It took AMR (AAMRQ) years to give up on selling American Eagle, its regional air unit, and decide to spin it off to shareholders. Unfortunately, soon thereafter, the company voluntarily entered bankruptcy. Talk about bad timing. Throughout the process though, and most recently earlier this month, American Eagle CEO Dan Garton has reiterated that he expects American Eagle to be spun out into a standalone entity when AMR eventually emerges from Chapter 11. According to Mr. Garton, ”when we again evaluate this, I believe we’ll again determine that it’s the right thing to do.”
While under bankruptcy protection, Eagle has been able to renegotiate its contracts with its pilot union and is working on agreements with its other workers. This should help bring down what were some of the highest labor costs in the industry. As we noted in our earlier articles on the subject, the company still faces additional challenges such as a mismatched fleet, but it’s a start. Nothing to take action on right now, but worth filing away if this spin ever leaves its current holding pattern.
Disclosure: Author holds no position in any stock mentioned.
- AMR seen likely to try again to spin off Eagle (miamiherald.com)
- American Eagle CEO Sees Spinoff After AMR Bankruptcy Completed – Bloomberg (bloomberg.com)