SOURCE: Pinnacle Airlines

Pinnacle Airlines

August 07, 2009 08:00 ET

Pinnacle Airlines Corp. Announces 2009 Second Quarter Earnings

Company Reports Consolidated Net Income Excluding Nonrecurring Items of $7.3 Million

MEMPHIS, TN--(Marketwire - August 7, 2009) - Pinnacle Airlines Corp. (NASDAQ: PNCL) (the "Company") today reported second quarter 2009 net income of $6.0 million and fully diluted earnings per share ("EPS") of $0.33. Excluding certain nonrecurring items more fully described below, the Company achieved net income and EPS of $7.3 million and $0.41, respectively, in the second quarter of 2009. This represents increases of 107% and 105%, respectively, over net income of $3.5 million and EPS of $0.20 in the second quarter of 2008, excluding nonrecurring items. Excluding nonrecurring items, the Company reported consolidated operating income of $23.7 million in the second quarter of 2009, an increase of 57% over consolidated operating income of $15.1 million in the second quarter of 2008, excluding nonrecurring items.

"Despite a challenging year for our industry, I am pleased to report solid financial performance for the second quarter of 2009 at both of our operating subsidiaries," said Phil Trenary, the Company's President and Chief Executive Officer. "Our investments in new aircraft and improvements to our pro-rate operations are beginning to produce positive results for all of our stakeholders."

During the second quarter, the Company recorded a nonrecurring charge of $1.5 million ($1.0 million net of income taxes, or $0.06 per share) related to the retirement of its Beech 1900 fleet. In addition, the Company recorded a net loss of $0.3 million ($0.3 million net of income taxes, or $0.02 per share) related to its portfolio of auction rate securities. The Company's net income and EPS for the second quarter of 2008 reported above also excludes certain nonrecurring items, which are listed in the attached table "Reconciliation of Non-GAAP Disclosures."

For the six months ended June 30, 2009, the Company reported net income of $24.8 million and EPS of $1.38. In addition to the nonrecurring items described above, the Company's year-to-date financial results include a number of previously announced nonrecurring items that increased net income by $14.4 million. These nonrecurring items are listed in the attached table "Reconciliation of Non-GAAP Disclosures." Excluding these nonrecurring items, the Company achieved net income of $10.4 million for the first six months of 2009, an increase of 118% over net income of $4.8 million in the first half of 2008, excluding nonrecurring items. Year-to-date 2009 EPS excluding these nonrecurring items was $0.58, an increase of 115% over EPS of $0.27 for the first half of 2008, excluding nonrecurring items.

Recent Significant Financial Events

On July 30, 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 the inception of the loan. This financing will enhance the Company's ability to repay its $109 million 3.25% senior convertible notes (the "Notes") in the event that holders of the Notes tender them to the Company in February 2010.

"This financing is evidence of the CIT Group's confidence in Pinnacle Airlines Corp.," said Peter Hunt, the Company's Chief Financial Officer. "Completion of this loan is an important step in meeting our financial commitments in early 2010."

On August 4, Pinnacle Airlines, Inc. ("Pinnacle"), the Company's regional jet operating subsidiary, and the Air Line Pilots Association ("ALPA") reached a tentative agreement to amend the collective bargaining agreement. Pinnacle had been involved in active negotiations with ALPA since April 2005, when the collective bargaining agreement between the two parties became amendable. The terms of the tentative agreement must be ratified by Pinnacle's pilots before it becomes final.

"Successfully completing a new Pilot agreement has been a very important goal for Pinnacle," said Phil Trenary. "I am proud of the way ALPA and our team worked together to reach this new tentative agreement for our Pilots."

Second Quarter 2009 Financial and Operating Results

During the second quarter of 2009, Pinnacle completed 106,475 block hours and 68,826 departures, a decrease and increase of (5)% and 1%, 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 decrease of two CRJ-200 aircraft that were removed from Pinnacle's fleet since June 30, 2008. In addition, Pinnacle has experienced a 7% decrease in aircraft utilization of its CRJ-200 fleet, primarily from route network changes resulting in shorter average flights and an overall decrease in its scheduled flying from Delta. Colgan Air, Inc. ("Colgan"), the Company's regional turboprop operating subsidiary, completed 34,233 block hours and 27,684 departures during the second quarter, decreases of 15% and 13%, respectively, over the same period in 2008. The decrease in operations is primarily related to the retirement of 11 Saab and Beech aircraft in conjunction with eliminating certain markets operated under the Company's pro-rate agreements. These decreases are partially offset by an increase in Q400 aircraft operations under the Company's Continental CPA.

