VOL. 128 | NO. 3 | Friday, January 04, 2013
Pinnacle to Emerge From Bankruptcy as Delta Subsidiary
MEMPHIS (AP) -- Pinnacle Airlines Corp. said Thursday that it reached agreements, including additional financing, that will allow it to emerge from bankruptcy protection as a subsidiary of Delta Air Lines Inc.
Pinnacle said it must file a reorganization plan acceptable to Delta and other creditors by Feb. 15.
The company is trying to cut costs and streamline its fleet to 81 fuel-efficient planes that it would operate for Delta, which has been pressing Pinnacle to reduce costs. Pinnacle used to operate regional flights for US Airways and United Airlines but flies only for Delta now.
Pinnacle said Thursday that it reached comprehensive agreements with Delta, the Air Line Pilots Association and the committee of unsecured creditors in its bankruptcy case that call for $30 million in additional borrowing capacity for operations and $22 million to cover payments to pilots. The credit facility will run through May 15, an extension from April 1. Delta or an affiliate will get the new company's stock after bankruptcy.
Pinnacle will take delivery of 40 CRJ-900 regional jets for Delta Connection beginning in the fall. Pinnacle plans to shed 140 smaller planes over the next two to three years. High fuel prices have made smaller regional jets too costly to operate.
An agreement with the pilots' union is subject to a ratification vote by Jan. 15.
CEO John Spanjers said the agreements provide a path to exit bankruptcy with a workable business plan. He said he was confident that Delta will remain a customer.
Memphis-based Pinnacle operates about 1,000 daily flights in the U.S. and Canada, with hubs in Memphis, Atlanta, Cincinnati, Detroit, Minneapolis and New York.
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