MEMPHIS, Tenn., Aug. 4, 2011 /PRNewswire/ -- Pinnacle Airlines
Corp. (NASDAQ: PNCL) (the "Company") today reported financial
results for the second quarter of 2011. Highlights include
the following:
- Net loss and net loss per share for the second quarter of 2011
were $2.4 million and $0.13, respectively.
- The Company's new pilot contract with the Air Line Pilots
Association ("ALPA"), effective February
2011, increased pilot compensation and benefits and caused
an increase in pilot-related expenses of $5.7 million for the quarter, as compared to the
same period in 2010. Second quarter 2011 results exclude rate
increases under the Company's contracts with Delta. These
rate increases, which the Company expects to begin receiving in
mid-2012, are structured to capture the increase in pilot wage
rates associated with the new ALPA contract. (See further
discussion below.)
- Scheduling changes by the Company's code-share partners
triggered a reallocation of pilots, which resulted in an increase
of $3.8 million in certain
crew-related expenses during the quarter, as compared to the same
period in 2010. These crew-related expenses include premium
pay, hiring, training, and crew overnight accommodations. The
Company also experienced an increase of $2.5
million in operating performance penalties over the second
quarter of 2010, which was primarily a result of this crew
reallocation. The Company has been working proactively with
its partners to evaluate more optimal network schedules, has
adjusted near-term block hour production and has been increasing
its pilot staffing levels to address this issue.
- The 35% year-over-year increase in the price per gallon of
aircraft fuel negatively impacted Colgan's Pro-Rate operations by
$2.1 million during the second
quarter of 2011.
- The Company recorded $0.5 million
during the second quarter of 2011 for integration, severance, and
contract implementation costs.
- In June 2011, the Company
completed a sale-leaseback transaction that resulted in the sale of
two Q400 aircraft, which the Company had previously acquired in
March 2011. The proceeds of the
sale were used to settle long-term debt and accrued interest of
$35.8 million and resulted in net
cash proceeds of $5.8 million.
- During the second quarter of 2011, the Company modified its
spare parts financing agreement with C.I.T. Leasing and funded by
CIT Bank to increase its financing to $37
million and to extend the maturity date through December 2015. The Company received net
cash proceeds of $13.4 million as a
result of the amendment.
- The Company ended the quarter with cash and cash equivalents of
$89 million.
(Logo: http://photos.prnewswire.com/prnh/20110112/CL29411LOGO
)
"I would like to thank the nearly 8,000 aviation professionals
within Pinnacle Airlines Corp. whose efforts are greatly
appreciated during a very difficult operating quarter," said
Sean Menke, the Company's President
and Chief Executive Officer. "Since joining the Company over
a month ago, I have learned that we have a significant amount of
work to do to accomplish the objectives related to the numerous
projects currently on the table. Over the next several
months, our focus will be on taking further steps to improve our
operational reliability, implementing our integrated pilot
seniority list recently agreed upon with our pilots, successfully
completing our corporate headquarters relocation, and most
importantly, continuing on the path to integrate all facets of our
three airlines into two separate operating certificates.
Successful completion of these projects, among others, will
lead to operational efficiencies and cost synergies. I look
forward to working with our outstanding employees to achieve our
goals and position us for sustainable profitability and
growth."
The Company's operating agreements with Delta Air Lines, Inc.
("Delta") provide for an increase to revenue in 2012 based on
changes in the Company's pilot labor costs after integrating the
pilot groups and regional jet operations of the Company's operating
subsidiaries. This increase will come in the form of a one-time
payment to the Company in mid-2012 tied to pilot labor and training
costs during the integration process (as measured over the previous
12 months), and a prospective rate increase based on the Company's
pilot labor costs after integration is complete. Management
currently estimates that the one-time payment to be received in
2012 could be as much as $18-$20
million, and the prospective rate increase to be received
post-integration could be as much as $14-$17
million annually. While the Company is not recording
this expected revenue increase in 2011 under generally accepted
accounting principles, management expects a substantial increase in
both revenue and operating income in 2012.
Second Quarter 2011 Financial and Operating Results
During the second quarter of 2011, the Company completed 211,411
block hours and 137,227 departures, increases of 50% and 41%,
respectively, over the same period in 2010. The
increases are mainly attributable to the Company's acquisition of
Mesaba on July 1, 2010, as well as
the delivery of 15 Q400s since July
2010.
The Company recorded consolidated operating revenue during the
second quarter of 2011 of $320.1
million, an increase of $101.4
million, over the same period in 2010. The
increase in operating revenue was mainly attributable to the
acquisition of Mesaba, which contributed additional revenue of
$73.3 million, as well as growth from
the Company's Q400 operations with United Airlines
("United").
