In addition to its blockbuster aircraft order, American Airlines also announced it was “spinning off” American Eagle airlines to free AA up to use other regional airlines.  I’m not sure how you spin this as good news either.  Your mother company doesn’t want you anymore because your too expensive now.  How do you sell a company that no other airline will want to use?  By issuing stock to existing AMR shareholders. 

American Eagle is in bad shape to compete in the real world.  It lacks a fleet that other airlines would want and it burdened with quite a few ERJ-140 aircraft that no one wants.  They aren’t useful anymore and they’re getting kind of old for a regional airliner these days. 

The good news for pilots there is that they have an escape path from this train wreck in the making.  Existing American Eagle pilots will have the right to “upgrade” to American Airlines as American Airlines has need for new pilots.   Let’s take note that there are first officers flying the MD-80 aircraft who’ve been on reserve for 10+ years.  It sounds good that they have an escape path but that escape path is currently blocked. 

Yes, American Airlines probably should use other, more cost efficient regional airlines.  No, they aren’t really going to get much money for American Eagle.  They’ll be rid of it but that’s the best that can be said. 

Anyone notice that AMR lost money again?  $250million plus compared to other mainline legacy and SuperLegacy airlines who have, once again, earned good profits in a crappy economic climate.  American has improved its cash holdings by arranging a sale and leaseback of 30+ aircraft and that will give them some breathing room but there are lingering problems that don’t appear to be getting addressed by the board of directors.

First and foremost, what about your labor problems.  How can a company operate healthy if most of its service staff are angry, sad, bitterly disappointed, hateful and resentful they work in the airline industry?  You don’t earn profits despite that condition, you earn them when you fix that condition.  Why this isn’t a public discussion for AA, I do not know.  Directors aren’t requiring that the hard work be done.  Instead, they appear to continue to bless the existing conditions in the hope that one day other airlines will have just as crappy a situation as they do.

That isn’t sustainable.

And that goes to the other problem.  AMR leadership.  Many saw the “historic” aircraft order as “bold” leadership.  I’ll point out that A)  this was long overdue by a few years and B) it cost they virtually nothing to make the order.  There was no “risk” or “vision” involved.  That isn’t bold leadership.

We haven’t heard about how AA is going to focus on profitable routes and a profitable network system.  We haven’t heard how AA plans to compete against 2 mega-carriers in its midst who are operating profitably and who are addressing their problems (successfully and unsuccessfully, the point is that they are addressing them).  We haven’t heard a word about how AA plans to deal with a coming storm of competition with Southwest Airlines  who will be able to operate what flights it wants to domestically from Love Field airport in just a couple of years. 

Partnerships with others don’t fix problems.  Aircraft orders don’t fix problems (although I’ll concede that if they had these aircraft today, they would be a lot better off).  Selling off assets to improve cash  holdings doesn’t put you in position to win against your competition, it just allows you to fight a holding action longer. 

What does turn around an airline (or any other business), is strong management and leadership from the front.  American Airlines hasn’t got that.

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