Delta/NWA merge effect on Pinnacle?

[av8sean]

The notion that 50-seat RJ feed is suddenly and completely unprofitable might not actually be the case. Pinnacle runs a very tight (cheap) ship, and I've seen the burn numbers - these flights are not very expensive to operate, even with $4/gallon Jet-A. Most flights are filled 40-50 pax every flight, and ticket prices are up across the board. The last time I saw, Pinnacle costs about $2200 for an average 50-seat RJ flight, so it doesn't take much to make these flights viable.

[PCL_128]

Pinnacle hasn't been profitable for NWA in years. It's a loss-leader. Always has been.

[kellwolf]

Originally Posted by PCL_128

The game of fear from Phildo and friends is to be expected. He'll milk this for everything it's worth to scare everyone. As long as the pilots are smart and listen to Erickson, everything will be fine.

And speaking of Scott....

Fellow Pilots,

As many of you are already aware Delta Airlines has announced an intention to acquire Northwest Airlines in an all stock deal that would have Delta as the surviving brand name and becoming the largest airline in the world. While this certainly wasn’t unexpected there is a possibility of it affecting the flying that we do. While it still unknown what kind of operational changes we may be in for the one thing that is clear is that none of this will happen overnight. Regulatory approval is expected to consume most of the rest of this year and if the deal is approved it will take upwards of six more months for the operational streamlining to begin.

We are fortunate to have very robust, long-term air service agreements with both Delta and Northwest that will be binding on the new carrier. These agreements leave little wiggle room to be cancelled or modified before their expiration date as evidenced by Phil Trenary’s recent shareholder conference calls and the recent upgrading of our stock by J.P. Morgan. J.P. Morgan also went on to say that the airline offers a “unique combination of free cash flow and contract certainty” and “with legacy airlines searching (and finding) opportunities to scale back on their regional commitments, we see little risk for Pinnacle.” Many of our fellow Airlink/Connection carriers are not so fortunate in the terms or longevity of their service agreements and a few of them don’t even operate under the protections of a binding contract.

Another hot issue lately has been that these past several months have seen a significant downturn in our performance statistics. This is highly unfortunate. Crew shortages, maintenance problems, SOC missteps, and unusually poor winter weather in the upper Midwest have all played a role in the poor performance numbers seen on the Northwest side. Understaffing, impossible schedules, and a generally poor fleet launch plan have also dogged the new Delta flying. Through all of these challenges you have performed superbly like the professionals that you are. You ran a very safe operation through this past winter and the record reflects that. Your dedication to a safe airline pays dividends not seen on any balance sheet and I know the company deeply appreciates your dedication.

I’m confident that our performance numbers will come back up to where they once were as soon as our management has adequately addressed the non-pilot related discrepancies that pervade our airline. Our performance is still near the top of our peer group when measured over the past 12 months so it’s to early to get overly alarmed. I’m also confident that with Pinnacle’s long track record of industry leading performance combined with some of the lowest block hour costs available anywhere that our future with a merged Delta/Northwest will be bright.

The most unfortunate part of the recent industry downturn and this merger is that management will likely use this opportunity to pressure you and your families to fear for your jobs. Don’t allow yourself to fall for the fear, uncertainly, and doubt tactics that will most likely be exploited in this time of change. Your MEC remains committed to securing a fair working agreement that recognizes the sacrifices and dedication of this pilot group as well as the dynamic market place that we work in.

Fraternally,

Captain Scott Erickson
Master Executive Council, Chairman
Pinnacle Airlines

In a nutshell, we think the contracts are iron clad, Phil and Co think so since they told the stockholders we're good and (probably most important) the money makers on Wall Street think it's iron clad. They can't re-write the contracts just b/c they merged, so worst case scenario, we don't grow. Seeing as they just JM'ed the #1 guy on the seniority list AGAIN in Atlanta, I don't think we could handle much growth right now anyway.....

[PCL_128]

Originally Posted by kellwolf

And speaking of Scott....

Scott's the frickin' man. The PCL guys are lucky to have him.

In a nutshell, we think the contracts are iron clad, Phil and Co think so since they told the stockholders we're good and (probably most important) the money makers on Wall Street think it's iron clad. They can't re-write the contracts just b/c they merged, so worst case scenario, we don't grow.

Could of sworn I said something like that on a couple of message boards, but some people didn't believe me.

Seeing as they just JM'ed the #1 guy on the seniority list AGAIN in Atlanta, I don't think we could handle much growth right now anyway.....

I saw Joe waiting in line at the NWA gates in the D concourse a few week ago trying to jumpseat home. Still can't believe that he's commuting to ATL just to fly a -900. And now getting JM'ed! He's always had bad luck with the JMs, though. Pinnacle, the only airline in the country where the number 1 guy on the seniority list can get junior manned over and over again.