SOURCE: Pinnacle Airlines

Pinnacle Airlines

March 05, 2009 07:00 ET

Pinnacle Airlines Corp. Reports 2008 Full Year and Fourth Quarter Financial Results

MEMPHIS, TN--(Marketwire - March 5, 2009) - Pinnacle Airlines Corp. (NASDAQ: PNCL) (the "Company") today reported its fourth quarter and full year 2008 results of operations. Prior to reviewing the Company's financial results, the People of Pinnacle Airlines Corp. wish to acknowledge the terrible tragedy of flight 3407. Fifty individuals perished in the crash of flight 3407 on February 12, 2009.

"On behalf of our senior management team and the entire Pinnacle Airlines Corp. family, I want to again express our deepest sympathies to the families of the passengers and crew members of flight 3407 and to those affected on the ground," said Philip Trenary, the Company's President and Chief Executive Officer. "We are all profoundly saddened by this terrible accident."

Company Reports Consolidated Fourth Quarter 2008 Operating Income of $16.3 Million

The Company reported fourth quarter 2008 net income of $4.0 million and fully diluted earnings per share ("EPS") of $0.22, excluding an $8.1 million ($7.8 million net of tax) special charge related to impairment of its auction rate securities ("ARS") portfolio. Including this charge, the Company reported a net loss of $3.8 million and a net loss per share of $0.21 for the fourth quarter of 2008. The Company reported net income and EPS of $6.7 million and $0.32, respectively, for the fourth quarter of 2007.

The Company's consolidated operating income during the fourth quarter of 2008 was $16.3 million, an increase of 73% over the fourth quarter of 2007. During the fourth quarter of 2008, Pinnacle Airlines, Inc. ("Pinnacle"), the Company's regional jet operating subsidiary, reported operating income and an operating margin of $13.8 million and 9.0%, respectively, while Colgan Air, Inc. ("Colgan"), the Company's regional turboprop operating subsidiary, reported operating income and an operating margin of $2.5 million and 4.0%, respectively.

The Company's consolidated net income for the full year 2008 excluding special charges was $19.9 million. During 2008, the Company recorded a special charge of $13.5 million ($8.7 million net of taxes) related to the impairment of goodwill and aircraft lease return costs associated with the restructuring of Colgan's pro-rate operations. In addition, the Company recorded charges totaling $16.8 million ($16.1 million net of taxes) related to the impairment of its ARS portfolio. Including these charges, the Company recorded a net loss and net loss per share of $4.9 million and $0.27, respectively, for 2008. In 2007, the Company reported net income and EPS of $37.3 million and $1.61, respectively, excluding special items.


Recent Financial Accomplishments

-- During January 2009 the Company repurchased $12 million par amount of its 3.25% convertible notes due 2025 (the "Notes") for a purchase price of approximately $9 million. This reduces the Company's potential obligation in February 2010, when the holders of the Notes have an option to require the Company to redeem the Notes at par. The Company continues to evaluate financing alternatives to raise additional capital in 2009, and may purchase additional Notes prior to the February 2010 optional redemption date.

-- The Company has finalized the amount of its 2008 federal income tax refund and expects to receive approximately $31 million in April 2009. This tax refund will further improve the Company's liquidity.

-- In January 2009, Colgan and Continental Airlines agreed to expand their relationship whereby Colgan will acquire and operate an additional 15 Q400 aircraft under its capacity purchase agreement with Continental (the "CPA"). Colgan is scheduled to take delivery of these aircraft from August 2010 through April 2011. Colgan also secured from Bombardier options to purchase an additional 15 Q400 aircraft with delivery dates beginning in March 2013. These options are reserved exclusively for Continental. In connection with this aircraft order, the Company has also arranged for a commitment from a lender to finance the 2010 and 2011 aircraft deliveries on terms substantially similar to the financing arrangements for its existing Q400 fleet. This arrangement includes a commitment to finance most pre-delivery payments. All of the Company's payment obligations through April 2010 associated with this aircraft order have been financed.

