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The bankruptcy court approves Pinnacle’s path out of bankruptcy, Delta to invest

Pinnacle Airlines Corporation (Memphis) has announced that the comprehensive agreements it reached with Delta Air Lines (Atlanta), the Air Line Pilots Association, International (ALPA) and the Official Committee of Unsecured Creditors (Creditors’ Committee) in Pinnacle’s Chapter 11 cases have been approved by the Bankruptcy Court overseeing Pinnacle’s cases. The agreements together provide a path for the Company to emerge from bankruptcy with a competitive cost structure and a viable long-term business plan. Under Pinnacle’s new business plan, the Company will transition to operating a fleet of 81 fuel-efficient, two-class regional jets for Delta.

The comprehensive agreements include:

  • An amendment to the Company’s existing debtor-in-possession credit facility to provide Pinnacle with $30 million of additional liquidity to support its continued operation through emergence from Chapter 11 and an additional $22 million to fund certain required payments to Pinnacle’s pilots under a Bridge Agreement and related employer taxes. The amendment would also extend the maturity date for the credit facility from April 1 to May 15, 2013.
  • Amendments to the existing operating agreements with Delta that form the basis of the new business plan. Pinnacle will receive Delta Connection’s next 40 CRJ900 aircraft awarded, setting Pinnacle’s long-term fleet plan at 81 CRJ900 aircraft. The 40 additional CRJ900 aircraft deliveries are planned to begin in the fall of 2013 and are expected to be completed by year-end 2014. Pinnacle’s 140 CRJ200 aircraft will be removed from operation over the next two to three years.
  • A new collective bargaining agreement with Pinnacle’s pilots, as well as a bridge agreement that provides transitional payments, furlough benefits and specified career opportunities at Delta to Pinnacle’s pilots.
  • A restructuring support agreement among Pinnacle, Delta and the Creditors’ Committee setting forth certain principal terms for a plan of reorganization to emerge from Chapter 11. The reorganization plan will provide for Delta or an affiliate to acquire the equity in the reorganized Pinnacle Airlines Corporation after it emerges from bankruptcy. Pinnacle must file a plan of reorganization acceptable to Delta and the Creditors’ Committee by February 15, 2013.

Copyright Photo: Bruce Drum. Bombardier CRJ900 (CL-600-2D24) N161PQ (msn 15161) arrives at the Atlanta hub.

Delta Connection-Pinnacle Airlines: AG Slide Show

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