SOURCE: Pinnacle Airlines

Pinnacle Airlines

November 09, 2010 07:00 ET

Pinnacle Airlines Corp. Announces Third Quarter 2010 Profit of $9.4 Million

Company Reports Diluted Earnings per Share of $0.51

MEMPHIS, TN--(Marketwire - November 9, 2010) - Pinnacle Airlines Corp. (NASDAQ: PNCL) (the "Company") today reported third quarter 2010 net income of $9.4 million and diluted earnings per share ("EPS") of $0.51, an increase of 29% and 28%, respectively, over net income and EPS for the third quarter of 2009, excluding special items. The Company reported consolidated operating income of $25.7 million in the third quarter of 2010, an increase of $1.9 million from the third quarter of 2009.

Mesaba Aviation, Inc. ("Mesaba"), which the Company acquired on July 1, 2010, achieved operating income of $3.1 million for the third quarter of 2010. Mesaba's EBITDA (earnings before interest, taxes, depreciation and amortization) was $4.4 million, which is consistent with the Company's previously announced quarterly target under Mesaba's operating agreements with Delta. Inclusive of interest expense on a $63.3 million note issued as part of the acquisition, Mesaba contributed $1.0 million to the Company's consolidated pre-tax earnings.

"I want to thank the People of Pinnacle Airlines Corp. for delivering a strong financial quarter for our shareholders," said Philip Trenary, the Company's President and Chief Executive Officer. "Both Pinnacle Airlines and Colgan Air reported solid financial results in the third quarter of 2010, and the acquisition of Mesaba was accretive from day one."

For the nine months ended September 30, 2010, the Company reported net income of $17.0 million and diluted EPS of $0.92, as compared to $17.6 million and $0.97 for the nine months ended September 30, 2009, excluding special items.

The Company took delivery of two Q400 aircraft during the third quarter of 2010 to be operated under the existing capacity purchase agreement with United Continental Holdings, Inc. In October and November, the Company took delivery of three additional Q400 aircraft, the first new regional aircraft to be added to the United/Continental network since the merger of Continental Airlines and United Airlines closed on October 1. One of these Q400 aircraft is the first regional aircraft to be delivered in the new United Express branded paint scheme. The Company expects to take delivery of three additional Q400 aircraft during the remainder of the fourth quarter 2010 and seven Q400 aircraft in the first half of 2011. This investment in new regional aircraft will increase the Company's operations as a United Express carrier and further diversify the Company's revenue.

The Company ended the quarter with total cash and cash equivalents of $126.7 million. Operating cash flow during the third quarter was $59.6 million. Operating cash flow was unusually high during the third quarter due to the acquisition of Mesaba and the timing of payments related to prepaid expenses, trade payables and accrued expenses. The Company expects operating cash flow in the fourth quarter to be lower than the average achieved in the first three quarters of 2010, as prepaid expenses, trade payables and accrued expenses are expected to return to lower levels. In addition, Management expects the balance of cash and cash equivalents to decline through April 2011 as the Company acquires new Q400 aircraft to operate under its capacity purchase agreement with United Continental Holdings, Inc.

"Our operating cash flow and liquidity strengthened considerably during the third quarter of 2010," said Peter Hunt, the Company's Chief Financial Officer. "However, our liquidity will decrease in the fourth quarter of 2010 and first quarter of 2011 as we make investments in new, next-generation Q400 aircraft. These investments will position us to continue to grow earnings and cash flow in the future."

Third Quarter 2010 Financial and Operating Results

During the third quarter of 2010, Pinnacle Airlines, Inc. ("Pinnacle"), the Company's largest regional airline operating subsidiary, completed 110,381 block hours and 71,818 departures, increases of 3% and 1%, respectively, over the same period in 2009. Pinnacle's average daily utilization of its operating fleet increased by 2%. Mesaba completed 68,186 block hours and 42,691 departures during the third quarter, with an average daily utilization of 8.1 block hours per day. Colgan Air, Inc. ("Colgan"), the Company's regional turboprop operating subsidiary, completed 35,384 block hours and 28,288 departures during the third quarter, decreases of 2% and 4%, respectively, from the same period in 2009. Colgan operated one less Saab 340 aircraft within its pro-rate network during the third quarter.

The Company recorded consolidated operating revenue during the third quarter of 2010 of $302.3 million, an increase of $85.1 million, or 39%, over the same period in 2009. The increase in operating revenue was largely attributable to the acquisition of Mesaba, which contributed additional revenue of $71.5 million. Annual rate increases from the Company's partners and higher reimbursable costs also contributed to the increase in consolidated operating revenue.

