Anyone Wanna Buy A Regional Airline?

In a move met with strong approval on Wall Street, on Wednesday AMR Corp. -- parent of American Airlines -- announced it plans to sell off regional carrier American Eagle.

"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," said AMR Chairman and CEO Gerard Arpey. "We have worked hard over the years to build a regional airline that is fully capable of standing on its own and is well positioned to pursue growth opportunities outside of the AMR corporate structure."

Shareholders have pressured American for months to boost earnings, in part by divesting itself of its less-profitable operations. Other candidates for possible spinoff down the line include investment advisory subsidiary American Beacon Advisors, as well as the airline's maintenance unit, and its repair and overhaul operations.

Shares in AMR rose eight percent Wednesday on the news, to $22.19, reports The Wall Street Journal.

The move is also intended to help the carrier focus on its mainline operations, with regional services provided at competitive prices -- meaning, AMR wants the chance to assign regional routes to the lowest bidder.

"Earlier this year, American and American Eagle entered into a new regional flying agreement between the airlines that reflects market-based rates, which ensures that American continues to have access to quality feed on competitive terms," the airline said.

The company expects to complete the sale next year, though completion of any transaction and its timing will depend on a number of factors, including general economic, industry and financial market conditions, as well as the ultimate form of the divestiture.

Arpey noted American Eagle already functions with an independent management structure, separate from mainline operations, and handles its own financial reporting.

The planned sale includes both American Eagle, which feeds American Airlines hubs throughout North America, and affiliate Executive Airlines, Inc. -- which carries the American Eagle name throughout the Bahamas and the Caribbean from bases in Miami and San Juan, Puerto Rico.

FMI: www.aa.com