AMR to Unload Exec

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Skyhungry

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Aug 20, 2002
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MIAMI
www.usaviation.com
Looks like the rumors are true.
Miami Herald 11/6/02
AMR to unload operator of American Eagle
BY INA PAIVA CORDLE
icordle@herald.com



COST-CUTTING MOVE: The sale of Executive Airlines may be a precursor to the disposal of American Eagle, an affiliate of American Airlines.

AMR Corp., urgently trying to stem losses and bring in cash, is expected to announce today the spinoff of Executive Airlines, the operator of Miami and San Juan flights for American Eagle.
The sale may be a precursor to the disposal of the remaining operations of American Eagle, a regional carrier that is an affiliate of American Airlines.
An American Eagle spokeswoman would not confirm the spinoff Tuesday, but said it is something the airline has thought about for some time.
''''When we have details, we''ll go public,'''' said spokeswoman Lisa Bailey.
Three sources close to American Eagle say a deal is almost certain to be announced this morning and could be completed by the end of the year.
American Eagle has shrunk its operations in Miami since Sept. 11, 2001, and now ranks as the fourth-largest carrier at Miami International Airport. Year-to-date, American Eagle has flown 880,936 passengers through MIA, representing 3.9 percent of the airport''s passenger volume, said airport spokeswoman Inson Kim.
The regional carrier began flying out of Miami in 1991 with 12 19-passenger Jetstreams. It now flies at least 50 daily flights aboard 46- and 64-seat turboprops.
In Miami, the airline employs at least 270.
AMR has announced it would slash 7,000 jobs by March, while it cuts capacity and costs, parks planes and delays aircraft deliveries. Unable to push leisure fares higher, the company is combating the decline in domestic business travel, lower Latin American traffic and a surge in low-cost competition in San Juan.
When AMR announced a staggering $924 million third-quarter loss last month, Chief Financial Officer Jeff Campbell told analysts the company would consider selling noncore assets, such as American Eagle.
''''Chairman [Don] Carty has said that everything is on the table,'''' Bailey said. ``We''re looking at all sorts of options. Nothing is being ruled out.''''
AMR paved the way for the sale of Executive on Oct. 1, transferring all of the turboprop aircraft flown out of Miami to Executive Airlines'' Federal Aviation Administration operating certificate. Miami region employees were also transferred to Executive last month.
Previously, Executive encompassed only the San Juan flights and employees.
Rumors have swirled for months regarding potential buyers for Executive. They include Chatauqua Airlines, a regional carrier that provides service for American Connection; Caribbean Star Airlines, a small Antiguan carrier that expressed interest in the past; or the previous, San Juan-based owner of Executive, which sold the carrier to AMR.
AMR could also take Executive Airlines public in an initial offering or sell the operation to a group of investors and managers.
''''All the majors are considering what they have that they can sell that can create liquidity and allow them to focus back on core operations,'''' said Coral Gables aviation consultant Stuart Klaskin, partner in Klaskin, Kushner & Co. ``And these sorts of sales are a classic example of both.''''
Depending on the buyer, the Executive sale may be largely transparent to South Florida passengers, Klaskin said. However, it would mean that American Eagle''s regional jets would not be placed here.
Pilot members of the Air Line Pilots Association say they oppose the sale.
''''The sale of Executive would break the basic promise that American Eagle made to its pilots in 1997, when they agreed to combine all the carriers that make up American Eagle into one airline,'''' said James Magee, spokesman for the American Eagle unit of the Air Line Pilots Association. The airline has 152 pilots in Miami and 260 in San Juan, said Ron Lovas, a spokesman for ALPA.
Flight attendants and pilots also say they are concerned that a buyer might not have an interline agreement with American, which would affect the flying benefits that they enjoy today. The airline has about 125 flight attendants in Miami and 120 in San Juan, said Patricia Hoefener, former president for the American Eagle unit of the Association of Flight Attendants.
American Eagle started service in 1984, with two carriers serving eight cities from Dallas/Fort Worth. Over the next several years, three other airlines were added, and two of the five merged.
In 1997, the four surviving carriers -- Executive, Simmons, Flagship and Command -- were combined into American Eagle. However, Executive, because it was based in San Juan, retained its separate operating certificate.
>From Miami, American Eagle''s destinations include Freeport, Nassau, George Town and Marsh Harbour, Bahamas, and Fort Myers, Jacksonville and Key West.

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