SOURCE: Pinnacle Airlines

Pinnacle Airlines

November 03, 2009 07:00 ET

Pinnacle Airlines Corp. Announces 2009 Third Quarter Earnings

Company Records Consolidated Earnings per Share Excluding Nonrecurring Items of $0.40

MEMPHIS, TN--(Marketwire - November 3, 2009) - Pinnacle Airlines Corp. (NASDAQ: PNCL) (the "Company") today reported third quarter 2009 net income of $11.4 million and fully diluted earnings per share ("EPS") of $0.62. Excluding a gain related to the sale of the Company's Auction Rate Securities ("ARS") portfolio, the Company achieved net income and EPS of $7.3 million and $0.40, respectively, in the third quarter of 2009. This represents increases of 6% and 5%, respectively, over net income of $6.9 million and EPS of $0.38 in the third quarter of 2008 (excluding certain special items). The Company reported consolidated operating income of $23.8 million in the third quarter of 2009, an increase of 13% over consolidated operating income of $21.1 million in the third quarter of 2008, excluding special items.

"Once again, our People at Colgan Air and Pinnacle Airlines have delivered consistent financial performance for our shareholders, despite the many challenges facing our industry today," said Phil Trenary, the Company's President and Chief Executive Officer. "I offer my thanks to all of our People for the outstanding job they perform day in and day out."

For the nine months ended September 30, 2009, the Company reported net income of $36.2 million and EPS of $2.01. In addition to the gain on the sale of the Company's ARS portfolio recorded during the third quarter, the Company's year-to-date financial results include a number of previously announced special items that increased net income by $14.9 million. These nonrecurring items, along with special items that occurred in 2008, are listed in the attached table "Reconciliation of Non-GAAP Disclosures." Excluding these special items, the Company achieved net income of $17.6 million for the nine months of 2009, an increase of 51% over net income of $11.7 million year-to-date in 2008. Year-to-date 2009 EPS excluding these nonrecurring items was $0.97, an increase of 49% over EPS of $0.65 year-to-date in 2008.

Recent Significant Financial Events

The Company completed a number of transactions during the third quarter of 2009 to increase its liquidity in preparation for the first quarter of 2010 when holders of its remaining outstanding 3.25% senior convertible notes (the "Notes") may require the Company to repurchase the Notes. These transactions included the following:

-- The Company completed a $25 million, three-year term loan financing with C.I.T. Leasing secured by its pool of spare rotable and expendable aircraft parts. The interest rate for this financing is a variable rate indexed to LIBOR and was 8.5% at September 30, 2009.

-- The Company sold its portfolio of ARS as part of a settlement with a financial institution. After repayment of a related credit facility, the Company netted an additional $27 million in cash proceeds from the sale. In addition, the Company received options to repurchase the ARS at any time during the next three years should the market for ARS become more liquid. The Company recorded a net gain of $4.2 million on the settlement. The Company has recorded the options as an asset at their fair value of $4.1 million at September 30, 2009. The Company will record in earnings any change in the fair value of its unexercised options each quarter during the three-year term of the options.

-- The Company repurchased approximately $78 million par value of the Notes at a purchase price of $75 million. After completion of this purchase, approximately $31 million par amount of the Notes remains outstanding.

"We laid out a number of liquidity objectives at the beginning of the year, and I'm pleased to report that we've made great strides in accomplishing them," said Peter Hunt, the Company's Chief Financial Officer. "We have made tremendous progress in deleveraging our balance sheet and increasing our liquidity."

Third Quarter 2009 Financial and Operating Results

During the third quarter of 2009, Pinnacle Airlines, Inc. ("Pinnacle"), the Company's regional jet operating subsidiary, completed 106,802 block hours and 71,002 departures, a decrease and increase of (1)% and 6%, respectively, over the same period in 2008. Capacity increases associated with Pinnacle's new CRJ-900 aircraft fleet operating under the Delta Connection Agreement ("DCA") were partially offset by a (1)% decrease in the average number of CRJ-200 aircraft as compared to 2008. In addition, Pinnacle has experienced a (5)% decrease in aircraft utilization of its fleet, primarily from route network changes resulting in shorter average flights. Colgan Air, Inc. ("Colgan"), the Company's regional turboprop operating subsidiary, completed 36,255 block hours and 29,332 departures during the third quarter, decreases of (16)% and (15)%, respectively, over the same period in 2008. The decrease in operations is primarily related to the retirement of seven Saab and Beech aircraft in conjunction with eliminating certain markets operated under the Company's pro-rate agreements. Also contributing to this decrease was a reduction of one Q400 aircraft in Colgan's fleet during the three months ended September 30, 2009 as compared to the same period in 2008.

