Posted on: 03 November 2011 by Ross McSweeny
Pinnacle Airlines Corporation has announced its financial results for the third quarter of 2011, include a net loss of $3.5 million.
Excluding special items, the net loss for 3Q11 was $1.7 million.
The company recorded $2.9 million during 3Q11 for integration, severance, and contract implementation expenses, which were primarily attributable to bonuses payable under a new collective bargaining agreement with the flight attendants at Pinnacle Airlines, Inc. as well as severance expenses associated with the company’s integration plan. Special items also include $0.8 million in previously disclosed severance expenses not related to the company’s integration plan.
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 $4.9 million for the quarter, as compared to the same period in 2010. Third quarter and year-to-date 2011 results do not reflect anticipated contractual rate increases under the company’s contracts with Delta Air Lines. These rate increases, which the company expects to begin receiving in mid-2012, are structured to compensate for the increase in pilot wage rates associated with the new ALPA contract.
The distribution of flight crews across the network due to partner schedule changes and the expenses associated with staging impacted flight crews at various destinations resulted in an increase of $5.1 million in certain crew-related expenses during the quarter, compared with the same period in 2010.
The 40% year-over-year increase in the price per gallon of aircraft fuel, which was partially offset by a 16% decrease in gallons consumed, negatively impacted Colgan Air’s pro-rate operations by $1.2 million during the third quarter of 2011.
"First, I would like to thank all of my fellow team members at Pinnacle Airlines Corporation for their efforts during the quarter. Without a doubt we saw improved performance across each of our subsidiaries in large part due to the dedication of these professionals," remarked Sean Menke, president and CEO of Pinnacle Airlines Corporation. "The financial results for the quarter are a disappointment, but are reflective of the numerous changes under way.
“The company made significant progress during the third quarter on multiple fronts. It has begun the implementation of the pilot integrated seniority list, agreed to and, shortly after the quarter ended, ratified a new five-year contract with Pinnacle’s flight attendants and completed over half of the move consolidating the corporate staff into its new headquarters. Additionally, the company has nearly completed all of the FAA requirements to transfer all of its regional jet operations under the Pinnacle Airlines certificate by year-end. This is an important trigger setting into motion the company’s move to its future-state structure.
“Following the acquisition of Mesaba, numerous teams were developed to map out our future management and professional organisation. With the pending transfer of jet aircraft to Pinnacle Airlines it is our intent to move individuals to their new position by the end of the first quarter [next year],” Menke added.
During 3Q11, the company recorded consolidated operating revenue of $319.8 million, an increase of $17.4 million, or 5.8%, over the same period in 2010. The increase in operating revenue was mainly attributable to an increase in the company’s Q400 operations with United and the year-over-year increase in the rates earned under operating contracts, which were partially offset by the wind-down of Saab operations with Delta as well as reduced regional jet flying with Delta.
Pinnacle Airlines Inc reported 3Q11 operating income of $2.6 million, a decrease of $12.9 million from 3Q10. Mesaba meanwhile reported break-even 3Q11 operating results compared with operating income of $3.1 million in 3Q10. Colgan reported operating income of $6.0 million, a decreases of $1.1 million from 3Q10.
Net nonoperating expense was $11.5 million for 3Q11, compared with $10.3 million for the same period in 2010.