-- In December 2008, Pinnacle took delivery of three CRJ-900 aircraft to be operated under its Delta Connection Agreement (the "DCA") with Delta Air Lines. These aircraft went into service under the DCA during the first quarter of 2009. With the addition of these three aircraft, Pinnacle now operates 14 permanent CRJ-900 aircraft under the DCA. Pinnacle expects to take delivery of the remaining two CRJ-900 aircraft and place them into service under the DCA during the second quarter of 2009. In January, Pinnacle also began returning to Delta the seven CRJ- 900 aircraft that it has temporarily operated under the DCA. These seven aircraft will be fully transitioned back to Delta during the second quarter of 2009, at which time Pinnacle will operate its permanent fleet of 16 CRJ-900 aircraft under the DCA.

-- Colgan continues to execute on its previously announced pro-rate turn-around plan. Colgan retired six Saab 340 and three Beech 1900 aircraft during the fourth quarter of 2008. During February 2009, Colgan retired its remaining two Beech 1900 aircraft from the operating fleet. The Company will continue to evaluate Colgan's pro-rate operations and may make additional adjustments throughout 2009 depending on revenue and fuel price trends.

Fourth Quarter 2008 Financial and Operating Results

During the fourth quarter of 2008, Pinnacle completed 111,167 block hours and 67,325 departures, increases of 1% and 2%, respectively, over the same period in 2007. Capacity increases associated with Pinnacle's new CRJ-900 fleet operating under the DCA were partially offset by a decrease of 13 CRJ-200 aircraft that were returned to Northwest Airlines during 2008. Colgan completed 36,262 block hours and 28,561 departures during the fourth quarter, increases of 12% and 5%, respectively, over the same period in 2007. The addition of Colgan's Q400 aircraft fleet was the primary factor in the growth in its operations.

The Company recorded consolidated operating revenue during the fourth quarter of 2008 of $217.5 million, an increase of $16.4 million, or 8%, over the same period in 2007. The increase is primarily related to an increase of $31.1 million in revenue earned under the Company's new DCA and CPA, partially offset by a decrease of $8.3 million in revenue earned under the Company's CRJ-200 Airline Services Agreement (the "CRJ-200 ASA") with Delta due to the return of 13 CRJ-200 aircraft throughout 2008. Also partially offsetting this increase was a decrease in Colgan's pro-rate revenue of $6.4 million, related primarily to the retirement of aircraft and exit of unprofitable markets, as compared to the same period in 2007.

Consolidated operating income and operating margin were $16.3 million and 7.5%, respectively, during the fourth quarter of 2008. Consolidated operating income and operating margin for the fourth quarter of 2007 were approximately $9.5 million and 4.7%, respectively.

Pinnacle reported fourth quarter 2008 operating income and operating margin of $13.8 million and 9.0%, a decrease of $0.4 million and 0.4 points, respectively, from the fourth quarter of 2007. This decrease is primarily related to a decrease in flight crew productivity due to higher than planned levels of pilot and flight attendant staffing. Pinnacle also incurred certain ownership costs related to two CRJ-900 aircraft that delivered in July 2008 but that did not enter permanent scheduled service under the DCA until January 2009. In addition, Pinnacle experienced an increase in unreimbursed maintenance costs associated with its CRJ-200 fleet. During the fourth quarter, unreimbursed maintenance costs increased at a greater rate than the inflation indexed revenue increases that Pinnacle received under the CRJ-200 ASA. In addition, Pinnacle has undertaken several maintenance programs that are expected to increase the operating reliability of the fleet, decrease maintenance costs in future periods, or that are recommended by the engine manufacturer. Pinnacle expects to continue to be affected by these higher maintenance costs during 2009. Partially offsetting these increased labor and maintenance costs is the addition of income from Pinnacle's DCA.

