American Eagle fate unclear with merger

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A decision on the future of American Eagle Airlines is still to come as American Airlines and US Airways work towards their merger.

Doug Parker, chairman and chief executive of US Airways, declines to comment on the fate of American Eagle, including the possibility of divesting the wholly-owned regional subsidiary, on the sidelines of a press conference in Dallas on 14 February. He adds that there are still many decisions to be made before the merger closes, which is expected in the third quarter.

"The lift that's currently being provided by Eagle to the network, as far as I know, will entirely be needed at the larger airline," he says.

American and US Airways announced that they would merge to create the world's largest airline with more than 170 million annual passengers and nearly $40 billion in annual revenues on 14 February. The all-stock deal is valued at more than $11 billion.

Parker will be chief executive of the new airline, which will retain the American name, while Tom Horton, chairman and chief executive of American, will be non-executive chairman.

American was planning to spin off American Eagle as a separate company prior to its entering chapter 11 bankruptcy protection in November 2011. Those plans were delayed due to the filing but were widely expected to be included in American's reorganisation plan with the bankruptcy court.

"It is far too early to tell how this merger will ultimately affect the regional carriers that support American Airlines and US Airways," says the Air Line Pilots Association (ALPA) American Eagle pilots master executive council in a statement.

"We look forward to working with the new management team as well as finalising arrangements to fulfil our fleet plan to provide regional flying as part of the new American Airlines network," it says.

American's capacity purchase agreement with Republic Airways for 53 76-seat Embraer 175s is also in question. Asked by reporters the status of the deal, Horton says that they are "still working on that" and declines to go into specifics, in Dallas on 14 February.

The number of large regional aircraft - those with 66 to 76 seats - is set at 25% of the combined American and US Airways mainline narrowbody fleet through 2016, based on an interim labour agreement between the two airlines and their respective pilots unions. This translates to 200 large regional aircraft with a combined narrowbody fleet of 801 aircraft, according to American and US Airways data.

The 38 Bombardier CRJ900s and 38 Embraer 175s in the US Airways Express fleet are grandfathered into the contract and exempt from the restrictions. Excluding these jets, the combined regional fleets have 81 large regional aircraft.