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American Eagle May Be Sold

American Airlines may sell its regional affiliate American Eagle

Jul 07, 2010

American Airlines is exploring the possibility of selling its regional affiliate American Eagle, and industry analysts say Indianapolis-based Republic Airways Holdings could be a potential buyer.

Daniel Garton, named recently to head American Eagle, was quoted in an Associated Press story from American headquarters in Dallas as saying he's been meeting with the airline's bankers before holding serious talks with potential buyers.

In 2007, American parent AMR Corp. tested the idea of selling American Eagle but then withdrew the offer when the skyrocketing price of jet fuel cut the value of regional carriers.

With fuel prices down or stable now and other major carriers divesting their regional affiliates, America executives are open to the idea again.

Financial analyst Robert Herbst said the potential market for Eagle is better now and Republic Holdings, which bought Frontier and Midwest airlines last year, could be a buyer.

Republic wouldn't address the speculation.

"There's always rumor and speculation in the industry, and we don't comment about that," Carlos Bertolini, spokesman for Republic Holdings, said Tuesday.

Aviation consultant Michael Boyd, based in Colorado, said American Airlines may now be interested in selling Eagle because it is a "shrinking business. It is getting hard to make money with 50-seat jets, and I'm not sure how many more of these small jets that Republic would need."

Since American Eagle only flies regional routes in the American Airlines network and can't serve other airlines, Boyd said Republic would need an "ironclad agreement" that American would continue to rely on Eagle.

"Whatever Republic might do, it would have to be a very good deal for Republic," Boyd added.

Bertolini also noted that Republic is currently in the midst of integrating operations from its recent acquisitions of Frontier and Midwest airlines.

"Our plate is pretty full right now," Bertolini said.

Those acquisitions helped increase Republic's passenger traffic for June from the previous month and last year.

Republic planes flew 1.98 billion revenue passenger miles in June, a 118 percent increase from the same month last year -- before brand-named airlines Frontier and Midwest joined the holding company.

Republic reported nearly 2.3 billion available seat miles, up 101 percent from last year. So the all-important load factor in June was a Republic record 91 percent, compared to 87 percent for June 2009.

American Airlines may sell its regional affiliate American Eagle
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