Pinnacle 'at Crossroads,' CEO Says

If Pinnacle Airlines can reclaim the 15 planes it lost after Northwest Airlines filed for bankruptcy and even half of the 36 regional jets up for grabs, it could add 620 employees, nearly 200 of them pilots.

The message from Pinnacle president and chief executive Phil Trenary was clear in a conference call with employees early Friday: "There are two ways to kill an airline. Either you grow too fast or you don't grow at all."

Although not in a crisis, he said, "We are at a crossroads."

The issue is how fast Pinnacle can get an agreement with its 1,400 pilots. Without it, Pinnacle may lose the ability to negotiate with its only customer.

Northwest Airlines contracts with Pinnacle to fly nearly 700 of its routes, using 50-seat regional jets.

Thursday, Northwest announced it was purchasing 72 new planes and planned to split them between Compass Airlines, the subsidiary it intends to begin flying in the first half of 2007, and the regional carriers that offer Northwest the best deal for flying its feeder routes.

Pinnacle has submitted a proposal - subject to pilot costs - and is competing for the bid against companies with known costs.

Pinnacle is scheduled to meet in final negotiations Tuesday and Wednesday with Northwest, which has told Pinnacle there will be no deal until it settles with its pilots.

The sides have been talking for 19 months, including three days in federal mediation last week.

Pilot spokesman Wakefield Gordon says the union feels no urgency.

"The company has imposed drop-dead deadlines so many times, we are vaccinated against them.

"We have no way of knowing if this is drop dead or not," said Gordon, scheduled to be gone next week on vacation.

Pinnacle says it is offering raises and benefit packages to compensate its pilots on a par with industry averages.

Among other requests, Trenary said, the union had demanded that captains at Pinnacle be paid what officers of narrow-body planes earn at Northwest.

Regional airline specialist Doug Abbey at The Velocity Group says the demand would doom Pinnacle.

"I can't imagine why the pilots at Pinnacle wouldn't be over the moon about securing additional planes, larger capacity and new-generation equipment."

The chance to fly the "biggest, best and newest planes," he said, "is clearly an incentive to put forward a credible proposal to Northwest."

Behind the scenes, industry experts say the Air Line Pilots Association, the union that represents Pinnacle pilots and pilots at many airlines where pay has been cut, including Northwest, believes airline profits are beginning to improve at labor's expense.

They say ALPA International president Duane Woerth, up for re-election Oct. 18, has made it quietly clear in his campaigning that the era of pilot give-backs is over.

Darryl Jenkins, independent aviation consultant in Virginia, says "contracts negotiated in these times will be very, very contentious.

"You can't use bankruptcy as leverage anymore. Airlines are making a little money. The time for big give-backs is over," he said.

"I think you will see the unions fight to get back some of the things they lost in the last five years. The question is, how patient will they be?"

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