The Company recorded consolidated operating revenue during the second quarter of 2009 of $211.3 million, a decrease of $9.9 million, or 4%, over the same period in 2008. The decrease is primarily related to the reduction in our pro-rate operations and the decrease in Pinnacle's CRJ-200 capacity noted above. These decreases are offset by an increase of $8.6 million and $6.1 million in revenue earned under our CRJ-900 DCA and Continental CPA.

Consolidated operating income excluding nonrecurring items was $23.7 million for the second quarter of 2009. Consolidated operating income for the second quarter of 2008 was approximately $15.1 million, excluding nonrecurring items. Pinnacle reported second quarter 2009 operating income and an operating margin of $17.0 million and 11.0%, an increase of $1.6 million and 1.1 points, respectively, from the second quarter of 2008. This increase is primarily related to a reduction of certain airport and ground handling expenses totaling $1.3 million resulting from a reversal of accrued amounts that Pinnacle no longer expects to pay. This one-time reduction of operating expenses increased net income by $0.8 million and EPS by $0.05. Additionally, increases in Pinnacle's operating income related to its new CRJ-900 operations were offset by unit cost increases related to salaries, wages and benefits and maintenance. Pinnacle continues to experience increased maintenance costs related to its CRJ-200 fleet, and a decrease in labor productivity associated with reduced attrition of pilots and flight attendants.

Excluding nonrecurring items, Colgan reported operating income and an operating margin of $6.7 million and 11.8%, an increase of $7.0 million and 12.3 points, respectively, from the second quarter of 2008, excluding nonrecurring items. The addition of Colgan's Q400 operations under its capacity purchase agreement with Continental Airlines contributed to the improvement in operating income during 2009. In addition, Colgan's fuel costs within its pro-rate operations decreased dramatically year-over-year. Colgan's fuel cost per gallon during the second quarter of 2009 was $1.90, down 50% as compared to 2008, improving operating income by approximately $5.2 million. Colgan also benefited from changes to its pro-rate operations implemented by the Company during 2008. These changes included the elimination of certain unprofitable markets, the retirement of six Saab and five Beech aircraft, and the restructuring of many of its Essential Air Service markets for more profitable operations. These improvements were offset by a three percent decrease in revenue per available seat mile.

Net nonoperating expense was $12.5 million for the three months ended June 30, 2009, including the $0.3 million net investment loss on our ARS noted above. Net nonoperating expense for the same period in 2008 was $18.0 million, inclusive of an $8.7 million impairment charge related to our ARS portfolio. Interest expense for the second quarter was $12.9 million, an increase of $1.7 million from the second quarter of 2009. The increase is primarily attributable to an increase in interest expense associated with the Company's owned fleet of CRJ-900 and Q400 aircraft that were acquired throughout 2008. Interest expense includes $2.5 million of additional expense for both the second 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 $0.09 and $0.08 for the second quarter of 2009 and 2008, respectively.

Cash and Cash Equivalents

The Company ended the quarter with unrestricted cash and cash equivalents totaling $94.2 million. The Company received its 2008 federal income tax refund of approximately $33 million on April 1, 2009, contributing significantly to the increase in cash during the quarter ended June 30, 2009.

The Company generated $56.3 million in cash and cash equivalents from operating activities during the second quarter 2009. This is primarily related to the federal income tax refund received of approximately $33 million, and operating cash flow from the Company's core airline operations of approximately $23.3 million. Net cash used by investing activities for the three months ended June 30, 2009 was $1.3 million. This was primarily attributable to $4.3 million of capital expenditures, offset by proceeds from redemptions of auction rate securities of $3.0 million. Net cash used in financing activities for the three months ended June 30, 2009 totaled $18.5 million, comprised of $9.3 million of scheduled principal payments on long-term debt obligations and $9.2 million of payments on two credit facilities.

