Letter from Daniel Garton to Jose Galarza

Dear Jose:

As you know, the AMR Board of Directors has determined that it is necessary for AMR and its affiliates, including American, American Eagle, Executive, and EASI to file a Petition under Chapter 11 of the Bankruptcy Code. Over the past several years, we have made you aware of the cost challenges that Eagle faces and the need to be competitive in all aspects of our business. The AMR Board is looking to Eagle and its affiliates to address its cost disadvantages just as it expects American to do so.

The purpose of Chapter 11 is to permit a financial restructuring and thereby make AMR, American, and Eagle viable for many years to come; we are committed to actively pursuing that objective. Much work will need to be done, however, to achieve that goal, and the process will take some time. To ensure we are providing American with cost competitive feed, Eagle will begin preparations to seek changes to the Eagle TWU Agreements pursuant to Section 1113 of the Bankruptcy Code. We will notify you promptly when we are prepared to present new proposals which reflect our changed circumstances.

Unfortunately, the AMR bankruptcy petition makes it likely the divestiture of Eagle will not be concluded until the reorganization is completed. This is certainly not the outcome we have been working toward over the past 18 months, but we are hopeful we can emerge from bankruptcy as a more competitive, viable company and that our plans to become an independent airline will be realized.

We know our employees will have many questions about what the bankruptcy process will mean for them. We pledge to work with you to provide accurate and candid information as soon as we are able to do so.


Daniel P. Garton
President and Chief Executive Officer
American Eagle

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