Pinnacle Airlines posted large loss in September, worst since bankruptcy filing

Pinnacle Airlines Corp. in September posted a $79.6 million net loss, its worst showing since filing for bankruptcy protection in April.

It was primarily driven by a decision to write down the value of 16 CRJ900 regional jets and incur a noncash charge of $72.8 million.

The Memphis-based operator of Delta Connection flights, in a court filing Thursday, said its operating loss for the month was $2.5 million and its actual loss, including restructuring fees, was $6.8 million. Total operating revenues were $60.2 million.

The company said nothing had changed on two key points: The outcome of Pinnacle's motion in bankruptcy court to reject a collective bargaining agreement with its 2,700 pilots, and deliberations on whether to keep headquarters in Memphis or move it to Minneapolis.

The bankruptcy court has until mid-November to rule on the labor issue, which would go a long way toward determining if Pinnacle can achieve the pay, benefit and work rule concessions it says are needed to survive bankruptcy.

Pinnacle's restructuring comes at a tumultuous time for the regional airline industry. Brand-name carriers, which typically contract with regionals to serve smaller markets, are squeezing out operating costs by moving to larger, more cost-efficient jets. Delta Air Lines pulled the plug on its Cincinnati-based regional subsidiary Comair in September.

Pinnacle's filing said the company on Oct. 1 drew down the $8 million balance of its $74,285,000 debtor-in-possession (DIP) financing from Delta.

Pinnacle drew $10 million in DIP financing on July 17 and $10 million on Sept. 11. The remainder, $46.2 million, was used to pay off a 2010 Delta loan that financed Pinnacle's purchase from Delta of the now-closed Mesaba Aviation unit.

Pinnacle said the value of 16 CRJ900s was written down to the current debt balance with aircraft financier, Export Development Canada. The 76-seat regional jets are fulfilling a capacity purchase agreement that has been amended to wind down by May 2013.Before filing for bankruptcy protection, Pinnacle provided regional feeder flights to Delta, United/Continental and US Airways.

Monthly reports submitted to U.S. Bankruptcy Court, Southern District of New York, show operating revenues and expenses have steadily fallen as Pinnacle shuttered its Colgan subsidiary, ended capacity purchase agreements with United and US Airways and reduced its overall number of flights.

Before September, the worst month had been April, when the company estimated a $60.6 million net loss.Over the six months, combined operating revenues have outstripped operating expenses by $11.6 million, while cumulative net losses were estimated at $177.7 million, largely due to noncash impairments related to the aircraft fleet.

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