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AMR to Proceed on Planned Eagle Spinoff Amid Market Turmoil

AMR to Proceed With Planned Eagle Spinoff
An American Eagle Embraer 135LR regional jet lands at Ronald Reagan National Airport in Arlington, Virginia.. Photographer: Andrew Harrer/Bloomberg

AMR Corp. will proceed with the planned spinoff of American Eagle amid the turmoil in U.S. markets, saying the move remains pivotal to the futures of the regional carrier and American Airlines.

“Both companies believe this is strategic to their long-term success, so we are expecting it to move forward as planned,” Roger Frizzell, American’s vice president of corporate communications, said in an e-mail today.

AMR tumbled 32 percent after directors agreed July 20 to divest Eagle, probably through a spinoff. The slump for the Fort Worth, Texas-based company was twice as much as the drop in the Standard & Poor’s 500 Index in the same period and the worst in the Bloomberg U.S. Airlines Index.

Separating from Eagle would let American seek other bids for regional flying while allowing the commuter unit to work for other airlines. A regulatory filing for a spinoff should come this month, and the deal may close this year, according to AMR, which hasn’t disclosed terms such as the distribution of stock.

“Get it done,” Michael Derchin, an analyst at CRT Capital Group LLC in Stamford, Connecticut, said in an interview. “The sooner you get it done, the better. Who knows what the markets are going to be doing?”

He recommends holding AMR shares.

AMR’s 14 percent increase today, the biggest one-day gain since September 2009, helped blunt the decline since the company decided to unload Eagle. The shares rose 48 cents to $3.81. The stock fell 57 percent this year through yesterday.

American plans to keep about $2.5 billion in debt and Eagle’s aircraft to improve the smaller carrier’s viability, a person familiar with the plan has said. American will lease the planes to Eagle for a token amount, said the person, who wasn’t authorized to speak publicly.

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