Pinnacle Airlines Corp. Announces 2009 Fourth Quarter Earnings

Pinnacle Airlines Corp. (NASDAQ: PNCL) today reported fourth quarter 2009 net income of $5.6 million and fully diluted earnings per share ("EPS") of $0.31. This represents an increase of 153% and 158% over net income and EPS recorded in the fourth quarter of 2008 of $2.2 million and $0.12, respectively, excluding special charges.

For the year ended December 31, 2009, the Company reported net income of $41.9 million and EPS of $2.31. The Company's financial results during 2009 include a number of previously announced special items that increased net income by $18.7 million. These nonrecurring items, along with special items that occurred in 2008, are listed in the attached table "Reconciliation of Non-GAAP Disclosures." Excluding these special items, the Company achieved net income of $23.2 million for the full year 2009, an increase of 68% over net income of $13.8 million in 2008, excluding special charges. The Company's 2009 EPS excluding these nonrecurring items was $1.28, an increase of 66% over EPS of $0.77 for 2008, excluding special charges.

The Company also announced today that all of the remaining $31 million par amount of 3.25% Senior Convertible Notes (the "Notes") were repaid on February 16, the day after the date that holders of the Notes could elect to tender the Notes to the Company. After repayment of the Notes, the Company's balance of unrestricted cash and cash equivalents on February 16 was approximately $60 million.

In January 2010, the Company entered into a short-term loan agreement for $10.0 million, secured by the Company's federal income tax refund. The interest rate on this loan is currently 4.5%. This short-term loan provided the Company with a low-cost alternative to maintain a strong working capital position until its 2009 federal tax refund is received late in the first quarter or early in the second quarter of 2010.

"2009 was a significant year for Pinnacle Airlines Corp.," said Phil Trenary, the Company's President and Chief Executive Officer. "We began the year with many challenges, both operationally and financially, but our People delivered solid results for our Customers and Shareholders. With the full repayment of our convertible notes, we are better positioned to take advantage of opportunities in the regional airline industry in 2010 and beyond."

Fourth Quarter 2009 Financial and Operating Results

During the fourth quarter of 2009, Pinnacle Airlines, Inc. ("Pinnacle"), the Company's regional jet operating subsidiary, completed 103,915 block hours and 66,619 departures, decreases of 7% and 1%, respectively, over the same period in 2008. Pinnacle experienced an 8% decrease year-over-year in the average utilization of its fleet, primarily from route network changes resulting in shorter average flights. Colgan Air, Inc. ("Colgan"), the Company's regional turboprop operating subsidiary, completed 33,766 block hours and 26,466 departures during the fourth quarter, decreases of 7% over the same period in 2008. The decrease in operations is primarily related to the retirement of seven Saab and Beech aircraft in conjunction with eliminating certain markets operated under the Company's pro-rate agreements. Also contributing to this decrease was a reduction of one Q400 aircraft during 2009.

The Company recorded consolidated operating revenue during the fourth quarter of 2009 of $209.2 million, a decrease of $8.3 million, or 4%, over the same period in 2008. This decrease is primarily related to a reduction in Colgan's pro-rate operations and the decrease in Pinnacle's utilization noted above. Consolidated operating income was $17.8 million for the fourth quarter of 2009. Consolidated operating income for the fourth quarter of 2008 was approximately $16.3 million.

Pinnacle reported fourth quarter 2009 operating income and an operating margin of $13.5 million and 8.8%, respectively, a decrease of $0.4 million and 0.2 points, respectively, from the fourth quarter of 2008. Pinnacle's operating income in the fourth quarter of 2009 was reduced by approximately $1.7 million related to an ongoing contractual disagreement with Delta Air Lines, Inc. ("Delta"), the Company's largest operating partner. Delta has disputed the contractual requirement to reimburse Pinnacle in full for its aviation hull and passenger liability insurance premiums. Under generally accepted accounting principles, Pinnacle will not record the unreimbursed insurance amounts as revenue until the parties resolve the issue.

Colgan reported operating income and an operating margin of $4.3 million and 7.6%, an increase of $1.8 million and 3.6 points, respectively, from the fourth quarter of 2008. Colgan's decreased fuel costs in its pro-rate operations were a primary factor leading to the increase in operating income. Fuel cost per gallon during the fourth quarter 2009 was $2.31, down 9%, from $2.53 per gallon during the same period in 2008. The decline in fuel costs was partially offset by a decrease in Colgan's revenue-per-available-seat-mile within its pro-rate operations of approximately 9%, and increases in Colgan's rising employee health insurance costs and wage and rate adjustments during 2009.

Net nonoperating expense was $10.1 million for the fourth quarter of 2009, as compared to nonoperating expense of $19.8 million for the same period in 2008, which included an $8.1 million impairment charge related to the Company's Auction Rate Securities ("ARS") portfolio. Interest income decreased by $1.5 million, primarily from a decrease in interest rates earned on invested assets, as well as the sale of the Company's ARS portfolio in August 2009. Interest expense for the fourth quarter was $10.2 million, a decrease of $3.2 million from the fourth quarter of 2008, primarily related to a reduction in interest expense on the Company's Notes, a large portion of which were repurchased throughout 2009.

Cash and Cash Equivalents

The Company ended the quarter with $91.6 million in unrestricted cash and cash equivalents. The Company generated $21.7 million in cash and cash equivalents from operating activities during the fourth quarter of 2009. Net cash used in investing activities for the three months ended December 31, 2009 was $0.1 million, primarily resulting from $1.4 million related to certain capital expenditures, partially offset by $1.3 million related to the redemption of certain of the Company's previously mentioned ARS. Net cash used in financing activities for the three months ended December 31, 2009 totaled $11.2 million, primarily comprised of $10.8 scheduled principal payments on long-term debt obligations and $0.3 million of other financing activities.

About Pinnacle Airlines Corp.

Pinnacle Airlines Corp., an airline holding company, is the parent company of Pinnacle Airlines, Inc. and Colgan Air, Inc. Pinnacle Airlines, Inc. operates under Delta brands and operates 126 CRJ-200 and 16 CRJ-900 regional jet aircraft throughout the United States and in the District of Columbia, Belize, Mexico, Turks and Caicos Islands, the U.S. Virgin Islands and three Canadian provinces. Colgan Air, Inc. operates as Continental Connection, United Express and US Airways Express and operates a fleet of 14 Q400 and 34 Saab aircraft throughout the United States and Canada. For further information about the Company, please refer to the Company's Form 10-K for the year ended December 31, 2009, which will soon be filed with the SEC.