NH/BB's

 

[NewHampshire Black Bears]

I have really enjoyed reading your posts and NHBB posts on this topic. I can not agree any more with you. I do not wish furlough or a job loss to anyone. But we could stand to let a few Legacy carriers go by the way side. In your opinion besides US Air who would the best one to go.

I hate to say it but NW and UA are the top of my list. I wish no ill will on any employee of those two carriers but as far as making the rest of the airlines profitable those would be my choices.

As ar as Eagle goes. I do not see AMR selling AE right now. Maybe when the industry is stable again but when and if that happens there would be no need to.

[post="199554"][/post]​

+++++++++++++++++++++++++++++++++++++++++++++++++++

operaations;
"One out of two, ain't bad"

You "may" get to (unfortunately) see UA roll over, BUT you will NEVER(in the mid-future) see "Big Red"(NW) fold.

Just my humble opinion.

NH/BB's

 

[WingNaPrayer]

IMHO, you will NEVER see A/E sold by AMR !!!!!!!!!!!

For many reasons, AMR is cash hungry right now, so I get the feeling that Eagle is very vulnerable. AMR, like everyone else, fully expects USAir to fold and I believe they are playing the stash the cash game so they will be best positioned to gobble up what's left over. Having learned their lesson with TWA, I expect this time they will go for routes, gates and hard assets, and only take people after they have been relegated to the position of a minimum wage new hirees. AA has enough of it's own people on furlough to staff what would be left of USAir after the auctioneer's gavel goes down for the last time.

 

[FWAAA]

Wing, with all due respect, you are 18 months too late in your prognostication that "AMR is cash hungry right now."

AMR was cash hungry when the cash balance was $1.2 billion at the end of Q1, 2003. Not so desperately cash hungry now with the cash balance over $3.1 billion. Fuel is plummeting in price, and things are turning the corner.

You (and lots of newspapers) have an analyst's question posed to Arpey and Beer about possible unencumbered assets and have turned that into "Eagle is for sale."

It's just not true. Maybe it will be if cash becomes critical or if some idiot offered billions in cash for Eagle, but not right now.

 

[WingNaPrayer]

Doesn't really matter, and isn't worth debate at this point. He said the words and it's upon those words that the speculation continues.

I quote:

On another issue, Arpey, who is also chairman and CEO of AMR, said the parent company was still considering selling its investment subsidiary and the commuter airline American Eagle. (emphasis added)

That's where the spec comes from, so no one is pipe dreaming, rumor mongering or making this stuff up. The horses mouth opened up, and out it came. Regardless of any statements that may have come later, it doesn't take away the fact that Arpey is the one that threw the info out there to begin with. Slip of the tongue? Perhaps, but Freudian slips oftentimes foretell of real intentions.

 

[eolesen]

On another issue, Arpey, who is also chairman and CEO of AMR, said the parent company was still considering selling its investment subsidiary and the commuter airline American Eagle. (emphasis added)

[post="199776"][/post]​

con·sid·er ( P ) Pronunciation Key (kn-sdr)
v. con·sid·ered, con·sid·er·ing, con·sid·ers
v. tr.

To think carefully about.
To think or deem to be; regard as.
To form an opinion about; judge.
To take into account; bear in mind.
To show consideration for.
To esteem; regard.
To look at thoughtfully.

 

[Boomer]

cost-cutting initiatives at AMR (nyse: AMR - news - people ), the holding company for American Airlines, appear to be "a real improvement" and reiterated an "outperform" rating for the major airline. "In a rating system that arrays stocks relative to their peers, an ongoing outperform rating for AMR is for us a no-brainer," the research firm said. CSFB added, "Of all the changes going on at AMR, the growing signs of interaction with labor that stands a chance of building a sustainable partnership to keep costs competitive while providing durable rewards for success is perhaps the most impressive. For a company whose labor relations have historically been, in our view, in the industry’s bottom tier, there truly appears to be real improvement in the works."

http://www.forbes.com/markets/2004/11/08/1...yahoo&referrer=

[post="199152"][/post]​

Citing the "susatinable partnership" created between the TWU and AMR as a likely reason for AMRs success is the same as citing the French when they said that the Viet Minh would never be able to haul artillery into the mountains surrounding Dien Bien Phue.

The resevoir of ill will towards AMR by those denied the ability to vote for a Union they believe in is sadly misunderstood. The TWU recently, over the course of the last year, was forced to threaten some 5000 AMTs with termination as a result of the NON-PAYMENT of UNION DUES. The drop in contributions towards the TWU Political Action Committee, through COPE deductions, resulted in the TWU actually participating in the internal debate within the AFL-CIO regarding restructuring the Labor Movement; said restructuring movement leading the IAM to vote for authorization to leave the AFL-CIO.

Amplifying the "ground effect" surrounding the above statement is the swelling of the support by AA employees to take the Company Private. The AA ESOP Committee has called for a meeting on NOV 20 to discuss the opportunity created by recent events. http://www.buyitfixit.org

Does AA stand a chance of making it? Hell yes, but not with guys that defended creating hidden accounts for Executive Pensions AND hiding NON-PERFORMING UNIONS from their bruises at the ballot box.