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 124 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, and the U.S. Virgin Islands. 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 June 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, pre-tax income, net income and diluted EPS for the three and six months ended June 30, 2009 and 2008, excluding nonrecurring items related to aircraft retirement charges, net investment losses, the excess of property insurance proceeds over cost basis of aircraft, 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
                                                          June 30,
                                                  ------------------------
                                                      2009         2008
                                                  -----------  -----------
                                                               (Restated)
Operating revenues
  Regional airline services                       $   209,212  $   219,013
  Other                                                 2,051        2,141
                                                  -----------  -----------
Total operating revenues                              211,263      221,154

Operating expenses
  Salaries, wages and benefits                         55,757       55,761
  Aircraft rentals                                     30,094       32,507
  Ground handling services                             22,196       23,672
  Aircraft maintenance, materials and repairs          24,800       23,775
  Other rentals and landing fees                       17,925       17,310
  Aircraft fuel                                         5,254       14,899
  Commissions and passenger related expense             5,227        7,430
  Depreciation and amortization                         8,782        6,609
  Other                                                17,512       24,106
  Impairment and aircraft retirement charges            1,533       12,619
                                                  -----------  -----------
Total operating expenses                              189,080      218,688
                                                  -----------  -----------

Operating income                                       22,183        2,466

Operating income as a percentage of operating
 revenues                                                10.5%         1.1%

Nonoperating (expense) income
  Interest income                                         759        1,724
  Interest expense                                    (12,930)     (11,241)
  Net investment loss                                    (334)      (8,675)
  Miscellaneous (expense) income, net                     (12)         148
                                                  -----------  -----------
Total nonoperating expense                            (12,517)     (18,044)
                                                  -----------  -----------
Income (loss) before income taxes                       9,666      (15,578)
Income tax (expense) benefit                           (3,673)       2,664
                                                  -----------  -----------
Net income (loss)                                 $     5,993  $   (12,914)
                                                  ===========  ===========

Basic and diluted earnings (loss) per share       $      0.33  $     (0.72)
                                                  ===========  ===========

Shares used in computing basic earnings (loss)
 per share                                             17,970       17,869
                                                  ===========  ===========
Shares used in computing diluted earnings (loss)
 per share                                             17,979       17,869
                                                  ===========  ===========




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

                                                      Six Months Ended
                                                          June 30,
                                                  ------------------------
                                                      2009         2008
                                                  -----------  -----------
                                                               (Restated)

Operating revenues
  Regional airline services                       $   415,136  $   420,172
  Other                                                 3,949        5,323
                                                  -----------  -----------
Total operating revenues                              419,085      425,495

Operating expenses
  Salaries, wages and benefits                        112,597      109,204
  Aircraft rentals                                     60,586       66,028
  Ground handling services                             48,658       51,061
  Aircraft maintenance, materials and repairs          49,489       45,649
  Other rentals and landing fees                       36,328       32,754
  Aircraft fuel                                         9,771       26,772
  Commissions and passenger related expense            10,054       14,255
  Depreciation and amortization                        17,363       10,980
  Other                                                33,141       46,922
  Impairment and aircraft retirement charges            1,980       12,619
                                                  -----------  -----------
Total operating expenses                              379,967      416,244
                                                  -----------  -----------

Operating income                                       39,118        9,251

Operating income as a percentage of operating
 revenues                                                 9.3%         2.2%

Nonoperating (expense) income
  Interest income                                       1,665        4,038
  Interest expense                                    (22,723)     (18,437)
  Net investment loss                                    (289)      (8,675)
  Miscellaneous income (expense), net                     344          (26)
                                                  -----------  -----------
Total nonoperating expense                            (21,003)     (23,100)
                                                  -----------  -----------
Income (loss) before income taxes                      18,115      (13,849)
Income tax benefit                                      6,721        2,171
                                                  -----------  -----------
Net income (loss)                                 $    24,836  $   (11,678)
                                                  ===========  ===========

