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VOL. 128 | NO. 17 | Friday, January 25, 2013

Pinnacle Moving Memphis Headquarters to Minnesota

By Bill Dries

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Memphis-based Pinnacle Airlines Corp. is moving its headquarters to Minneapolis by May as part of its bankruptcy reorganization.

The regional air carrier announced the move out of One Commerce Square Downtown Thursday, Jan. 24, saying the new headquarters will be in vacant space leased by Delta Air Lines at the Minneapolis-St. Paul International Airport.

Pinnacle president and CEO John Spanjers said the company considered staying at One Commerce Square, the Downtown office tower the company announced it was moving to in October 2010 after considering a move at that time to Olive Branch, Miss.

“We had the responsibility to explore every aspect of our business to find opportunities to reduce costs, including evaluating our property leases, to find the most economical options for Pinnacle,” Spanjers said in the written statement. “Our analysis covered everything from the available labor pool and operational alignment to economic incentives. … In the end, it was an economic decision.”

Memphis civic leaders made a big play for keeping Pinnacle just two years ago.

After a private discussion on the 29th floor of One Commerce Square to sell them on the merits of locating Downtown, board members descended to the One Commerce lobby for the October 2010 reception. “Pinnacle Land Here” was displayed on one wall of the lobby.

Pinnacle board members wore brightly colored nametags, making them easier to identify to socialize with.

During that discussion high atop One Commerce, among those in the room were Shelby County Mayor Mark Luttrell, Memphis Mayor A C Wharton Jr. and AutoZone founder “Pitt Hyde,” all urging the company to choose Memphis. 

No level of detail was too small to use to try to seal the deal. Downtown Memphis Commission president Paul Morris told the Pinnacle board members that employees’ parking lot-to-office walk Downtown would be covered and air-conditioned.

To drive that point home, someone had thought to include at the bottom of one slide that day’s heat index for the city: 110 degrees.

The lineup of that private presentation to Pinnacle board members that day in 2010 to convince them to pick One Commerce as the company’s headquarters was such that Wharton went last. And he reportedly turned on the charm.

The moment reminded him, Wharton told the execs, of his days giving closing arguments to juries. This particular pitch, though, wasn’t an argument at all, Wharton noted - just a conversation among people he hopes agree with him that Memphis would take care of Pinnacle, should the company choose to stay put.

Wharton said Thursday that while he is "disheartened" by Pinnacle's decision to leave Memphis, the city is working with others to attract new tenants for the skyscraper.

"I don't think this is any reflection on Memphis," Wharton added.

He also pointed out that the city gave no financial incentives directly to Pinnacle but instead to the local owners of the building who continue to own the building.

The Thursday decision caps a turbulent year for Pinnacle that included the company filing for bankruptcy reorganization in April in a stunning reversal of its fortunes in a larger industry changed forever by a spike in fuel prices.

Since the fall 2010 ceremony marking the move Downtown, Pinnacle has had four CEOs.

Pinnacle is the anchor tenant of One Commerce Square, which shifted to local ownership as part of the bid to keep Pinnacle in the city and move its headquarters from office space near Memphis International Airport to Downtown.

Pinnacle leased 170,000 square feet with 500 employees at the site.

Since Pinnacle’s move to bankruptcy, local civic leaders have said a relocation by Pinnacle out of the city would not be a fatal blow to continuing efforts to keep the office tower occupied.

Paul Morris, president of the Downtown Memphis Commission, has said the Pinnacle move prompted other businesses to locate their offices at One Commerce Square creating their own momentum.

“If Pinnacle did leave, the city would still be better off having made possible the redevelopment of One Commerce Square,” Morris told The Daily News in December. “We were at risk of having another major building in our skyline go dark. Now because the city acted, One Commerce Square is a premier office tower that helps attract businesses to Memphis and can be a source of pride in our skyline.”

The coming move to vacant space held by Delta Airlines in Minneapolis cements already strong ties to Delta in Pinnacle’s plan for recovery. Under the bankruptcy reorganization plan approved in Federal Bankruptcy Court in New York state earlier this month, Delta could take in Pinnacle as a wholly owned subsidiary as it emerges from bankruptcy. Pinnacle is heavily dependent on contracts with Delta to fly regional flights, dropping its contracts with other legacy global air carriers in bankruptcy reorganization to focus on the contracts with Delta.

Senior reporter Andy Meek contributed to this report.

PROPERTY SALES 74 196 20,828
MORTGAGES 86 244 23,989
BUILDING PERMITS 138 453 43,046
BANKRUPTCIES 64 174 13,354