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Pinnacle Airlines Corp. Business Information, Profile, and History

express regional northwest company

1689 Nonconnah Boulevard, Suite 111
Memphis, Tennessee 38132
U.S.A.

Company Perspectives:

We have made our mark as one of the largest regional airlines in the world from the dedication and wisdom of our People and from the strong relationship we have with Northwest Airlines and other stakeholders. I'm so proud of our People and all they have accomplished at our airline. We are built on the foundation of being "Simply the Best" and we will use that platform to fly into the next 20 years of success at Pinnacle.

History of Pinnacle Airlines Corp.

Pinnacle Airlines Corp. is the holding company for Pinnacle Airlines, Inc., a regional airline based in Memphis. As Northwest Airlink, Pinnacle operates feeder routes on behalf of Northwest Airlines Corporation. Pinnacle operates a fleet of more than 130 regional jets to more than 100 destinations, with secondary hubs in Detroit and Minneapolis-St.Paul. More than six million people flew the airline in 2004; it has been ranked as the world's fastest-growing airline as well as the eighth largest regional carrier.

Origins

Pinnacle Airlines was incorporated in Georgia in early 1985 as Express Airlines I, Inc. The Roman numeral "I" in the company's name indicated plans to build a family of regional feeders under parent company Phoenix Airline Services, Inc. It was led by Atlanta entrepreneur Michael J. Brady, who had formerly been head of Eastern Metro Express, a feeder for Eastern Airlines, and had formed another regional airline, Southeastern Airlines (later part of Atlantic Southeast Airlines). He also helped launch a local fighter aircraft adventure business called Sky Warriors.

Express I soon landed a contract to supply feeder traffic to Republic Airlines and by June 1 was flying as Republic Express. The company's original fleet consisted of three 19-seat British Aerospace Jetstream 3100s, which connected Memphis with three destinations: Columbus and Greenville, Mississippi, and Monroe, Louisiana. By December 1985, it had a dozen turboprops, including two 33-seat Saab 340s, flying to ten cities. It also started flying out of Minneapolis-St. Paul during the month.

NWAirlink in 1986

The fleet more than doubled to 27 planes by June 1986. Republic Airlines was acquired by Northwest Airlines in October 1986, and Republic Express, also called Express Airlines I, Inc. (Express I for short), began operating as an NWAirlink carrier.

Express I's fleet shifted entirely to the Saab 340s in the 1990s, and grew to 32 aircraft. The route network expanded to include 56 southeastern and midwestern destinations. The airline suffered its first disaster when one of its turboprops crashed on December 1, 1993, killing 18 people.

Like other airlines, Express I was forced to undergo extensive cost-cutting in the early 1990s recession. It was profitable, however, by the mid-1990s. Revenues were about $150 million in 1995, when more than 1.5 million passengers were carried. It was (with Business Express) one of the top two privately owned regional airlines in the United States.

A second company, Express II, was created from the operations at the Minneapolis hub, but it soon was recombined with Express I. Parent company Phoenix Air Services also was providing back-office support to an affiliated company, Chicago Express.

There were a couple of major developments in the Northwest/Express I relationship in 1994. In March of that year, Northwest switched to a very successful new system of connecting flights at Memphis. In October, Express I entered a novel new contract wherein it merely sold all of its seats to NWA for a fixed price, freeing it from fare wars and marketing considerations. NWA handled all booking and scheduling. Express I was leasing all of its aircraft from Northwest.

Acquisition by Northwest: 1997

Northwest bought Express I from founder and CEO Michael J. Brady and CFO Glenn Schabb in April 1997. The price was later reported to be $33 million.

Phil Trenary, founder of Lone Star Airlines, was named its new CEO and president. The Minneapolis-St. Paul operation was transferred to sister Airlink carrier Mesaba Airlines, while the corporate headquarters were relocated from Atlanta to the Memphis base of operations in August 1997.

Trenary was given the task of immediately improving Express I's customer service, operational reliability, and costs. This was accomplished with the help of key executives brought in from Lone Star and Northwest, and an emphasis on staff training and motivation. A new program called ITMAD--Input That Makes a Difference--encouraged employees to contribute ideas.

