Oct 1st announcement.

[eolesen]

Just back from my junket, and the sweeping are reveling that AMR is close to a APA with RJET for F9,YX,and S5. RJET is in a MOU with AMR on a JV for a 50% APA of MQ with a ten 10 year CPA on MQ, YX current routes and a ASA on YX, S5 non-current route with UA,US, and DL.

DW

I'll attempt to translate...

Republic has a memorandum of understanding (MOU) to buy a 50% stake (JV) in AMR Eagle, in exchange for AMR giving a 10 year Capacity Purchase Agreement (CPA) on existing Eagle (MQ) and Midwest Express (YX) routes (not sure why -- they ceased to exist on Friday...).

That's about all I could read...

I'm not sure how ASA is being used to define a regional/major agreement... Perhaps it's an attempt to say that the JV would be able to serve non-competing routes for fulfilling the capacity UA, US, and DL?... or maybe they're planning to dual code existing AA* flights as DL*, US*, and DL* similar to what Eagle used to do out of LAX as NW*?....

 

[star power]

APA = Asset Purchase Agreement

CPA = Capacity Purchase Agreement

ASA = Air Service Agreement

RJET Republic Airways Holdings as YX Republic Airways / Midwest Airlines, and S5 Shuttle America. S5 is under contract with DL until 2017, and S5 with UA until 2015. YX is under contract with US until 2019.

 

[will fix for food]

That didn't help much.

Are you saying RJet is buying 50% of Eagle and AMR is buying RJet?

 

[Bob Owens]

Capacity Purchase Agreement
Translation, AA pays for the seats on Eagle, even if the go empty. Basically its also a form of outsourcing thats not counted.

 

[will fix for food]

Capacity Purchase Agreement
Translation, AA pays for the seats on Eagle, even if the go empty. Basically its also a form of outsourcing thats not counted.

Eagle won't fly them empty though. Dispatch will cancel the flight rather than pay for the gas as it is all coming out of AMR's pocket. I've seen it a hundred times.

Chatauqua will fly it every time though as it is still profit for them.

 

[MERV]

If RJET buys 50% of Eagles assets that will bring a CPA contract or some type agreement between the two companies.
If RJET purchase 50% of Eagle. That in turn will create a holding company that will be owned by both AMR and RJET. It also will bring some type of agreement with the newly from holding company.
Right now RJET has CPA with AA conxs its run by one of its sister brand chatauqua. Most likely Chatauqua will be operating those new asset purchased by RJET because of cap.
All the purchases RJET has made in the past was right out buy outs of the companies.
Most likely what will happen is that AMR and RJET will expand their CPA covering 50% of Eagle routes/FLTs in turn shrinking Eagle. RJET might Sub lease some of those asset off AMR.
This suppose to save AMR money at the end and bring fresh cash to it.

 

[737823]

Just back from my junket, and the sweeping are reveling that AMR is close to a APA with RJET for F9,YX,and S5. RJET is in a MOU with AMR on a JV for a 50% APA of MQ with a ten 10 year CPA on MQ, YX current routes and a ASA on YX, S5 non-current route with UA,US, and DL.

DW
:huh: ------- Would you like to translate that for those who don't speak that language!

Clueless.

I'll attempt to translate...

Republic has a memorandum of understanding (MOU) to buy a 50% stake (JV) in AMR Eagle, in exchange for AMR giving a 10 year Capacity Purchase Agreement (CPA) on existing Eagle (MQ) and Midwest Express (YX) routes (not sure why -- they ceased to exist on Friday...).

That's about all I could read...

I'm not sure how ASA is being used to define a regional/major agreement... Perhaps it's an attempt to say that the JV would be able to serve non-competing routes for fulfilling the capacity UA, US, and DL?... or maybe they're planning to dual code existing AA* flights as DL*, US*, and DL* similar to what Eagle used to do out of LAX as NW*?....

How would a sale or spin-off effect scope clause permitting 70-100 seat aircraft on Eagle pay scale? AA has a large void in the fleet between the 76 seat CRJ and 140 seat MD-80 and the scope clause is hindering the companies growth opportunities. This doesn't seem like a very brotherly act by APA for their "brothers and sisters" at the regionals. Personally, I'd like to see UA/CO negotiate an agreement to increase mainline capacity by putting pay rates more in line with the market. My EWR CO FA friend mentioned they were considering offering concessions on condition that mainline capacity is added.

Josh

 

[eolesen]

Regardless if it is a spin or JV, the scope clauses are still in place. 70 seaters remain capped at the current contractual limit.

Only thing happening with this is 50% sale to RJET, and a 10 year agreement for AMR to continue to purchase X amount of capacity from Eagle.

Might not be a bad deal, especially if they could negotiate a flow-thru to the rest of Republic....