The Company recorded consolidated operating revenue during the third quarter of 2009 of $217.2 million, a decrease of $4.6 million, or 2%, over the same period in 2008. This decrease is primarily related to a reduction in Colgan's pro-rate operations and the decrease in Pinnacle's capacity noted above. Consolidated operating income was $23.8 million for the third quarter of 2009. Consolidated operating income for the third quarter of 2008 was approximately $21.1 million, excluding nonrecurring items. Pinnacle reported third quarter 2009 operating income and an operating margin of $15.7 million and 10.1%, respectively, an increase of $3.7 million and 2.0 points, respectively, from the third quarter of 2008. Increases in Pinnacle's operating income related to its new CRJ-900 operations were partially offset by unit cost increases related to salaries, wages and benefits and maintenance.

Colgan reported operating income and an operating margin of $8.1 million and 13.1%, a decrease of $1.0 million and 0.7 points, respectively, from the third quarter of 2008, excluding nonrecurring items. Colgan's unit revenue in its pro rate operations declined by (4)% due to the current economic conditions. Offsetting this decline in unit revenue, Colgan's average fuel cost per gallon decreased (44)% during the quarter, as compared to 2008. During the third quarter of 2009, Colgan also accelerated the amortization of certain slots that it plans to vacate in early 2010, increasing depreciation and amortization by $0.6 million. In addition, Colgan recorded a one-time reduction of maintenance expense of $1.4 million in the third quarter of 2008 related to the adjustment of certain maintenance accruals.

Net nonoperating expense was $7.4 million for the third quarter of 2009, including the previously discussed $4.2 million net investment gain related to the Company's ARS portfolio. Net nonoperating expense for the same period in 2008 was $11.3 million. Interest expense for the third quarter was $12.0 million, a decrease of $0.8 million from the third quarter of 2008. Interest income decreased by $1.0 million, primarily from a decrease in interest rates earned on invested assets. Interest expense includes $2.1 million and $2.5 million of additional expense for the third quarter of 2009 and 2008 related to the Company's previously disclosed adoption of a new accounting standard, which resulted in a change in the Company's accounting for the Notes. Prior year amounts have been restated to reflect the new accounting standard. The effect of this change was a non-cash reduction to EPS of $0.06 and $0.08 for the third quarter of 2009 and 2008, respectively.

Cash and Cash Equivalents

The Company ended the quarter with $81.2 million in unrestricted cash and cash equivalents. The Company generated $21.2 million in cash and cash equivalents from operating activities during the third quarter of 2009. Net cash provided by investing activities for the three months ended September 30, 2009 was $24.8 million, primarily resulting from the Company's sale of its ARS portfolio. Net cash used in financing activities for the three months ended September 30, 2009 totaled $59.0 million, comprised of $75 million used to repurchase a portion of the Notes and $8.2 million of scheduled principal payments on long-term debt obligations, partially offset by $24.2 million in net proceeds received from its term loan with C.I.T. Leasing.

About Pinnacle Airlines Corp.

Pinnacle Airlines Corp., an airline holding company, is the parent company of Pinnacle Airlines, Inc. and Colgan Air, Inc. Pinnacle Airlines, Inc. operates under Delta brands and operates 126 CRJ-200 and 16 CRJ-900 regional jet aircraft throughout the United States and in the District of Columbia, Belize, Mexico, Turks and Caicos Islands, the U.S. Virgin Islands and three Canadian provinces. Colgan Air, Inc. operates as Continental Connection, United Express and US Airways Express and operates a fleet of 14 Q400 and 34 Saab aircraft throughout the United States and Canada. For further information about the Company, please refer to the Company's Form 10-Q for the three months ended September 30, 2009, which will be filed with the SEC shortly.

Non-GAAP Disclosures

This release and certain tables accompanying this release include certain financial information not prepared in accordance with generally accepted accounting principles ("GAAP"), Colgan's operating income, Colgan's operating margin, the Company's operating income, operating margin, pre-tax income, net income and EPS for the three and nine months ended September 30, 2009 and 2008, excluding nonrecurring items related to aircraft retirement charges, the excess of property insurance proceeds over cost basis of aircraft, net investment gains and losses, ineffective portion of cash flow hedge, reversal of income tax reserves and related accrued interest, and the gain on debt extinguishment. The Company believes that this information is useful to investors as it indicates more clearly the Company's comparative year-to-year results. None of this information should be considered a substitute for any measures prepared in accordance with GAAP. The Company has included its reconciliations of these non-GAAP financial measures to the most comparable GAAP financial measures in the accompanying schedules.

