Pinnacle Airlines Reports First Quarter 2008 Financial Results

Market Wire, May, 2008

Pinnacle Airlines Corp. (NASDAQ: PNCL) ("the "Company") today reported first quarter 2008 net income and fully diluted earnings per share ("EPS") of $2.7 million and $0.15, respectively. The Company's net income and EPS were $9.4 million and $0.38, respectively, for the first quarter of 2007.

The Company's financial performance for the quarter was negatively affected by two primary issues. First, Colgan Air, Inc. ("Colgan"), the Company's turboprop aircraft operating subsidiary, recorded an operating loss of approximately $5 million. The loss is almost entirely caused by recent significant increases in fuel costs affecting the entire airline industry. Colgan's average cost per gallon of fuel increased 54% as compared to the first quarter of 2007, adding approximately $3.9 million in fuel costs. Colgan's financial performance is also affected by seasonal changes in demand, with unit revenue typically weaker in the first quarter each year as compared to the second and third quarters.

Second, the operating performance of Pinnacle Airlines, Inc. ("Pinnacle"), the Company's regional jet operating subsidiary, was below incentive levels contained in Pinnacle's Airline Services Agreement ("ASA") with Northwest Airlines. Specifically, to obtain full payment for regional airline services provided under the ASA, Pinnacle is required to maintain certain levels of completed flights, on-time performance, mishandled baggage performance, and customer complaints over six month periods from January 1 to June 30 and July 1 to December 31 of each year. During the first quarter of 2008, Pinnacle's operating performance was affected by severe winter weather and by an increase in the number of operational maintenance events. As a result, Pinnacle's completion factor, on-time performance, and customer complaints fell below the incentive standards contained in the ASA. The Company recorded a $2.5 million performance-related reduction of revenue as an estimate of what it might owe to Northwest related to the first quarter of 2008. The ultimate amount that the Company will owe Northwest will not be determined until after the six month performance period ends on June 30, 2008. The Company has also estimated that Pinnacle's operating income was reduced by approximately $2 million because of lost revenue associated with cancelled flights and increased interrupted trip and passenger re-accommodation costs related to the higher level of cancelled and delayed flights. Pinnacle's operating performance is still well above minimum required standards in the ASA.

Pinnacle's operating performance has improved significantly during April 2008. Pinnacle may record a similar or smaller reduction of revenue during the second quarter of 2008, depending on Pinnacle's operating performance during the second quarter and the ultimate amount owed to Northwest for the six month performance period ending June 30, 2008.

First Quarter 2008 Significant Events

-- Pinnacle took delivery of three Bombardier CRJ-900 next generation regional jet aircraft. Pinnacle operated six 76-seat CRJ-900s as a Delta Connection carrier as of March 31, 2008 and will add ten additional aircraft through early 2009. The CRJ-900 has operating costs that are the lowest among comparably sized regional jets, providing for an economic, efficient aircraft in the Delta Air Lines network. Enhanced cabin modifications on Pinnacle's models provide a significantly improved passenger experience as compared to traditional regional jets.

-- Colgan began operating Bombardier 74-seat Q400 next generation turboprop aircraft as a Continental Connection carrier. Colgan took delivery of six Q400 aircraft during the first quarter and will add nine additional aircraft by June 2008. The Q400 provides passenger comfort, speed, and operational flexibility that rival regional jets, but at significantly lower operating costs. In particular, the Q400 uses 28% less fuel than a comparably sized regional jet.

-- Colgan reached an agreement with the United Steel Workers ("USW") as the legal representative of its flight attendant group. The agreement provides Colgan's flight attendants with industry standard pay and benefits, while maintaining Colgan's long-term competitive regional airline cost structure.

-- The Company purchased its Series A Preferred Share (the "Preferred Share") from Northwest at a purchase price of $20 million during the first quarter. The purchase of the Preferred Share was a part of the Company's agreement for an amended and restated ASA with Northwest in December 2006 as part of Northwest's bankruptcy reorganization proceedings.

"Although we are disappointed in our first quarter performance, we are proud of the efforts of our People to bring both the CRJ-900 next generation and Q-400 aircraft into service for Delta and Continental respectively," said Philip H. Trenary, President and Chief Executive Officer of Pinnacle Airlines Corp. "These aircraft represent the best solution for our customers in a very difficult operating environment. Coupled with the actions we are taking to improve Colgan's performance, this provides a positive outlook for the future."