Dear Eagle and Executive Employees:
This morning, American Eagle took the next step toward independence by filing a “Form 10 Registration Statement” with the Securities and Exchange Commission (SEC). This is a standard document that is required of all companies wishing to become a publicly-traded entity and provides details about American Eagle as a stand-alone company. More than that, it marks another step in the process to forge our future as an independent airline.
The Form 10 provides a summary of Eagle’s structure and assets, our agreements with American Airlines to provide regional air service and ground handling services, historical financial information and our business plan to succeed as an independent company. It also includes the standard disclosure of potential risks that is required in any communication regarding investments. It will be reviewed by the SEC in the coming months. While we do not yet have a date for a spin-off, we will be better able to determine that date following the SEC review.
Of particular interest to Eagle employees are the duration of the agreements and the pace at which American may begin to bid out portions of its regional flying or ground handling to other competitors. The Air Services Agreement (ASA) will govern the flying services Eagle provides to AA, and will have a nine-year term from the date of spin-off. It includes a schedule outlining when American has the option to bid out certain portions of its regional flying. Under the ASA, American has the right to withdraw up to 12 ATR aircraft from Eagle per year, beginning in January 2012. While American has not indicated whether it plans to do so, if they elect to exercise that option and bid that flying out to other regional carriers, American Eagle would be an active participant competing to retain that business. The first of Eagle’s regional jet flying would not be impacted until 2014.
The Ground Handling Agreement (GHA) covers Eagle’s airport ground handling operations for American and will have an eight-year term from the effective date of a spin-off. American would have the right to re-bid ground handling services at a specified number of airports each year.
While this is certainly a period of change for Eagle, it is also an exciting time – after many years of deliberation by AMR and more than a year of hard work by so many members of the Eagle team, we are moving ever closer to having full control of our destiny and the ability to seek out new opportunities.
I’d like to reiterate something we have communicated throughout the process – that American Eagle already operates very independently from American and the majority of employees will see few, if any, changes immediately following a spin-off. Our pay scales, benefit plans, work schedules, vacation and travel privileges, 401(k) Plan, etc. will remain the same – and we will continue to operate as “American Eagle” for as long as we are serving American. So, while I know that the thought of becoming an independent company is unsettling for many, rest assured that we are working to minimize the impact on our people.
I am personally and professionally encouraged by the progress demonstrated by today’s filing. But I am also well aware of the challenges we will face. This industry is intensely competitive and it will not be easy to transform Eagle from a wholly-owned subsidiary into an independent company overnight. I’m sure we will have growing pains along the way – but I am equally confident that we are up to the challenge. Answers to a number of frequently-asked questions will be available on Jetnet and we will continue to share any new developments with you.
I am immensely proud of the job you do every day, operating safely and serving our customers. And I know that together we can continue doing an outstanding job for American, while seeking out new customers that will allow Eagle to grow and prosper.
Thanks for all you do,
Dan Garton
President & CEO