Pinnacle reported third quarter 2010 operating income and operating margin of $16.5 million and 9.9%, an increase of $0.8 million and a decrease of 0.2 points, respectively, from the third quarter of 2009. Operating income increased as a result of higher revenue from an annual increase in rates under Pinnacle's operating agreements, slightly improved aircraft utilization, and a $0.5 million reduction in estimated performance based penalties that the Company had previously recorded.

Mesaba reported third quarter 2010 operating income and operating margin of $3.1 million and 4.3%, respectively. Mesaba is temporarily operating a fleet of Saab 340 B+ aircraft under a capacity purchase agreement with Delta that is structurally designed to produce little or no EBITDA, resulting in a lower aggregate operating margin until this agreement expires in June 2012.

Colgan reported operating income and operating margin of $6.1 million and 9.5%, a decrease of $2.0 million and 3.6 points, respectively, from the third quarter of 2009. Fuel costs associated with Colgan's pro-rate operations increased by $0.6 million year-over-year. Fuel cost per gallon during the third quarter of 2010 was $2.47, up 17% from $2.11 per gallon during the same period in 2009. In addition, Colgan experienced an increase in salaries, wages and benefits of $1.0 million from lower productivity, higher health care and other benefits costs, and a buildup of crews in advance of the delivery of additional Q400 aircraft. Colgan maintenance expense increased $2.9 million quarter-over-quarter primarily as a result of a maintenance contract covering Colgan's Q400 engines as well as increased heavy airframe maintenance on Saab 340 aircraft. These cost increases were partially offset by $2.7 million of additional revenue, primarily from a 10% increase in revenue-per-available-seat-mile in Colgan's pro-rate markets.

Net nonoperating expense of $10.3 million for the three months ended September 30, 2010 increased by approximately $3.0 million as compared to the same period in 2009. The Company recorded a nonrecurring gain of $4.2 million in the third quarter of 2009 related to sale of its ARS portfolio. Excluding this gain, net nonoperating expense decreased by $1.3 million. This decline is primarily due to the repayment of the Company's senior convertible notes in the second half of 2009 and early 2010, partially offset by interest on a $63.3 million note issued as part of the acquisition of Mesaba.

Cash Flow

The Company generated $59.6 million in cash from operating activities during the third quarter of 2010. The acquisition of Mesaba contributed to the increase in cash and cash equivalents, as Mesaba receives payments weekly under its contracts with Delta, yet the related operational expenses are typically not required to be paid to vendors for up to 30 days after completing flights. In addition, Mesaba's actual working capital (as defined under the stock purchase agreement with Delta Airlines) as of July 1, 2010 was $6.3 million higher than the targeted working capital under the stock purchase agreement, which ultimately resulted in additional operating cash flow during the third quarter. The Company reimbursed Delta for this excess working capital in October 2010 through a $5.0 million cash payment and through a $1.3 million increase in the note issued to Delta as part of the acquisition. Finally, the timing of payments related to prepaid expenses, trade payables and accrued expenses had a positive impact on operating cash flow during the third quarter.

Net cash used in investing activities for the three months ended September 30, 2010 was $0.2 million. Approximately $4.2 million in outflows for routine capital expenditures were offset by approximately $4.0 million in inflows from ARS redemptions and cash received in the acquisition of Mesaba.

Net cash used in financing activities for the three months ended September 30, 2010 totaled $11.7 million, which is primarily related to scheduled principal payments on long-term debt obligations.

About Pinnacle Airlines Corp.

Pinnacle Airlines Corp. (NASDAQ: PNCL), an airline holding company, is the parent company of Pinnacle Airlines, Inc.; Colgan Air, Inc.; and Mesaba Aviation, Inc. Pinnacle Airlines, Inc. operates a fleet of 142 regional jets as Delta Connection in the United States, Belize, Mexico, and Canada. Colgan Air, Inc. operates a fleet of 50 regional turboprops as Continental Connection, United Express and US Airways Express in the northeastern United States and Texas. Mesaba Aviation, Inc. operates a fleet of 60 regional jets and 30 jet-prop aircraft as Delta Connection in the United States. The corporate headquarters is located in Memphis, Tenn. Airport hub operations are located in Atlanta, Boston, Detroit, Newark, New York - John F. Kennedy airport, Washington Dulles, Houston, Memphis, Minneapolis/St. Paul, and Salt Lake City. For further information about the Company, please refer to the Company's Form 10-Q for the quarter ended September 30, 2010, which will soon be filed with the SEC.

