It's just great news!!!
http://memphis.bizjournals.com/memphis/stories/2010/07/12/story5.html?b=1278907200^3618041
When Pinnacle Airlines Corp. purchased Mesaba Aviation Inc. for $62 million, it further tied its star to Delta Airlines Inc. while making itself one of the largest regional airline companies in the country.
Pinnacle , which is also the parent company of wholly owned subsidiaries Pinnacle Airlines Inc. and Colgan Air Inc., increased its total fleet from 202 aircraft to 297.
The Mesaba merger gives Pinnacle 34% of the Delta Connection business, second only to Utah-based Skywest Inc., which has 36%.
“This really further strengthens our long-term relationship with Delta,” says Pinnacle president and CEO Phil Trenary.
The move also raised Pinnacle’s overall employment from 5,928 to 7,700.
“Regional flying has been and will remain a key component of our network, but we’ve long believed that it’s not necessary for us to own these assets to derive any value from them,” says Delta spokesman Kristin Baur.
Mesaba will continue to operate its headquarters in Eagan, Minn., under its current management team. Delta financed the $62 million purchase over a five-year term with a 12.5% interest rate.
Pinnacle was also attracted to the transaction because Mesaba has no debt.
“We’re inheriting a company that has a very strong balance sheet,” Peter Hunt, Pinnacle’s chief financial officer, says.
The Mesaba acquisition could increase Pinnacle’s annual revenue by $200 million.
“We do view these as very positive cash flow generators for the company,” Hunt says.
The purchase will mean annual contract cash flows of $12 million to $18 million through 2022, excluding interest on the seller-financed debt.
“The contract cash flows will be a little lower as we absorb integration costs,” Hunt says.
Over time, the company plans to consolidate all regional jet operations under the Pinnacle Airlines brand and turbo-prop operations under Mesaba.
The move also gives Pinnacle more purchasing power with third-party vendors and could reduce redundant inventory investments and training costs.
“This gives us the scale to operate efficiently,” Hunt says.
Pinnacle Airlines Corp.
Read more: Pinnacle set to soar with Mesaba aboard - Memphis Business Journal