AMR says reviewing ownership of AAdvantage, American Eagle

[MiAAmi]

AMR says reviewing ownership of AAdvantage, American Eagle

By Laura Mandaro
Last Update: 3:18 PM ET Oct 17, 2007

SAN FRANCISCO (MarketWatch) -- AMR Corp. (AMR:AMR Corporation


3:38pm 10/17/2007

management said they are reviewing strategic options for units other than its flagship American Airlines carrier but cautioned there are numerous benefits to keeping regional carrier American Eagle, American Beacon Advisors and other subsidiaries in its portfolio. An analyst and a major investor has pushed AMR to spin off or divest some of its noncore units, particularly its AAdvantage frequent flier program. CFO Thomas Horton said the company is looking at "opportunities to deleverage our balance sheet and other strategic options, such as asset divestitures that we might consider to improve shareholder returns." But it noted AAdvantage is "deeply intertwined" with its parent, making separation "more complicated than it might first appear." Shares were recently up 4.5%.

 

[WeAAsles]

AA should sell off some of there investments to capitalize on there shareholder returns. If they concentrate more on there core product then we could have a much stronger airline. Although they have to maintain some control over how those assets are utilized by there new owners. Especially the AAdvantage program. Eagle doesn't really matter and should be sold. That way they can farm out to the lowest bidder for a commuter that would feed to the mainline product. If it's not Eagle than so be it. But it would be a great way for AA to purchase some of those 737 and possibly some 787's that they say they so desperatly need. I know that I refuse to subsidise those purchases on the backs of the money I gave up in 03!!!!!!!!!!!!!!

 

[NewHampshire Black Bears]

I'm willing to bet, that AA has already "examined" the A/E situation many times over.

For example,.....IF a city like(say) PIT is served by A/E only, AA can claim to have an AA presence there, even though the correct answer would be, AMR.

Personally, I would NEVER sell A/E, unless that (AMR) unit was losing $$$ !

 

[Boomer]

AA should sell off some of there investments to capitalize on there shareholder returns. If they concentrate more on there core product then we could have a much stronger airline. Although they have to maintain some control over how those assets are utilized by there new owners. Especially the AAdvantage program. Eagle doesn't really matter and should be sold. That way they can farm out to the lowest bidder for a commuter that would feed to the mainline product. If it's not Eagle than so be it. But it would be a great way for AA to purchase some of those 737 and possibly some 787's that they say they so desperatly need. I know that I refuse to subsidise those purchases on the backs of the money I gave up in 03!!!!!!!!!!!!!!

AMR owning AA and AE gives it tremendous flexibility in responding tp market demand- the problem, for AA Employees with AE is that AA capital is used to develop markets and infrastructure which are then hand delivered to AE without paying what it was worth: end game, AE looks more profitable than it actually performs.

As always, when dealing with AMR from the Employee position, nothing is ever what it seems.

 

[WeAAsles]

AMR owning AA and AE gives it tremendous flexibility in responding tp market demand- the problem, for AA Employees with AE is that AA capital is used to develop markets and infrastructure which are then hand delivered to AE without paying what it was worth: end game, AE looks more profitable than it actually performs.

As always, when dealing with AMR from the Employee position, nothing is ever what it seems.

Ah Boomer too true, too true. Thank you for the quote. Maybe the investors realize that also and we can finally dump that turkey?

 

[Boomer]

Ah Boomer too true, too true. Thank you for the quote. Maybe the investors realize that also and we can finally dump that turkey?

You took 2+2 and got 5. The answer is not separation, the answer is integration.

The short term gain from selling an asset like AE will only go towards lining the pockets of Management while probably locking AA into a long term fee-for service agreement ala SABRE at above market rates.

 

[Boomer]

To The Administrators of US Aviation:

Why did my reply become posted as a yesterday reply when I waited more than 13 hours between that post and actually posting my real time reply?

I have reviewed my preferences, there is nothing there that accounts for the discrepancy.

Please reply on this forum: I am perfectly willing to accept an operator error.

 

[StraaightTaalk]

To The Administrators of US Aviation:

Why did my reply become posted as a yesterday reply when I waited more than 13 hours between that post and actually posting my real time reply?

I have reviewed my preferences, there is nothing there that accounts for the discrepancy.

Please reply on this forum: I am perfectly willing to accept an operator error.

Boomer,

Check your Time Zone Setting on your Control Panel. Go to My Controls, then Board Settings.

I agree about rethinking any decision to sell ego. We would be mortgaging our future, and would be at the mercy of whoever buys Eagle as to what they want to charge us. It's kind of like taking a cash advance to pay off another credit card debt.

It would all go in the pockets of upper management anyway.

Bad idea. Let UA pioneer the "fire sale" strategy and see what happens.

 

[WeAAsles]

You took 2+2 and got 5. The answer is not separation, the answer is integration.

