US regional Pinnacle declares bankruptcy
Published: April 2, 2012
Pinnacle Airlines Corp., the Memphis-based parent of regionals Pinnacle Airlines, Colgan Air and Mesaba Aviation, filed for Chapter 11 bankruptcy protection in a New York court.
The company had warned late last year that it was in serious financial peril ( ATW Daily News, Dec. 9, 2011 ). President and CEO Sean Menke said in a statement issued Sunday, “We intend to use the Chapter 11 process to reset our financial and operational structure in order to position Pinnacle for viability over the long term. Quite simply, our current business model is not sustainable.”
Pinnacle said it has received “a commitment for secured super-priority debtor-in-possession financing from Delta Air Lines” (DL) totaling $ 74.3 million. It added that $ 44.3 million of this will be used to repay a secured promissory note held by DL while the remaining $ 30 million, combined with cash from ongoing operations, “will be available to help ensure that Pinnacle has sufficient liquidity to meet its operational and restructuring needs.”
During the Chapter 11 process, Pinnacle said it plans to restructure “key operating agreements with Delta Air Lines,” wind down United Airlines flying, end US Airways’ Essential Air Service (EAS) routes and gain concessions from workers. Menke said “restructuring is the only feasible course of action” given Pinnacle’s fiscal woes.
He emphasized that the regional operator is “committed to delivering safe, reliable travel” while reorganizing under Chapter 11. The company said it will end Colgan Saab 340 flying for United Express by Aug. 1. Also, Colgan’s Q400 fleet will be retired by Nov. 30.
Pinnacle Airlines Corp. has 8,000 employees and operates 261 regional aircraft on more than 1,540 daily flights to 188 destinations in the US, Canada, Mexico and Belize.