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"), including Mesaba's EBITDA for the three months ended September 30, 2010. For 2009, these non-GAAP items include the Company's net nonoperating expense, net income, and diluted EPS for the three and nine months ended September 30, 2009, excluding special charges related to 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, net investment gain, 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 Income (Unaudited)
                  (in thousands, except per share data)


                                                     Three Months Ended
                                                        September 30,
                                                   -----------------------
                                                      2010         2009
                                                   ----------   ----------

Operating revenues
  Regional airline services                        $  297,197   $  214,478
  Other                                                 5,138        2,730
                                                   ----------   ----------
Total operating revenues                              302,335      217,208

Operating expenses
  Salaries, wages and benefits                         92,199       55,402
  Aircraft rentals                                     34,000       30,093
  Ground handling services                             27,528       21,964
  Aircraft maintenance, materials and repairs          39,198       25,311
  Other rentals and landing fees                       24,219       17,659
  Aircraft fuel                                         6,814        6,197
  Commissions and passenger related expense             6,466        5,660
  Depreciation and amortization                        10,293        9,377
  Other                                                35,899       21,749
                                                   ----------   ----------
Total operating expenses                              276,616      193,412
                                                   ----------   ----------

Operating income                                       25,719       23,796

Operating income as a percentage of operating
 revenues                                                 8.5%        11.0%

Nonoperating (expense) income
  Interest expense, net                               (10,693)     (11,712)
  Miscellaneous income, net                               357        4,334
                                                   ----------   ----------
Total nonoperating expense                            (10,336)      (7,378)
                                                   ----------   ----------
Income before income taxes                             15,383       16,418
Income tax expense                                     (5,942)      (5,041)
                                                   ----------   ----------
Net income                                         $    9,441   $   11,377
                                                   ==========   ==========

Basic earnings per share                           $     0.52   $     0.63
                                                   ==========   ==========

Diluted earnings per share                         $     0.51   $     0.62
                                                   ==========   ==========

Shares used in computing basic earnings
 per share                                             18,137       17,970
                                                   ==========   ==========
Shares used in computing diluted earnings
 per share                                             18,392       18,204
                                                   ==========   ==========





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


                                                      Nine Months Ended
                                                        September 30,
                                                   -----------------------
                                                      2010         2009
                                                   ----------   ----------

Operating revenues
  Regional airline services                        $  717,530   $  629,614
  Other                                                11,605        6,679
                                                   ----------   ----------
Total operating revenues                              729,135      636,293

Operating expenses
  Salaries, wages and benefits                        207,377      167,999
  Aircraft rentals                                     94,055       90,679
  Ground handling services                             75,291       70,622
  Aircraft maintenance, materials and repairs          92,814       76,780
  Other rentals and landing fees                       57,542       53,987
  Aircraft fuel                                        19,234       15,968
  Commissions and passenger related expense            16,090       15,714
  Depreciation and amortization                        27,927       26,740
  Other                                                80,621       54,890
                                                   ----------   ----------
Total operating expenses                              670,951      573,379
                                                   ----------   ----------

Operating income                                       58,184       62,914

Operating income as a percentage of operating
 revenues                                                 8.0%         9.9%

Nonoperating (expense) income
  Interest expense, net                               (29,294)     (32,770)
  Miscellaneous (expense) income, net                    (922)       4,389
                                                   ----------   ----------
Total nonoperating expense                            (30,216)     (28,381)
                                                   ----------   ----------
Income before income taxes                             27,968       34,533
Income tax (expense) benefit                          (10,948)       1,680
                                                   ----------   ----------
Net income                                         $   17,020   $   36,213
                                                   ==========   ==========

Basic earnings per share                           $     0.94   $     2.02
                                                   ==========   ==========

Diluted earnings per share                         $     0.92   $     2.01
                                                   ==========   ==========

Shares used in computing basic earnings
 per share                                             18,121       17,968
                                                   ==========   ==========
Shares used in computing diluted earnings
 per share                                             18,433       18,050
                                                   ==========   ==========





