Pinnacle Airlines and Phil Trenary have had some bad news (and some good news) since visiting with Airline Business in April: Pinnacle will lose 17 regional jets it was to fly in Northwest Airlink service because it failed to negotiate a labor agreement with its pilots union by 31 March. Back in December, Northwest had notified Pinnacle that it must meet that deadline or risk losing the jets. “Northwest put an unreasonable deadline on us getting a new contract”, Wakefield Gordon, chairman of the Pinnacle pilots union, an Air Line Pilots Association local, told the newspaper in Memphis, the Commercial-Appeal. “We didn’t make the deadline, and we lost the airplanes”.
Pinnacle will continue to operate its 124 CRJs for Northwest and, it explained in a regulatory filing, Pinnacle is entitled to the full amount of its unsecured $42.5 million claim in bankruptcy proceedings because the planes were not committed to Pinnacle on a long-term basis,. It plans to sell that claim quickly and then apply the proceeds to the bottom line.
The company and its pilots have been negotiating since February 2005 and in mediation since September. Until late in December when Pinnacle signed a new deal with Northwest, it had been flying solely as a regional carrier for Northwest. The deal let it seek other customers. It also gave Pinnacle 17 additional 50-seat regional jets, with the stipulation that Northwest could take them back if Pinnacle and its pilots did not have a deal by 31 March. Northwest will start reallocating the planes to its Mesaba subsidiary in September. George Hamlin, the Washington area consultant, said, “Northwest waved the big stick in an effort to get its costs down at Pinnacle, and it had to be prepared to follow through. On the other hand, Pinnacle is likely to get new business elsewhere under its new contract.”
Indeed, it has new business under a ten-year contract to fly 16 jets for Delta, starting Delta Connecting service in December of this year. Pinnacle will directly acquire and finance 16 of Bombardier’s CRJ-900s for delivery between November of this year and July 2008. The airline has the confidence of the capital markets and can finance aircraft purchases, Trenary notes. Trenary is also chuffed about the Bombardier Q400 turboprops it will fly for Continental through its Colgan Air unit’s Continental Express contracts. He is upbeat about the turboprop’s ability to boost traffic at Continental’s Newark hub. The turboprops can operate in heavy tailwinds, which can sometimes slow down large-jet operations at Newark; the begin service by early next year.