Basic and diluted earnings (loss) per share       $      1.38  $     (0.65)
                                                  ===========  ===========

Shares used in computing basic earnings (loss)
 per share                                             17,968       17,864
                                                  ===========  ===========
Shares used in computing diluted earnings (loss)
 per share                                             17,974       17,864
                                                  ===========  ===========




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

                                                  June 30,    December 31,
                                                    2009          2008
                                                ------------  ------------
Assets                                          (Unaudited)    (Restated)
Current assets
  Cash and cash equivalents                     $     94,209  $     69,469
  Restricted cash                                      4,758         5,417
  Receivables, net                                    30,420        31,619
  Spare parts and supplies, net                       17,827        17,106
  Prepaid expenses and other assets                    6,136         8,160
  Assets held for sale                                 1,020         2,786
  Deferred income taxes, net of allowance             10,495        13,908
  Income taxes receivable                             33,708        31,117
                                                ------------  ------------
    Total current assets                             198,573       179,582
Property and equipment
  Flight equipment                                   754,831       721,499
  Aircraft pre-delivery payments                      10,022         5,721
  Other property and equipment                        46,480        46,218
  Less accumulated depreciation                      (69,381)      (53,507)
                                                ------------  ------------
    Net property and equipment                       741,952       719,931

Investments                                          116,433       116,900
Deferred income taxes, net of allowance                  588        40,847
Other assets                                         329,141        33,724
Debt issuance costs, net                               3,409         3,711
Goodwill                                              18,422        18,422
Intangible assets, net                                13,751        14,585
                                                ------------  ------------
Total assets                                    $  1,422,269  $  1,127,702
                                                ============  ============

Liabilities and stockholders' equity
Current liabilities
  Current maturities of long-term debt          $     33,878  $     32,116
  Bank line of credit                                      -         8,275
  Credit facility                                     85,767             -
  Senior convertible notes                           102,504        10,754
  Pre-delivery payment facility                            -         4,075
  Accounts payable                                    25,579        30,431
  Deferred revenue                                    24,363        23,851
  Accrued expenses and other current
   liabilities                                        54,513        74,669
                                                ------------  ------------
    Total current liabilities                        326,604       184,171

Senior convertible notes                                   -        97,683
Noncurrent pre-delivery payment facility               4,910             -
Long-term debt, less current maturities              513,741       502,741
Credit facility                                            -        90,000
Deferred revenue, net of current portion             185,349       192,191
Other liabilities                                    303,597         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                         120,803       119,610
  Accumulated other comprehensive loss               (10,870)      (17,172)
  Retained earnings                                   46,059        21,223
                                                ------------  ------------
Total stockholders' equity                            88,068        55,734
                                                ------------  ------------
Total liabilities and stockholders' equity      $  1,422,269  $  1,127,702
                                                ============  ============




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

                                                      Six Months Ended
                                                          June 30,
                                                  ------------------------
                                                      2009         2008
                                                  -----------  -----------

Cash provided by (used in) operating activities   $    62,752  $      (959)

Cash provided by investing activities                   3,728       31,387

Cash (used in) provided by financing activities       (41,740)       8,015
                                                  -----------  -----------

Net increase in cash and cash equivalents              24,740       38,443

Cash and cash equivalents at beginning of period       69,469       26,785
                                                  -----------  -----------

Cash and cash equivalents at end of period        $    94,209  $    65,228
                                                  ===========  ===========





                      Pinnacle Airlines Corp.
             Pinnacle Operating Statistics (Unaudited)

                                         Three Months Ended June 30,
                                    -------------------------------------
                                        2009         2008       Change
                                    -----------  -----------  -----------
Other Data:
Revenue passengers (in thousands)         2,778        2,726            2%
Revenue passenger miles ("RPMs")
 (in thousands)                       1,211,030    1,287,429           (6)%
Available seat miles ("ASMs") (in
 thousands)                           1,548,790    1,622,264           (5)%
Passenger load factor                      78.2%        79.4%   (1.2) pts.
Operating revenue per ASM (in cents)       9.98         9.60            4%
Operating cost per ASM (in cents)          8.88         8.65            3%
Operating revenue per block hour    $     1,452  $     1,390            4%
Operating cost per block hour       $     1,292  $     1,252            3%
Block hours                             106,475      112,051           (5)%
Departures                               68,826       67,810            1%
Average daily utilization (block
 hours)                                    8.29         8.97           (8)%
Average stage length (miles)                427          468           (9)%