 

[star power]

After going thru all the shreadding and piece mealing it together,AMR wants to unload MQ inpart or inhole, perferred inhole, but now buyers for $900 Mil to $1 Bil. RJET was asking about the operation but the price and financing would be out of the question.

AMR ask about MQ to be a purchase inpart, if RJET could make a workable deal on price and financing. RJET said with the purchase of Midwest Airlines YX, 31 Mil and Frontier Airlines F9, 87 Mil and the on going cost related to the APA asset purchase agreements, that the MQ price and financing are out of the question.

RJET reply to AMR was in a question if AMR was in position to seek a 50% joint venture on MQ. some of the terms and conditions were CPA capacity purchase agreement and ASA air service agreements. RJET said there position would be if AMR could purchase F9 and YX operations and E-190s 15, and Republic Airlines RP now coded as YX E-175s 51,and E-170s 68. They would entertain a price range between $350Mil to $400 Mil in exchange for a 50% stake in MQ for a $400 Mil with financing thru JPM JP Morgan Chase.

AMR counter position is that could be workable provided the F9 and YX operations and the Embraer aircraft would be a APA Asset Purchase Agreement, do to scope clauses with their unions at AA, APA, AFPA and TWU, AA would need time work out deals with the unions and AA position would like be F9 fleet and E90s would be mainline and E75 and E70s would be sub- mainline.

AMR other position would be that there MQ personnel would be move into RJET operation. AMR would perfer that RJET would take a position that AMR would be the first place to applied for any new CPA and/or ASA before DL,US and UA, which would keep its operation inhouse first to get more return on both of there investments, and that if the cost structure would show that competing for DL,US, and/or UA for a CPA and/or ASA and the profit margin was there on a non-compete from the AA 5 main hubs, then extra flying would be workable.

RJET counter with it could be workable provided the contracts with DL thru S5 Shuttle America as DL express on their CPA. and UA contract thru S5 shuttle america and YX republic airlines as UA express on their CPA, and US thru YX republic airlines as US express on their CPA and ASA agreements continue to go thru. the earliest contract could come up for renew in 2Q 2016 with DL and the other between 2016 to 2019.

 

[737823]

AMR counter position is that could be workable provided the F9 and YX operations and the Embraer aircraft would be a APA Asset Purchase Agreement, do to scope clauses with their unions at AA, APA, AFPA and TWU, AA would need time work out deals with the unions and AA position would like be F9 fleet and E90s would be mainline and E75 and E70s would be sub- mainline.

AMR other position would be that there MQ personnel would be move into RJET operation. AMR would perfer that RJET would take a position that AMR would be the first place to applied for any new CPA and/or ASA before DL,US and UA, which would keep its operation inhouse first to get more return on both of there investments, and that if the cost structure would show that competing for DL,US, and/or UA for a CPA and/or ASA and the profit margin was there on a non-compete from the AA 5 main hubs, then extra flying would be workable.

US also has E190 mainline and E170/175 as regional but I heard they were considering dumping E190s and replacing shuttle with E170/175 and A319 on some routes. Anyway, if (and a big if) AMR worked out such a deal with APA I think restricting the 190 to mainline and 170/175 to regional would defy the benefit of commonality from the E-Jet fleet. How would APA staff E190 aircraft? 738/MD-80 crews will not want to take a paycut to operate Embraer aircraft and AA can't hire if they have pilots on furlough. Would APA leadership consider offering this concession to the company inorder to bring members back to work?

So many of the APA members have huge egos and I can tell sitting next to them and seeing the walk the concourses they are G-d's gift to AA and wouldn't make a brotherly concession to better the company and overall welfare of the membership. I hope nothing more than:
1) my employer not renew our AA contract (no longer requiring me to fly AA if non-stop service exists on other carriers)
2) AA file BK and have a bankruptcy court imposed contract handed to APA members
3) AA continue to increase codeshare and other partner capacity, reducing domestic ASMs and allow AA's demise and contraction to not only continue but advance quicker

Josh

 

[star power]

correction: RJET purchase F9 Frontier Airlines for $108 Mil, not $87 Mil. sorry.

 

[JFK Fleet Service]

Why would AMR be interested in acquiring a narrow body Airbus sub fleet? A small one at that?

 

[eolesen]

AMR purchasing pieces of RJET is a non-starter.

 

[737823]

Could AA pull a GoJet on mainline and eagle crews and bring in a third party under a separate operating certificate to side step the scope clause?

Josh

 

[eolesen]

Could AA pull a GoJet on mainline and eagle crews and bring in a third party under a separate operating certificate to side step the scope clause?

Josh

There's a lot of history about AMR & scope you obviously don't know. If AMR could have gotten away with it, what you're proposing above would have been done 15 years ago with Reno and Midway.