American Eagle Ascends Under the Radar

It's developed a financial footing that would be the envy of many larger airlines, posting a $49 million profit last year, while the industry overall lost billions.

American's pilots, however, aren't particularly happy with the growth at Eagle. Hunter of the American pilots union acknowledges that Eagle is needed to feed American's hubs.

But he adds that most pilots believe that growth at Eagle comes at the expense of American and the large carrier's pilots.

"Eagle was established to feed American, and they have drifted well outside of that mission," he said.

Eagle pilots, meanwhile, say the carrier's expansion has been a mixed bag. Many value the opportunity to fly jets instead of turboprops, and pay and benefits have improved somewhat since their contract was amended last year.

But most pilots joined Eagle with hopes of moving to American. Today they face the prospect of spending far more time at the regional carrier than originally intended. That's because American's growth has stalled, and fur8loughed American pilots are first in line for any new jobs.

For example, in their most recent round of contract talks, union leaders made a priority of improving retirement benefits. Previously, few Eagle pilots had worried about retirement, because they planned on moving to American soon and accessing that airline's pension plan.

"A significant portion of our pilots are now realizing that they're going to be retiring from this carrier," said David Ryter, an Eagle pilot who is vice chairman of that airline's chapter of the Air Line Pilots Association. "That didn't used to be the case, and that can be frustrating."

Ace in the hole

One significant difference between Eagle and most other regional airlines is its status as a wholly owned subsidiary of AMR. Other airlines contract with independent carriers for most of their regional service.

That relationship allows American and Eagle to coordinate more smoothly, Sbarra said.

"It's a completely integrated operation," he said. "That's more difficult when you have an independent regional partner."

It also means that Eagle is an asset that can be sold or spun off to investors if AMR needs to raise cash. Airline executives rejected that option in 2003, even as AMR flirted with filing for bankruptcy protection.

Since then, a sale has seemed less likely as AMR's bottom line has stabilized. But Delta Air Lines' recent sale of its regional subsidiary Atlantic Southeast Airlines to SkyWest for more than $400 million showed how cashing in can provide breathing space even for a cash-strapped carrier.

It's unclear how much Eagle - the largest regional airline - could fetch on the auction block, but the price could be as high as $1 billion, analysts say.

Regardless, Bowler said, Eagle will remain an important part of American's operation, even if operating as a separate company in the future.

"We think Eagle is the right size, and has the right priorities, for what we want to accomplish," he said.

Fort Worth Star Telegram

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