Restricts Trading Of Equity And Debt Claims Against Pinnacle Airlines
By Daniel Baxter
April 8, 2012 - Pinnacle Airlines announced that the
United States Bankruptcy Court for the Southern District
of New York has entered an order that imposes
substantial restrictions on trading in equity interests
in and debt claims against Pinnacle Airlines Corp. and
April 1, 2012 Pinnacle Airlines announced that the
Company and its subsidiaries had filed voluntary
petitions for relief under Chapter 11 of the United
States Bankruptcy Code in the U.S. Bankruptcy Court for
the Southern District of New York (the "Court").
Pinnacle intends to use the Chapter 11 process to
continue implementing a comprehensive turnaround plan
aimed at addressing its operational and financial
challenges in a rapidly evolving regional airline
this process, the company will remain focused on providing
passengers with safe, reliable and timely service in
collaboration with its network partners, Delta Connection,
United Express and US Airways Express.
initiatives include restructuring its key operating agreements
with Delta Air Lines, winding down its operations with United
Airlines, completing the wind-down of its Essential Air Service
(EAS) flying with US Airways, achieving cost savings from its
workforce, identifying additional opportunities across the
organization to reduce costs, and ensuring that it has the
appropriate fleet, staffing levels and network to operate
profitably on an ongoing basis.
Sean Menke, President and CEO of Pinnacle, said, "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. Quite simply, our current business model is not sustainable, as increasing operating expenses, liquidity constraints, business integration delays and difficulties associated with combining our operations have hindered our ability to maximize our growth potential.
a lengthy review process, and with the assistance of independent
financial, industry and legal advisors, our Board of Directors
determined that a court-supervised restructuring is the only
feasible course of action to implement our turnaround plan."
"We are committed to delivering safe, reliable travel throughout this
process, and thank all of our employees for their continued focus on
providing our mainline partners and their customers with on-time flights
and superior in-flight service.
Our objective is to emerge from this process as a stronger, more
focused company, with a revised business model, a substantially improved
cost structure and operating agreements that will position us for
profitable growth in the future."
with the filing, Pinnacle has received a commitment for secured
super-priority debtor-in-possession financing ("DIP Financing") from
Delta Air Lines, Inc. in the amount of $74.3 million. Following Court
approval, $44.3 million will be used by Pinnacle to repay a secured
promissory note held by Delta. The remaining $30 million in DIP
financing, combined with cash generated by Pinnacle's ongoing
operations, will be available to help ensure that Pinnacle has
sufficient liquidity to meet its operational and restructuring needs.
Pinnacle has filed
a series of customary motions with the Court seeking to ensure the
continuation of normal operations, including requesting Court approval
to continue to pay employee wages, salaries and benefits without
interruption and to pay suppliers for fuel and other goods and services
provided after the filing date.
Pinnacle noted that it previously filed withdrawal notices with the U.S. Department of Transportation (DOT) for all of the Essential Air Service (EAS) markets currently served by Colgan Air, a Pinnacle subsidiary. Pinnacle has asked the DOT to establish an accelerated process to identify replacement carriers for the EAS markets it serves, which are currently served by Saab 340 aircraft.
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