Number of operating aircraft (end of
 period)
  CRJ-200                                   124          126           (2)%
  CRJ-900                                    16            9           78%
Employees (end of period)                 4,060        4,144           (2)%



                                          Six Months Ended June 30,
                                    -------------------------------------
                                        2009         2008       Change
                                    -----------  -----------  -----------
Other Data:
Revenue passengers (in thousands)         5,163        5,151            0%
Revenue passenger miles ("RPMs")
 (in thousands)                       2,301,384    2,386,709           (4)%
Available seat miles ("ASMs") (in
 thousands)                           3,129,301    3,116,125            0%
Passenger load factor                      73.5%        76.6%   (3.1) pts.
Operating revenue per ASM (in cents)       9.90         9.95           (1)%
Operating cost per ASM (in cents)          8.92         9.06           (2)%
Operating revenue per block hour    $     1,437  $     1,384            4%
Operating cost per block hour       $     1,294  $     1,260            3%
Block hours                             215,715      224,112           (4)%
Departures                              135,456      133,789            1%
Average daily utilization (block
 hours)                                    8.38         8.95           (6)%
Average stage length (miles)                439          461           (5)%






                      Pinnacle Airlines Corp.
              Colgan Operating Statistics (Unaudited)

                                         Three Months Ended June 30,
                                    -------------------------------------
                                        2009         2008       Change
                                    -----------  -----------  -----------

Pro-rate Agreements:
Revenue passengers (in thousands)           305          377          (19)%
RPMs (in thousands)                      53,010       68,681          (23)%
ASMs (in thousands)                     114,768      153,540          (25)%
Passenger load factor                      46.2%        44.7%     1.5 pts.
Passenger yield (in cents)                73.02        77.99           (6)%
Operating revenue per ASM (in cents)      33.73        34.89           (3)%
Operating revenue per block hour    $     1,720  $     1,692            2%
Block hours                              22,507       31,653          (29)%
Departures                               20,018       26,292          (24)%
Fuel consumption (in thousands of
 gallons)                                 2,772        3,931          (29)%
Average price per gallon            $      1.90  $      3.79          (50)%
Average fare                        $       127  $       142          (11)%

Capacity Purchase Agreement:
Revenue passengers (in thousands)           405          286           42%
RPMs (in thousands)                     113,096       80,278           41%
ASMs (in thousands)                     157,299      115,053           37%
Passenger load factor                      71.9%        69.8%     2.1 pts.
Operating revenue per ASM (in cents)      11.41        10.28           11%
Operating revenue per block hour    $     1,531  $     1,338           14%
Block hours                              11,726        8,838           33%
Departures                                7,666        5,692           35%

Total Colgan:
Block hours                              34,233       40,491          (15)%
Departures                               27,684       31,984          (13)%
ASMs (in thousands)                     272,067      268,593            1%
Total operating cost per ASM
 (in cents)                               18.94        29.18          (35)%
Total operating cost per block hour $     1,505      $ 1,936          (22)%

Average daily utilization
 (block hours)                             7.84         7.76            1%
Average stage length (miles)                221          213            4%
Number of operating aircraft
 (end of period)
  Saab 340                                   34           40          (15)%
  Beech 1900                                  -            5         (100)%
  Q400                                       14           13            8%
Employees                                 1,334        1,427           (7)%



                                          Six Months Ended June 30,
                                    -------------------------------------
                                        2009         2008       Change
                                    -----------  -----------  -----------