The short term gain from selling an asset like AE will only go towards lining the pockets of Management while probably locking AA into a long term fee-for service agreement ala SABRE at above market rates.

American has said they would integrate Eagle in the past if it didn't cost them anything. I would love it if they merged actually. It would open up alot of transfer options. But how do you integrate the seniorities? Pilots and Fa's are the easy one but what about MX and Fleet? The only reason I'm saying to dump the Turkey is not to line the Mgmt WeAAsles pocets but to see some return on my investment, IE I want my pre May 03 wages restored.......

 

[FWAAA]

AMR didn't sell Eagle in 2002-04 when things were most bleak - there's not a chance in hell Arpey would sell Eagle now. As Boomer said, this would mean contracting with Eagle (or another regional) and guaranteeing that regional a profit. Cost plus 8% or 9% or 10%. That's why Republic has been so profitable during the post-September 11 financial meltdown that hit the legacies. The legacies' contracts with Republic guaranteed it a profit no matter what.

When times are really good, it might make sense to outsource the regional flying. But when times are bad - as they've been for several years, guaranteeing someone else a profit to fly your regional feed wastes money.

Selling AAdvantage? There's only one shareholder banging the drum for that right now, and those Icelandic losers probably won't get their wish. They've suffered a huge loss on their stock and they care not about AMR. They only want to line their pockets with the cash they think AA could get if AAdvantage were sold. Just like with Eagle, there's not a chance in hell that's gonna happen. AA doesn't like to burn furniture, so don't look for a major asset sale anytime soon.

 

[The Goose]

AMR didn't sell Eagle in 2002-04 when things were most bleak - there's not a chance in hell Arpey would sell Eagle now. As Boomer said, this would mean contracting with Eagle (or another regional) and guaranteeing that regional a profit. Cost plus 8% or 9% or 10%. That's why Republic has been so profitable during the post-September 11 financial meltdown that hit the legacies. The legacies' contracts with Republic guaranteed it a profit no matter what.

When times are really good, it might make sense to outsource the regional flying. But when times are bad - as they've been for several years, guaranteeing someone else a profit to fly your regional feed wastes money.

Selling AAdvantage? There's only one shareholder banging the drum for that right now, and those Icelandic losers probably won't get their wish. They've suffered a huge loss on their stock and they care not about AMR. They only want to line their pockets with the cash they think AA could get if AAdvantage were sold. Just like with Eagle, there's not a chance in hell that's gonna happen. AA doesn't like to burn furniture, so don't look for a major asset sale anytime soon.

Stop and consider - AMR wouldn't consider selling Eaglet or AAdvantage under normal circumstances, but with 9.1% holdings (and maybe more now) FL could, and I believe will, stage a helluva proxy fight. Granted, their are other players in the soup but if given a chance to oust a few board members and accomplish the short term gains that would improve appearances, ... AMR will do what is necessary to preserve its useless board of directors.

The value of the two entities in question wouldn't have been brought up in 2003, for the same reasons United didn't fully declare all of its assets in substantially the same types of businesses during its bankruptcy filing (frequent flier, feeders, etc.). There's been some talk re: the PBGC giving United back its pension obligations because of this 'omission' of fact. Doubtful anything will come of that.

This entertainment gets better all the time and I'm getting paid for watching it.

 

[Boomer]

American has said they would integrate Eagle in the past if it didn't cost them anything. I would love it if they merged actually. It would open up alot of transfer options. But how do you integrate the seniorities? Pilots and Fa's are the easy one but what about MX and Fleet? The only reason I'm saying to dump the Turkey is not to line the Mgmt WeAAsles pocets but to see some return on my investment, IE I want my pre May 03 wages restored.......

Historically, AE employees transfering into AA carried their Company Seniority for vacation and retirement but restarted for Occupational.

Neither of us can say what would happen given the TWU.

 

[eolesen]

with 9.1% holdings (and maybe more now) FL could, and I believe will, stage a helluva proxy fight.

There's a higher chance of the TWU striking than there is for FL to be in a position to stage a succesful proxy fight.

 

[LGA Fleet Service]

To The Administrators of US Aviation:

Why did my reply become posted as a yesterday reply when I waited more than 13 hours between that post and actually posting my real time reply?

I have reviewed my preferences, there is nothing there that accounts for the discrepancy.

Please reply on this forum: I am perfectly willing to accept an operator error.

Perhaps you've got a bad router somewhere upline with your provider, I had pings from USAviation coming back with 75% packet loss the other night.

 

[flyhigh]

I think the reality is that you'd rather keep Eagle & AAdvantage...it keeps the predictability of them as opposed to having to renegotiated every few years. In United's case, they promised creditors return on stock in order to exit bankruptcy...that hasn't happened. As such, now they have to explore ways to spin off assets to give creditors what they were promised. AMR was able to avoid those explicit promises by avoiding bankruptcy. I'll trust AMR mgmt anyday over a sharholder looking for a quick buck...this is not a business to make a quick buck in...