Express Jet 1st, Eagle 2nd...., I expect to hear about Comair any day!


Well-known member
May 20, 2004
Total Time
The RJ Glut - More Evidence

American Eagle On The Block: Part of A Necessary AA Re-Fleeting

Aviation Planning, December 3, 2007

As we made clear in our presentation to the Senate Small Community Air Service Symposium last week (covered below), the US airline industry is shedding smaller units of capacity, and the trend will gain pace in the months ahead.

If It's Under 51 Seats, It's An Economic Bow-Wow. They have no real choice. Fifty-seat "regional" jets are moving toward the fringes of operational viability. Junior versions (37 - 44 seats) are even worse, because they enjoy virtually all of the costs of a 50-seater, with much less productive capacity. While our Global Fleet Demand Forecast indicates that 1,200 ERJ and CRJ (all series) airliners will be retired by 2017, this may be conservative.

There were two more events this past week that underscored this dynamic. One was the SkyWest order for CRJ-700s and CRJ-900s, intended to replace existing 50-seat CRJs. While the ergonomics of these stretched-cabin CRJs are still tight, their larger capacity makes them fundamentally more economic than the 50-seaters. The fly in that ointment is that they will need more passengers on board to fill those extra seats. And that means they need larger markets.

The next event was AMR's announcement to spin-off American Eagle. Not necessarily sell it, but at least get it out and away from the AMR empire. Despite being a well-managed entity (which is not an airline, but is instead in business to lease aircraft and crews to AA), the Eagle fleet is a poster child for airliners that won't be economically-hip in the future. Aside from just 25 CRJ-700s, some S-340s, and a few ATR-72s, Eagle is overburdened with 37-seat, 44-seat, and 50-seat ERJs. Great airplanes. But not great operating economics.

Eagle is a deteriorating asset for AMR, and one that likely represents a notable portion of the corporation's debt. Spinning it off - for cash, prizes, a future NFL draft pick, a stock deal to existing shareholders, or whatever - represents sound management planning.

In the future world of accessing small jet capacity, American, shed of Eagle ownership, will be theoretically and actually able to play the field when it comes to bidding for lift. And make no mistake, the lift requirements represented by 50-seat and smaller airliners will be a declining part of the US airline industry in the future.

A Step Toward Re-Fleeting The AA System. Getting Eagle, its RJs, and (hopefully) its debt, out from under the AMR umbrella is likely part of AA's future fleet strategy. The AA system has a significant problem in that between 50 seat RJs and 140 seat MD-80s ("Super 80s" in AA parlance) they have almost no lift at all, save for just 25 70-seat CRJs. Culling out Eagle would allow AA to cost-effectively re-adjust the number of RJs it needs (way, way downward) and potentially fill the under-140 seat gap with mainline-operated 90 to 100 seat jets.

The veneer analysts will go knee-jerk with this observation, claiming that mainline AA can't possibly operate such airliners cost-effectively. The facts point in the opposite direction. First, AA has traditionally operated such airliners - the F-100s retired in just a couple of years ago were 87 seats. Second, pay rates are negotiated for each type of aircraft. Therefore, a fleet of E-190s is not beyond possibility at AA. In fact, having aircraft in this size (and cost) category will become more critical in the future.

(We'd point out that our 2008-2017 Global Fleet Demand Forecast indicates that 40% of the new mainline-cabin equipment airlines will need are in categories between 75 and 125 seats. Other than the CRJ-700s at Eagle, AA has no jets in that range today.)

And The Buyer Is? That raises the question of just who might want a piece of, or all of, Eagle. On one hand, if an acquirer could negotiate a fixed-rate deal with AA, for a set period of, say, three to five years, it could play the come line by working in the meantime to get costs down, and implement a re-fleeting program.

Sounds reasonable. The 37-seat and 44-seat ERJs could be upgraded to 50-seat ERJs or even CRJs. They are - and will be - available, and at attractive lease rates. But there are lots of buts. Such as getting out of the existing leases, if necessary. And there's no assurance that when the agreement with AA expires, another SLP might not get the deal. Furthermore, in three to five years, the operational economics of 50-seaters aren't going to get any better, and the number of units needed is going to be less. It's sort of like musical RJs. Increasing numbers will be finding no place to sit. Except in the desert, maybe.

Upgrading to more 70-seaters is an option that looks great on paper. In the current labor environment at American, the Allied Pilots Association is sure to approve such a move.

Right after Hillary re-registers as a Republican.

New Business? Not. Then there's been the suggestion that Eagle, once independent, will be able to pursue other lucrative business opportunities by selling its services to mega-carriers other than AA. That's about as likely as a bidding war for a litter of stray kittens at Sotheby's. Eagle will be facing the fun ExpressJet is having with its excess ERJs.

Best guess, AMR will structure Eagle as some sort of spin-off, perhaps with a sweetened service agreement with AA to attract a suitor. And best guess, somebody'll bite at the deal.

In any case, it's another irrefutable piece of evidence that the RJ era is over. To be sure, Bombardier will do well selling larger CRJs to replace 50-seaters, but it won't represent growth in global RJ fleets.

It's all about economics.


Well-known member
Feb 13, 2002
Total Time
There were two more events this past week that underscored this dynamic. One was the SkyWest order for CRJ-700s and CRJ-900s, intended to replace existing 50-seat CRJs.
Actually they are replacements for 23 Brasilia's and 4 CRJ-200s. Maybe there will be a future order to replace the bulk of 50-seater's.


Well-known member
Aug 19, 2002
Total Time
Gonna be a lot of old crj/erj freighters out there eventually...

Sad thing is that the guys flying boxes in them when the planes are "over the hill" will most likey be paid alot more than their predecessors. DOJS(Dirty Dld Jet Syndrome) pays better than SJS.