CoATP
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American Eagle fleet could put damper on sale
Friday November 30, 2007
American Airlines parent AMR Corp. may have decided to sell off its regional subsidiary American Eagle but there may not be a frantic rush by other regional airlines or investors to acquire it.
"At the end of the day, they have no growth," long-time regional airline analyst Doug Abbey told ATWOnline. AMR announced the decision to divest Eagle Wednesday (ATWOnline, Nov. 29), saying the regional is "fully capable of standing on its own and is well positioned to pursue growth opportunities outside of the AMR corporate structure." But Abbey was not as bullish on Eagle's prospects: "They haven't taken a new airplane since 2004, there is nothing on order and they have older aircraft. I don't think it's terribly attractive."
Analysts have predicted that Eagle could fetch $800 million-$1.2 billion for AMR. But whether another regional or group of investors will step up to make such an offer remains to be seen. "This [sale] has been floated before," Abbey said. "But clearly it's been given more consideration than it has in the past."
If AMR could offer a potential investor a guaranteed revenue stream for a period of 3-5 years, the deal might be more attractive, according to analyst Michael Boyd of The Boyd Group. But the 300-strong Eagle fleet is saturated with 37/44-seat RJs that now are out of production and quickly are losing their appeal as regionals continue to up-gauge, Boyd argued, adding that the fleet has "all the marketability of a litter of kittens."
He does see a glimmer of hope if one of the more successful regionals such as Republic Airways, Mesa Air Group, SkyWest Airlines or Pinnacle Airlines is able to strike the right arrangement with AMR. "It's not totally crazy if they could cut an ironclad contract that would guarantee revenue," he told this website. "That might be worth the risk. I think there are people out there who will try to cut a deal."
Too bad is AWAC, PSA, Comair, ASA, TSA, G*Jets aren't successful. I guess the China outfit is included in MAG.
Friday November 30, 2007
American Airlines parent AMR Corp. may have decided to sell off its regional subsidiary American Eagle but there may not be a frantic rush by other regional airlines or investors to acquire it.
"At the end of the day, they have no growth," long-time regional airline analyst Doug Abbey told ATWOnline. AMR announced the decision to divest Eagle Wednesday (ATWOnline, Nov. 29), saying the regional is "fully capable of standing on its own and is well positioned to pursue growth opportunities outside of the AMR corporate structure." But Abbey was not as bullish on Eagle's prospects: "They haven't taken a new airplane since 2004, there is nothing on order and they have older aircraft. I don't think it's terribly attractive."
Analysts have predicted that Eagle could fetch $800 million-$1.2 billion for AMR. But whether another regional or group of investors will step up to make such an offer remains to be seen. "This [sale] has been floated before," Abbey said. "But clearly it's been given more consideration than it has in the past."
If AMR could offer a potential investor a guaranteed revenue stream for a period of 3-5 years, the deal might be more attractive, according to analyst Michael Boyd of The Boyd Group. But the 300-strong Eagle fleet is saturated with 37/44-seat RJs that now are out of production and quickly are losing their appeal as regionals continue to up-gauge, Boyd argued, adding that the fleet has "all the marketability of a litter of kittens."
He does see a glimmer of hope if one of the more successful regionals such as Republic Airways, Mesa Air Group, SkyWest Airlines or Pinnacle Airlines is able to strike the right arrangement with AMR. "It's not totally crazy if they could cut an ironclad contract that would guarantee revenue," he told this website. "That might be worth the risk. I think there are people out there who will try to cut a deal."
Too bad is AWAC, PSA, Comair, ASA, TSA, G*Jets aren't successful. I guess the China outfit is included in MAG.