Colgan reported operating income and operating margin of $2.5 million and 4.0%, an increase of $7.3 million and 13.8 points, respectively, from the fourth quarter of 2007. The addition of Colgan's Q400 aircraft fleet contributed significantly to the improvement in operating income during the fourth quarter. In addition, Colgan's revenue per available seat mile within its pro-rate operations increased by 22% from the same period in the prior year due to increases in Essential Air Service subsidies, the elimination of lower unit revenue markets, and a general increase in fares as compared to the fourth quarter of 2007. A decrease in Colgan's fuel cost as compared to the same period in the prior year also contributed to the increase in operating income. Colgan's fuel cost per gallon during the fourth quarter of 2008 was $2.41, down $0.30 from $2.71 during the same period 2007.

Net nonoperating expense for the fourth quarter was approximately $17.2 million, as compared to net nonoperating income of $0.4 million during the fourth quarter of 2007. The increase is primarily related to an increase in interest expense of $8.0 million from the investments the Company has made in its new fleet of Q400 and CRJ-900 aircraft. In addition, the Company recorded an impairment charge of $8.1 million on the Company's investment portfolio of auction rate securities ("ARS"). The market for ARS continues to be illiquid. While the Company's ARS portfolio still contains highly rated securities with strong underlying collateral support, changes in interest rates and credit spreads have caused a decline in the estimated value of the Company's ARS portfolio. The Company has recorded this $8.1 million impairment charge to reflect this estimated decline in value.

Full Year 2008 Financial and Operating Results

During the full year 2008, Pinnacle completed 442,911 block hours and 267,893 departures, increases of 1% and 1%, respectively, over 2007. Colgan completed 152,890 block hours and 121,635 departures, increases of 21% and 13%, respectively, over 2007. During 2008, the Company continued executing its growth plan with the addition of 13 CRJ-900 aircraft and 15 Q400 aircraft, which is the primary reason for increases in both block hours and departures. Offsetting this increase in capacity was the return of 13 CRJ-200 aircraft during 2008.

For the year ended December 31, 2008, the Company recorded consolidated operating revenue of $864.8 million, an increase of $77.4 million, or 10%, over 2007. The increase is primarily related to an increase in the Company's capacity purchase revenue as a result of the Company's Q400 and CRJ-900 fleet growth, partially offset by the reduction in CRJ-200 aircraft. The Company's pro-rate revenue also increased slightly as a result of an increase in unit revenue stemming from the changes made under the Company's pro-rate operations restructuring efforts.

In 2008, Pinnacle achieved operating income and an operating margin of $53.5 million and 8.7%, a decrease of $3.9 million and 1.0 point, respectively, from 2007. Operating income decreased in 2008 primarily from a decrease in productivity for Pinnacle's pilots and flight attendants, increased unreimbursed maintenance costs, and transition costs associated with the introduction of the CRJ-900 fleet. Pinnacle did not receive the fixed revenue associated with ownership costs for the period of time between when an aircraft delivered to Pinnacle and when it was placed into service under the DCA. Pinnacle absorbed the majority of the ownership costs for two CRJ-900 aircraft during the third and fourth quarters of 2008.

Excluding special charges of $13.5 million related to goodwill impairment and aircraft lease return costs associated with Colgan's pro-rate restructuring plan, Colgan reported operating income and an operating margin of $5.6 million and 2.2%, an increase of $10.7 million and 4.8 points, respectively, from 2007. Including these special items, Colgan reported an operating loss of $7.9 million. The increase in operating income excluding the aforementioned special charges relates to the addition of Colgan's Q400 fleet in 2008 and increases in unit revenue associated with Colgan's pro-rate operations, offset primarily by an $11.3 million increase in Colgan's fuel costs.

Net nonoperating expense for the year ended December 31, 2008 was approximately $44.3 million, an increase of $42.9 million, as compared to nonoperating expense of $1.4 million during 2007. The increase is primarily related to an increase in interest expense of $25.8 million from the debt associated with the investments the Company has made in its new fleet of Q400 and CRJ-900 aircraft. In addition, the Company recorded total impairment charges during the year of $16.8 million related to the Company's ARS portfolio.