Express I had about 1,200 employees in 1999 and was flying more than one million passengers a year. Its network connected three dozen destinations in 11 states.

Regional Jets in 2000

Northwest was a little late in transitioning its feeders in the industrywide shift from turboprops to small jets. Express I acquired its first 50-seat Canadair Regional Jet (CRJ) in April 2000; this plane was dubbed "The Spirit of the Memphis Belle" after the storied World War II bomber. A month earlier, the airline had joined FlightSafety International in opening a $23 million Flight Learning Center in Memphis to meet its increased training requirements. (NWA's other Airlink partner, Mesaba, would not get regional jets until 2005.)

Business really took off after the addition of the CRJs, as Northwest increased its flights at Memphis-Shelby County Airport by 25 percent and started a major expansion program of its facilities there. Express I's payroll doubled to 1,300 employees within a year, and it opened a second hub in Detroit as Northwest Airlines reorganized its regional feeders along market-based rather than strictly geographical lines. By this time, Express I was operating 17 CRJs and 26 Saab 340s to 56 destinations. About 650 employees, however, were laid off following the terrorist attacks on the United States on September 11, 2001. The Saabs were divested by November 2001, giving Express I an all-jet fleet.

Renamed Pinnacle Airlines in 2002

Express I was renamed Pinnacle Airlines, Inc. on May 8, 2002. A holding company, Pinnacle Airlines Corp., had been formed in January 2002. According to Commuter/Regional Airline News, about 200 advertising agencies around the world were asked to help select the name from a list of 200 sugges- tions developed by a public relations firm. "We were changing everything--our culture, our fleet, the look of the airline, everything--so we went looking for a new name," explained a company spokesperson. During the year, Professional Pilot magazine commended Pinnacle on its management/employee relations.

An initial public offering (IPO) on the NASDAQ followed in November 2003. Northwest retained an 11 percent shareholding and two board seats. Proceeds from the IPO, which raised $271.6 million, went to the Northwest Airlines Pension Plans, which had been transferred the stock earlier.

Pinnacle Airlines Corp., the publicly traded parent company, had revenues of $457.8 million for 2003, with net income of $35.1 million. Its major limitation at the time seemed to be contractual stipulations preventing it from operating larger, 70-seat regional jets, which made up the segment of the market considered by analysts to offer the most potential for growth, according to Air Transport World.

Earnings were up 16 percent to $40.7 million on revenues of $635.5 million in 2004. The company ended the year with about 1,100 pilots. It was the fastest-growing of about five dozen regional airlines in the United States.

Pinnacle celebrated the arrival of its 100th regional jet in July 2004, naming it the Spirit of Beale Street in honor of a World War II B-24 bomber whose purchase was funded by the Memphis African-American community.

An expansion of Pinnacle's headquarters was underway. To help meet its onboard staffing needs while maintaining flexibility, Pinnacle began hiring large numbers of part-time flight attendants. It also was using more part-timers as ramp workers. Pinnacle was hiring hundreds of pilots, but two new flight crew members were lost when they crashed on a positioning flight on October 14, 2004.

20 in 2005

At the time of the company's 20th anniversary in 2005, Pinnacle was ranked by Airline Business News as the world's fastest-growing airline and the eighth largest regional. It had 3,400 employees and was operating 134 jets to about 100 destinations.

Within some limits, Pinnacle was free to pursue business from other carriers. Northwest's guarantee of a minimum operating margin for Pinnacle was set to expire in 2008, and its contract would be up for renewal several years after that.

Principal Subsidiaries: Pinnacle Airlines, Inc.

Principal Competitors: American Eagle Airlines, Inc.; Comair, Inc.; ExpressJet Airlines, Inc.; MAIR Holdings Inc.

Chronology

  • Key Dates:
  • 1985: Express Airlines I, Inc. begins flying out of Memphis as Republic Express.
  • 1986: The airline begins flying for Northwest.
  • 1997: Northwest acquires Express I.
  • 2000: Express I begins flying regional jets.
  • 2001: Express I opens a second hub in Detroit and retires its last turboprops.
  • 2002: Express I is renamed Pinnacle Airlines, Inc.
  • 2003: Pinnacle goes public on the NASDAQ.
  • 2005: Pinnacle is ranked as the world's fastest-growing airline.
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