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


                                             September 30,   December 31,
                                                 2010            2009
                                             -------------   -------------
Assets                                        (Unaudited)
Current assets
  Cash and cash equivalents                  $     126,729   $      91,574
  Restricted cash                                    8,018           3,115
  Receivables, net                                  43,021          34,518
  Spare parts and supplies, net                     34,879          19,472
  Prepaid expenses and other assets                  7,594           3,508
  Assets held for sale                                   -           1,255
  Deferred income taxes, net of allowance           10,141          10,406
  Income taxes receivable                            3,966          40,803
                                             -------------   -------------
     Total current assets                          234,348         204,651
Property and equipment
  Flight equipment                                 848,622         755,236
  Aircraft pre-delivery payments                    38,981          12,049
  Other property and equipment                      66,132          48,710
  Less accumulated depreciation                   (112,792)        (86,501)
                                             -------------   -------------
     Net property and equipment                    840,943         729,494

Investments                                          1,709           2,723
Debt issuance costs, net                             4,421           3,561
Goodwill                                            25,339          18,422
Intangible assets, net                              16,066          12,586
Other assets, primarily insurance
 receivables                                       317,880         317,659
                                             -------------   -------------
Total assets                                 $   1,440,706   $   1,289,096
                                             =============   =============

Liabilities and stockholders' equity
Current liabilities
  Current maturities of long-term debt       $      51,132   $      36,085
  Senior convertible notes                               -          30,596
  Pre-delivery payment facility                     30,552           2,027
  Accounts payable                                  50,598          23,982
  Deferred revenue                                  26,530          24,363
  Accrued expenses and other current
   liabilities                                      98,309          60,610
                                             -------------   -------------
     Total current liabilities                     257,121         177,663
Noncurrent pre-delivery payment facility                 -           4,910
Long-term debt, less current maturities            577,255         519,234
Deferred revenue, net of current portion           166,860         177,711
Deferred income taxes                               26,495          13,532
Other liabilities                                  290,236         293,809

Commitments and contingencies

Stockholders' equity
  Common stock, $0.01 par value; 40,000,000
   shares authorized; 23,065,179 and
   22,786,743 shares issued, respectively              231             228
  Treasury stock, at cost, 4,493,327 and
   4,450,092 shares, respectively                  (68,479)        (68,152)
  Additional paid-in capital                       123,900         121,513
  Accumulated other comprehensive loss             (13,012)        (14,431)
  Retained earnings                                 80,099          63,079
                                             -------------   -------------
Total stockholders' equity                         122,739         102,237
                                             -------------   -------------
Total liabilities and stockholders' equity   $   1,440,706   $   1,289,096
                                             =============   =============





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


                                                      Nine Months Ended
                                                        September 30,
                                                   -----------------------
                                                      2010         2009
                                                   ----------   ----------
Cash provided by operating activities              $  104,377   $   83,982
Cash (used in) provided by investing activities        (6,910)      24,325
Cash used in financing activities                     (62,312)     (96,565)
                                                   ----------   ----------
Net increase in cash and cash equivalents              35,155       11,742
Cash and cash equivalents at beginning of period       91,574       69,469
                                                   ----------   ----------
Cash and cash equivalents at end of period         $  126,729   $   81,211
                                                   ==========   ==========





                          Pinnacle Airlines Corp.
                Pinnacle Operating Statistics (Unaudited)


                                          Three Months Ended September 30,
                                         ----------------------------------
                                           2010        2009        Change
                                         ---------   ---------   ----------

Other Data:
Revenue passengers (in thousands)            2,755       2,953         (7)%
Revenue passenger miles ("RPMs")
 (in thousands)                          1,190,396   1,203,519         (1)%
Available seat miles ("ASMs")
 (in thousands)                          1,592,069   1,508,956          6%
Passenger load factor                         74.8%       79.8%  (5.0) pts.
Operating revenue per ASM (in cents)         10.43       10.29          1%
Operating cost per ASM (in cents)             9.40        9.25          2%
Operating revenue per block hour         $   1,505   $   1,454          4%
Operating cost per block hour            $   1,355   $   1,307          4%
Block hours                                110,381     106,802          3%
Departures                                  71,818      71,002          1%
Average daily utilization (block hours)       8.45        8.29          2%
Average stage length (miles)                   425         404          5%

Number of operating aircraft
 (end of period)
   CRJ-200                                     126         126          0%
   CRJ-900                                      16          16          0%
Employees (end of period)                    3,727       3,903         (5)%


                                          Nine Months Ended September 30,
                                        ----------------------------------
                                          2010        2009        Change
                                        ---------   ---------   ----------