Consolidated net income for the year ended December 31, 2008 excluding the special charges related to ARS impairment, goodwill, and aircraft lease return costs, was $19.9 million, as compared to net income during the year ended 2007 of $37.3 million. Including these items, the Company's consolidated net loss for 2008 was $4.9 million.

Cash and Investments

The Company ended the quarter with cash and cash equivalents totaling $69.5 million.

The Company generated $14.9 million in cash and cash equivalents from operating activities during the fourth quarter 2008. This consisted of $18.8 million of cash generated from airline operations, net of a $3.8 million payment related to settlement of the last remaining interest rate hedge associated with the Company's aircraft interest hedging program. All of the interest rate hedges that the Company entered into have now been settled, and the Company does not anticipate any additional cash outflows associated with this program.

Cash used for investing activities of $5.1 million primarily related to the net purchase of three CRJ-900 aircraft and other non-aircraft capital expenditures. Cash used in financing activities was $4.2 million, which included $10.0 million in credit facility proceeds, partially offset by $6.4 million in debt repayments associated with the pre-delivery payment financing facilities for three CRJ-900 aircraft and $7.8 million of regularly scheduled principal payments on long-term debt and other items.

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 in the United States, Canada, the Bahamas, Mexico, and 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.

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"), the Company's operating income, operating margin, net income and diluted earnings (loss) per share ("EPS") for the three and twelve months ended December 31, 2008 and 2007, excluding special charges related to the impairment of goodwill and aircraft lease return costs and the impairment of auction rate securities in 2008 and the loss on the sale of the unsecured claim in 2007. 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.

For further information, please contact Joe Williams, at (901) 346-6162, or visit our website at www.pncl.com.


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


                                                       Three Months Ended
                                                          December 31,
                                                      --------------------
                                                        2008       2007
                                                      ---------  ---------

Operating revenues:
  Regional airline services                           $ 215,245  $ 198,483
  Other                                                   2,253      2,617
                                                      ---------  ---------
Total operating revenues                                217,498    201,100

Operating expenses:
  Salaries, wages and benefits                           54,388     50,553
  Aircraft rentals                                       31,120     34,664
  Ground handling services                               23,647     24,168
  Aircraft maintenance, materials and repairs            26,912     25,116
  Other rentals and landing fees                         19,471     14,615
  Aircraft fuel                                           7,847     11,404
  Commissions and passenger related expense               5,589      6,707
  Depreciation and amortization                           7,952      2,445
  Other                                                  24,226     21,976
                                                      ---------  ---------
Total operating expenses                                201,152    191,648
                                                      ---------  ---------
Operating income                                         16,346      9,452
Operating income as a percentage of operating
 revenues                                                   7.5%       4.7%
Nonoperating (expense) income:
  Interest expense                                      (10,746)    (2,744)
  Impairment of auction rate securities                  (8,125)         -
  Interest income                                         1,544      3,133
  Miscellaneous income, net                                 115          2
                                                      ---------  ---------
Total nonoperating (expense) income                     (17,212)       391
                                                      ---------  ---------

(Loss) income before income taxes                          (866)     9,843
Income tax expense                                       (2,960)    (3,137)
                                                      ---------  ---------
Net (loss) income                                     $  (3,826) $   6,706
                                                      =========  =========

Basic (loss) earnings per share                       $   (0.21) $    0.35
                                                      =========  =========
Diluted (loss) earnings per share                     $   (0.21) $    0.32
                                                      =========  =========
Shares used in computing basic (loss) earnings
 per share                                               17,867     19,411
                                                      =========  =========
Shares used in computing diluted (loss) earnings
 per share                                               17,867     20,894
                                                      =========  =========




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


                                                  Years Ended December 31,
                                                  ------------------------
                                                      2008         2007
                                                  -----------  -----------
                                                  (Unaudited)

Operating revenues:
  Regional airline services                       $   855,659  $   777,179
  Other                                                 9,126       10,195
                                                  -----------  -----------
Total operating revenues                              864,785      787,374

