Pinnacle Airlines (PNCL) 8-K Pinnacle Airlines Reports Second Quarter 2006 Financial Results

Exhibit 99.1

Pinnacle Airlines Reports Second Quarter 2006 Financial Results

MEMPHIS, TN — August 1, 2006 — Pinnacle Airlines Corp. (Nasdaq:PNCL) (“Pinnacle” or the “Company”) today reported second quarter 2006 earnings per fully diluted share (“EPS”) of $0.54. Operating income and net income were $19.5 million and $11.9 million, respectively. For the six months ended June 30, 2006, Pinnacle reported EPS of $1.15. Operating income and net income were $41.0 million and $25.2 million, respectively.

Operating income during the second quarter was negatively affected by a one-time, noncash charge of $1.4 million related to the previously unrecorded obligation for Pilot post-retirement health care benefits. Pinnacle provides a benefit for its Pilots which enables them to continue coverage under the Company’s health care plan after reaching the mandatory retirement age of 60 and prior to their eligibility for Medicare coverage. This charge negatively affected second quarter EPS by $0.04. The amounts were not material for any prior period. In addition, Pinnacle recorded a pre-tax charge of $1.4 million during the second quarter related to a change in estimate in its provision for sublease losses associated with the return of eleven Saab 340 aircraft from Mesaba Aviation, Inc., which also reduced second quarter EPS by $0.04. Pinnacle’s second quarter 2006 EPS would have been $0.62 without these two nonrecurring items, as compared to second quarter 2005 EPS of $0.63.

EPS for the six months ended June 30, 2006 was $1.15. During the first quarter of 2005, the Company recorded a pre-tax gain of $18.0 million ($11.3 million net of related income taxes) associated with the repurchase of its note payable to Northwest Airlines. This gain increased EPS for the six months ended June 30, 2005 by $0.51. Excluding this gain, EPS for the six months ended June 30, 2005 was $1.18. EPS for the six months ended June 30, 2006 excluding the charges related to the pilot post-retirement liability and bankruptcy provisions was $1.23, a 4% increase over the same period in 2005, excluding the aforementioned gain.

For the three months ended June 30, 2006, Pinnacle recorded operating revenue of $204.5 million, a decrease of $8.4 million, or 4%, over the same period in 2005. Pinnacle completed 103,471 block hours and 63,053 cycles, decreases of 6% and 2%, respectively, over the same periods in 2005. The decrease in revenue, block hours and cycles was attributable to the decrease in fleet size after Northwest removed 15 aircraft from our CRJ fleet in November 2005. During the second quarter 2005, Pinnacle accepted deliveries of 14 aircraft and had an average fleet size of 131 aircraft, as opposed to the second quarter 2006 in which it maintained a fleet size of 124 throughout the quarter.

For the six months ended June 30, 2006, Pinnacle recorded operating revenue of $411.6 million, an increase of $4.0 million, or 1%, over the same period in 2005. For the six months ended June 30, 2006, Pinnacle completed 206,068 block hours and 124,318 cycles, a decrease of 2% and an increase of 3%, respectively, over the same periods in 2005. While block hours decreased due to the decrease in fleet size, cycles increased due to a decrease in the average length of Pinnacle’s flights.

Pinnacle’s operating margin for the three months ended June 30, 2006 was 9.5%. Excluding the aforementioned charges related to the pilot post-retirement liability and the bankruptcies of Northwest and Mesaba, Pinnacle’s margin for the quarter was 10.9%, as compared to an operating margin of 10.7% for the three months ended June 30, 2005. This margin increase was primarily attributable to annual rate increases under the Company’s airline services agreement with Northwest that were greater than Pinnacle’s year-over-year unit cost increase. In addition, there was a reduction in costs related to services provided by outside vendors.

Pinnacle repaid in full the $17.0 million drawn under its revolving credit facility upon its expiration in June 2006. Pinnacle ended the quarter with cash and short-term investments totaling $78.2 million. Management believes that the Company’s current liquidity is adequate, and the Company does not have immediate plans to seek a replacement credit facility.

A time frame for discussions to resolve the status of Pinnacle’s contractual relationship with Northwest has still not been set, although Northwest has indicated that they expect such discussions will begin soon. Pinnacle also continues to negotiate with the Airline Pilots Association (“ALPA”) to amend the collective bargaining agreement between the Company and ALPA, and believes that successful conclusion of this negotiation is necessary to complete discussions with Northwest.

“I want to thank our People for another successful quarter,” said Phil Trenary, Pinnacle’s President and Chief Executive Officer. “We have continued to exceed our already high standards, and our strong operating performance will help us retain Northwest Airlines as a Customer. Satisfactory conclusion of discussions with both Northwest and the negotiating committee representing our Pilots remains our top priority.”

