AMR Corp has taken the next step in spinning off subsidiary American Eagle into a separate company.
The parent of American Airlines issued a Form 10 filing earlier, providing an overview of Eagle’s business, management and its ongoing relationship with American Airlines as it prepares for the move.
If the spin-off were completed, AMR would distribute to its stockholders 100 per cent of the outstanding shares of Eagle.
AMR and Eagle believe a spin-off would offer a number of benefits to both airlines.
American would able to diversify the source of its regional feed over time, lowering costs, for example.
In turn, Eagle would be able to grow its business by better competing to offer regional flight services to other mainline carriers, while each company could allocate resources and deploy capital in a manner consistent with its strategic priorities in order to optimise total returns to shareholders.
Eagle would maintain nine-year air service agreement with American and would initially operate 281 aircraft on behalf of American.
On a pro forma basis, in 2010, Eagle generated $1.2 billion in revenue with more than $250 million from ground handling services.
“The filing of Eagle’s Form 10 is an important milestone in a potential spin-off that we expect would provide significant benefits for both companies and maximize value for our shareholders,” said AMR chairman Gerard Arpey.
“The spin-off would enable American over time to diversify its regional feed and to continue to procure the most competitive rates and service, while also enabling Eagle to more effectively compete for new business.
“We look forward to taking the next steps toward completing this process.”
Eagle would operate the third largest regional airline in the United States as it provides the vast majority of
American’s regional flight operations.
Eagle would also operate one of the largest ground handling operations in the U.S., serving American Airlines and other passenger airlines at more than 100 airports in the U.S., the Bahamas, the Caribbean and Canada.