Pinnacle Airlines Corp. could announce a new CEO to lead the Memphis-based regional air carrier as early as Monday.
Interim CEO Donald J. Breeding announced Thursday morning during a first quarter earnings report conference call with analysts and investors the company is close to making its choice.
The announcement came as Pinnacle said it lost $3 million in Q1 compared with Q1 2010 due to “major winter storms” that had a “negative impact” on its financial bottom line.
Pinnacle attributed $800,000 in costs to the process in the first quarter with “roughly” $12 million left for the rest of the year and early next year in integration costs, according to company chief financial officer Peter Hunt.
Pinnacle posted consolidated operating revenue for the first quarter of $298.2 million, which was an increase of $90.1 million over the first quarter of 2010.
Of the increase, $68 million came from its Mesaba Aviation Inc. subsidiary, which wasn’t part of Pinnacle in Q1 2010.
First quarter 2011 operating income of $9 million was down $4.8 million from first quarter 2010. The company attributed the decline to winter weather-related issues that came with performance penalties for delays and increased pilot wages under the new contract with the Air Line Pilots Association.
Pinnacle’s operating margin for the first quarter was 5.5 percent, down 3.3 points from first quarter 2010.
“We do expect to be profitable for the rest of the year,” Hunt said. “Earnings will not grow this year. … We do expect earnings to be down slightly year over year. But we do think in 2012, we’ll have a pretty major increase in earnings.”
Thursday’s earnings report conference call was the first since former CEO Phil Trenary stepped down.
The company’s executives in the previous earnings conference call, including Trenary, said 2011 would be a transitional year for Pinnacle as the company positioned itself for a more profitable 2012 after weathering an overhaul of its structure as well as rapidly increasing fuel prices that have greatly affected the airline industry as a whole.
Last week, Pinnacle announced the first quarter results would be down because of one-time costs from Trenary’s departure in March as CEO as well as costs from a new collective bargaining agreement with ALPA.
Trenary has a two-year consulting fee with Pinnacle of $1.7 million that includes a one-year no compete clause. The company is also paying Breeding and director Alfred T. Spain a monthly consulting fee of $27,100 each through the transition period.
The special items totaled $5.8 million for the quarter. They also included severance costs linked to the company’s plan to get its three subsidiaries, Pinnacle Airlines Inc., Mesaba Aviation Inc. and Colgan Air Inc., down to two carriers – one for turbo props and the other for jets.
The “integration” of the subsidiaries will be a priority for the new CEO. Hunt also announced that the integration is at a stage where the company will begin announcing its operating results by fleet type instead of a breakdown by the subsidiary.
“We’re really at the beginning of the integration program,” Hunt said, adding there will be more costs to come as a result.
Pinnacle’s search committee was to interview three finalists from within the company Thursday and three finalists from outside the company Monday.
“At the end of next Monday, we should be in a position to extend an offer to one of the six,” Breeding said. “I would anticipate … that we should have someone in place here sometime in the month of June.”