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VOL. 125 | NO. 171 | Thursday, September 02, 2010

Pinnacle CEO: No Decision on HQ Yet

By Andy Meek

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Pinnacle Airlines Corp. appears to be in the final throes of making a decision about where it will relocate the corporate headquarters it’s outgrown near Memphis International Airport.

Phil Trenary, president and CEO of the Memphis-based regional air carrier, sent a question-and-answer document to company employees this week by way of providing an update on the headquarters search.

Among other things, he said the company is likely to make a decision soon about what is generally understood to be a choice between three sites – remaining near the airport, moving Downtown to One Commerce Square or shifting south of the state line to Olive Branch. He also shot down the rumor the company has already reached a preliminary agreement with the winning site owner.

Pinnacle board members have only formally toured two sites – One Commerce Square and offices at Corporate Plaza near the airport. Mississippi’s pitch to Pinnacle involves a build-to-suit arrangement, so there’s no infrastructure to tour in Olive Branch.

“Groups representing downtown at One Commerce Square and up the road at Corporate Plaza are putting their best proposals together,” Trenary told employees. “We’ve toured both facilities and are more than satisfied that either one of those locations would absolutely meet our needs, but at this point neither group has provided us with their final bid. Once we receive those bids, we’ll compare all bids and make the best decision.”

Trenary did acknowledge Pinnacle executives were impressed with Mississippi’s offer to convince the company to move to DeSoto County. And he suggested that third option may not yet be out of the running.

“We’ve said that it is our desire to remain a Memphis company,” Trenary said. “Mississippi offered a very generous package of incentives to entice us to locate in Olive Branch. From an economic point of view, we have a responsibility to consider their offer, and we are impressed with their efforts.

“When we make our recommendation to the board, we will have to weigh all the factors, including our desire to stay in Memphis and the competiveness of all bids.”

Pinnacle’s decision is also about the availability of nearby hotel space, convenience for employees, and room to grow.

Despite the company’s recent acquisition of Mesaba Airlines, Pinnacle spokesman Joe Williams said growth and expansion have always been part of Pinnacle’s long-term plans. Pinnacle is also known to have been looking at One Commerce Square for at least a few years before now.

“The key thing is that we want to be in one building, but the other key thing is that it lowers our occupancy and operating costs,” Williams said after Pinnacle acknowledged Mississippi’s offer this summer. “We need to make sure that it’s as comfortable and convenient as possible for our people.”

The reason why a healthy amount of conveniently located hotel space is also needed is that about 9,000 Pinnacle employees come to Memphis from other cities during a given year. That’s a result of new-hire orientation, flight attendant classes, pilot classes and more.

Trenary said other hoped-for amenities include a large meeting space, break rooms, updated IT and telecommunications infrastructure and ample parking.

He tried to reassure employees who had concerns about any convenience they might lose if the company moves Downtown.

“I don’t want us to get ahead of ourselves, since we truly don’t know where we’ll move,” Trenary said. “Since Downtown is in the running, I can appreciate the concern. The first thing I’d say is you might find it wouldn’t be as big of an inconvenience as you envision. I have meetings Downtown pretty regularly, and even during lunch hour it only adds about 15 minutes to the commute.

“The other point I’d make is if we wind up choosing downtown, it would be at least a year before the renovations and upgrades can be made and we officially move in. So, during that time period, you’d have plenty of opportunities to test different routes, evaluate potential alternative daycare or doctor arrangements and adjust your commuting schedule.”

He said a focus on employees will remain a top priority at the company amid the closing stages of the headquarters search.

“I never want Pinnacle to become a place where our people feel like they need to put their jobs ahead of themselves or their families,” Trenary said. “We’ve always placed an emphasis on putting families first, and providing employees with flexibility to do what they need to take care of themselves and their families. Regardless of which location we choose, we’ll continue with that philosophy.”

The memo:

Q – Have you already decided where the headquarters will be located and you’re just waiting for the right time to make an announcement?

No. I know there’s been so much attention in the media these past few weeks that it might lead you to think a preliminary agreement has already been reached but it hasn’t. We will announce the decision to our People as soon as possible after reaching an agreement.

Groups representing downtown at One Commerce Square and up the road at Corporate Plaza are putting their best proposals together. We’ve toured both facilities and are more than satisfied that either one of those locations would absolutely meet our needs, but at this point neither group has provided us with their final bid. Once we receive those bids, we’ll compare all bids and make the best decision.

Q – So when do you think we’ll announce a decision?

We haven’t put a timeline on it, but we’re hopeful that it will be soon. We expect the final bids any day now. We’ll take some time to assess our options. Once we make a decision we’ll draft a letter of intent, which will be an offer to enter into an agreement. There will likely be a few days between us sending the letter of intent and us officially announcing the decision, and we know the rumor mill will have a lot of speculation along the way. So, just know that nothing is official until we announce it.

Q – Is Desoto County out of the running?

We’ve said that it is our desire to remain a Memphis company. Mississippi offered a very generous package of incentives to entice us to locate in Olive Branch. From an economic point of view, we have a responsibility to consider their offer, and we are impressed with their efforts. When we make our recommendation to the Board, we will have to weigh all the factors, including our desire to stay in Memphis and the competiveness of all bids.

Q – You’ve said we have a “long list” of things to consider in making the decision. Can you give more detail?

Sure. First and foremost, it has to be right for our people. For starters, it needs to comfortably fit our 600 current headquarters employees, but also leave room for future growth. Comfort includes amenities like a large meeting space for employee gatherings, well-appointed break rooms, updated IT and telecommunications infrastructure, ample parking, etc. But, we’re also going to factor in some of the more intangible things like convenience for our employees, a warm, energetic workplace environment, and everything else that would go into the corporate culture a new headquarters can create and nurture. And finally, economics is an important factor. We want to keep our occupancy costs to a minimum so we can focus more dollars into safely maintaining and growing our airline operations.

Q – I’ve read that hotel contracts will play into our decision. Why is that?

Some people don’t realize just how many people we bring to Memphis for training. From new-hire orientation to Flight Attendant and Pilot classes, in a given year, approximately 9,000 fellow employees come to Memphis from other cities. That’s a lot of hotel rooms, and we need to be sure we have safe, comfortable accommodations available for our people that are within walking distance of the training center. Since our Corporate Education Center will also be located in our new headquarters, available hotel space is a very important factor.

Q – I really like being able to quickly get to and from things like daycare, my kids’ school, or the doctor’s office. If we move downtown, I’m concerned that I won’t have the flexibility to do that. How would we address that?

I don’t want us to get ahead of ourselves, since we truly don’t know where we’ll move. Since downtown is in the running, I can appreciate the concern.

The first thing I’d say is you might find it wouldn’t be as big of an inconvenience as you envision. I have meetings downtown pretty regularly, and even during lunch hour it only adds about 15 minutes to the commute.

The other point I’d make is IF we wind up choosing downtown, it would be at least a year before the renovations and upgrades can be made and we officially move in. So, during that time period, you’d have plenty of opportunities to test different routes, evaluate potential alternative daycare or doctor arrangements and adjust your commuting schedule.

Bottom line though, I never want Pinnacle to become a place where our people feel like they need to put their jobs ahead of themselves or their families. We’ve always placed an emphasis on putting families first, and providing employees with flexibility to do what they need to take care of themselves and their families. Regardless of which location we choose, we’ll continue with that philosophy.

Phil Trenary

President and CEO

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