Pinnacle Airlines, Inc. ("Pinnacle") reported second quarter
2011 operating income and an operating margin of $2.9 million and 1.8%, decreases of $12.9 million and 8.3 points, respectively, from
the second quarter of 2010. Pinnacle's financial results were
negatively impacted by an increase in pilot wage rates related to
the new labor agreement with ALPA and an increase in crew related
expenses resulting from scheduling changes by Delta, which resulted
in the reallocation of flight crews.
Mesaba reported operating income and an operating margin of
$1.8 million and 2.4%, respectively,
during the second quarter of 2011. Mesaba's financial results
were favorably impacted by the final determination with Delta of
the rate reset adjustment associated with pilot and mechanic wage
rates under the Saab capacity purchase agreement. During the
second quarter of 2011, Mesaba recognized $0.8 million in additional revenue as a result of
the rate adjustment, of which $0.4
million pertained to the first quarter of 2011. These
favorable results were offset by increased pilot labor costs under
the new ALPA pilot contract.
Colgan Air, Inc. ("Colgan") reported operating income and an
operating margin of $6.1 million and
7.4%, an improvement of $2.2 million
and 1.2 points, respectively, from the second quarter of 2010.
The increase in operating margin was mainly attributable to
the growth of Q400 operations with United, partially offset by
increased pilot labor costs under the new ALPA pilot contract.
The improved operating results were also negatively impacted
by a 35% year-over-year increase in the price per gallon of
aircraft fuel.
Net nonoperating expense was $11.9
million for the second quarter of 2011, as compared to net
nonoperating expense of $10.0 million
for the same period in 2010.
Cash and Cash Equivalents
The Company ended the quarter with $88.7
million in unrestricted cash and cash equivalents. The
Company generated $12.4 million in
cash from operating activities during the second quarter of
2011. Net cash provided by investing activities during the
second quarter of 2011 was $3.4
million, primarily related to $5.8
million received in the sale-leaseback of two Q400s and
$1.4 million in proceeds from
redemptions of call options on auction rate securities, which were
partially offset by $3.8 million cash
outflows on capital expenditures. Net cash used in
financing activities during the second quarter of 2011 totaled
$6.6 million, primarily related to
the $3.0 million repayment on the
short-term credit facility associated with the Q400 aircraft
delivery during the quarter and $17.0
million of regular scheduled payments on debt obligations
and capital leases. These financing outflows were partially
offset by $13.4 million in net
proceeds from the amendment of the Company's spare parts loan.
About Pinnacle Airlines Corp.
Pinnacle Airlines Corp. (NASDAQ: PNCL), a $1 billion airline holding company with 7,700
employees, is the parent company of Pinnacle Airlines, Inc.; Mesaba
Aviation, Inc.; and Colgan Air, Inc. flying as Delta Connection,
United Express and US Airways Express. Pinnacle Airlines
Corp. operating subsidiaries operate 202 regional jets and 84
turboprops on more than 1,500 daily flights to 196 cities and towns
in the United States, Canada, Mexico and Belize. Corporate offices are located in
Memphis, Tenn., and hub operations
are located at 11 major U.S. airports. Visit www.pncl.com for more
information.
Forward-Looking Statements
This press release contains various forward-looking statements
that are based on management's beliefs, as well as assumptions made
by and information currently available to management.
Although the Company believes that the expectations reflected
in such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to have been
correct. Such statements are subject to certain risks,
uncertainties and assumptions, including those set forth in our
filings with the Securities and Exchange Commission, which are
available to investors at our website or online from the
Commission. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove
erroneous, actual results may vary materially from results that
were anticipated or projected. The Company does not intend to
update these forward-looking statements before its next required
filing with the Securities and Exchange Commission.
For further information, please contact Joe Williams, at (901) 346-6162, or visit our
website at www.pncl.com.
Pinnacle
Airlines Corp.
