American Eagle CEO Eyes Post-Bankruptcy Plan
MINNEAPOLIS (AP) - American Eagle may still be spun off to shareholders after the feeder airline for American Airlines emerges from Chapter 11 bankruptcy protection, its CEO said on Wednesday.
It's not clear yet what structure either American or Eagle will have after Chapter 11. But one possibility is that Eagle would be sold or spun off to future shareholders, American Eagle CEO Daniel Garton said at a regional airline conference on Wednesday.
"I'm sure we will look at all the different options" for Eagle's ownership, Garton said. "But I would think that those shareholders ... wouldn't mind a spin as a solution." That would allow future shareholders in American to be able to sell their new Eagle shares without having to sell their American shares, Garton said.
American and Eagle are both owned by AMR Corp., which is based in Fort Worth, Texas. AMR had tried to sell Eagle before all three of them filed for Chapter 11 protection in November. A deal never materialized.
AMR shares still trade on the over-the-counter Pink Sheets market, which offers quotes for stocks that do not meet minimum requirements to list on an exchange. In other airline bankruptcies, prior shareholders were wiped out at the time the company emerged from bankruptcy protection, and new stock was issued to pay unsecured creditors. Also, US Airways Group Inc. has said it's interested in merging with American while it's still in bankruptcy.
American Eagle is in a tough spot. The bulk of its fleet at the time of its bankruptcy filing was almost 200 jets in the 50-seat-and-smaller range. Those are some of the most unpopular airplanes in U.S. aviation today because they're often unprofitable at current fuel prices.
Garton said American Eagle is still negotiating with its banks and other parties over the future of most of those planes. Eighteen of its 37-seat regional jets that had been parked in the desert have already been returned to Embraer.
Eagle also has 47 Bombardier CRJ 700s, with 65 seats. Garton said American Eagle expects to keep those planes.
American Eagle provides nearly all of American's feeder flights. A unit of Republic Airways Holdings Inc. flies 15 regional planes for American out of Chicago. Republic CEO Bryan Bedford said Wednesday that his airline's contract with American runs through February 2013 and he doesn't expect it to be renewed.
(© Copyright 2012 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)
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