Pinnacle Airlines – Crashing and Burning?
Eric is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Yesterday, Pinnacle Airlines (NASDAQOTH: PNCLQ.PK) announced an ‘all hands to battle stations’ call. The company is scrambling to negotiate with everyone they could possibly owe money. Employees, pilots, vendors, debt holders, equipment lessors, and property lessors, were all targeted in the company’s press release. The company is also trying to bring its mainline airline partners to the negotiating table.
The 2010 management team may have done an irreparable number on the company. The five-person executive team collected $4.41 million in compensation in 2010, which was an amount proportional to 35% of the company’s net income for the year. A hearty reward, considering the stock returned 4% during the period. Since then, management has been completely replaced, with the exception of the Brian T. Hunt, Vice President and General Counsel.
According to Sean Menke, who became the CEO and President of the company on May 25th this year, "Pinnacle Airlines Corp. is facing a convergence of events that, if left unaddressed, will make 2012 an extremely challenging year."
Investors, the few that remain after the stock’s negative 80% performance year to date, dove for the door and sent the stock down 21% yesterday when the announcement was made.
Now, Pinnacle Airlines finds itself a beggar - reliant on charity and the leniency of the parties it holds financial obligations to. It is unlikely to win many concessions. It should only be noted that the current management roster has had little time to create a turnaround.
The author does not own any financial interest in the company mentioned. Forward looking statements in the article are the author's opinion, and no guarantee can be provided of their future validity.