Operating expenses:
  Salaries, wages and benefits                        219,971      195,767
  Aircraft rentals                                    128,559      138,661
  Ground handling services                             96,359       96,306
  Aircraft maintenance, materials and repairs          92,909       89,661
  Other rentals and landing fees                       71,857       58,956
  Aircraft fuel                                        49,450       38,122
  Commissions and passenger related expense            27,025       25,740
  Depreciation and amortization                        26,518        9,265
  Other                                                92,982       83,533
  Provision for decreases in losses associated
   with bankruptcy filings of Northwest and
   Mesaba                                                   -       (1,048)
  Impairment of goodwill and aircraft lease
   return costs                                        13,548            -
                                                  -----------  -----------
Total operating expenses                              819,178      734,963
                                                  -----------  -----------
Operating income                                       45,607       52,411
Operating income as a percentage of operating
 revenues                                                 5.3%         6.7%

Nonoperating (expense) income:
  Interest expense                                    (34,661)      (8,853)
  Impairment of auction rate securities               (16,800)           -
  Interest income                                       6,870       11,601
  Loss on sale of unsecured claim                           -       (4,144)
  Miscellaneous income, net                               281           22
                                                  -----------  -----------
Total nonoperating expense                            (44,310)      (1,374)
                                                  -----------  -----------

Income before income taxes                              1,297       51,037
Income tax expense                                     (6,204)     (16,400)
                                                  -----------  -----------
Net (loss) income                                 $    (4,907) $    34,637
                                                  ===========  ===========

Basic (loss) earnings per share                   $     (0.27) $      1.66
                                                  ===========  ===========
Diluted (loss) earnings per share                 $     (0.27) $      1.50
                                                  ===========  ===========
Shares used in computing basic (loss)
 earnings per share                                    17,865       20,897
                                                  ===========  ===========
Shares used in computing diluted (loss)
 earnings per share                                    17,865       23,116
                                                  ===========  ===========




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


                                                 December 31,  December 31,
                                                    2008          2007
                                                 -----------   -----------
                                                 (unaudited)
Assets
Current assets
  Cash and cash equivalents                      $    69,469   $    26,785
  Restricted cash                                      5,417         5,327
  Short-term investments                                   -       186,850
  Receivables, net of allowances of $135
   in 2008 and $131 in 2007                           31,619        31,107
  Spare parts and supplies, net of allowances
   of $4,213 in 2008 and $2,536 in 2007               17,106        16,030
  Prepaid expenses and other assets                    8,160        16,535
  Deferred income taxes                               14,338        12,285
  Income taxes receivable                             31,117             -
                                                 -----------   -----------
    Total current assets                             177,226       294,919
Property and equipment
  Flight equipment                                   723,529       162,374
  Aircraft pre-delivery payments                       5,721        81,425
  Other property and equipment                        45,769        39,969
                                                 -----------   -----------
                                                     775,019       283,768
  Less accumulated depreciation                      (54,262)      (28,358)
                                                 -----------   -----------
  Net property and equipment                         720,757       255,410
Investments in auction rate securities               116,900             -
Deferred income taxes                                 45,004        79,856
Other assets, primarily aircraft lease deposits       33,723        28,528
Debt issuance costs, net of amortization of
 $1,117 in 2008 and $636 in 2007                       6,505         4,598
Goodwill                                              18,422        28,206
Intangible assets, net of amortization of
 $5,180 in 2008 and $3,594 in 2007                    14,585        17,071
                                                 -----------   -----------
Total assets                                     $ 1,133,122   $   708,588
                                                 ===========   ===========