Pro-rate Agreements:
Revenue passengers (in thousands)           553          726          (24)%
RPMs (in thousands)                      95,614      132,785          (28)%
ASMs (in thousands)                     225,791      300,169          (25)%
Passenger load factor                      42.3%        44.2%   (1.9) pts.
Passenger yield (in cents)                76.03        75.55            1%
Operating revenue per ASM (in cents)      32.20        33.42           (4)%
Operating revenue per block hour    $     1,627  $     1,614            1%
Block hours                              44,683       62,140          (28)%
Departures                               39,638       51,348          (23)%
Fuel consumption (in thousands of
 gallons)                                 5,404        7,617          (29)%
Average price per gallon            $      1.81  $      3.51          (48)%
Average fare                        $       131  $       138           (5)%

Capacity Purchase Agreement:
Revenue passengers (in thousands)           734          376           95%
RPMs (in thousands)                     202,801      104,895           93%
ASMs (in thousands)                     306,763      149,019          106%
Passenger load factor                      66.1%        70.4%   (4.3) pts.
Operating revenue per ASM (in cents)      11.85        10.05           18%
Operating revenue per block hour    $     1,550  $     1,304           19%
Block hours                              23,461       11,485          104%
Departures                               15,134        7,406          104%

Total Colgan:
Block hours                              68,144       73,625           (7)%
Departures                               54,772       58,754           (7)%
ASMs (in thousands)                     532,554      449,188           19%
Total operating cost per ASM
 (in cents)                               18.95        29.78          (36)%
Total operating cost per block hour $     1,481      $ 1,818          (19)%

Average daily utilization
 (block hours)                             7.72         7.52            3%
Average stage length (miles)                219          206            6%






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


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

GAAP Colgan operating
 income (loss)         $   5,188  $ (12,939)  $  18,127              (140)%
Impairment and
 aircraft
 retirement charges        1,533     12,619     (11,086)              (88)%
                       ---------  ---------   ---------         ---------
Non GAAP Colgan
 operating income
 (loss)                $   6,721  $    (320)  $   7,041            (2,200)%
                       =========  =========   =========         =========

GAAP Colgan operating
 margin                      9.1%     (19.8)%      28.9   pts.
Impairment and aircraft
 retirement charges          2.7%      19.3 %     (16.6)  pts.
                       ---------  ---------   ---------
Non GAAP Colgan
 operating margin           11.8%      (0.5)%      12.3   pts.
                       =========  =========   =========

GAAP operating income  $  22,183  $   2,466   $  19,717               800%
Impairment and
 aircraft
 retirement charges        1,533     12,619     (11,086)              (88)%
                       ---------  ---------   ---------         ---------
Non GAAP operating
 income                $  23,716  $  15,085   $   8,631                57%
                       =========  =========   =========         =========

GAAP operating margin       10.5%       1.1 %       9.4   pts.
Impairment and aircraft
 retirement charges          0.7%       5.7 %      (5.0)  pts.
                       ---------  ---------   ---------
Non GAAP operating
 margin                     11.2%       6.8 %       4.4   pts.
                       =========  =========   =========

GAAP pre tax income
 (loss)                $   9,666  $ (15,578)  $  25,244              (162)%
Impairment and
 aircraft
 retirement charges        1,533     12,619     (11,086)              (88)%
Net investment loss          334      8,675      (8,341)              (96)%
                       ---------  ---------   ---------         ---------
Non GAAP pre tax
 income                $  11,533  $   5,716   $   5,817               102%
                       =========  =========   =========         =========

GAAP net income (loss) $   5,993  $ (12,914)  $  18,907              (146)%
Impairment and aircraft
 retirement charges,
 net of tax                  992      8,139      (7,147)              (88)%
Net investment loss,
 net of tax                  320      8,309      (7,989)              (96)%
                       ---------  ---------   ---------         ---------
Non GAAP net income    $   7,305  $   3,534   $   3,771               107%
                       =========  =========   =========         =========

GAAP EPS               $    0.33  $   (0.72)  $    1.05              (146)%
Impairment and
 aircraft
 retirement charges,
 net of tax                 0.06       0.46       (0.40)              (87)%
Net investment loss,
 net of tax                 0.02       0.46       (0.44)              (96)%
                       ---------  ---------   ---------         ---------
Non GAAP EPS           $    0.41  $    0.20   $    0.21               105%
                       =========  =========   =========         =========






