Pinnacle Jumps on Higher-Rate Accord With United: Atlanta Mover
Pinnacle Airlines Corp. (PNCL) jumped as much as 24 percent after the regional carrier reached a two- month agreement with partner United Continental Holdings Inc. (UAL) that includes higher rates and certain aircraft expenses.
Pinnacle shares rose 26 cents, or 23 percent, to $1.38 at 4 p.m. in Nasdaq Stock Market trading after touching $1.45 earlier. The shares have gained 68 percent so far this year, after tumbling 90 percent in 2011.
Pinnacle still faces “short-term liquidity issues” that might not be resolved outside of a Chapter 11 filing, Helane Becker, an analyst at Dahlman Rose & Co. in New York, wrote today in a note to clients. The amended agreement with United “does not change the fundamentals for the company” because it only covers February and March flying, she said.
About 25 percent of Pinnacle’s revenue comes from United, with the rest coming from Delta Air Lines Inc. (DAL), whose contracts with Pinnacle also must be amended for the regional carrier’s financial health, Becker wrote.
Pinnacle Chief Executive Officer Sean Menke warned on Jan. 20 that the Memphis, Tennessee-based company’s financial position “will continue to worsen at an alarming rate” unless immediate cost reductions with labor, vendors and other partners are made. Analysts including Maxim Group LLC’s Ray Neidl have said Pinnacle has a “high probability” of filing for Chapter 11 bankruptcy.
To contact the reporter on this story: Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net.
To contact the editor responsible for this story: Anita Sharpe in Atlanta at asharpe6@bloomberg.net.
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