Liabilities and stockholders' equity
Current liabilities
  Short-term notes payable and current
   maturities of long-term debt                  $    44,116   $     9,910
  Bank line of credit                                  8,275         8,375
  Pre-delivery payment facilities                      4,075        63,603
  Accounts payable                                    29,962        33,062
  Deferred revenue                                    23,851        24,099
  Income taxes payable                                     -         2,356
  Accrued expenses and other current
   liabilities                                        75,136       102,054
                                                 -----------   -----------
    Total current liabilities                        185,415       243,459
Senior convertible notes, less $12.0 million
 of current portion                                  109,000       121,000
Long-term debt, less current maturities              502,741        71,812
Credit facility                                       90,000             -
Deferred revenue, net of current portion             192,191       209,752
Capital leases, net of current portion                 2,601         3,668
Other liabilities                                      2,581         1,075
Commitments and contingencies
Stockholders' equity
  Series A preferred share, stated value
   $100 per share; one share authorized and
   issued, retired on January 4, 2008                      -             -
  Common stock, $0.01 par value; 40,000,000
   shares authorized; 22,514,782 and 22,402,999
   shares issued, respectively                           225           224
  Treasury stock, at cost, 4,450,092 shares          (68,152)      (68,152)
  Additional paid-in capital                          93,814        91,165
  Accumulated other comprehensive income             (17,172)      (10,200)
  Retained earnings                                   39,878        44,785
                                                 -----------   -----------
Total stockholders' equity                            48,593        57,822
                                                 -----------   -----------
Total liabilities and stockholders' equity       $ 1,133,122   $   708,588
                                                 ===========   ===========




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


                                                  Years Ended December 31,
                                                  ------------------------
                                                      2008         2007
                                                  -----------  -----------

Cash provided by operating activities             $    28,605  $   275,480
Cash provided by (used in) investing activities        20,605     (220,133)
Cash used in financing activities                      (6,526)     (29,267)
                                                  -----------  -----------
Net increase in cash and cash equivalents              42,684       26,080
Cash and cash equivalents at beginning of period       26,785          705
                                                  -----------  -----------
Cash and cash equivalents at end of period        $    69,469  $    26,785
                                                  ===========  ===========




                   Pinnacle Airlines Corp.
             Operating Statistics (Unaudited)


                                         Pinnacle Airlines, Inc.
                                   --------------------------------------
                                       Three Months Ended December 31,
                                   --------------------------------------
                                       2008          2007        Change
                                   -----------   -----------   ----------

Other Data:
Revenue passengers (in thousands)        2,623         2,519        4%
Revenue passenger miles
 (in thousands)                      1,221,750     1,149,586        6%
Available seat miles "ASMs"
 (in thousands)                      1,605,215     1,476,501        9%
Passenger load factor                     76.1%         77.9%    (1.8) pts.
Operating revenue per ASM
 (in cents)                               9.65         10.27       (6)%
Operating cost per ASM (in cents)         8.79          9.30       (5)%
Operating revenue per block hour   $     1,393   $     1,382        1%
Operating cost per block hour      $     1,269   $     1,251        1%
Block hours                            111,167       109,787        1%
Departures                              67,325        65,820        2%
Average daily utilization
 (block hours)                            8.67          8.53        2%
Average stage length (miles)               456           453        1%

Number of operating aircraft
 (end of period)
    CRJ-200                                124           137       (9)%
    CRJ-900                                 18(1)          1     1700%
Employees (end of period)                4,204         4,008        5%

(1) On October 1, 2008, we entered into an agreement with Delta to
    operate on a short-term basis seven additional CRJ-900 aircraft.


                                           Pinnacle Airlines, Inc.
                                   --------------------------------------
                                           Years Ended December 31,
                                   --------------------------------------
                                       2008          2007        Change
                                   -----------   -----------   ----------

Other Data:
Revenue passengers (in thousands)       10,393         9,996        4%
Revenue passenger miles
 (in thousands)                      4,844,526     4,620,861        5%
Available seat miles "ASMs"
 (in thousands)                      6,320,269     6,004,680        5%
Passenger load factor                     76.7%         77.0%    (0.3) pts.
Operating revenue per ASM
 (in cents)                               9.70          9.91       (2)%
Operating cost per ASM (in cents)         8.86          8.96       (1)%
Operating revenue per block hour   $     1,384   $     1,356        2%
Operating cost per block hour      $     1,264   $     1,225        3%
Block hours                            442,911       438,988        1%
Departures                             267,893       265,418        1%
Average daily utilization
 (block hours)                            8.78          8.73        1%
Average stage length (miles)               460           455        1%




