Pinnacle Airlines, Inc agreed with Northwest to defer the transition of 15 CRJ-200 aircraft from Pinnacle to Mesaba, a Northwest wholly owned subsidiaries. In exchange for Pinnacle's agreement to defer the transition, Northwest agreed to pay Pinnacle $1.5 million to compensate it for the costs associated with the delay.
The transition, originally scheduled to begin in September 2007, will now begin in November 2007 at a rate of approximately two aircraft per month. The move allows Northwest to more efficiently minimize the down time between an aircraft leaving service at Pinnacle and entering service with Mesaba. The transition plan can be further extended by mutual agreement of the parties. Mesaba currently has 49 Saabs, one CRJ 200, seven CRJ 900s with an additional 29 900s on the way by next year.
Pinnacle will treat this $1.5 million payment as deferred revenue and amortize it into operating revenue over the transition period (currently expected through the second quarter of 2008). Pinnacle will also continue to earn revenue at normal contractual rates under its Airline Services Agreement with Northwest with the soon-to-be transitioned aircraft.