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Monday, November 13, 2006

Pinnacle Posts $36 million Turnaround

Despite the fact that operating income was down from the year-ago period, Pinnacle Airlines (PNCL) managed a dramatic turnaround in net income to $15.8 million compared to a loss of $21.3 million in the third quarter of 2005. The airline slashed costs and improved operating margins to 10.6 percent, despite a six percent decline in revenues resulting from the decrease in fleet size after Northwest (NWACQ) dropped 15 CRJs last November. It attributed the results to a significant decrease in operating expenses.

Pinnacle is currently in negotiations with its partner Northwest for a new Airline Services Agreement, but it said it expects the new ASA will significantly reduce revenues as well as certain expenses and earnings. Before it can complete its Airlink deal, however, Pinnacle has to hammer out a labor contract with pilots. After holding discussions with the Air Line Pilots Association (ALPA), Pinnacle filed for mediation with the National Mediation Board in August. Since then, Pinnacle and ALPA have met several times with the mediator, but have been unable to reach an agreement.

It also said Northwest's new operation Compass, was on track to take the 36 Embraer (ERJ) 175s recently ordered by the major carrier. (RAN, October 9, p.1) The order was part of a 72-aircraft order split equally between the Embraer aircraft and the Bombardier (BBD) CRJ900. The CRJs will be operated by Northwest's Airlink partners. In September, the airline completed its transition to an all 50-seat aircraft fleet.

 Pinnacle Airlines Corp. Condensed Consolidated Statements of Operations (Unaudited) (in thousands, except per share data)
  Three Months Ended September 30

2006 2005
Operating revenues
Regional airline services
$ 206,827
$ 218,832
Other
1,673
2,111
Total operating revenues
208,500
220,943
Operating expenses
Salaries, wages and benefits
34,567
35,155
Aircraft fuel
28,041
30,555
Aircraft maintenance, materials and repairs
8,691
7,473
Aircraft rentals
66,031
73,737
Other rentals and landing fees
11,480
11,464
Ground handling services
21,663
23,616
Depreciation
1,003
1,041
Other
15,002
16,344
Provision for (decreases) increases in losses associated with bankruptcy filings of Northwest and Mesaba
(3,537)
53,914
Total operating expenses
182,941
253,299
Operating income (loss)
25,559
(32,356)
Operating income (loss) as a percentage of operating revenues
12.3%
(14.6%)
Nonoperating income (expense)
Interest expense
(1,198)
(1,109)
Interest income
640
402
Miscellaneous income (expense), net
18
(2)
Total nonoperating expense
(540)
(709)
Income (loss) before income taxes
25,019
(33,065)
Income tax expense (benefit)
9,182
(11,673)
Net income (loss)
$15,837
$(21,392)
Basic and diluted earnings (loss) per share
$0.72
$(0.98)
Shares used in computing basic earnings (loss) per share
21,945
21,908
Shares used in computing diluted earnings (loss) per share
21,990
21,908
Source: Pinnacle Airlines Corp.    

 

 Pinnacle Airlines Corp. Operating Statistics (Unaudited)
  Three Months Ended September 30 Nine Months Ended September 30

2006 2005 Change 2006 2005 Change
Other Data:
Revenue passengers (in thousands)
2,330
2,192
6 %
6,685
5,971
12 %
Revenue passenger miles (in thousands) (1)
1,110,898
1,160,095
(4)%
3,193,715
3,064,647
4 %
Available seat miles (in thousands)
1,459,943
1,555,520
(6)%
4,173,150
4,326,501
(4)%
Passenger load factor (2)
76.1%
74.6%
1.5pts.
76.5%
70.8%
5.7 pts.
Operating revenue per available seat mile (in cents)
14.28
14.20
1 %
14.86
14.53
2 %
Operating costs per available seat mile (in cents)
12.53
16.29
(23)%
13.26
14.22
(7)%
Operating revenue per block hour
$1,996
$1,915
4 %
$1,997
$1,929
4 %
Operating costs per block hour
$1,752
$2,195
(20)%
$1,783
$1,888
(6)%
Block hours
104,435
115,358
(9)%
310,503
325,802
(5)%
Cycles
63,713
66,094
(4)%
188,031
187,188
0 %
Average daily utilization (block hours)
9.15
9.04
1 %
9.17
9.20
(0)%
Average stage length (miles)
471
510
(8)%
471
502
(6)%
Number of operating aircraft (end of period)
124
139
(1)%
124
139
(11)%
Employees (end of period)
3,554
3,605
(1)%
3,554
3,605
(1)%
(1) Revenue passenger miles represents the number of miles flown by revenue passengers. (2) Passenger load factor equals revenue passenger miles divided by available seat mile. Source: Pinnacle            
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