Non-GAAP Disclosures

This release and certain tables accompanying this release include certain financial information not prepared in accordance with generally accepted accounting principles (“GAAP”), regarding operating income, net income and EPS for the three and six months ended June 30, 2006 excluding the losses associated with the bankruptcy filings of Northwest and Mesaba, the nonrecurring charge related to the pilot post-retirement liability and the nonrecurring gain on repurchase of the note payable with Northwest. Pinnacle believes that this information is useful to investors as it indicates more clearly Pinnacle’s comparative year-to-year results. None of this information should be considered a substitute for any measures prepared in accordance with GAAP. Pinnacle has included its reconciliations of these non-GAAP financial measures to the most comparable GAAP financial measures in the accompanying schedules.

About Pinnacle

Pinnacle Airlines Corp. operates through its wholly owned subsidiary, Pinnacle Airlines, Inc., as a regional airline that provides airline capacity to Northwest Airlines, Inc. Pinnacle operates as a Northwest Airlink carrier at Northwest’s domestic hub airports in Detroit, Minneapolis/St. Paul and Memphis and the focus city of Indianapolis. Pinnacle currently operates an all-jet fleet of 124 Canadair Regional Jets and offers scheduled passenger service with 709 daily departures to 113 cities in 37 states and six Canadian provinces. Pinnacle Airlines maintains its headquarters in Memphis, Tennessee, and employs approximately 3,570 People.

Forward-Looking Statements

This press release contains various forward-looking statements that are based on management’s beliefs, as well as assumptions made by and information currently available to management. Although Pinnacle believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Such statements are subject to certain risks, uncertainties and assumptions, including those set forth in our filings with the Securities and Exchange Commission, which are available to investors at our web-site or online from the Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove erroneous, actual results may vary materially from results that were anticipated or projected. Pinnacle does not intend to update these forward-looking statements before its next required filing with the Securities and Exchange Commission.

For further information, please contact Philip Reed, Vice President of Marketing, at (901) 348-4257, or visit our Web site at www.nwairlink.com.

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Pinnacle Airlines Corp.
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)

	Three Months Ended June 30,
	2006			2005
Operating revenues
Regional airline services	$	202,811		$	210,958
Other		1,703			1,941
Total operating revenues		204,514			212,899
Operating expenses
Salaries, wages and benefits		35,593			33,027
Aircraft fuel		27,211			28,643
Aircraft maintenance, materials and repairs		7,996			8,835
Aircraft rentals		66,031			69,589
Other rentals and landing fees		11,223			11,062
Ground handling services		21,765			23,125
Depreciation		967			1,016
Other		12,885			14,821
Provision for losses associated with bankruptcy filings of Northwest and Mesaba		1,348			—
Total operating expenses		185,019			190,118
Operating income		19,495			22,781
Operating income as a percentage of operating revenues		9.5	%		10.7	%
Nonoperating income (expense)
Interest expense		(1,452	)		(1,069	)
Interest income		645			261
Miscellaneous income, net		23			—
Total nonoperating expense		(784	)		(808	)
Income before income taxes		18,711			21,973
Income tax expense		6,820			8,177
Net income	$	11,891		$	13,796
Basic and diluted earnings per share	$	0.54		$	0.63
Shares used in computing basic earnings per share		21,945			21,908
Shares used in computing diluted earnings per share		21,984			21,932

Pinnacle Airlines Corp.
Condensed Consolidated Statements of Income (Unaudited)
(in thousands, except per share data)

	Six Months Ended June 30,
	2006			2005
Operating revenues
Regional airline services	$	407,816		$	403,709
Other		3,787			3,922
Total operating revenues		411,603			407,631
Operating expenses
Salaries, wages and benefits		70,020			64,509
Aircraft fuel		53,912			54,105
Aircraft maintenance, materials and repairs		18,258			16,073
Aircraft rentals		132,062			132,895
Other rentals and landing fees		22,474			21,204
Ground handling services		44,124			45,789
Depreciation		1,929			1,978
Other		26,435			28,226
Provision for losses associated with bankruptcy filings of Northwest and Mesaba		1,365			—
Total operating expenses		370,579			364,779
Operating income		41,024			42,852
Operating income as a percentage of operating revenues		10.0	%		10.5	%
Nonoperating income (expense)
Interest expense		(2,952	)		(2,157	)
Interest income		1,149			417
Miscellaneous income, net		51			—
Gain on extinguishment of debt		—			18,000
Total nonoperating income (expense)		(1,752	)		16,260
Income before income taxes		39,272			59,112
Income tax expense		14,085			21,984
Net income	$	25,187		$	37,128
Basic and diluted earnings per share	$	1.15		$	1.69
Shares used in computing basic earnings per share		21,945			21,908
Shares used in computing diluted earnings per share		21,979			21,930

Pinnacle Airlines Corp.
Condensed Consolidated Balance Sheets
(in thousands, except share data)

