American Eagle pilots evaluate prospective spin-off

Washington DC
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With an eye on a spate of regional airlines being sold off, pilots at American Eagle say that parent-company American Airlines would need to make the case that a spin-off would be good for Eagle employees.

"Although we are not positive that Eagle will be divested, every indication is that a divestiture is more real today than ever before," says Tony Guiterreiz, chairman of the Air Line Pilots Association unit that represents Eagle pilots, in a letter to his fellow pilots. "There is no surprise that in the wake of significant mainline consolidation over the past few years, regional airlines are following suit."

After discussions with American Eagle CEO Dan Garton, Guiterrez explains that while nothing has been decided, management is seriously considering the possibility.

Eagle pilots were told that by September an investment bank could be placed under contract to advise management concerning a divestiture and to evaluate Eagle's financials and market position.

Four regional carriers have become powerhouses in the industry, through recent acquisitions. Republic Airways Holdings operates Shuttle America, Chautauqua and Republic Airways and acquired Midwest Airlines and Frontier Airlines last year; Pinnacle Airlines acquired Colgan Air in 2007 and recently acquired Mesaba Airlines; SkyWest acquired ASA in 2005 and this week announced the acquisition of ExpressJet; and Trans States has acquired Compass Airlines.

A spokesperson from American Airlines says that an Eagle spinoff could be in the future. "Back in June, American reiterated its intent to evaluate the possible divestiture of American Eagle," the spokesperson says. "That has not changed."

Guiterrez tells pilots that Eagle could be sold to a "strategic buyer" or a private equity firm; through a merger or acquisition by another carrier; a public offering where stock is sold or a stock split divestiture.