Eagle spin off?
- Thread starter Hopeful
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eolesen
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- Jul 23, 2003
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A couple of different sources have indicated that something should happen by July 1. If they're going thru the process of informing ALPA, I doubt it is just idle speculation on anyone's part.
General consensus is nobody want the 50 seaters, but if AMR structures a spin to where they keep ownership of the aircraft, and only sells the employees, facilities and certificates, maybe this really does have legs...
General consensus is nobody want the 50 seaters, but if AMR structures a spin to where they keep ownership of the aircraft, and only sells the employees, facilities and certificates, maybe this really does have legs...
OP
- Dec 21, 2002
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I don't see why not....
Doesn't the routes alone have some value?
Like you said, facilities and certificates, employees....has to be some value there...Keep the aircraft until they get replaced.
I don't see this being all that unattainable.
eolesen
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- Jul 23, 2003
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Route authorities rarely have any commercial value, nor do networks when you're talking about feeder airlines.
Slots might have value, but in most cases, both the route authority & the slots belong to the major/marketing carrier, not the regional/operating carrier.
Slots might have value, but in most cases, both the route authority & the slots belong to the major/marketing carrier, not the regional/operating carrier.
This came up in Negotiations. We felt that AA was looking to increase the value of Eagle by getting us to agree to increase the ASMs eagle could fly for AA.
Tell that to all the guys in the Class II Stations that would be given the choice of NYC, MIA, ORD, LAX, DFW, or the street. More than likely their only choices would be NYC or LAX.
OP
- Dec 21, 2002
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So maybe AMR should just GIVE Eagle away....Seems worthless after reading your take on it.
OP
- Dec 21, 2002
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Just think...All AA had to do was go through with that trip to the bankruptcy court. And all this debate would be behind us. Unions busted and AA free to manage AA they way they really want to without any union interference.
I am sure there are higher ups at AA regretting the day they didn't go through with it and be rid of us pesky greedy union people.
Wrong, when a company goes through bankruptcy, the unions dont go away.
Go read up on Section 1113, it orders negotiations, and if a deal isnt reached the CBA gets abrogated, one is either imposed or voted on, I lived it twice at US Airways and was on the Negotiating Committee, US M&R are now in negotiations for their second post bankruptcy CBA.
Dont let the facts get in your way.
Go read up on Section 1113, it orders negotiations, and if a deal isnt reached the CBA gets abrogated, one is either imposed or voted on, I lived it twice at US Airways and was on the Negotiating Committee, US M&R are now in negotiations for their second post bankruptcy CBA.
Dont let the facts get in your way.
That's essentially the result if AMR spins off Eagle as a separate company. The AMR shareholders would be given the stock in Eagle. They'd be no better off (nor worse off) than they are before the transaction: they'd own stock in AMR and stock in Eagle. Today they own AMR (which owns Eagle).
Eagle is pretty much worthless. The market vaule for 50 seat jets (and 44 and 37 seaters) is in the toilet. It owns no valuable routes. It uses slots which it may own or may be owned by AA or AMR (not publicly known). Compared to the other regionals, its costs are higher.
As I've posted before, AMR was almost 10 years too late to the "let's make a ton of money off a divestiture of our wholly owned regional subsidiary" party. CO wrote the book on how to fluff-up the value of its regional when it sold a little bit if XJT to the public. Then, in the wake of September 11, 2001, it contributed stock in XJT to its pension plans instead of cash (like most airlines, CO was not flush with cash in 2001-03). The pension plans sold the stock to the unsuspecting public (idiot investors) and then, once CO didn't own XJT anymore, CO approached XJT and demanded and got concessions. That must have made the buyers of XJT stock real happy, but CO got what it wanted: Lots of cash for its XJT stock to fund its pension contributions when cash was tight.
Arpey should have done the same thing at the same time. In retrospect, yet another shortsighted management failure.
To try to raise cash to avoid Ch 11 in late 2004, early 2005, Delta sold ASA for about $500 million but couldn't find any high-dollar buyers for Comair. Maybe Eagle could have brought that much in 2005. But that was six years ago - Eagle's value is much smaller now than it was then.
Investors, when buying stock, will only pay the discounted present value of the stream of profits they expect. I doubt anyone sees any significant stream of profits at Eagle. Like XJT, a near bankruptcy at Eagle is much more likely than sustainable profits.
OP
- Dec 21, 2002
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eolesen
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- Jul 23, 2003
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How do you figure, Bob? You think that absent the ASM cap, AA would just abandon everything except hub to hub flying?... That'd be pretty counterproductive.
Or are you perhaps confusing the ASM cap with the 2555 cap on departures which determines insourcing vs. outsourcing? I think it's entirely reasonable to have a ceiling on departures which triggers insourcing in a given city.
I was doing some schedule analysis the other day, and excluding Eagle, it appears there are 38 domestic airports with 8 or more mainline departures:
Code:
DFW 474
MIA 221
ORD 169
LAX 82
JFK 72
LGA 49
SFO 31
STL 31
DCA 30
BOS 30
MCO 25
LAS 24
AUS 23
SAT 17
TPA 16
PHX 15
ATL 15
DEN 15
SAN 14
SNA 14
EWR 13
SEA 13
BNA 12
IAD 12
MSY 12
RDU 12
PHL 11
MSP 11
MCI 11
ELP 10
ABQ 10
FLL 10
IAH 9
TUS 9
HNL 8
BWI 8
SJC 8
TUL 8Unless AA plans on parking a lot of aircraft, I don't see how they could cut out 32 cities and replace them with Eagle, Bob.
A spin-off is the most likely route by far. However, if I was a shareholder, I would be pretty pissed if they split the stocks and my Eagle stock was worthless because they couldn't or didn't provide a viable stand alone business plan and my American stock was going to take a hit because they are now paying outside vendors to do what AMR was able to do itself before.
We should know one way or the other by the end of the month.
We should know one way or the other by the end of the month.
If we raised the cap then the company may mix and match flights and staff our current class II stations with Eagle mechanics. The departure threshold has never applied specifically to Aircraft mechanics.
The company has made it clear they wish to consolidate their maint operations around five focus cities, where do you think they are going to get the mechanics needed? (Some of the stations listed already dont have A&Ps.)
