Delta axes Pinnacle's flying

[DTWFO]

Why is this so hard to understand?? Pinnacle owns the 900's. They bought them. From the annual report:


Property and Equipment Nature of Estimates Required: More than 35% of our total assets are invested in property and equipment, which will continue to increase as we acquire additional aircraft to support our new agreements with Delta and Continental.

Item 1.01 Entry into a Material Definitive Agreement
On October 3, 2007, Pinnacle Airlines Corp. and its operating subsidiaries (collectively, the "Company"), entered into the second of two short-term pre-delivery payment financing facilities (the "Facility") with Export Development Canada ("EDC") for up to $38.5 million to finance certain pre-delivery payments to Bombardier, Inc. ("Bombardier") under the Company's aircraft purchase agreements.


Overview During the third quarter of 2007, we continued to make progress in what we have identified as a significant year of transition for the Company. We have continued to prepare for our new operations with Continental Airlines and Delta Air Lines by entering into agreements to obtain financing for the Q400 and CRJ-900 aircraft pre-delivery payments. We further increased shareholder value through our recently expanded share repurchase program, and through continued use of our hedging program, designed to reduce our exposure to interest rate risk related to financing our aircraft purchases.

Delta does NOT own these planes...period.

 

[rickair7777]

Duplicate Post.....

 

[rickair7777]

Here's a little business perspective for the aviation science grads. I'm not in this mess, so nothing personal or emotional, just business logic.

PCL does not have many options to re-utilize the airplanes. Not many scopes allow regional 900 flying, not to mention to state of the industry (downsizing).

Best option: Get DAL to reinstate the flying. If not, then get them to buy out the contract. This will at least provide income/profit to safeguard management bonuses...which is what it's REALLY all about, if you didn't know.

Plan B: Hope mesa tanks, and pick up some Airways 900 flying.

NWA is probably not an option...they are in a merger process with, guess who? Delta Airlines! They are not likely to piss off their wedding partner by turning around and hiring their rejects. Stranger things have happened, but still.

Also, I'm pretty sure that PCL does not "own" the 900's, rather they "lease" them. What will happen if they can't make the payments? Reference the home mortgage industry for more details. If they cannot cover their leases, they will unload the airplanes in a flash. The good news is that 900's are a hot commodity, and they may be able to re-lease them at a markup...ensuring positive cash flow and management bonuses. These people are NOT in business to fly airplanes or employ pilots...they just want to make money.

Best of luck to the pilots.

 

[DTWFO]

Also, I'm pretty sure that PCL does not "own" the 900's, rather they "lease" them. What will happen if they can't make the payments? Reference the home mortgage industry for more details. If they cannot cover their leases, they will unload the airplanes in a flash. The good news is that 900's are a hot commodity, and they may be able to re-lease them at a markup...ensuring positive cash flow and management bonuses. These people are NOT in business to fly airplanes or employ pilots...they just want to make money.

Best of luck to the pilots.

You are correct. PNCL is just leasing the airplanes. It is just irritating to see how many people are foaming at the mouth to get their hands on these airplanes. And also those claiming they are the authority on something they know NOTHING about.

 

[Spicepilots]

And also those claiming they are the authority on something they know NOTHING about.

FI would not exist otherwise

 

[Flyprdu]

It is just irritating to see how many people are foaming at the mouth to get their hands on these airplanes.

Bunch of vultures if you ask me.

 

[joe_pilot]

You are correct. PNCL is just leasing the airplanes. It is just irritating to see how many people are foaming at the mouth to get their hands on these airplanes. And also those claiming they are the authority on something they know NOTHING about.

I find it to be not only irritating, but disgusting.

For the record, I am an ATL based OO pilot who hopes something can be worked out for you guys to keep the flying.

Short of that, the best thing would be for the work to return to mainline.

Good luck guys.

-JP

 

[norskman2]

You are correct. PNCL is just leasing the airplanes.

No. DAL required that 9E purchase the airplanes as part of the contract.

 

[B.T.Justice]

No. DAL required that 9E purchase the airplanes as part of the contract.

Overview During the third quarter of 2007, we continued to make progress in what we have identified as a significant year of transition for the Company. We have continued to prepare for our new operations with Continental Airlines and Delta Air Lines by entering into agreements to obtain financing for the Q400 and CRJ-900 aircraft pre-delivery payments.



So your saying the 9 aircraft are completely paid off, and free of all liens? Thats about 315M, for 9 aircraft, and 560M for all 16. Where did PNCL come up with that cash?

PNCL "owns" the airplanes, like I own my house. Well I own about 23% of it, the bank owns the rest.

05/08/2008
Peter Hunt
Well, the total of the new aircraft we're adding is 31. We added three in the fourth quarter of '07 and then we got those 28 that come in '08 and January '09, and the total investment on the fleet is $660 million, of which $100 million is financed by Pinnacle. It's come out of our pocket and then $560 million of the $660 million is financed through Export Development Canada, where we're borrowing the funds from EDC in 15-year mortgage-style loans.

It sounds to me like Export Development Canada owns the airplanes.

 

[TOOL CRIB]

Pinnacle can always start branded flying!

 

[SmitteyB]

Guys-

Pinnacle owns the CRJ900's. They are financed. EDC holds the certificate of ownership.

Pinnacle owns the Q400's. They are financed. EDC holds the certificate of ownership.

What is soooo hard?

Pinnacle has a LOT of cash. Nothing like Skywest, but not bad either.

If PNCL cannot put these airplanes into a CPA, they will lease them overseas. Management reaps bonuess.

 

[theo]

If Pinnacle cannot find a place to fly the 900's then they will need to dump them. My guess is they have the option of giving them to DAL. DAL will take them and turn around and fly them using Comair pilots. That explains why Comair is continuing to hire and train 900 pilots. Seems like DAL has a plan, they are in the middle of executing that plan. Also DAL probably has the option to pick up any deliveries Pinnacle fails to take, those too probably end up at Comair.