Condensed
Consolidated Statements of Operations (Unaudited)
(in
thousands, except per share data)
|
|
|
Three Months
Ended June 30,
|
|
Six Months
Ended June 30,
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
|
|
|
|
|
|
|
Regional airline
services
|
$
314,722
|
|
$
214,844
|
|
$
608,140
|
|
$
420,333
|
|
Other
|
5,388
|
|
3,876
|
|
10,153
|
|
6,467
|
|
Total operating
revenues
|
320,110
|
|
218,720
|
|
618,293
|
|
426,800
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
Salaries, wages and
benefits
|
110,357
|
|
60,222
|
|
211,577
|
|
119,898
|
|
Aircraft
rentals
|
34,491
|
|
30,004
|
|
68,533
|
|
60,055
|
|
Ground handling
services
|
29,891
|
|
22,921
|
|
57,810
|
|
47,763
|
|
Aircraft maintenance,
materials and repairs
|
41,927
|
|
27,747
|
|
81,800
|
|
55,067
|
|
Other rentals and landing
fees
|
26,594
|
|
17,411
|
|
51,512
|
|
33,323
|
|
Aircraft fuel
|
10,871
|
|
6,727
|
|
18,182
|
|
12,420
|
|
Commissions and passenger
related expense
|
6,894
|
|
5,194
|
|
12,519
|
|
9,624
|
|
Depreciation and
amortization
|
12,838
|
|
8,793
|
|
25,271
|
|
17,634
|
|
Integration, severance,
and contract implementation expenses
|
518
|
|
-
|
|
6,352
|
|
-
|
|
Other
|
35,420
|
|
19,932
|
|
68,149
|
|
38,551
|
|
Total operating
expenses
|
309,801
|
|
198,951
|
|
601,705
|
|
394,335
|
|
Operating income
|
10,309
|
|
19,769
|
|
16,588
|
|
32,465
|
|
Nonoperating (expense)
income
|
|
|
|
|
|
|
|
|
Interest
expense, net
|
(13,274)
|
|
(8,810)
|
|
(25,762)
|
|
(18,601)
|
|
Miscellaneous income (expense),
net
|
1,397
|
|
(1,231)
|
|
1,997
|
|
(1,279)
|
|
Total nonoperating
expense
|
(11,877)
|
|
(10,041)
|
|
(23,765)
|
|
(19,880)
|
|
(Loss) income before income
taxes
|
(1,568)
|
|
9,728
|
|
(7,177)
|
|
12,585
|
|
Income tax (expense)
benefit
|
(799)
|
|
(3,841)
|
|
1,833
|
|
(5,006)
|
|
Net (loss) income
|
$
(2,367)
|
|
$
5,887
|
|
$
(5,344)
|
|
$
7,579
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings per
share
|
$
(0.13)
|
|
$
0.32
|
|
$
(0.29)
|
|
$
0.42
|
|
Diluted (loss) earnings per
share
|
$
(0.13)
|
|
$
0.32
|
|
$
(0.29)
|
|
$
0.41
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing basic
(loss) earnings per share
|
18,484
|
|
18,137
|
|
18,429
|
|
18,112
|
|
Shares used in computing diluted
(loss) earnings per share
|
18,484
|
|
18,449
|
|
18,429
|
|
18,454
|
|
|
|
|
|
|
|
|
|
|
|
Pinnacle
Airlines Corp.
Consolidated
Operating Statistics (Unaudited)
|
|
|
Three Months
Ended June 30, 2011
|
|
Six Months
Ended June 30, 2011
|
|
|
2011
|
|
2010
|
|
%
Change(1)
|
|
2011
|
|
2010
|
|
%
Change(1)
|
|
Revenue passengers (in
thousands)
|
5,326
|
|
3,432
|
|
55 %
|
|
9,712
|
|
6,442
|
|
51 %
|
|
Revenue passenger miles ("RPMs")
(in thousands)
|
2,324,416
|
|
1,345,240
|
|
73 %
|
|
4,277,923
|
|
2,539,193
|
|
68 %
|
|
Available seat miles ("ASMs")
(in thousands)
|
3,018,173
|
|
1,823,951
|
|
65 %
|
|
5,872,734
|
|
3,524,784
|
|
67 %
|
|
Block hours
|
211,411
|
|
141,165
|
|
50 %
|
|
414,479
|
|
275,884
|
|
50 %
|
|
Departures
|
137,227
|
|
97,266
|
|
41 %
|
|
264,851
|
|
187,929
|
|
41 %
|
|
Passenger load factor
|
77.0 %
|
|
73.8%
|
|
3.2 pts.
|
|
72.8%
|
|
72.0%
|
|
0.8 pts.
|
|
Average daily utilization (block
hours)
|
8.06
|
|
8.16
|
|
(1)%
|
|
8.02
|
|
8.02
|
|
0 %
|
|
Average stage length
(miles)
|
414
|
|
372
|
|
11 %
|
|
419
|
|
373
|
|
12%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The increase in operations over
the three and six months ended June 30, 2010 is mainly attributable
to the Company's acquisition of Mesaba on July 1, 2010 and the
Company's delivery of 15 Q400s since July 2010.
|
|
|
|
|
|
SOURCE Pinnacle Airlines Corp.