Pinnacle Airlines

Republic works to restructure loss-making 50-seat operations at its subsidiary Chautauqua

Republic Airways Holdings has undertaken a restructuring of its Chautauqua Airlines subsidiary that operates 50-seat regional jets with a targeted USD40-60 million improvement by 2013. The company is hoping to overcome the daunting challenge facing all US regional airlines of finding a price point that makes the operation of smaller jets consistently profitable.

During the late 1990s and early 2000s the introduction of the 50-seat regional jet ushered in heady times for US regional carriers as they negotiated high margin capacity purchase agreements with their US legacy partners that allowed for strong profits that often times bested the financial performance of the network carriers they were partners with.

Yanking of Jazz Thomas Cook contract underscores ever-growing difficulty in regional airlines

A decision by travel package operator Thomas Cook to end a five-year charter agreement three years early with Canada’s Jazz Aviation reflects the stark realities regional carriers face in attempting to meaningfully diversify their core business of providing feed to network legacy airlines.

While Thomas Cook ended the deal due to souring demand, it leaves Jazz again with just one client, Air Canada. Tensions between Jazz and Air Canada have flared over a dispute on rates paid to Jazz that could result in the regional carrier having to pay its partner CAD26 million (USD26.2 million) if an arbitrator later this year rules in Air Canada’s favour.

Pinnacle’s bankruptcy underlies growing weakness of US regional carriers

Pinnacle Airlines’ highly anticipated entrance into Chapter 11 bankruptcy protestion reflects challenges regional airlines in the US face in finding ways to achieve sustained profitability. Delta’s decision to become Pinnacle’s benefactor also shows the complexity of the intertwined relationships between regionals and their mainline partners that foster an unhealthy interdependency.

Pinnacle CEO Sean Menke has been flagging up the possibility of a formal restructuring of the company since late last year when the carrier embarked on an extensive cost-cutting scheme by attempting to gain concessions from employees, restructure supplier contracts and negotiate changes to some of the capacity purchase agreements it has with its major partners to make those deals profitable.

SkyWest reverses 1Q loss, goes beyond anticipated break even

SkyWest resumed profitability in the second quarter when it posted net income of USD1.6 million on USD933.7 million in operating revenues, a dramatic turnaround from the first quarter when it posted its first quarterly loss in 23 years.

At long last, divestiture for American Eagle

As expected, and as no other regional airline wanted to buy it, AMR is divesting its regional airline subsidiary American Eagle by spinning off Eagle stock to AMR shareholders. This was also expected since early reports said one of the options was to set up Eagle as an independent, publicly traded company with stock given to AMR shareholders.

Delta aggression toward US regionals revealed in latest earnings calls

An interesting discussion as to how Delta is trying to change the financial dynamics of the US regional airline industry occurred during the Pinnacle Airlines conference call, as Dahlman Rose analyst Helane Becker frankly stated that Delta is not a good partner for any of its regional partners.