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Pinnacle Airlines Corp. Q2 2010 Earnings Call Transcript

Pinnacle Airlines Corp. Q2 2010 Earnings Call Transcript

Pinnacle Airlines Corp. (PNCL)

Q2 2010 Earnings Conference Call

August 3, 2010 10:00 AM ET


Brian Hunt – VP and General Counsel

Phil Trenary – President and CEO

Peter Hunt – VP and CFO


Duane Pfennigwerth – Raymond James

Helane Becker – Dahlman Rose

Bob Mcadoo – Avondale Partners LLC

Dave Enotyle (ph) Banc of America


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Good day ladies and gentlemen and welcome to the Second Quarter 2010 Pinnacle Airlines Corp. Earnings Conference Call. My name is Alisha and I will be your coordinator for today. (Operator Instructions). I would now like to turn the presentation over to Brian Hunt, please proceed, Sir.

Brian Hunt

Good morning everyone and welcome to the second quarter 2010 earnings conference call of Pinnacle Airlines Corp. On behalf of the more than 7,200 employees of Pinnacle, Colgan and Mesaba, I would like to thank you for your interest in our company. This call is being presented live over the Internet via webcast from our website, It will also be available on our site for 30 days after this call.

This presentation 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 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.

And at this time, I will turn the call over to Phil Trenary, our President and CEO.

Phil Trenary

Thanks Brian, and good morning everyone. I am also joined today by Peter Hunt, our Chief Financial Officer; and Doug Shockey, our Chief Operating Officer.

I’ll start off by thanking all of our people at Pinnacle, Colgan, and now Mesaba for everything they’ve done in delivering another quarter of profitability for our shareholders. It’s actually a little bit better earnings and Peter will discuss some of the one-time issues when he comes on here in a minute.

First of all, I would like to welcome the Mesaba Aviation folks to the Pinnacle family. Now this transaction provides a lot of benefits for all of our stakeholders. Probably one of the – ones that we think about a lot is this strengthens our relationship with Delta going forward. It has resolved all of our outstanding suits with Delta. It also solves some issues that Pinnacle had and also Mesaba as it relates to the fleet that we operate.

Pinnacle has very large fleet or has a very large fleet of CRJ-200s, but our CRJ-900 fleet only has 16 aircraft. By bringing Mesaba into the family, we now have a large fleet with critical mass with 900s, and we also solved Mesaba’s problem of not having enough CRJ-200s. Mesaba really operating 19 CRJ-200s. So, putting the carriers together means we have the right size fleet in both those aircraft. The other thing it does, the Saab aircraft operating by Colgan, our older aircraft, and Mesaba also has some aircraft that are being phased out of their fleet, their Saabs, they happen to be the newest fleet of Saabs operating in the industry. So, from an operating cost standpoint and customer confidence standpoint, we will be able to leverage that, improve the service we have with that.

Speaking of the aircraft, if we look out into the future, and the aircraft that Pinnacle operates, we will talk a lot about how the CRJ-900 is absolutely the right, large regional jet to operate. The Q400s is an aircraft and class all by itself, it’s going to be a strong competitor going forward. 200s that we have is a relatively new fleet, and we have contracts on those through 2017. As we said, the Saabs is still the airplane that can really do the job that it does.

So, bottom line is we have the right aircraft going forward. The Q400 is bringing us the growth that we have right now, Continental in fact will be taking be a delivery later this week that will go into Continental. All of the Q400 deliveries we have now are the next generation Q400s.

It is our ultimate goal with this to transfer the jets at Mesaba to Pinnacle and then merge the Mesaba and Colgan certificates, so we wind up with all of the jet aircraft being operated by Pinnacle and all the turboprop aircraft at Colgan.

This puts us in a better position than any other carrier to compete some new business we expect to be available between 2011 to 2015. It’s no secret that there is approximately 500 regional jet contracts that will be expiring in that timeframe. Certainly some of those aircraft will remain in the network but a lot of them will be converted to larger regional jets and larger turboprop aircraft. As far as the number and the mix of the two, a lot of that will depend on what happens with scope with the major carriers.

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