AMR, holding company for American Airlines and American Eagle, is saying that it might keep the more than $2 Billion in debt that is associated with American Eagle in order to give them a good send off in the attempted spin-off of the airline.  In addition, they’re considering leasing the existing aircraft to American Eagle at a token rate to give them an additional boost.

Why?  Because it’s damn hard to sell a regional airline that primarily is stocked with 1st generation 50 seat regional jets.  No one wants a company laden with old equipment.  Furthermore, American Eagle is already overburdened with higher labor costs than many regional airlines.   There is a reason why Delta couldn’t find a buyer for the similar COMAIR regional airline. 

That means that AMR is willing to take on additional debt risk just to find a way to enjoy the lower costs of other regional airlines servicing their routes.  That willingness makes me wonder just how far out of line their labor costs are with other regional airlines.

Filed under: Airline News by ajax