Other Data:
Revenue passengers (in thousands)           7,931       8,116          (2)%
Revenue passenger miles ("RPMs")
 (in thousands)                         3,420,138   3,504,903          (2)%
Available seat miles ("ASMs")
 (in thousands)                         4,598,110   4,638,257          (1)%
Passenger load factor                        74.4%       75.6%   (1.2) pts.
Operating revenue per ASM (in cents)        10.56       10.03           5%
Operating cost per ASM (in cents)            9.52        9.02           6%
Operating revenue per block hour        $   1,501   $   1,442           4%
Operating cost per block hour           $   1,353   $   1,298           4%
Block hours                               323,519     322,517           0%
Departures                                208,876     206,458           1%
Average daily utilization (block hours)      8.35        8.36          (0)%
Average stage length (miles)                  422         427          (1)%

Number of operating aircraft
 (end of period)
   CRJ-200
   CRJ-900
Employees (end of period)





                          Pinnacle Airlines Corp.
                 Mesaba Operating Statistics (Unaudited)


                                                      Three Months Ended
                                                     September 30, 2010(1)
                                                     ---------------------
Other Data:
Revenue passengers (in thousands)                                    1,639
RPMs (in thousands)                                                910,891
ASMs (in thousands)                                              1,183,364
Passenger load factor                                                 77.0%
Operating revenue per ASM (in cents)                                  6.05
Operating cost per ASM (in cents)                                     5.79
Operating revenue per block hour                     $               1,049
Operating cost per block hour                        $               1,004
Block hours                                                         68,186
Departures                                                          42,691
Average daily utilization (block hours)                               8.06
Average stage length (miles)                                           525

Number of operating aircraft (end of period)
   CRJ-900                                                              41
   CRJ-200                                                              19
   Saab 340 B+                                                          32
Employees (end of period)                                            2,228

(1) As previously discussed, the acquisition of Mesaba was completed on
    July 1, 2010. As such, Mesaba's 2009 data is not presented. Mesaba's
    2010 data includes the period from the acquisition date through the
    three months ended September 30, 2010.





                          Pinnacle Airlines Corp.
                  Colgan Operating Statistics (Unaudited)


                      Three Months Ended           Nine Months Ended
                         September 30,                September 30,
                  ---------------------------  ---------------------------
                    2010     2009     Change     2010     2009     Change
                  -------  -------  ---------  -------  -------  ---------
Pro-rate
 Agreements:
Revenue
 passengers
 (in thousands)       335      332        1%       867      885        (2)%
RPMs (in
 thousands)        58,942   58,486        1%   149,846  154,100        (3)%
ASMs (in
 thousands)       116,949  122,642       (5)%  316,464  348,434        (9)%
Passenger load
 factor              50.4%    47.7%  2.7 pts.     47.4%    44.2%   3.2 pts.
Passenger yield
 (in cents)         76.64    73.75        4%     77.60    75.16         3%
Operating revenue
 per ASM
 (in cents)         38.63    35.17       10%     36.75    33.24        11%
Operating revenue
 per block hour   $ 1,948  $ 1,786        9%   $ 1,832  $ 1,683         9%
Block hours        23,192   24,152       (4)%   63,461   68,836        (8)%
Departures         20,515   21,273       (4)%   56,420   60,911        (7)%
Fuel consumption
 (in thousands
 of gallons)        2,759    2,935       (6)%    7,660    8,340        (8)%
Average price
 per gallon       $  2.47  $  2.11       17%   $  2.51  $  1.91        31%
Average fare      $   135  $   130        4%   $   134  $   131         2%


                      Three Months Ended           Nine Months Ended
                         September 30,                September 30,
                  ---------------------------  ---------------------------
                    2010     2009     Change     2010     2009     Change
                  -------  -------  ---------  -------  -------  ---------
Capacity Purchase
 Agreements:
Revenue
 passengers
 (in thousands)       408      427       (4)%    1,142    1,161        (2)%
RPMs
 (in thousands)   133,080  122,312        9%   351,601  325,113         8%
ASMs
 (in thousands)   183,317  169,371        8%   502,545  476,134         6%
Passenger load
 factor              72.6%    72.2%  0.4 pts.     70.0%    68.3%   1.7 pts.
Operating revenue
 per ASM
 (in cents)         10.49    11.00       (5)%    11.00    11.55        (5)%
Operating revenue
 per block hour   $ 1,577  $ 1,540        2%   $ 1,594  $ 1,547         3%
Block hours        12,192   12,103        1%    34,669   35,563        (3)%
Departures          7,773    8,059       (4)%   22,739   23,193        (2)%