                    Pinnacle Airlines Corp.
                Operating Statistics (Unaudited)


                                               Colgan Air, Inc.
                                   --------------------------------------
                                      Three Months Ended December 31,
                                   --------------------------------------
                                       2008          2007        Change
                                   -----------   -----------   ----------

Pro Rate Agreements:
Revenue passengers (in thousands)          298           386      (23)%
Revenue passenger miles
 (in thousands)                         51,564        71,281      (28)%
ASMs (in thousands)                    111,223       155,619      (29)%
Passenger load factor                     46.4%         45.8%     0.6 pts.
Passenger yield (in cents)               83.46         69.21       21%
Operating revenue per ASM
 (in cents)                              38.69         31.70       22%
Operating revenue per block hour   $     1,875   $     1,530       23%
Block hours                             22,955        32,242      (29)%
Departures                              20,172        27,189      (26)%
Fuel consumption
 (in thousands of gallons)               3,167         4,214      (25)%
Average price per gallon           $      2.41   $      2.71      (11)%
Average fare                       $       145   $       128       13%

Capacity Purchase Agreement:
Revenue passengers (in thousands)          383             -       N/A
Revenue passenger miles
 (in thousands)                        112,025             -       N/A
ASMs (in thousands)                    176,990             -       N/A
Passenger load factor                     63.3%            -       N/A
Operating revenue per ASM
 (in cents)                              11.05             -       N/A
Operating revenue per block hour   $     1,470             -       N/A
Block hours                             13,307             -       N/A
Departures                               8,389             -       N/A

Total Colgan:
Block hours                             36,262        32,242       12%
Departures                              28,561        27,189        5%
ASMs (in thousands)                    288,214       155,619       85%
Total operating cost per ASM
 (in cents)                              20.88         34.87      (40)%
Total operating cost per block
 hour                              $     1,659   $     1,683       (1)%

Average daily utilization
 (block hours)                            7.13          7.20       (1)%
Average stage length (miles)               228           178       28%
Number of operating aircraft
 (end of period)
  Saab 340                                  34            40      (15)%
  Beech 1900                                 2             7      (71)%
  Q400                                      15             -      100%
Employees                                1,324         1,202       10%




                                               Colgan Air, Inc.
                                   --------------------------------------
                                          Years ended December 31,
                                   --------------------------------------
                                       2008          2007        Change
                                   -----------   -----------   ----------

Pro Rate Agreements:
Revenue passengers (in thousands)        1,380         1,498       (8)%
Revenue passenger miles
 (in thousands)                        249,520       277,326      (10)%
ASMs (in thousands)                    558,389       599,402       (7)%
Passenger load factor                     44.7%         46.3%    (1.6) pts.
Passenger yield (in cents)               78.94         69.27       14%
Operating revenue per ASM
 (in cents)                              35.28         32.05       10%
Operating revenue per block hour   $     1,716   $     1,517       13%
Block hours                            114,816       126,675       (9)%
Departures                              97,174       107,171       (9)%
Fuel consumption
 (in thousands of gallons)              14,761        16,797      (12)%
Average price per gallon           $      3.33   $      2.36       41%
Average fare                       $       143   $       128       12%

Capacity Purchase Agreement:
Revenue passengers (in thousands)        1,153             -       N/A
Revenue passenger miles
 (in thousands)                        326,627             -       N/A
ASMs (in thousands)                    501,832             -       N/A
Passenger load factor                     65.1%            -       N/A
Operating revenue per ASM
 (in cents)                              10.86             -       N/A
Operating revenue per block hour   $     1,432             -       N/A
Block hours                             38,074             -       N/A
Departures                              24,461             -       N/A

Total Colgan:
Block hours                            152,890       126,675       21%
Departures                             121,635       107,171       13%
ASMs (in thousands)                  1,060,221       599,402       77%
Total operating cost per ASM
 (in cents)                              24.49         32.94      (26)%
Total operating cost per block
 hour                              $     1,698   $     1,559        9%

