Originally Posted by
sailingfun
I would be surprised if you don't understand the loan to Pinnacle. Your post however suggests you don't. Pinnacle owed Delta Airlines 40 million dollars. Money that Delta was unlikely to ever see again except perhaps a few pennies on the dollar. Delta actually only loaned Pinnacle 33 million dollars. This was a very smart move on managements part. It accomplished two things. It insured in the near term we did not have major disruptions for our passengers by allowing them to continue to operate. As part of that loan however Pinnacle agreed to pay off the 40 million dollar loan. That is why the cost is only 33 million out of pocket to Delta. Here is the beauty of the concept. The entire 73 million is now DIP financing and even if Pinnacle goes chapter 7 its likely Delta will recover most if not all of the 73 million since they are now first in line to get paid for the entire amount.
Oh what a tangled web they weave when they practice so much outsourcing. If they were really savvy, they would be able to pick up on ponzi scheme ACMIs and their unsustainable low ball bidding and stop signing them but they can't pass up a deal in the short term. We had years to see this coming just like Mesa and could have easilly gotten out of that mess by hiring a more competent regional or, God forbid, doing it ourselves.
Yeah yeah, there's no money in actually providing goods and/or services. Hey look, I lowered the cost unit for some DCI lift by signing an incompetent company that can't run an operation at the prices we're paying! Weeeeeeeee! Whar's mah bonus!