Pinnacle Airlines plans to close its PinnPro Ground Services unit by September as part of its ongoing chapter 11 bankruptcy reorganisation.
The Memphis-based regional airline filed for bankruptcy after failing to win agreements on pay cuts from employees on 1 April. It operates contract regional services for Delta Air Lines and United Airlines.
The majority of PinnPro functions will be shifted to outside vendors beginning with those at Detroit between 7 June and 21 June, says Pinnacle. Other airports will transition between 24 July and 21 August with Memphis being the final airport to make the shift on 6 September.
Pinnacle will maintain a much smaller PinnPro to manage ground services vendor contracts and support other airline related functions.
PinnPro provides ground services at 11 airports for 16 airlines.
The United Steelworkers, which represents PinnPro employees, says it is "outraged" at the decision to shut down the ground services unit and layoff its 800 employees.
Pinnacle says it is working with employees and will encourage the new vendors to hire the employees.
"We said when we started the restructuring process that we would have to make tough decisions for our business to emerge from chapter 11 stronger and profitable. We are discontinuing unprofitable units as part of the reorganisation plan," says Pinnacle.
The regional airline plans to operate solely as a Delta Connection carrier with a fleet of Bombardier CRJ200s and CRJ900s. It plans to wind down its Bombardier Q400 and Saab 340 flying for United Airlines, which is operated by Pinnacle subsidiary Colgan Air, by November.