PNCL Expects Performance Penalties, $5M Loss at Colgan,

While it completes its first quarter 2008 financial statement, Pinnacle filed with the Security and Exchange Commission a statement lowering its earnings expectations because of an expected $5 million first quarter operating loss at Colgan Air, its wholly owned subsidiary, and a $2.5 million reduction of revenue for performance-related payments that it does not expect to receive from Northwest. In addition, the company estimated that Pinnacle’s operating income for the quarter was further reduced by approximately $2.0 million related to lost revenue and incremental costs associated with cancelled flights. Pinnacle expects to report its first quarter 2008 financial results on May 8.
Pinnacle Airlines experienced severe weather throughout its system during the first quarter as well as a higher rate of maintenance events compared to previous winters. Pinnacle cited the crushing rise in fuel costs for the results, saying Colgan’s average fuel price for the first quarter increased by 54 percent year-over-year, adding approximately $4.2 million in additional fuel costs. Colgan’s revenue and non-fuel costs on its branded, pro-rate flying have shown improving trends in the first quarter, said the company, but the improvements have not been enough to offset the fuel costs. Absent additional increases in fuel prices, the company expects Colgan’s operating losses to decrease during the second and third quarters, when passenger demand is seasonally stronger.
Pinnacle’s operating performance has improved significantly over the past few weeks with improved weather. While it expects operating performance to improve as it usually does during the second quarter, should it mirror that of the first quarter, it would record a similar reduction of revenue during the second quarter.