Average daily utilization
 (block hours)                            7.51          7.32        3%
Average stage length (miles)               228           170       34%




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


                                       Three Months Ended December 31,
                                    ------------------------------------
                                                              % Increase
                                        2008         2007     (Decrease)
                                    -----------  ------------ ----------

Net (loss) income:
Net (loss) income in accordance
 with GAAP                          $    (3,826) $      6,706   (157)%
Add: Impairment of auction rate
 securities, net of tax                   7,782             -    100%
                                    -----------  ------------ ----------
Non-GAAP net income                 $     3,956  $      6,706    (41)%
                                    ===========  ============ ==========

Diluted (loss) earnings per share:
Diluted (loss) earnings per share
 in accordance with GAAP            $     (0.21) $       0.32   (166)%
Add: Impairment of auction rate
 securities, net of tax                    0.43             -    100%
                                    -----------  ------------ ----------
Non-GAAP diluted earnings
 per share                          $      0.22  $       0.32    (31)%
                                    ===========  ============ ==========


                                           Years Ended December 31,
                                    -------------------------------------
                                                              % Increase
                                        2008         2007      (Decrease)
                                    -----------  ------------  ----------

Colgan operating income (loss):
Colgan operating loss in
 accordance with GAAP               $   (7,913)  $   (5,053)       57%
Add: Impairment of goodwill and
 aircraft lease return costs            13,548            -       100%
                                    ----------   ----------    ----------
Colgan non-GAAP operating income
 (loss)                             $    5,635   $   (5,053)     (212)%
                                    ==========   ==========    ==========

Colgan operating margin:
Colgan operating margin in
 accordance with GAAP                     (3.1)%       (2.6)%     0.5 pts.
Add: Impairment of goodwill and
 aircraft lease return costs               5.3%           -       5.3 pts.
                                    ----------   ----------    ----------
Colgan non-GAAP operating margin           2.2%        (2.6)%     4.8 pts.
                                    ==========   ==========    ==========

Consolidated operating income:
Operating income in accordance
 with GAAP                          $   45,607   $   52,411       (13)%
Add: Impairment of goodwill and
 aircraft lease return costs            13,548            -       100%
                                    ----------   ----------    ----------
Non-GAAP operating income           $   59,155   $   52,411        13%
                                    ==========   ==========    ==========

Consolidated operating margin:
Operating margin in accordance
 with GAAP                                 5.3%         6.7%     (1.4) pts.
Add: Impairment of goodwill and
 aircraft lease return costs               1.5%           -       1.5 pts.
                                    ----------   ----------    ----------
Non-GAAP operating margin                  6.8%         6.7%      0.1 pts.
                                    ==========   ==========    ==========

Net income:
Net (loss) income in accordance
 with GAAP                          $   (4,907)  $   34,637      (114)%
Add: Impairment of goodwill and
 aircraft lease return costs,
 net of tax                              8,688            -       100%
Add: Impairment of auction rate
 securities, net of tax                 16,091            -       100%
Add: Loss on sale of unsecured
 claim, net of tax                           -        2,635      (100)%
                                    ----------   ----------    ----------
Non-GAAP net income                 $   19,872   $   37,272       (47)%
                                    ==========   ==========    ==========

Diluted EPS:
Diluted (loss) earnings per share
 in accordance with GAAP            $    (0.27)  $     1.50      (118)%
Add: Impairment of goodwill and
 aircraft lease return costs,
 net of tax                               0.48            -       100%
Add: Impairment of auction rate
 securities, net of tax                   0.90            -       100%
Add: Loss on sale of unsecured
 claim, net of tax                           -         0.11      (100)%
                                    ----------   ----------    ----------
Non-GAAP diluted earnings
 per share                          $     1.11   $     1.61       (31)%
                                    ==========   ==========    ==========

Contact Information

  • Contact:
    Joe Williams
    901-346-6162