Delta to buy Pinnacle
 

Not even in the least a surprise, but it's official- pending bankruptcy court and creditors committee approval.

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Pinnacle takes steps to emerge from bankruptcy protection
January 3, 2013






Pinnacle Airlines filed motions with the bankruptcy court Thursday seeking approval of several components of a new business plan that the airline says will allow it to emerge from bankruptcy with a competitive cost structure and as a viable airline over the long term.

As part of its new business plan, Pinnacle seeks to amend its existing debtor-in-possession financing agreement with Delta. As part of the new agreement, Delta will provide $52 million of additional liquidity to allow Pinnacle to continue its operations and to emerge from bankruptcy as a successful Delta Connection carrier.

Pinnacle also filed a restructuring support agreement setting forth the basic terms for Pinnacle’s plan of reorganization. This reorganization plan, if approved, will allow Delta to convert its financial support into ownership of Pinnacle after it emerges from bankruptcy.

Pinnacle must file a plan of reorganization acceptable to Delta and the Creditors’ Committee by Feb. 15. The plan also is subject to ratification by Pinnacle’s pilots of a revised collective bargaining agreement.
“This enhanced debtor-in-possession financing agreement is yet another step in enabling Pinnacle to achieve long-term stability and profitability, which is in the best interests of Delta’s network and customers,” said Don Bornhorst, s.v.p.–Delta Connection. “Converting Delta’s financing of Pinnacle to equity makes the most sense for both Pinnacle and Delta given Delta’s position as Pinnacle’s only customer and the fact that Delta has provided substantially all of the financing that is enabling Pinnacle to restructure its business.”

In a memo to Pinnacle employees, Pinnacle CEO John Spanjers outlined several components of the airline’s new business plan, including removal of 140 less efficient 50-seat regional jets from Pinnacle’s fleet and adding 40 fuel-efficient, two-class regional jets to be flown under the Delta Connection umbrella. All of the components of the comprehensive agreement are subject to bankruptcy court approval.

Deja vu all over again....

What was Comair Aviation Academy's slogan? "Being owned by Delta means everything?"

OMG. The kiss of death is complete. Only a matter of time now.

I hear the fat lady warming up!

Ouch, I know some guys at 9E think this a good sign. However, in order to shut down a company, one must own the company. Good luck guys.

Recent history has shown that wholly-owned regionals make good "capacity accumulators" because you don't have pesky long-term contracts to worry about.

Ruh Roh! :confused:

Im not sure if this is a good thing or a bad thing...

Bingo. No CPA means no contract to comply with.

There you have it, Pinnacle is the next Comair (Delta Owned regional) :D



"We would be a separate entity, but a subsidiary of Delta,"

Under bankruptcy agreement, Pinnacle to operate as Delta subsidiary - Memphis Business Journal

I've been through the "wholy disowned entity" scenario before....looks like it's china or japan for me now!!!

It's a very bad thing. At least that's been my past experience.

I guess Delta sure figured out how to take Mesaba's first BK concessionary contract, under which we delivered profit and good service to our previous owners, Delta Airlines, and rip it to shreds.

Pinnacle Airlines (and Mesaba and Colgan) RIP.

Please ask yourselves this question, why would the Mother D divest itself of all regional carriers a few years ago, then cease ops for Comair, and within a matter of months acquire another regional? Only one answer I can think of.
Then again, I am not sitting in ATL front office.

Use a small operation to bully other contractors. The threat to do it in house vs outsourcing can be used against 9E or the RFP bidders.

Acquiring a regional at the expense equivalent to 2 crj200s. Smart!

This is what I have feared all along even though I knew it was coming. Being owned by Delta will limit our growth opportunities and stagnate career progression immensely, no bueno.

It should also be interesting hearing Andersons comments on why they are getting back into the regional owning business when they have made it clear they want no part of it.

Or, and pncl has seen this before with RA and NW, the mainline carrier strips all value from its regional partner, buys them, builds them up, and cashes out.

If the TA passes, Delta isn't going to shutdown an airline with 12 year CA and 4 year FO payscales, meager payrates, and a 401k built to discourage lifers. They are going to use it to whipsaw the other DCI carriers.

