Pinnacle Nears Exit From Bankruptcy

Jan. 17, 2013
Pinnacle's plan since filing bankruptcy last April 1 has been to emerge as an exclusive Delta Connection carrier

Jan. 17--U.S. Bankruptcy Court on Wednesday approved an array of agreements that provide Memphis-based Pinnacle Airlines with a clear path to survival.

Pinnacle president and CEO John Spanjers hailed the court action as a milestone in Pinnacle's fight to come out of Chapter 11 bankruptcy as a smaller regional carrier wholly owned by partner Delta Air Lines.

Pinnacle was directed to file a plan of reorganization acceptable to Delta and the creditors' committee by Feb. 15.

Among the approved items was a pilot labor agreement, freshly ratified by Pinnacle's Air Line Pilots Association unit; an agreement that calls for Delta or an affiliate to acquire Pinnacle's equity post-bankruptcy; and modifications of Pinnacle's current operating agreements with Delta.

The court action goes a long way toward assuring Pinnacle's future, but it remains to be seen if the trimmed down carrier keeps Memphis as its corporate headquarters. Company officials have said they expect to make a decision on that by Jan. 31.

Pinnacle's board is scheduled to discuss the matter, among others, during a conference call on Friday.

"The agreements represent a significant milestone in Pinnacle's restructuring and provide a clear and achievable path toward emergence from Chapter 11," Spanjers said in a company release.

"Pinnacle will be well positioned to emerge from the bankruptcy process with a viable business plan that provides meaningful opportunities for our employees. We also thank Delta, our partners, employees and other stakeholders who have helped us achieve this milestone."

Pinnacle's plan since filing bankruptcy last April 1 has been to emerge as an exclusive Delta Connection carrier.

Amendments to Pinnacle's operating agreements with Delta call for Pinnacle to receive Delta Connection's next 40 CRJ-900 aircraft awarded, setting Pinnacle's long-term fleet plan at 81 CRJ-900 aircraft. The aircraft deliveries are planned to start this fall and continue until the end of 2014. Pinnacle's 140 CRJ-200 aircraft will be removed from operation over the next two to three years.

Also approved was a plan for Delta to provide Pinnacle with $30 million of additional liquidity to support its continued operation through emergence from Chapter 11 and an additional $22 million to fund certain required payments to Pinnacle's pilots under a bridge agreement and related employer taxes. The amendment would also extend the maturity date for the credit facility from April 1 to May 15.

Delta has provided Pinnacle's debtor-in-possession financing to keep it afloat during bankruptcy.

Copyright 2013 - The Commercial Appeal, Memphis, Tenn.