Pinnacle Airlines (Nasdaq: PNCL) Seeks Chapter 11 Bankruptcy Protection

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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American Airlines' AMR Corp (PK: AAMRQ) posts $1.1 billion 4Q loss

Northern, WI 2/16/12 (StreetBeat) – AMR Corp. (PinkSheets: AAMRQ), the parent of American Airlines, said Wednesday that it lost $1.1 billion in the fourth quarter as it wrote down the value of planes and other property and paid more for jet fuel.

The company, which filed for bankruptcy protection in November, said that the results compared with a loss of $97 million a year earlier, when AMR still hoped to avoid bankruptcy by cutting costs.

The most recent loss included $768 million in special items, including $725 million from write-downs of aircraft that the company had announced two weeks ago. It also took a $43 million hit as it changed assumptions on recognition of revenue in its frequent-flier program.

Excluding special items, AMR said it would have lost $209 million, compared to an after-items loss of $69 million a year ago.

American is the nation's third-biggest airline, and it has presented a business-as-usual face since becoming the latest in a long string of U.S. airlines to file for bankruptcy protection. Even though it is still losing money, the airline is benefiting from higher ticket prices and decent demand for travel.

AMR said fourth-quarter revenue rose 7.4 percent to $6 billion. Analysts expected $5.89 billion, according to FactSet.

The amount of revenue for every mile flown by one seat, a closely watched measure in the airline industry, rose 8.9 percent, a reflection of the higher fares.

But costs have also mounted, especially for fuel, which accounts for about one-third of an airline's budget.

AMR paid about $3.01 per gallon for jet fuel, up from $2.42 per gallon a year earlier, for an increase of 24.5 percent. The company said it spent $394 million more on fuel than it would have at last year's prices.

For the full year, the company posted a net loss of $2 billion, compared with a loss of $471 million in 2010. Revenue rose to $23.98 billion from $22.17 billion.

AMR, American and affiliate American Eagle filed for bankruptcy protection Nov. 29. Company management proposes to slash annual costs by $2 billion through steps including eliminating 13,000 jobs and terminating pension plans for 130,000 current and former workers. It says it can boost revenue by $1 billion per year with additional flights in key markets and better services.

The company's shares no longer trade on the New York Stock Exchange, and it decided to drop the conference call with analysts that typically goes with a quarterly earnings report.

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AMR Shares Fall Again on Lack of Labor Deals

Tallahassee, FL 11/16/11 (StreetBeat) --Shares of AMR Corp. (NYSE: AMR) fell near an 8-year-low on Wednesday as the parent of American Airlines pushed union workers to accept contracts that would boost productivity at the money-losing company.

A longtime airline industry analyst said compromise was possible with the pilots' union, but American — the world's biggest airline just three years ago — must accept that it will become a smaller carrier.

Other airline stocks were down too, as oil prices surged to a four-month high and raised the threat of higher costs for jet fuel.

THE SPARK: American tried to wrap up a contract with pilots this week by making an offer — two options, actually — before it was accepted by union negotiators. Union leaders balked, however, leaving the talks in limbo.

THE BIG PICTURE: A deal with the Allied Pilots Association could establish a precedent for deals with flight attendants and mechanics, who are represented by separate unions.

Leaders of all three unions, and many of their members, are angry about what they see as overly generous executive compensation while workers continue to labor under wage and benefit cuts they accepted in 2003.

American claims that it spends at least $600 million more on labor than it would if it had the same work rules as other airlines. It offered pilots pay raises in exchange for more flexible rules and longer hours.
AMR, which also owns the American Eagle regional airline, is also struggling with high fuel costs and hasn't turned an annual profit since 2007 — it's lost $4 billion since then.

THE ANALYSIS: Some analysts suggested this week that the lack of labor deals would increases chances that AMR could file for bankruptcy protection. Rodman & Renshaw LLC analyst Daniel McKenzie said Wednesday that the company and the pilots' union are close enough to compromise. He said AMR's future will hinge on fuel prices and routes, and it is shrinking in several key markets.

"AMR needs to resign itself to being a smaller airline turbocharged by deeper domestic and international alliance relationships" with other airlines, McKenzie said. He added that any such restructuring must be accompanied by new labor contracts.

SHARE ACTION: AMR shares fell 11 cents, or 5.5 percent, to $1.82 in afternoon trading. That's near the 52-week intraday low of $1.75, hit on Oct. 3. If they drop below $1.75, they would be at their lowest levels since March 2003, when the company was on the verge of bankruptcy.

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