Forward-Looking Statements

This press release contains various forward-looking statements that are based on management's beliefs, as well as assumptions made by and information currently available to management. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Such statements are subject to certain risks, uncertainties and assumptions, including those set forth in our filings with the Securities and Exchange Commission, which are available to investors at our website or online from the Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove erroneous, actual results may vary materially from results that were anticipated or projected. The Company does not intend to update these forward-looking statements before its next required filing with the Securities and Exchange Commission.

                          Pinnacle Airlines Corp.
        Condensed Consolidated Statements of Operations (Unaudited)
                  (in thousands, except per share data)


                                          Three Months Ended September 30,
                                          --------------------------------
                                                2009             2008
                                          ---------------  ---------------
                                                              (Restated)
Operating revenues
  Regional airline services               $       214,478  $       220,242
  Other                                             2,730            1,550
                                          ---------------  ---------------
Total operating revenues                          217,208          221,792

Operating expenses
  Salaries, wages and benefits                     55,402           56,378
  Aircraft rentals                                 30,093           31,411
  Ground handling services                         21,964           21,651
  Aircraft maintenance, materials and
   repairs                                         25,311           20,612
  Other rentals and landing fees                   17,659           19,369
  Aircraft fuel                                     6,197           14,831
  Commissions and passenger related
   expense                                          5,660            7,183
  Depreciation and amortization                     9,377            7,586
  Other                                            21,749           21,692
  Impairment and aircraft retirement
   charges                                              -            1,069
                                          ---------------  ---------------
Total operating expenses                          193,412          201,782
                                          ---------------  ---------------

Operating income                                   23,796           20,010

Operating income as a percentage of
 operating revenues                                  11.0%             9.0%

Nonoperating (expense) income
  Interest income                                     277            1,289
  Interest expense                                (11,989)         (12,758)
  Investment gain                                   4,233                -
  Miscellaneous income, net                           101              192
                                          ---------------  ---------------
Total nonoperating expense                         (7,378)         (11,277)
                                          ---------------  ---------------
Income before income taxes                         16,418            8,733
Income tax expense                                 (5,041)          (2,526)
                                          ---------------  ---------------
Net income                                $        11,377  $         6,207
                                          ===============  ===============

Basic earnings per share                  $          0.63  $          0.35
                                          ===============  ===============

Diluted earnings per share                $          0.62  $          0.35
                                          ===============  ===============

Shares used in computing basic earnings
 per share                                         17,970           17,867
                                          ===============  ===============
Shares used in computing diluted earnings
 per share                                         18,204           17,891
                                          ===============  ===============




                          Pinnacle Airlines Corp.
        Condensed Consolidated Statements of Operations (Unaudited)
                  (in thousands, except per share data)


                                          Nine Months Ended September 30,
                                          --------------------------------
                                                2009             2008
                                          ---------------  ---------------
                                                              (Restated)
Operating revenues
  Regional airline services               $       629,614  $       640,414
  Other                                             6,679            6,873
                                          ---------------  ---------------
Total operating revenues                          636,293          647,287

Operating expenses
  Salaries, wages and benefits                    167,999          165,582
  Aircraft rentals                                 90,679           97,439
  Ground handling services                         70,622           72,712
  Aircraft maintenance, materials and
   repairs                                         74,800           66,261
  Other rentals and landing fees                   53,987           52,123
  Aircraft fuel                                    15,968           41,603
  Commissions and passenger related
   expense                                         15,714           21,438
  Depreciation and amortization                    26,740           18,566
  Other                                            54,890           68,614
  Impairment and aircraft retirement
   charges                                          1,980           13,688
                                          ---------------  ---------------
Total operating expenses                          573,379          618,026
                                          ---------------  ---------------

Operating income                                   62,914           29,261

Operating income as a percentage of
 operating revenues                                   9.9%             4.5%

