Orlando, FL 4/2/12 (StreetBeat) -- Pinnacle Airlines Corp. (Nasdaq: PNCL), a U.S. carrier operating under the names of Continental Express, Delta Connection and United Express, sought bankruptcy protection after costs rose and revenue declined.The airline, based in Memphis, Tennessee, listed assets of $1.5 billion and liabilities of $1.4 billion in the Chapter 11 filing in U.S. Bankruptcy Court in New York yesterday. It will halt United Express services by Aug. 1, while continuing other services, it said.
Pinnacle said it obtained a $74.3 million loan from Delta Air Lines Inc. (NYSE: DAL) to help maintain operations while it reorganizes, and to repay an existing $44.3 million debt to the larger airline. The filing is the 43rd by a U.S. carrier since the Sept. 11, 2001, attacks, based on Airlines for America data, as they contend with rising competition and higher fuel costs.
“Regional airlines have been forced to bid ever-lower rates and accept increasingly unfavorable contract terms to win the business of major carriers,” John Spanjers, the airline’s chief operating officer, said in a court filing.
Other Regional airlines to seek bankruptcy protection include Mesaba Airlines and Delta’s Comair unit, which both made filings in 2005, Spanjers said. Mesa Air Group Inc. (Pinksheets: MESAQ) filed in 2010 and American Eagle filed as part of AMR Corp. (Pinksheets: AAMRQ)’s bankruptcy in November 2011, he said.
Pinnacle rose 2 cents, or 1.5 percent, to $1.35 in Nasdaq stock market trading on March 30. The stock has gained 65 percent this year after dropping 90 percent in 2011.
1,300 Daily Flights
Pinnacle has about 7,500 employees, according to the court filing. It had 199 regional jets and 77 turboprops, according to its website. The airline said it has more than 1,300 daily flights to 188 cities and towns in the U.S., Canada and Mexico.
“We intend to use the Chapter 11 process to reset our financial and operational structure in order to position Pinnacle for viability over the long term,” President and Chief Executive Officer Sean Menke said in a PRNewswire statement. “We are committed to delivering safe, reliable travel throughout this process.”
The airline has long-term debt of about $690 million owed to Export Development Canada, which is secured by Bombardier Inc. Q400 and CRJ-900 planes, Spanjers said.
Before Pinnacle, Ryan International Airlines Inc., a charter airline, was the last U.S. carrier to file for Chapter 11 protection, on March 6, according to Airlines for America, an industry lobby group.
The filing by AMR, the parent of American Airlines, was the latest for a major U.S. carrier, according to the Airlines for America. Fort Worth, Texas-based AMR posted a loss of $1.76 billion for the three months through February, its first quarter in bankruptcy protection.
AMR, which is seeking court authority to nullify its union contracts, has said it must cut yearly expenses by $2 billion, including $1.25 billion from labor. U.S. Bankruptcy Judge Sean Lane in Manhattan is to hear arguments on the request. No date has been set for the hearing.
The case is In re: Pinnacle East Coast Operations Inc., 12-11343, U.S. Bankruptcy Court, Southern District of New York (New York).
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