Pinnacle Airlines files for bankruptcy in U.S.
By Kyle Peterson and Sakthi Prasad
(Reuters) - Pinnacle Airlines Corp PNCL.O, parent of Pinnacle Airlines and Colgan Air, filed for bankruptcy protection, the latest victim of high fuel prices and dampened travel demand.
Memphis, Tennessee-based Pinnacle operates as various regional airlines - most notably Delta Connection - for bigger-name partners including Delta Air Lines (DAL.N: Quote), United Airlines (UAL.N: Quote) and US Airways LCC.N.
Pinnacle, in a filing late on Sunday, said it would rework its contracts with Delta and end flying for United and US Airways. The company also wants to cut its labor and operating costs.
The U.S. airline industry has been battered by soaring fuel costs and economic weakness that has drained travel demand. Regional carriers have felt the squeeze as their major partners cut back on flights to smaller cities.
"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," Sean Menke, Pinnacle's president and chief executive, said in a statement.
Pinnacle, which has 8,000 employees, flies as Delta Connection, United Express and US Airways Express. It operates more than 1,540 daily flights to 188 cities and towns in the United States, Canada, Mexico and Belize.
The company said it had received a commitment for $74.3 million of debtor-in-possession (DIP) financing from Delta that would help it carry out normal operations.
"Delta will continue to support Pinnacle during its restructuring and is working closely with them to ensure there's no impact to our customers," Delta spokeswoman Betsy Talton said. Continued...