AMR Says to Shed Regional Carrier America Eagle

AMR's American Airlines said Wednesday it plans to shed its regional carrier American Eagle.

The world's largest airline said the divestiture of American Eagle is in the best interests of AMR and its shareholders.

AMR shares gained 7.73 percent to $22.13 on the New York Stock Exchange.

American Eagle operates about 300 aircraft, with about 1,700 daily flights to more than 150 cities throughout the United States, Canada, the Bahamas, the Caribbean and Mexico.

In 2007, American Eagle expects to generate annual revenues of $2.3 billion.

The planned divestiture would include American Eagle, which feeds American hubs throughout North America, and its affiliate, Executive Airlines, which flies to destinations in the Bahamas and the Caribbean from Miami and San Juan, Puerto Rico.

AMR, which has been under pressure from investors to consider spinoffs as a way to boost share prices, said the transaction will allow American to focus on its mainline business. Once the two airlines separate, American Eagle will continue to provide American with regional flying, AMR said.

AMR said it is evaluating the form of the divestiture, which may include a spin-off to AMR shareholders, a sale to a third party, or some other form of separation from AMR.