Questions on Holding Companies, specifically AMR Eagle Holdings Corporation


Questions on Holding Companies, specifically AMR Eagle Holdings Corporation
I was reading on wikipedia about holding companies. I was surprised on a few things about holding companies.
1. AMR Eagle Holdings Corporation owns all of American Airlines. How is this ownership different than if American Airlines were NOT owned by a holding company?
2. What benefits does it have if ABC Corporation were a part of a holding company VS if it were not part of a holding company?
3. What are the differences in a mutual fund and a holding company?
So why couldn't the founders of Google be a holding company that owns only one stock (that of Google itself)?
AMR Corporation (NYSE: AMR) is a commercial aviation business and airline holding company based in Fort Worth, Texas, United States.[1] Formed in 1982, as part of American Airlines's reorganization, its name derives from American Airlines's ticker symbol on the New York Stock Exchange. In addition to American Airlines, AMR owns TWA Airlines LLC, (formerly Trans World Airlines) and regional airlines American Eagle Airlines, successor to Simmons Airlines, and Executive Airlines by way of AMR Eagle Holdings Corporation. Regional Airlines flown in conjunction with American Airlines marketing brand, known as AmericanConnection, are independent of AMR Corporation's divisions and subsidiaries, but do operate in conjunction with them in order to provide seamless connections to AMRs two principal airline holdings. AMR's and AA's Chairperson, President, and CEO is Gerard Arpey.[2]
Reply to
2.7182818284590...

On Aug 28, 10:57 am, "2.7182818284590..." wrote:
Lots of legal reasons why and benefits to doing this. Basically holding companies protect assets and allow them to be bought and sold more easily. Take an example from "The West Wing" where they portrayed an oil company making each tanker its own "holding company" so if there were a spill punative damages would be limited. Or go back to Texas Air in the 1980s. TA had just a few employees and small office but owned Eastern, Continental, and other assets. When Eastern went on strike TA had the option of "leasing" the route to Continental and keep flying. Suggested Reading: "Grounded: How Frank Lorenzo Destroyed Eastern Airlines."
Same as above, limited liability and keeping assets seperate. Lets make another example. Say in the day GM had all five divisions as individual holdong companies. When they closed Oldsmobile they could just say "closed" and that was that. But as part of GM the dealers can say, "HEY, buy out the franchise if you want to do that!" Again, more legal things are involved to ask a lawyer about, but that is the gist of it.
Mutual funds are owned by many individuals for a stated investment goal. Holding companies are owned by very few even one entity to operate a business. They should not be discussed together for the most part.
Yes, and they might. Here is a good example. Many performers, say Billy Joel or someone like him, set up as corporation. Thus "Billy Joel, Inc" would stage all the concerts and cut the individual a paycheck.
Reply to
AZDuffman

AZDuffman,
You did a good job explaining all this to me. Regarding mutual funds *VS* holding companies: But even a corporation like Google is owned by hundreds of thousands of investors, and also, AMR is also owned by thousands of investors.
Why can't GE, Ford, Microsoft all of a sudden become a holding company of itself?
Reply to
2.7182818284590...

On Aug 28, 2:16 pm, "2.7182818284590..." wrote:
Not sure what you mean "a holding company of itself?" There are SEC rules about what is called circular-ownership so for example you could not have Company A owning Company B which owns Company C which owns Comapny A.
If I remember right, Texas Air was publically traded, but owned lots of holding companies. They even did things like fired all the Eastern ramp workers who made $15/hr way back, then made a holding company of something like "Gate Services, ltd" paying $7/hr. Point of the example that corporations can and do make holding companies, but need a reason, business, tax, or otherwise, to do so.
Reply to
AZDuffman

Thats just with the publicly listed corps. Those that arent listed are generally owned by far fewer.
Because it makes no sense to do it that way.
You dont have to do the IPO if you dont want it publicly listed etc.
In fact almost all started that way.
Its the IPO that makes those like Gates and Brin sinking rich tho, which might just be why they go that route.
Reply to
Rod Speed

2.7182818284590... wrote
Its essentially a mechanism for the owership of more than one company.
The reason for having more than one company is to allow the liabilitys etc of the separate companys to be kept separate, so you can sell off one company and keep the other assets etc conveniently.
Its more what the benefit of separate companys is.
They are completely different in the sense that mutual funds never hold more than a small part of the corps they own shares in. Holding companys usually own a much bigger percentage of the corps they own and dont own anything like as bits of various corps either.
And the ownership of mutual funds is very different to the ownership of holding companys.
That does happen at times but there isnt necessarily much point in going that route with just one company.
Reply to
Rod Speed

That varys with the jurisdiction.
less than 51%. The other 49% of each would
That isnt the main reason for the use of holding companys.
Reply to
Rod Speed

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