AMR Plans To Spin Off American Eagle

Wednesday, November 28th 2007, 2:31 pm
By: News On 6

DALLAS (AP) _ The parent of American Airlines said Wednesday it plans to sell or spin off its American Eagle regional carrier next year. Its shares rose 8 %. Investors have been pressing AMR Corp. to sell the regional carrier and other assets, moves they say could raise money and lift AMR's stock price. American Airlines is the nation's biggest airline.

American Eagle operates regional jets that connect American Airlines hubs such as Dallas-Fort Worth with smaller cities. It has about 300 planes and operates about 1,700 daily flights to more than 150 cities in the United States, Canada, Mexico and the Caribbean. It generates annual revenue of about $2.3 billion.

Fort Worth-based AMR said in a statement that it is still studying whether to spin off Eagle to AMR shareholders, sell to a third party or divest the carrier in some other way. Although planned for 2008, the timing of the divestiture could be affected by economic, industry and financial-market conditions, the company said.

AMR said divesting Eagle ``is in the best interests of AMR and its shareholders.'' AMR said the move would also give Eagle the chance to win new business and provide new opportunities for its employees.

Shares of AMR jumped $1.65 to $22.21 in afternoon trading.

``The decision comes after a careful and deliberate evaluation of the strategy that will best enable us to continue to create value for our shareholders,'' AMR Chairman and Chief Executive Gerard Arpey said in a statement.

Arpey said the company had built Eagle to be ``fully capable of standing on its own and is well-positioned to pursue growth opportunities outside of the AMR corporate structure.''

The divestiture would also include Eagle's Executive Airlines Inc. affiliate, which operates American Eagle flights in the Bahamas and the Caribbean from bases in Miami and San Juan, Puerto Rico.