Pinnacle being dropped as a Delta Connection partner

0 Comments | Deseret News (Salt Lake City), Jun 11, 2008 | by Harry R. Weber Associated Press

ATLANTA -- Pinnacle Airlines Corp. shares fell nearly 25 percent Tuesday, after it disclosed that Delta Air Lines Inc. plans to cancel its flying contract with the regional carrier, citing poor on- time performance.

Northwest Airlines Corp., Pinnacle's biggest customer, has no current plans to change its relationship with Pinnacle. However, Delta is acquiring Northwest, worrying investors about what that might mean for Pinnacle's future if the contract termination sticks.

"We think today's news shows how a Delta-Northwest merger may hurt Pinnacle," Standard & Poor's airline analyst Jim Corridore said in a research note.

Pinnacle. based in Memphis, Tenn., called the move against it by Delta "wrongful," saying its on-time performance has been hurt by factors beyond its control. It said the operational schedule created by Delta is a key factor affecting on-time performance.

Pinnacle said it plans to pursue "appropriate remedies," though it wasn't more specific. The move by Delta would affect nearly 5 percent of the fleet maintained by Pinnacle Airlines Corp., which operates Pinnacle and Colgan Air. The Delta contract represents about $3.5 million in monthly revenue for Pinnacle, which recorded $787 million in annual revenue last year, Pinnacle spokesman Joe Williams said.