AMERICAN EAGLE PREPARING TO SELL 14 ERJ-145s

17 July 2002

American Eagle today announced that it has reached an agreement in principle to dispose of 14 ERJ-145, 50-seat regional jets. Ultimately, these airplanes will be acquired by Trans States Airlines, an AmericanConnection carrier. The potential deal still requires the consent of the companies financing these aircraft and is subject to the negotiation of final documentation.

"We’re undertaking this move to ensure American remains in compliance with its Allied Pilots Association contract, " said Peter Bowler, American Eagle’s president. "We’ve always hoped that American and the APA would reach agreement on increasing the number of RJs that we can fly. But, in the absence of such an agreement, we must dispose of these airplanes. We are at least pleased that these planes will be flown by airlines connecting passengers to American rather than to one of American’s competitors."

American’s pilot contract limits the total flying done by regional airlines on American’s code. One of the provisions of that contract limits the total number of regional jets with more than 44 seats flown under the AA code to 67 aircraft. Eagle’s current delivery schedule of firm orders for new Bombardier CRJ aircraft, which feature seating for 70 passengers, will place the airline at this cap in January 2003.

The limitation places American Eagle at a competitive disadvantage to its competitors.

"Eagle is proud to operate more than 130 new regional jets from hubs and other cities across the country," Bowler said. "However, when expressed as a percentage of the total American Airlines fleet, Eagle’s regional jet fleet is considerably smaller than the comparable figure for American’s competitors and their regional affiliates."

If all parties approve the potential transactions, the planes will be delivered to Trans States beginning in November with the transition completed by early 2004. Operating the planes under its "AX" airline code, Trans States will determine how to deploy the aircraft later this year, with the first phase of deployment scheduled for its St. Louis hub where it feeds American Airlines.