Nonoperating (expense) income
  Interest income                                   1,942            5,326
  Interest expense                                (34,712)         (31,194)
  Investment gain (loss)                            3,944           (8,675)
  Miscellaneous income, net                           445              166
                                          ---------------  ---------------
Total nonoperating expense                        (28,381)         (34,377)
                                          ---------------  ---------------
Income (loss) before income taxes                  34,533           (5,116)
Income tax benefit (expense)                        1,680             (355)
                                          ---------------  ---------------
Net income (loss)                         $        36,213  $        (5,471)
                                          ===============  ===============

Basic earnings (loss) per share           $          2.02  $         (0.31)
                                          ===============  ===============

Diluted earnings (loss) per share         $          2.01  $         (0.31)
                                          ===============  ===============

Shares used in computing basic earnings
 (loss) per share                                  17,968           17,864
                                          ===============  ===============
Shares used in computing diluted earnings
 (loss) per share                                  18,050           17,864
                                          ===============  ===============




                          Pinnacle Airlines Corp.
                  Condensed Consolidated Balance Sheets
                    (in thousands, except share data)


                                    September 30, 2009  December 31, 2008
                                    ------------------  ------------------
Assets                                  (Unaudited)         (Restated)
Current assets
  Cash and cash equivalents         $           81,211  $           69,469
  Restricted cash                                4,158               5,417
  Receivables, net                              33,486              31,619
  Spare parts and supplies, net                 18,570              17,106
  Prepaid expenses and other assets              6,157               8,160
  Assets held for sale                           1,020               2,786
  Deferred income taxes, net of
   allowance                                    10,058              13,908
  Income taxes receivable                       34,186              31,117
                                    ------------------  ------------------
    Total current assets                       188,846             179,582
Property and equipment
  Flight equipment                             754,274             721,499
  Aircraft pre-delivery payments                10,022               5,721
  Other property and equipment                  47,336              46,218
  Less accumulated depreciation                (77,954)            (53,507)
                                    ------------------  ------------------
    Net property and equipment                 733,678             719,931

Investments                                      4,078             116,900
Deferred income taxes, net of
 allowance                                           -              40,847
Other assets                                   319,726              33,724
Debt issuance costs, net                         3,737               3,711
Goodwill                                        18,422              18,422
Intangible assets, net                          12,784              14,585
                                    ------------------  ------------------
Total assets                        $        1,281,271  $        1,127,702
                                    ==================  ==================

Liabilities and stockholders' equity
Current liabilities
  Current maturities of long-term
   debt                             $           35,918  $           32,116
  Bank line of credit                                -               8,275
  Senior convertible notes                      29,853              10,754
  Pre-delivery payment facility                      -               4,075
  Accounts payable                              20,748              30,431
  Deferred revenue                              24,363              23,851
  Accrued expenses and other
   current liabilities                          59,131              74,669
                                    ------------------  ------------------
  Total current liabilities                    170,013             184,171

Senior convertible notes                             -              97,683

Noncurrent pre-delivery payment
 facility                                        4,910                   -
Long-term debt, less current
 maturities                                    529,045             502,741
Credit facility                                      -              90,000
Deferred revenue, net of current
 portion                                       182,464             192,191
Deferred income taxes, net of
 allowance                                       4,191                   -
Other liabilities                              295,214               5,182

Commitments and contingencies

Stockholders' equity
  Common stock, $0.01 par value;
   40,000,000 shares authorized;
   22,792,426 and 22,514,782 shares
   issued, respectively                            228                 225
  Treasury stock, at cost,
   4,450,092 shares                            (68,152)            (68,152)
  Additional paid-in capital                   120,838             119,610
  Accumulated other comprehensive
   loss                                        (14,916)            (17,172)
  Retained earnings                             57,436              21,223
                                    ------------------  ------------------
Total stockholders' equity                      95,434              55,734
                                    ------------------  ------------------
Total liabilities and stockholders'
 equity                             $        1,281,271  $        1,127,702
                                    ==================  ==================




                          Pinnacle Airlines Corp.
        Condensed Consolidated Statements of Cash Flows (Unaudited)
                              (in thousands)


                                          Nine Months Ended September 30,
                                          --------------------------------
                                                2009             2008
                                          ---------------  ---------------

Cash provided by operating activities     $        83,982  $        13,827
Cash provided by investing activities              24,325           25,538
Cash used in financing activities                 (96,565)          (2,321)
                                          ---------------  ---------------
Net increase in cash and cash equivalents          11,742           37,044
Cash and cash equivalents at beginning of
 period                                            69,469           26,785
                                          ---------------  ---------------
Cash and cash equivalents at end of
 period                                   $        81,211  $        63,829
                                          ===============  ===============