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

                                      Six Months Ended June 30,
                          -----------------------------------------------

                            2009        2008     $ change        % change
                          --------   ---------   ---------        -------

GAAP Colgan operating
 income (loss)            $  8,222   $ (18,485)  $  26,707           (144)%
Impairment and aircraft
 retirement charges          1,980      12,619     (10,639)           (84)%
Excess of property
 insurance proceeds over
 cost basis of aircraft       (835)          -        (835)           N/A
                          --------   ---------   ---------        -------
Non GAAP Colgan operating
 income (loss)            $  9,367   $  (5,866)  $  15,233           (260)%
                          ========   =========   =========        =======

GAAP Colgan operating
 margin                        7.5%      (16.0)%      23.5   pts.
Impairment and aircraft
 retirement charges            1.8%       10.9%       (9.1)  pts.
Excess of property
 insurance proceeds over
 cost basis of aircraft       (0.7)%         -         N/A
                          --------   ---------   ---------
Non GAAP Colgan operating
 margin                        8.6%       (5.1)%      13.7   pts.
                          ========   =========   =========

GAAP operating income     $ 39,118   $   9,251   $  29,867            323%
Impairment and aircraft
 retirement charges          1,980      12,619     (10,639)           (84)%
Excess of property
 insurance proceeds over
 cost basis of aircraft       (835)          -        (835)           N/A
                          --------   ---------   ---------        -------
Non GAAP operating income $ 40,263   $  21,870   $  18,393             84%
                          ========   =========   =========        =======

GAAP operating margin          9.3%       2.2%         7.1   pts.
Impairment and aircraft
 retirement charges            0.5%       3.0%        (2.5)  pts.
Excess of property
 insurance proceeds over
 cost basis of aircraft       (0.2)%         -        (0.2)  pts.
                          --------   ---------   ---------
Non GAAP operating margin      9.6%        5.2%        4.4   pts.
                          ========   =========   =========

GAAP pre tax income
 (loss)                   $ 18,115   $ (13,849)  $  31,964           (231)%
Impairment and aircraft
 retirement charges          1,980      12,619     (10,639)           (84)%
Excess of property
 insurance proceeds over
 cost basis of aircraft       (835)          -        (835)           N/A
Net investment loss            289       8,675      (8,386)           (97)%
Ineffective portion of
 hedge                       1,424           -       1,424            N/A
Reversal of interest on
 tax reserves               (2,719)          -      (2,719)           N/A
Gain on debt
 extinguishment             (1,857)          -      (1,857)           N/A
                          --------   ---------   ---------        -------
Non GAAP pre tax income   $ 16,397   $   7,445   $   8,952            120%
                          ========   =========   =========        =======

GAAP net income (loss)    $ 24,836   $ (11,678)  $  36,514           (313)%
Impairment and aircraft
 retirement charges, net
 of tax                      1,280       8,139      (6,859)           (84)%
Excess of property
 insurance proceeds over
 cost basis of aircraft,
 net of tax                   (540)          -        (540)           N/A
Net investment loss, net
 of tax                        277       8,309      (8,032)           (97)%
Ineffective portion of
 hedge, net of tax             921           -         921            N/A
Reversal of interest on
 tax reserves, net of tax   (1,719)          -      (1,719)           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       $ 10,382   $   4,770   $   5,612            118%
                          ========   =========   =========        =======

GAAP EPS                  $   1.38   $   (0.65)  $    2.03           (312)%
Impairment and aircraft
 retirement charges, net
 of tax                       0.07        0.46       (0.39)           (85)%
Excess of property
 insurance proceeds over
 cost basis of aircraft,
 net of tax                  (0.03)          -       (0.03)           N/A
Net investment loss, net
 of tax                       0.02        0.46       (0.44)           (96)%
Ineffective portion of
 hedge, net of tax            0.05           -        0.05            N/A
Reversal of interest on
 tax reserves, net of tax    (0.10)          -       (0.10)           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              $   0.58   $    0.27   $    0.31            115%
                          ========   =========   =========        =======

Contact Information

  • For further information, please contact:

    Joe Williams
    (901) 346-6162
    www.pncl.com