American Eagle Airlines

Republic works to restructure loss-making 50-seat operations at its subsidiary Chautauqua

Republic Airways Holdings has undertaken a restructuring of its Chautauqua Airlines subsidiary that operates 50-seat regional jets with a targeted USD40-60 million improvement by 2013. The company is hoping to overcome the daunting challenge facing all US regional airlines of finding a price point that makes the operation of smaller jets consistently profitable.

During the late 1990s and early 2000s the introduction of the 50-seat regional jet ushered in heady times for US regional carriers as they negotiated high margin capacity purchase agreements with their US legacy partners that allowed for strong profits that often times bested the financial performance of the network carriers they were partners with.

American Eagle’s exit from San Juan leaves gap in small intra-Caribbean markets

American Eagle appears closer to ending a 41-year era with the planned phase-out of its base in San Juan as part of a network overhaul in the Chapter 11 restructuring of its parent American Airlines. Closing San Juan was becoming more apparent as the fleet supporting its operations in the Caribbean – the ATR 72 – is being phased out at the end of next year. But other carriers could capitalise on American’s exit either through backfilling the flights or forging partnerships to feed the islands.

The carrier has sent out a announcement to employees in San Juan explaining the base would be closing during a phase-out period ending in March 2013, CAPA has learned.

The cuts are only being applied to American Eagle’s operations in San Juan, not American’s mainline operations.

American Airlines charts a course through bankruptcy

Last week’s Chapter 11 filing by American Airlines (AA) and American Eagle (AE) parent AMR marks the end of the post-deregulation period as well as possibly signalling the beginning of the end of US legacy consolidation as many believe the shedding of American’s baggage will position it for the US industry’s final merger with the only other independent legacy, US Airways (LCC).

Across the board the feeling is this is the best thing for both AMR and the US industry because it means more capacity cuts. Delta and United are expected to be the principal beneficiaries. JP Morgan expects a 10% capacity cut from American, which translates to a USD1.4 billion, or 1-3% revenue jump for United, Delta Air Lines, US Airways, Alaska Airlines, Southwest and JetBlue in 2012. US Airways was already slated to benefit from the capacity cuts of competitors this quarter.

Questions surround American Eagle divestiture

Eagle pilots want to improve the air service agreement (ASA) between American Eagle and American before the divestiture of the regional operation is completed and have proposed a new plan to Eagle management which has yet to respond to the 18-Sep-2011 submission. Essentially, pilots want more time for Eagle to secure non-American Airlines business, according to a recent pilot briefing, indicating American said it would extend the agreements beyond the initial nine years if Eagle could guarantee attractive rates that would ensure its costs would not rise.

Unlike American, Eagle has a history of good labour relations which is expected to stand it in good stead as it becomes independent. Pilots, represented by the Air Line Pilots Association, have been very active in spin-off plans keeping its members informed.

American Eagle spun off, AA to keep aircraft, debt, give Eagle USD50 million

Given the fact that American Eagle was actually profitable to the tune of USD40 million in 2010, it is clear American has been working hard over the last few years to do what it could not do for itself: achieve Eagle profitability as it positioned its regional operations for spinoff. Yesterday, on 11-Aug-2011, it filed Form 10, required of all companies wishing to become a publicly-traded entity, with the Securities and Exchange commission in the latest milestone in an effort that dates back to 2008.