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Essentia l Ai rServic e a t Waterloo , Iowa

. unde r4 9 U.S.C

. 4173 1 e tseq . DOT-OST-2011-013 2

AMERICA N EAGL E AIRLINE S PROPOSA LT O PROVID E ESSENTIA LAI R SERVIC E A T WATERLOO

. IOW A

America n Eagl e Airline s ("America n Eagle") , a wholl yowne d subsidiar yo fAiVl R Corporation , respectfull ysubmit s it s proposa l t o provid e subsidize d Essentia l Ai rServic e t o Waterloo , Iowa

. America n Eagl e propose s servic e fro m AMR' s hu b a tChicag o O'Har e Internationa l Airpor t ("ORD" ) t o th e Waterlo o Regiona l Airpor t("ALO") , wit h tw o dail yround-trip s o n Embrae r Regiona l Je taircraft

. -America n €agl. e i s th e predominat e regiona l carrie rfo rAmerica n Airlines , offerin g approximatel y1,70 0 dail ydeparture s wit h servic e t o nearl y18 0 cities

. Throug h ou r relationshi p wit h American , ou rcustomer s hav e acces s t o mor e tha n 25 0 cities , 4 0 countrie s • an d mor e tha n 3,40 0 dail ydepartures

. I n addition , ou roneworld ® allianc e provide s ou r customer s acces s t o ove r70 0 destination s i n 14 0 countrie s worldwide

. Schedule s an d pricin g ar e coordinate d acros s th e expans e o fth e America n Airlines , Britis h Airways , Iberi a Airlines , Japa n Airline s an d QANTA S Airway s networ k throug h ou rimmunize d alliance s unde rth e oneworld ®

banner

. A tOR D alone , American , America n Eagl e an d America n Connectio n offe r mor e tha n 50 0 dail ydeparture s t o ove r11 5 destinations

. Thi s direc tacces s t o th e vas t America n an d oneworld ® networ k

wil l ensur e Waterlo o remain s a vibran tan d growin g par to f th e nationa l ai rtransportatio n system
. America n Eagl e ha s mad e a renewe d commitmen tt o th e Essentia l Ai rServic e marke ti n 2011 , winnin g th e righ tt o serv e Joplin , MO , Gran d Island , NE , an d Watertown , NY. , an d biddin g t o serv e Garde n City , KS

. I n addition , w e hav e bee n servin g smalle rcommunitie s fo rman yyears . I n th e cas e o fRoswell , NM , w e too k a marke ttha twa s o n th e verg e o fsubsidize d servic e afte r Mes a Airline s announce d it s departure , an d turne d i tint o a self-sustainin g marke twit h fou r dail yflight s t o DFW

. I n Manhattan , KS , America n Eagl e wa s brough ti n t o serv e th e communit y throug h a partnershi p wit h th e stat e o fKansas

. Sinc e beginnin g servic e i n Augus t2009 , w e hav e no tonl ymad e th e DFWservic e self-sustaining , bu tadde d servic e t o OR D 1 5 month s late r (Novembe r2010) , an d wil l ad d a secon d dail yfligh tt o ou rOR D hu b thi s winte r(Novembe r2011)

. America n Eagl e hope s an d believe s tha tw e wil l hav e as muc h succes s i n Waterlo o as w e

hav e ha d i n othe rregion s o fth e country
. America n Eagl e woul d lik e t o reques t th e abilit yt o operat e an yo fou rthre e variant s t o Embrae r Regiona l Jet s fo rth e sam e subsid yamount
. Allowin g u s t o substitut e 37- , 44 - o r50-sea tRJ s wil l provid e u s th e flexibilit yt o matc h suppl ywit h demand , as wel l a s provid e operationa l flexibility , whic h wil l improv e reliability

. America n Eagl e als o request s tha tth e DOTan d Waterlo o waiv e th e righ t t o hold-i n America n Eagl e upo n issuanc e o fa 12 0 da ynotic e t o terminat e service

. Althoug h w e d o no t forese e thi s t o b e a n issu e an d pla n o n servin g Waterlo o fo rman yyear s t o com e i fselected , w e canno t b e operationall yconstraine d an d kep ti n a marke tindefinitely , withou t th e abilit yt o adap t t o a changin g marketplace

. W e believ e tha t ou rhistor yo fsucces s i n smalle rcommunitie s ar e demonstrativ e o fth e qualit y o fAmerica n Eagle' s produc t an d o fth e strengt h o fth e America n an d oneworld ® brand s an d network

. Further , America n Eagl e i s th e onl yregiona l airlin e wit h a dedicate d Marketin g an d Sale s grou p tha t work s side-by-sid e wit h smalle rcommunitie s t o promot e th e servic e an d stimulat e traffic

. W e loo k forwar d t o servin g Waterlo o an d th e surroundin g region , an d appreciat e th e community' s an d th e Departmen t o fTransportation' s consideratio n o fAmerica n Eagle

.

Sin e

Rober t M

. Emric h Managin g Director , Plannin g an d Schedulin g America n Eagl e Airline sMarket :

Aircraft : Waterloo

. l At o Chicag o O'Hare Emb14 0 Mileag e Annua l Dep s (Factored ) Bloc k pe rDa p Annua l Bloc k

Hour s (Factored ) Completio n % 

### 23 7 1,32 9 1.0 8 1,42 8 98 % Numbe ro

fSeats pe rDe p 4 4 Annua l ASM s (Factored ) 13,854,64 1 Annua l RPM s 10,241,35 0 Annua l L F 74 %

Revenues Annua l Passengers Avg Fare - Onboard 

### 43,21 2 91.9 7 Expense s Fligh t operation s Passenge rrelate d Fue l Station s Othe r $ 3,974,24 9 $ 1,734,00 5 S 434,07 5 $ 1,623,592 S 1,127,91 7 $ 333,81 3 Profit/(Loss ) Profi t Elemen t (@5% ) Subsid yrequire d Subsid y/

Departur e Subsid y/

Passenge r $ 5,253,40 2 $ (1,279,154 ) $ 262,67 0 $ 1,541,82 4 1,160 35.6 8

Segmen t ALO-OR D ORD-AL O ALO-OR D ORD-AL O Propose d Schedule * Depart 6:3 0 14:3 0 16:2 0 19:3 0 Arriv e 7:3 0 15:45 17:2 0 20:4 5 Frequency Dail y Dail y Dail y Dail y

' Schedul e i s shown fo rillustrative purposes onl yan d America n Eagl e reserves th e righ tt o change withoutnotic

e