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AMR Plans To Spin Off American Eagle

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FORT WORTH (AP) - The parent company of American Airlines said Wednesday it expects to spin-off regional carrier American Eagle, although it won’t completely rule out a sale.

AMR Corp. didn’t offer a timeframe for the plan. AMR, which is based in Fort Worth, Texas, said making American Eagle an independent company allows it to compete to provide regional service for other big airlines and grow larger.

American Eagle carries passengers from smaller cities to American Airlines hub airports. All major U.S. carriers use smaller airlines to run their regional flights.

The regional carrier had the fifth-most departures among major airlines in the 12 months ending in April, according to the Bureau of Transportation Statistics. But it consistently ranks towards the bottom of the pack in on-time performance and near the top on the number of lost or damaged bags and bumped passengers.

READ MORE: American Airlines Orders 460 New Planes

Getting rid of Eagle also allows American Airlines, which posted a $286 million second-quarter loss on Wednesday, to cut costs. It’s been considering a sale since 2007, but hasn’t found a suitable bidder. AMR does not break out profit and loss numbers for Eagle.

Big airlines are increasingly outsourcing their regional flights to reduce expenses. Last year, Delta Air Lines Inc. sold two of its regional carriers for $82.5 million.

As it proceeds with the spin-off, AMR says it remains open to other options, including a sale.

American Eagle has a fleet of about 281 small planes, each with between 44 and 66 seats. It took its first flight in 1984, and now operates about 1,500 per day. American Airlines runs more than double that — about 3,400 flights each day.

Last year, the company named American’s executive vice president of marketing Daniel Garton to head up American Eagle in an attempt to breathe new life into the airline.

(© Copyright 2011 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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