Pinnacle Unveils Drastic Plans To Cut Costs
Memphis-based Pinnacle Airlines last month announced that it had begun what it called a comprehensive program to cut costs and enhance liquidity, centering on initiatives to modify its agreements with mainline airline partners, equipment lessors, debt holders, real estate lessors and vendors.
The company also confirmed plans to introduce new cost concessions from its pilots and other employees, regardless of whether the group in question enjoys union representation. As part of its efforts, the company said it would “examine and further rationalize its business lines, organizational structure and executive and director level functions.”
Flying under contract with Delta Air Lines, US Airways and United Airlines, the company employs some 7,800 people at its Pinnacle Airlines, Colgan Air and Mesaba Airlines divisions.
“Pinnacle Airlines Corp. is facing a convergence of events that, if left unaddressed, will make 2012 an extremely challenging year,” said Pinnacle president and CEO Sean Menke in a statement. “We have a great deal of hard work ahead of us, but these efforts are necessary to ensure we can operate as a profitable business for our shareholders, mainline flying partners, employees and other stakeholders.”
The airline lost $8.8 million in the first nine months of last year. During the same period in 2010, it turned a profit of $17 million. In its latest earnings report, it attributed much of its $3.5 million third-quarter net loss to cost increases related to its new pilot contract, which took effect last February, partner schedule changes that required re-staging of certain flight crews to different locations and a 40-percent year-over-year rise in fuel costs that reduced Colgan Air’s pro-rate returns by $1.2 million.
The company reported unrestricted cash and cash equivalents of $82 million as of Sept. 30, 2011.