Pinnacle Airlines Corp Announces Bankruptcy
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PRESS RELEASE - Pinnacle Airlines Corp Enters Bankruptcy
The parent company of regional airlines that fly on behalf of Atlanta-based Delta Air Lines and other carriers has filed for Chapter 11 bankruptcy protection.
Memphis, Tenn.-based Pinnacle Airlines Corp. -- which owns Pinnacle Airlines and Colgan Air -- filed its petition for relief in U.S. Bankruptcy Court for the Southern District of New York. The airlines fly as Delta Connection, United Express and U.S. Airways Express.
“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," Sean Menke, president and CEO of Pinnacle, said in a news release. "Quite simply, our current business model is not sustainable, as increasing operating expenses, liquidity constraints, business integration delays and difficulties associated with combining our operations have hindered our ability to maximize our growth potential. Following a lengthy review process, and with the assistance of independent financial, industry and legal advisors, our Board of Directors determined that a court-supervised restructuring is the only feasible course of action to implement our turnaround plan.”
Delta, according to Pinnacle, has pledged $74.3 million in so-called debtor-in-possession financing (DIP Financing) to help with ongoing operations. To save money, the airline also wants to reduce labor costs, rework its agreements with Delta and wrap up the "wind-down" of Essential Air Service (EAS) flights for U.S. Airways.
“We are committed to delivering safe, reliable travel throughout this process, and thank all of our employees for their continued focus on providing our mainline partners and their customers with on-time flights and superior in-flight service," Menke said. "Our objective is to emerge from this process as a stronger, more focused company, with a revised business model, a substantially improved cost structure and operating agreements that will position us for profitable growth in the future.”
Through its subsidiaries, Pinnacle uses 199 regional jets and 62 turboprops to operate more than 1,540 daily flights to 188 destinations in Belize, Canada, Mexico and the United States.