Deal signed to outsource some flying!

[WorldTraveler]

yes, I was surprised by the use of pretty accurate numbers in the filings.....

It probably says that the value of 50 seaters (and smaller) is so low that it isn't worth hiding because everyone knows it.
It still leaves AMR with a fleet of 175ish aircraft worth over $1B which they are contractually required to use for at least 5 more years.

The chances are fairly high that AMR or a buyer will take a writeoff on the $1B several years down the road and this exercise just reduced the size of the writeoff.
Until AA has sufficient numbers of new generation smaller jets, it doesn't really matter what the value of the fleet is because they are necessary in order to maintain the network.
At some point, it will be worth it for most of the rest of the US industry walking away from larger and larger chunks of the 50 seat and smaller fleet because the economics will make it increasingly unlikely they can be used profitably.

Given that all US carriers have a minimum of 100 50 seaters (or smaller) in their fleets for the next few years, the financial exercise is simply to continue to use the asset until they can be retired, either as a write off or not.
Many carriers besides AA also have long-term contracts with contracted regional carriers which will are probably more tricky to renegotiate than just getting rid of the aircraft.
AA might have an advantage over other airlines in that regard.

 

[FWAAA]

It still leaves AMR with a fleet of 175ish aircraft worth over $1B which they are contractually required to use for at least 5 more years.

Agree with everything in your post except this part. The filing claims that under the revised terms of the ERJ debt, AA is permitted to pay off individual planes without any prepayment penalties, so theoretically, AA can fly them or ground them on its own terms without any fixed term of contractual use. Of course, it will take some time for AA to acquire 200-300 large RJs, so some of them may still be flying five years from now. On top of that, there may be a few markets where 50-seaters continue to fly even after AA has acquired its fill of 76-seaters.

The Skywest contract is a four year deal for 23 CRJ200s, so AA is stuck with them for four years unless AA pays whatever Skywest wants to terminate that flying early.

 

[WorldTraveler]

ok...thanks for noting that... it is relevant that AA is only obligated for the total value but gives AMR freedom to wind down the fleet on its terms.

 

[eolesen]

And knowing that AA has that flexibility to wind down the fleet on its own terms is going to set the tone for anyone looking to bid on Eagle flying.

The 37 seaters would make a great small charter or corporate airframe. But corporate jets are still a sign of greed, so they'll go bake in the desert for now.

 

[FWAAA]

This is just wild-ass speculation, but I'd bet that Embraer might be willing to help with some of the outstanding balance if AA orders a large number of 175s/190s. Of course, Bombardier might also be motivated to help out if AA were to order a large number of CRJ900s.

 

[WorldTraveler]

Bombardier is really hurting for orders so yes they very much would consider some sort of trade... even w/ hefty discounts, the entire remaining EMB fleet at AA is comparable to the price of about 30-40 CRJ 900s... so there is a huge opportunity for one or more manufacturers to participate in the AE refleeting. It is also possible that AMR could order the new aircraft and still place them w/ contract carriers to allow AMR to be able to negotiate a large order and dispose of the AE fleet, something a contract carrier has no desire of getting in the middle of.

 

[Lloyd Grey]

Maybe this is the first step in getting rid of American Eagle. Outsourcing is what American says they need to do to stay competitive.

I always thought American Eagle was the definition of "outsourcing". ​

- Mongo only pawn in game of life. ​