Yes they will shut it down. They will use to bring everyone else's cost in line, then they will shut it down. Those that don't believe this are in denial. A few years from now, I will dig up these posts and tell you, "I told you so." It is what it is.

There are plenty examples of being wholly owned working out for the regional partner. See compass and express1/pncl. We just can't know at this point

Ahhh this sucks....

Hey Mav, do you still have the number of that truck driving school?

And plenty of examples of stagnation and extremely long upgrade times, Eagle, Piedmont, Horizon, etc....

In related news, Delta posted positions for new managers of subsidiary airlines flight operations, human resources, regulatory compliance, diversity, marketing, accounts payable, receivable, inflight, below wing, cargo, technology, maintence, ground service maintenance, safety, labor relations and related secretarial positions. After trying unsuccessfully to buy back the Comair HQ they just built, then shut down at a loss of 30 million, they have worked out a 18 percent loan to build a new Delta xpress tower, where regional outsourcing can be coordinated while ensuring employment for friends, family and those who want to supplement their retirement income.

There is also a manager to coordinate management among the redundant departments. This much redundancy requires a lot of coordination and meetings.

ALPA's President stated that he is glad his kids now all have jobs in airline management ....

just kidding, I think....

Did everyone notice the 100 airframe reduction ? They are going to ask you to vote for a contact that puts 66% of you out of work?

****** them burn it to the ground.

And then you'll ask we call you the oracle?

Other regional airlines that may not exist in 7 years... (based on the new FT/DT regs and equipment flown) Commutair, Silver, Great Lakes, Air Wisconsin, Mesa, TSA, XJT/ASA...

You aren't exactly a soothsayer when you predict the demise of a regional. There is no reason to believe being wholly owned with a cheap contract with low fixed costs is a bigger reason to shut down an airline than another. Delta could just as easily sell the airline off as has been done before.

Compass being wholly owned only kinda "worked out" under NWA. Once DAL took over it was a whole different regime and we were met with hostility. The only reason DAL mgmt didn't kill our flow was our ex-mgmt declined to "play ball" and NWA alpa was smart enough to include scope snap backs in their section 1 should the flow be disolved. DAL is not NWA.

The only reason the Compass flow continued after Compass was sold to TSH was because the DAL MEC chairman made it happen.

Pinnacle is being "bought" for a song. The previous owners were crooks who skimmed money while failing to perform. DAL bought it because nobody else wanted it. Without firm agreements for lift with the consolidated legacy carriers, Pinnacle wasn't an attractive package. The purchase gives DAL the opportunity to reconfigure the airline and offer it for sale with a strong lift agreement with DAL.

Nobody is really talking about the Pink Elephant in the room.


Shockingly, there's alot of pilots on here trying to justify how to vote in a paycut for themselves while eliminating their own job!!!!!!


"I agree that I need a paycut, and shortly there after, eliminate my job. It's in the best interest of my career! Delta said they will give me free travel and $hit"

DL buys PCL. Spools them up with 20 more 900's then sells an airline that has 100 900's and cheap labor for a profit. Or simply shuts PCL down...nobody knows.

This sounds like Comair part II

Why don't some of you guys from other carriers go to one of our road shows and find out what really is happening here at PCL and what is projected to happen. I guess it wouldn't be as fun spouting off facts instead of rumors on APC.

Because that worked real well when Comair tried that.

I am sure some have

Dunno. Since you said DOH, what is the senior Pinnacle CA's DOH?

don't wet your whistle because I don't care either way, but #1 starts in 81, and # 200 ends in 97. Prolly wouldn't be a big deal, especially since most ISL mergers lately are category/class instead of straight DOH.

Delta is just formalizing what has been going on in reality since last April. Delta wants their money back. The only way to get it back is to get costs under control, clean house, put competent management in place, fix the problems there, put a long term contract in place, and sell the company to get back the money Delta has dumped into Pinnacle over the last 9 months.

I guess your MEC chair could have chosen to not enforce his own section 1. Good thing you sent that guy to national.

Or maybe because the DAL pilot's contact had substantial penalties for dissolving the flow back? And since Delta management signed said contract, they decided to actually comply with it? Also, I believe the concept of forced large RJ reductions as a result of flow back dissolution was in the PMNW contract.