                      Three Months Ended           Nine Months Ended
                         September 30,                September 30,
                  ---------------------------  ---------------------------
                    2010     2009     Change     2010     2009     Change
                  -------  -------  ---------  -------  -------  ---------
Total Colgan:
Block hours        35,384   36,255       (2)%   98,130  104,399        (6)%
Departures         28,288   29,332       (4)%   79,159   84,104        (6)%
ASMs
 (in thousands)   300,265  292,013        3%   819,009  824,568        (1)%
Total operating
 cost per ASM
 (in cents)         19.50    18.44        6%     20.13    18.77         7%
Total operating
 cost per block
 hour             $ 1,654  $ 1,485       11%   $ 1,680  $ 1,483        13%

Average daily
 utilization
 (block hours)       7.91     8.21       (4)%     7.44     7.89        (6)%
Average stage
 length (miles)       238      224        6%       230      221        (4)%
Number of
 operating
 aircraft
 (end of period)
   Saab 340            34       34        0%
   Q400                16       14       14%
Employees           1,442    1,326        9%





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


                                        Three Months Ended September 30,
                                       ----------------------------------
                                                               % Increase
                                          2010        2009     (Decrease)
                                       ----------  ----------  ----------
Net nonoperating expense:
Net nonoperating expense in
 accordance with GAAP                  $  (10,336) $   (7,378)         40%
Deduct:  Net investment gain                    -      (4,233)        N/A
                                       ----------  ----------  ----------
Non-GAAP net nonoperating expense      $  (10,336) $  (11,611)        (11)%
                                       ==========  ==========  ==========

Mesaba EBITDA (earnings before
 interest, taxes, depreciation
 and amortization):
Mesaba operating income in
 accordance with GAAP                  $    3,065         N/A         N/A
Add: Mesaba depreciation and
 amortization                               1,340         N/A         N/A
                                       ----------  ----------  ----------
Non-GAAP Mesaba EBITDA                 $    4,405         N/A         N/A
                                       ==========  ==========  ==========

Net income:
Net income in accordance with GAAP     $    9,441  $   11,377         (17)%
Deduct:  Net investment gain,
 net of tax                                     -      (4,054)        N/A
                                       ----------  ----------  ----------
Non-GAAP net income                    $    9,441  $    7,323          29%
                                       ==========  ==========  ==========

Diluted EPS:
Diluted EPS in accordance with GAAP    $     0.51  $     0.62         (18)%
Deduct:  Net investment gain,
 net of tax                                     -       (0.22)        N/A
                                       ----------  ----------  ----------
Non-GAAP diluted earnings per share    $     0.51  $     0.40          28%
                                       ==========  ==========  ==========





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


                                        Nine Months Ended September 30,
                                      -----------------------------------
                                                               % Increase
                                         2010         2009     (Decrease)
                                       ----------  ----------  ----------
Net income:
Net income in accordance with GAAP     $   17,020  $   36,213         (53)%
Add: Aircraft retirement charges,
 net of tax                                     -       1,280         N/A
Deduct: Excess of property insurance
 proceeds over cost basis of
 aircraft, net of tax                           -        (540)        N/A
Deduct: Net investment gain, net of tax         -      (3,777)        N/A
Add: Ineffective portion of interest
 rate hedge, net of tax                         -         921         N/A
Deduct: Reversal of interest on
 income tax reserves, net of tax                -      (1,849)        N/A
Deduct: Gain on repurchase of senior
 convertible notes, net of tax                  -      (1,122)        N/A
Deduct: IRS settlement                          -     (13,551)        N/A
                                       ----------  ----------  ----------
Non-GAAP net income                    $   17,020  $   17,575          (3)%
                                       ==========  ==========  ==========

Diluted EPS:
Diluted EPS in accordance with GAAP    $     0.92  $     2.01         (54)%
Add: Aircraft retirement charges,
 net of tax                                     -        0.07         N/A
Deduct: Excess of property insurance
 proceeds over cost basis of
 aircraft, net of tax                           -       (0.03)        N/A
Deduct: Net investment gain, net of tax         -       (0.21)        N/A
Add: Ineffective portion of interest
 rate hedge, net of tax                         -        0.05         N/A
Deduct: Reversal of interest on
 income tax reserves, net of tax                -       (0.11)        N/A
Deduct: Gain on repurchase of senior
 convertible notes, net of tax                  -       (0.06)        N/A
Deduct: IRS settlement                          -       (0.75)        N/A
                                       ----------  ----------  ----------
Non-GAAP diluted earnings per share    $     0.92  $     0.97          (5)%
                                       ==========  ==========  ==========

Contact Information

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