                            Pinnacle Airlines Corp.
                  Pinnacle Operating Statistics (Unaudited)


           Three Months Ended September 30, Nine Months Ended September 30,
            ------------------------------  ------------------------------
              2009       2008     Change      2009       2008      Change
            ---------  ---------  -------   ---------  ---------  -------
Other Data:
Revenue
 passengers
 (in
 thousands)     2,953      2,619       13 %     8,116      7,770        4 %
Revenue
 passenger
 miles
 ("RPMs")
 (in
 thousands) 1,203,519  1,236,067       (3)% 3,504,903  3,622,776       (3)%
Available
 seat miles
 ("ASMs")
 (in
 thousands) 1,508,956  1,598,929       (6)% 4,638,257  4,715,054       (2)%
Passenger
 load
 factor          79.8%      77.3%  2.5 pts.      75.6%      76.8% (1.2)pts.

Operating
 revenue
 per ASM
 (in cents)     10.29       9.27       11 %     10.03       9.72        3 %
Operating
 cost per
 ASM (in
 cents)          9.25       8.51        9 %      9.02       8.88        2 %
Operating
 revenue
 per block
 hour       $   1,454  $   1,376        6 % $   1,442  $   1,381        4 %
Operating
 cost per
 block hour $   1,307  $   1,265        3 % $   1,298  $   1,261        3 %
Block hours   106,802    107,632       (1)%   322,517    331,744       (3)%
Departures     71,002     66,779        6 %   206,458    200,568        3 %
Average
 daily
 utilization
 (block
 hours)          8.29       8.74       (5)%      8.36       8.91       (6)%

Average
 stage
 length
 (miles)          404        465      (13)%       427        462       (8)%

Number of
 operating
 aircraft
 (end of
 period)
    CRJ-200       126        124        2 %
    CRJ-900        16         11       45 %
Employees
 (end of
 period)        3,903      4,164       (6)%




                             Pinnacle Airlines Corp.
                     Colgan Operating Statistics (Unaudited)

                     Three Months Ended            Nine Months Ended
                         September 30,                September 30,
                  ---------------------------  ---------------------------
                    2009     2008     Change     2009     2008     Change
Pro-rate
 Agreements:
Revenue
 passengers (in
 thousands)           332      356        (7)%     885    1,082       (18)%
RPMs (in
 thousands)        58,486   65,192       (10)% 154,100  197,977       (22)%
ASMs (in
 thousands)       122,642  146,997       (17)% 348,434  446,643       (22)%
Passenger load
 factor              47.7%    44.3%   3.4 pts.    44.2%    44.3% (0.1) pts.
Passenger yield
 (in cents)         73.75    82.26       (10)%   75.16    77.76        (3)%
Operating revenue
 per ASM (in
 cents)             35.17    36.48        (4)%   33.24    34.47        (4)%
Operating revenue
 per block hour   $ 1,786  $ 1,804        (1)% $ 1,683  $ 1,675         0 %
Block hours        24,152   29,722       (19)%  68,836   91,888       (25)%
Departures         21,273   25,679       (17)%  60,911   77,147       (21)%
Fuel consumption
 (in thousands of
 gallons)           2,935    3,918       (25)%   8,340   11,535       (28)%
Average price per
 gallon           $  2.11  $  3.79       (44)% $  1.91  $  3.61       (47)%
Average fare      $   130  $   151       (14)% $   131  $   142        (8)%

Capacity Purchase
 Agreement:
Revenue
 passengers (in
 thousands)           427      394         8 %   1,161      770        51 %
RPMs (in
 thousands)       122,312  109,687        12 % 325,113  214,582        52 %
ASMs (in
 thousands)       169,371  175,823        (4)% 476,134  325,365        46 %
Passenger load
 factor              72.2%    62.4%   9.8 pts.    68.3%    66.0%   2.3 pts.
Operating revenue
 per ASM (in
 cents)             11.00    11.36        (3)%   11.55    10.74         8 %
Operating revenue
 per block hour   $ 1,540  $ 1,504         2 % $ 1,547  $ 1,413         9 %
Block hours        12,103   13,282        (9)%  35,563   24,741        44 %
Departures          8,059    8,641        (7)%  23,193   15,927        46 %

