Pinnacle Airlines Corp. announced that it has received final approval from the United States Bankruptcy Court for the Southern District of New York for $74.3 million in debtor-in-possession (DIP) financing. Delta Air Lines is providing the funding.
“We are pleased that the court has granted Pinnacle final approval for DIP financing with the support of the unsecured creditors’ committee,” said Sean Menke, president and CEO of Pinnacle. “Combined with cash from our ongoing operations, this funding will be available to help ensure that Pinnacle has sufficient liquidity to meet its operational and restructuring needs. This is an important step in our ongoing efforts to develop a viable business plan, while continuing to provide passengers with safe, reliable and timely service.”
As previously announced, $44.3 million of the DIP financing will be used by Pinnacle to repay a secured promissory note held by Delta. The remaining $30 million will be available to fund operations during the restructuring process.
Separately, The United Steelworkers (USW) said that through the successful work of Pinnacle Airlines’ Official Committee of Unsecured Creditors, Pinnacle and Delta Air Lines agreed to extend to July 13 the bankrupt regional carrier’s deadline to renegotiate its union labor contracts. The USW is one of seven members of the committee.
In its presentation to the U.S. Bankruptcy Court, which convened to consider Pinnacle’s motion for approval of DIP financing and other agreements, the USW advised the court that agreements between Pinnacle and Delta will pose problems in upcoming bargaining.
USW International vice president at Large Carol Landry, who leads the union’s Airline Division, stressed that the complex economic and non-economic issues that must be addressed in negotiations will require patience, good faith and commitment from top-level corporate management, Delta and other stakeholders in order to ensure that Pinnacle emerges from bankruptcy as a viable, more stable employer in the future.
Pinnacle presented the USW with a proposal on May 8 seeking changes to the labor agreement covering the company’s flight attendants.
Landry pointed out that since Pinnacle filed its Chapter 11 bankruptcy case, USW officers, staff, financial experts and legal counsel have been actively involved in the proceedings.
As a member of the Creditors’ Committee, the USW provides the committee and its members with the unique perspective of the more than 2,700 flight attendants and ground operations employees that the union represents at Pinnacle and Colgan Air.
Davis Polk & Wardwell and Akin Gump Strauss Hauer & Feld are serving as the company’s legal advisors in the restructuring. Barclays Capital and Seabury Group LLC are serving as financial advisors.
Previously on abfjournal.com:
Pinnacle Airlines Files for Chapter 11; Receives $74.3MM DIP Loan, Monday, April 02, 2012