Pinnacle Airlines Corp. (NASDAQ: PNCL) has announced that the company and its subsidiaries have filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the Southern District of New York.
Pinnacle said it intends to use the Chapter 11 process to implement a comprehensive turnaround plan aimed at addressing its operational and financial challenges in a rapidly evolving regional airline industry.
The company said it will remain focused on providing passengers with safe, reliable and timely service in collaboration with its network partners, Delta Connection, United Express and US Airways Express.
Pinnacle said it expects to accomplish several key initiatives including a return to profitability and remaining viable over the long term as the regional airline industry continues to contract and transform.
These initiatives include restructuring its key operating agreements with Delta Air Lines, winding down its operations with United Airlines, completing the wind-down of its Essential Air Service (EAS) flying with US Airways, achieving cost savings from its workforce, identifying additional opportunities across the organization to reduce costs, and ensuring that it has the appropriate fleet, staffing levels and network to operate profitably on an ongoing basis.
Sean Menke, president and CEO of Pinnacle, said, “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."
Pinnacle said it has received a commitment for secured super-priority debtor-in-possession financing from Delta Air Lines, Inc. in the amount of $74.3 million. Following Court approval, $44.3 million will be used by Pinnacle to repay a secured promissory note held by Delta. The remaining $30 million in DIP financing, combined with cash generated by Pinnacle’s ongoing operations, will be available to help ensure that Pinnacle has sufficient liquidity to meet its operational and restructuring needs.
Pinnacle says it is seeking to ensure the continuation of normal operations, including requesting Court approval to continue to pay employee wages, salaries and benefits without interruption and to pay suppliers for fuel and other goods and services provided after the filing date.
Pinnacle Airlines Corp. is a $1 billion airline holding company with 8,000 employees and is the parent company of Pinnacle Airlines, Inc. and Colgan Air, Inc. Flying as Delta Connection, United Express and US Airways Express, Pinnacle Airlines Corp. operating subsidiaries operate 199 regional jets and 62 turboprops on more than 1,540 daily flights to 188 cities and towns in the United States, Canada, Mexico and Belize.
Visit www.flypinnacle.com