Total Colgan:
Block hours        36,255   43,004       (16)% 104,399  116,629       (10)%
Departures         29,332   34,320       (15)%  84,104   93,074       (10)%
ASMs (in
 thousands)       292,013  322,820       (10)% 824,568  772,008         7 %
Total operating
 cost per ASM (in
 cents)             18.44    20.34        (9)%   18.77    25.85       (27)%
Total operating
 cost per ASM (in
 cents)
  (excluding
   impairment
   and aircraft
   lease
   return costs)    18.44    20.01        (8)%   18.53    24.07       (23)%
Total operating
 cost per block
 hour             $ 1,485 $  1,527        (3)% $ 1,483 $  1,711       (13)%

Total operating
 cost per block
 hour
  (excluding
   impairment
   and aircraft
   lease
   return costs)  $ 1,485 $  1,502        (1)% $ 1,464 $  1,593        (8)%
Average daily
 utilization
 (block hours)       8.21     7.88         4 %    7.89     7.56         4 %
Average stage
 length (miles)       224      221         1 %     221      209         6 %
Number of
 operating
 aircraft (end of
 period)
   Saab 340            34       37        (8)%
   Beech 1900           -        4      (100)%
   Q400                14       15        (7)%
Employees           1,326    1,389        (5)%




                          Pinnacle Airlines Corp.
            Reconciliation of Non-GAAP Disclosures (Unaudited)
                  (in thousands, except per share data)


                                   Three Months Ended September 30,
                           -----------------------------------------------
                             2009       2008     $ change        % change
                           ---------  ---------  ---------       --------

GAAP Colgan operating
 income                    $   8,110  $   7,994  $     116              1 %
Impairment and aircraft
 retirement charges                -      1,069     (1,069)           N/A
                           ---------  ---------  ---------       --------
Non-GAAP Colgan operating
 income                    $   8,110  $   9,063  $    (953)           (11)%
                           =========  =========  =========       ========

GAAP Colgan operating
 margin                         13.1%      10.9%       2.2  pts.
Impairment and aircraft
 retirement charges                -        1.5%      (1.5) pts.
                           ---------  ---------  ---------
Non-GAAP Colgan operating
 margin                         13.1%      12.4%       0.7  pts.
                           =========  =========  =========

GAAP operating income      $  23,796  $  20,010  $   3,786             19 %
Impairment and aircraft
 retirement charges                -      1,069     (1,069)           N/A
                           ---------  ---------  ---------       --------
Non-GAAP operating income  $  23,796  $  21,079  $   2,717             13 %
                           =========  =========  =========       ========

GAAP operating margin           11.0%       9.0%       2.0  pts.
Impairment and aircraft
 retirement charges                -        0.5%      (0.5) pts.
                           ---------  ---------  ---------
Non-GAAP operating margin       11.0%       9.5%       1.5  pts.
                           =========  =========  =========

GAAP pre-tax income        $  16,418  $   8,733  $   7,685             88 %
Impairment and aircraft
 retirement charges                -      1,069     (1,069)           N/A
Net investment gain           (4,233)         -     (4,233)           N/A
                           ---------  ---------  ---------       --------
Non-GAAP pre-tax income    $  12,185  $   9,802  $   2,383             24 %
                           =========  =========  =========       ========

GAAP net income            $  11,377  $   6,207  $   5,170             83 %
Impairment and aircraft
 retirement charges, net
 of tax                            -        674       (674)           N/A
Net investment gain, net
 of tax                       (4,054)         -     (4,054)           N/A
                           ---------  ---------  ---------       --------
Non-GAAP net income        $   7,323  $   6,881  $     442              6 %
                           =========  =========  =========       ========

GAAP EPS                   $    0.62  $    0.35  $    0.27             77 %
Impairment and aircraft
 retirement charges, net
 of tax                            -       0.03      (0.03)           N/A
Net investment gain, net
 of tax                        (0.22)         -      (0.22)           N/A
                           ---------  ---------  ---------       --------
Non-GAAP EPS               $    0.40  $    0.38  $    0.02              5 %
                           =========  =========  =========       ========




                          Pinnacle Airlines Corp.
            Reconciliation of Non-GAAP Disclosures (Unaudited)
                  (in thousands, except per share data)


