Pinnacle makes offer and stock tanks... huh?!?

[Mel Sharples]

I'm not a financial analyst and I did NOT stay at a Holiday Inn Express last night...

With that said, I'm not sure what the Pinnacle "sale" is all about. I'm guessing they want to raise cash and/or get out from the NWA umbrella.

With THAT said, why did that go over like a lead balloon? That idea flew about as well as a concrete chicken, as far as investors are concerned. The stock lost a ton today... but why? (Okay... obviously because of this "sale" but please help me with the financial part.)

Any of you guys with smarts please let me know why investors balked on this little announcement.

And for you Flagship types, do you see this as "yeah! future growth!" or "crap! Phil is running us into the ground!"

In any event, BEST OF LUCK with your continued negotiations. I hope you guys kick butt!


.

 

[Fly BI]

Mel,

I don't know the answers to anything you asked. I do; however, know that your avatar creeps my dog out. You know what they say about dogs and there senses...maybe she's on to something?

 

[JB74]

http://biz.yahoo.com/iw/050201/080170.html



Pinnacle Airlines Announces Convertible Note Offering
Tuesday February 1, 5:32 pm ET

MEMPHIS, TN--(MARKET WIRE)--Feb 1, 2005 -- Pinnacle Airlines Corp. (NasdaqNM:PNCL - News) announced today that it intends to offer, subject to market and other conditions, approximately $110,000,000 aggregate principal amount of 20-year convertible senior notes through an offering within the United States to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933. The interest rate, number of shares issuable upon conversion of the notes, investor put rights and company redemption rights are to be determined by negotiations between the company and the initial purchasers of the notes.


Basically the amount of outstanding debt increases, lowering or "diluting" the value of the current outstanding debt. Investors know that the stock is now worth less because there will be more shares available in the future.

 

[Lear70]

And for you Flagship types, do you see this as "yeah! future growth!" or "crap! Phil is running us into the ground!"

Most of us that I have talked to see it as the beginning of a push for growth outside the NWA ASA. Many of the restrictions against flying for other carriers exists as part of the debt that we owe NWA; if the debt disappears, so do many of the restrictions on what we can do.

Specifically, it's my understanding that we cannot use our current SOC (scheduling and operations control center), or maintenance, training, etc., to operate codeshare for other airlines until the debt is paid back. With the debt resting solely on the shoulders of private investors rather than NWA, the company can start looking to obtain our own aircraft leases, put them on our own certificate, and fly them for whomever we want. (Note, the NWA-owned CRJ's in NWA colors can NEVER be flown for anyone else - part of the ASA).

Personally, for reasons JB74 listed and others, I'm not surprised to see the stock price go down; personally I'm waiting for it to hit about $7 a share then I'm putting about half my savings into it; our growth isn't anywhere near done on a long-term scale and I've always been a betting man anyway...

In any event, BEST OF LUCK with your continued negotiations. I hope you guys kick butt!.

Thanks, I sincerely appreciate the support and we're gonna need it - it's going to be a LONG, drawn-out process that has only just begun.

 

[flyinglow]

Does this mean there could be a new bottom feeder on the block?

 

[NDPILOT]

Seems like over the last few years, it's been a race to win that title.

 

[scabseeker]

our growth isn't anywhere near done on a long-term scale

Do you really think you are going to be growing after the 139th CRJ arrives on the property?

 

[flyinglow]

I think Pinnacle management has found the holy grail of low cost operation.

1. Hire a whole lot of low time Gulfstream pilots who will take years to upgrade, and don't care what you pay, or if you pay them in training. Hey their used to it.
2. Meanwhile you need street captains to fill your seats. You get guys coming in for the PIC time for a few years and then their gone. Hey, who cares, first year captain pay at Pinnacle beats 2nd and 3rd year FO pay anywhere.

With this mix you have a low cost structure, all pilots are at the low end of their longevity pay.

Brilliant, I am going go buy some Pinnacle stock now.

 

[Lear70]

Do you really think you are going to be growing after the 139th CRJ arrives on the property?

Yup. My guess is right at 150 aircraft total by the end of the year.

I'm also guessing that they'll delay any more announcements of orders until after Independence returns their CRJ's and see if they can pick them up on the cheap...

But like I said before, I'm a gamblin' man.