Pinnacle moves to defer loan payments on Q400s

Washington DC
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Pinnacle Airlines has moved to defer loan payments worth $16.4 million until 2 April on 16 Bombardier Q400s operated by subsidiary Colgan Air, Inc.

The agreement signed on 20 January with the lender, Export Development Canada, appears to give the Memphis-based regional carrier more time to close a sweeping cost-restructuring plan and avert bankruptcy.

The loan payments are due from 14 January to 31 March, but Export Development Canada has agreed to wait until 2 April, Pinnacle said.

The agreement covers loans on Colgan's 16 Q400 airframes and Pratt & Whitney Canada engines.

The new agreement, which was revealed in a filing with the Securities and Exchange Commission, comes less than a week after Pinnacle acknowledged bankruptcy could be its best option.

For nearly two months, Pinnacle has tried to unravel its existing cost structure, negotiating concessions with lenders, airline partners and employee groups.

The negotiations started on 8 December, but dragged on past a self-imposed, 16 January deadline.