                                   Nine Months Ended September 30,
                           ----------------------------------------------
                             2009       2008     $ change        % change
                           --------   --------   ---------       --------
GAAP Colgan operating
 income (loss)             $ 16,332   $(10,491)  $  26,823           (256)%
Impairment and aircraft
 retirement charges           1,980     13,688     (11,708)           (86)%
Excess of property
 insurance proceeds over
 cost basis of aircraft        (835)         -        (835)           N/A
                           --------   --------   ---------       --------
Non-GAAP Colgan operating
 income                    $ 17,477   $  3,197   $  14,280            447 %
                           ========   ========   =========       ========

GAAP Colgan operating
 margin                         9.5 %     (5.5)%      15.0  pts.
Impairment and aircraft
 retirement charges             1.2 %      7.2 %      (6.0) pts.
Excess of property
 insurance proceeds over
 cost basis of aircraft        (0.5)%        -        (0.5) pts.
                           --------   --------   ---------
Non-GAAP Colgan operating
 margin                        10.2 %      1.7 %       8.5  pts.
                           ========   ========   =========

GAAP operating income      $ 62,914   $ 29,261   $  33,653            115 %
Impairment and aircraft
 retirement charges           1,980     13,688     (11,708)           (86)%
Excess of property
 insurance proceeds over
 cost basis of aircraft        (835)         -        (835)           N/A
                           --------   --------   ---------       --------
Non-GAAP operating income  $ 64,059   $ 42,949   $  21,110             49 %
                           ========   ========   =========       ========

GAAP operating margin           9.9 %      4.5 %       5.4  pts.
Impairment and aircraft
 retirement charges             0.3 %      2.1 %      (1.8) pts.
Excess of property
 insurance proceeds over
 cost basis of aircraft        (0.1)%        -        (0.1) pts.
                           --------   --------   ---------
Non-GAAP operating margin      10.1 %      6.6 %       3.5  pts.
                           ========   ========   =========

GAAP pre-tax income (loss) $ 34,533   $ (5,116)  $  39,649           (775)%
Impairment and aircraft
 retirement charges           1,980     13,688     (11,708)           (86)%
Excess of property
 insurance proceeds over
 cost basis of aircraft        (835)         -        (835)           N/A
Net investment (gain) loss   (3,944)     8,675     (12,619)          (145)%
Ineffective portion of
 hedge                        1,424          -       1,424            N/A
Reversal of interest on
 tax reserves                (2,926)         -      (2,926)           N/A
Gain on debt
 extinguishment              (1,857)         -      (1,857)           N/A
                           --------   --------   ---------       --------
Non-GAAP pre-tax income    $ 28,375   $ 17,247   $  11,128             65 %
                           ========   ========   =========       ========
GAAP net income (loss)     $ 36,213   $ (5,471)  $  41,684           (762)%
Impairment and aircraft
 retirement charges, net
 of tax                       1,280      8,828      (7,548)           (86)%
Excess of property
 insurance proceeds over
 cost basis of aircraft,
 net of tax                    (540)         -        (540)           N/A
Net investment (gain)
 loss, net of tax            (3,777)     8,309     (12,086)          (145)%
Ineffective portion of
 hedge, net of tax              921          -         921            N/A
Reversal of interest on
 tax reserves, net of tax    (1,849)         -      (1,849)           N/A
Gain on debt extinguishment,
 net of tax                  (1,122)         -      (1,122)           N/A
IRS settlement              (13,551)         -     (13,551)           N/A
                           --------   --------   ---------       --------
Non-GAAP net income        $ 17,575   $ 11,666   $   5,909             51 %
                           ========   ========   =========       ========
GAAP EPS                   $   2.01   $  (0.31)  $    2.32           (748)%
Impairment and aircraft
 retirement charges, net
 of tax                        0.07       0.49       (0.42)           (86)%
Excess of property
 insurance proceeds over
 cost basis of aircraft,
 net of tax                   (0.03)         -       (0.03)           N/A
Net investment (gain)
 loss, net of tax             (0.21)      0.47       (0.68)          (145)%
Ineffective portion of
 hedge, net of tax             0.05          -        0.05            N/A
Reversal of interest on
 tax reserves, net of tax     (0.11)         -       (0.11)           N/A
Gain on debt extinguishment,
 net of tax                   (0.06)         -       (0.06)           N/A
IRS settlement                (0.75)         -       (0.75)           N/A
                           --------   --------   ---------       --------
Non-GAAP EPS               $   0.97   $   0.65   $    0.32             49 %
                           ========   ========   =========       ========

Contact Information

  • For further information, please contact:
    Joe Williams
    (901) 346-6162
    www.pncl.com