Northwest reaches Pinnacle deal and eyes Mesaba

Source:
This story is sourced from Airline Business
Subscribe today »

Northwest is poised to take over its troubled regional partner Mesaba and has reached a new contract with another of its Airlink partners, Pinnacle.

The restructuring of regional relationships is an important part of the Northwest strategy to exit bankruptcy in the second quarter. The carrier plans to reveal by the end of February financing details for its emergence.

Its tentative $145 million contract to buy Mesaba outright would bring the regional carrier's fleet of 49 Saab 340 turboprops in-house. Mesaba's parent, MAIR Holdings, filed for bankruptcy protection in October 2005. The deal, if approved by the bankruptcy courts over some creditor objections, would also give Mesaba the right to fly 36 new Bombardier 76-seat regional jets that Northwest has ordered.

These CRJs are also a bargaining chip in Northwest's new deal with Pinnacle, a former Northwest subsidiary that was spun off in 2003. A new contract to run until 2017 gives Tennessee-based Pinnacle as many as 17 of the 76-seaters if the carrier can agree a new deal with its pilots by the end of March. Pinnacle now operates for Northwest 124 Bombardier 50-seat regional jets, which are being extended under the new deal.

Importantly, Pinnacle wins the right to fly for other majors. It instantly secured relationships with three majors in January when it acquired Colgan Air for $20 million. Colgan operates 38 Saabs for Continental, United and US Airways.

Northwest still plans to launch regional subsidiary Compass later this year with 76-seat Embraer 175s. Northwest established Compass last year using an operating certificate acquired from defunct Independence Air. But the launch has been delayed, fuelling speculation Compass was created largely to give Northwest bargaining leverage with other regional partners.

Pinnacle will expand its Northwest flying if it can agree a new deal with its pilots