Monday, April 2, 2012
Pinnacle Airlines Corporation has become the latest U.S. carrier to resort to the Chapter 11 process in the hopes of reorganizing a business model that has produced shortfalls in liquidity and profitability. See Jeremy Lemer, Pinnacle Files for Bankruptcy Protection, Financial Times, April 2, 2012 (available here). The U.S. regional carrier market, which operates short-haul routes primarily for the purpose of feeding the larger airlines, has struggled in recent years with high oil prices and reduced payments from major carriers. Pinnacle, which acquired Colgan Air in 2007 and Mesaba Aviation in 2010, apparently intends to wind down its Colgan operations, which serve United, and focus on its contracts with Delta. See Jerry Zremski, Colgan Parent Company Pinnacle Airlines Files for Bankruptcy, Buffalo News, April 2, 2012 (available here). Delta has agreed to provide financing to help Pinnacle restructure.