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American Eagle Airlines, Inc.

We have decided to grant American Eagle's request to suspend service. As we have noted in recent orders,  the U.S. air carrier traffic and revenues have dropped sharply as a result of the September 11 events. As indicated in testimony leading up to the Stabilization Act and a study by the General Accounting Office (GAO), many air carriers suffered precipitous losses in traffic and revenue as consequences of the September 11 events.

Even before the events of September 11, American Eagle was reporting significant losses. Our review of American Eagle's system operating results for the year ended December 31, 2001, shows that during this period American Eagle reported operating and net losses in each quarter, and for the year the carrier reported a total operating loss of $249.5 million and a total net loss of $255.7 million.^° American Eagle has also reported losses of $1.269 million for its O'Hare-Baton Rouge service for the year ended December 31, 2001, and, consistent with recent orders, we find this level of losses to be substantial. In this regard, we would not have required American Eagle to file additional financial information since the data for the year ended November 30, 2001, are close enough to the February 1, 2002, notice date to be considered current and relevant. The more current data simply reinforce the previously reported losses. Even Baton Rouge has not suggested that additional January 2002 data would reverse the reported O'Hare-Baton Rouge losses of the previous 11 months, only that an improving trend would be demonstrated. Finally, we do not find that Baton Rouge has demonstrated that American Eagle is seeking to terminate the O'Hare-Baton Rouge service based on a contractual arrangement between American Airlines and its pilots. Rather, we find that the American Eagle has demonstrated losses for its O'Hare-Baton Rouge service justifying grant of its request to terminate this service.

By:  Read Van de Water

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