Is AMR going to try to writedown Eagle??? Can't find a buyer, can't merge it with anything. Could they actually be scheming to put that on the balance sheet as a loss??? Wow. Not without a very large secondary share offering......think MESA.
Even so, I don't think its possible. Something is causing a very very large change in analyst EPS estimates. If it isn't the end of the world, what is it???
Who in their right mind would invest in Eagle as a stand-alone company? The legacy carriers are squeezing these regional airlines for every penny they can get. Eagle will be getting thrown into a shark tank to fight for scraps with the other sharks.
AMR should run Eagle through Chapter 11 (along with American) to get rid of a large percentage of the smaller planes and drop service to a large number of small cities. After this Eagle can come out with a better fleet and an exclusive agreement with the new American, then maybe AMR could find a buyer for eagle.
Jake, I'm not sure you get what is being forecast. Based on the downward revision of EPS in the last 30 days AMR will book an additional $415 Million in losses this year $345 Million next year. Combined that is $760 Million. The TOTAL market cap of AMR is $1.35 Billion.
Thats not a divestiture man, thats an insurance claim. Total loss situation. What has changed in a month???
What's changed is the Eagle divestiture. It looks like AMR is going to keep the debt. And since AMR is in talks with all 3 unions it gets to cry poor me at the bargaining table (making lemonade from lemons).
There is a reason AMR NEVER broke out financial data on Eagle. It is a money losing operation. Always has been/always will be. They'll get a 3-5 year feed agreement then they will be outbid by another operator and they will disappear into history. AA will recover some percentage of that flying back into the mainline and the feed will be right-sized. About 5-7 years out.
AMR is divesting AE. More details to follow when AMR files with the SEC. It should tell which assets go with AE and which stay with AMR. More importantly, how much debt goes with AE and how much stays with AMR.
Any new AE stock is not one I would own. I might short it but never be long in it.