Pinnacle Airlines exercised its options of 15 additional Bombardier Q400 aircraft after it closed a deal for additional Continental Connection flying for subsidiary Colgan Air. Colgan will purchase and take delivery of the 15 additional Q400 aircraft, scheduled for delivery between August 2010 and April 2011, which will ultimately bring Colgan’s Q400 fleet to 30, all operated under the Continental Connection agreement.
Each aircraft will be operated for a period of 10 years under the CPA, under existing rates but with an escalator clause to cover the increase in the purchase price of the aircraft. At the same time, Pinnacle optioned an additional 15 Q400 delivery positions slated for Continental after delivery in 2013, subject to financing. Pinnacle also has 15 options for 2011 delivery which is may market to other U.S. airlines.
Pinnacle was able to obtain financing for up to 85 percent of the purchase price on each of the 15 new aircraft as well as for most pre-delivery payments. All cash payments that are required to be made to the manufacturer prior to the second quarter of 2010 will be financed subject to this financing commitment, said the company. In addition, PNCL expects to pursue lease financing to reduce its capital requirements associated with the acquisition of these aircraft.