	June 30,			December 31,
	2006			2005
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	32,790		$	31,567
Short-term investments		45,450			44,160
Receivables, net of allowance		29,968			30,190
Spare parts and supplies, net		6,847			6,368
Prepaid expenses and other assets		11,349			5,623
Deferred income taxes, net of allowance		9,781			9,146
Total current assets		136,185			127,054
Property and equipment
Aircraft and rotable spares		39,050			39,362
Other property and equipment		20,586			19,209
Office furniture and fixtures		2,018			2,002
		61,654			60,573
Less accumulated depreciation		(19,922	)		(18,038	)
Net property and equipment		41,732			42,535
Other assets, primarily aircraft deposits		22,010			22,155
Debt issuance costs, net		4,088			4,198
Contractual rights under airline services agreement, net		13,834			14,435
Goodwill, net		18,422			18,422
Total assets	$	236,271		$	228,799

Pinnacle Airlines Corp.
Condensed Consolidated Balance Sheets
(in thousands, except share data)

	June 30,			December 31,
	2006			2005
	(Unaudited)
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	14,662		$	12,945
Accrued expenses		25,066			25,158
Line of credit with First Tennessee		—			17,000
Income taxes payable		14,231			17,756
Other current liabilities		6,818			7,161
Total current liabilities		60,777			80,020
Deferred income taxes		7,736			7,426
Other liabilities		2,677			1,735
Senior convertible notes		121,000			121,000
Commitments and contingencies
Stockholders’ equity
Preferred stock, par value $0.01 per share; 1,000,000 shares authorized, no shares issued		—			—
Series A preferred stock, stated value $100 per share; one share authorized and issued		—			—
Series common stock, par value $0.01 per share; 5,000,000 shares authorized; no shares issued		—			—
Common stock, $0.01 par value; 40,000,000 shares authorized, 22,080,585 and 21,945,260 shares issued, respectively		221			219
Additional paid-in capital		85,824			85,550
Accumulated deficit		(41,964	)		(67,151	)
Total stockholders’ equity		44,081			18,618
Total liabilities and stockholders’ equity	$	236,271		$	228,799

Pinnacle Airlines Corp.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)

	Six Months Ended June 30,
	2006			2005
Cash provided by operating activities	$	21,101		$	31,689
Cash used in investing activities		(2,878	)		(9,604	)
Cash (used in) provided by financing activities		(17,000	)		9,490
Net increase in cash and cash equivalents		1,223			31,575
Cash and cash equivalents at beginning of period		31,567			34,912
Cash and cash equivalents at end of period	$	32,790		$	66,487

Pinnacle Airlines Corp.
Reconciliation of Non-GAAP Disclosures (Unaudited)

	Three Months Ended June 30,
							% Increase
	2006			2005			(Decrease)
	(in thousands, except per share data)
Operating Income:
Operating income in accordance with GAAP	$	19,495		$	22,781			(14	%)
Add: Pilot post-retirement liability		1,377			—			100	%
Add: Provision for losses associated with Northwest and Mesaba bankruptcy filings		1,348			—			100	%
Non-GAAP operating income	$	22,220		$	22,781			(2	%)
Operating Margin:
Operating margin in accordance with GAAP		9.5	%		10.7	%	(1.2) pts.
Add: Pilot post-retirement liability		0.7	%		0.0	%	0.7 pts.
Add: Provision for losses associated with Northwest and Mesaba bankruptcy filings		0.7	%		0.0	%	�� 0.7 pts.
Non-GAAP operating margin		10.9	%		10.7	%	0.2 pts.
Net Income:
Net income in accordance with GAAP	$	11,891		$	13,796			(14	%)
Add: Pilot post-retirement liability, net of related tax		883			—			100	%
Add: Provision for losses associated with Northwest and Mesaba bankruptcy filings, net of related tax		785			—			100	%
Non-GAAP net income	$	13,559		$	13,796			(2	%)
Basic and Diluted EPS:
Basic and diluted EPS in accordance with GAAP	$	0.54		$	0.63			(14	%)
Add: Pilot post-retirement liability, net of related tax		0.04			—			100	%
Add: Provision for losses associated with Northwest and Mesaba bankruptcy filings, net of related tax		0.04			—			100	%
Non-GAAP basic and diluted EPS	$	0.62		$	0.63			(2	%)

Pinnacle Airlines Corp.
Reconciliation of Non-GAAP Disclosures (Unaudited)

	Six Months Ended June 30,
							% Increase
	2006			2005			(Decrease)
	(in thousands, except per share data)
Operating Income:
Operating income in accordance with GAAP	$	41,024		$	42,852			(4	%)
Add: Pilot post-retirement liability		1,377			—			100	%
Add: Provision for losses associated with Northwest and Mesaba bankruptcy filings		1,365			—			100	%
Non-GAAP operating income	$	43,766		$	42,852			2	%
Operating Margin:
Operating margin in accordance with GAAP		10.0	%		10.5	%	(0.5) pts.
Add: Pilot post-retirement liability		0.3	%		0.0	%	0.3 pts.
Add: Provision for losses associated with Northwest and Mesaba bankruptcy filings		0.3	%		0.0	%	0.3 pts.
Non-GAAP operating margin		10.6	%		10.5	%	0.1 pts.
Net Income:
Net income in accordance with GAAP	$	25,187		$	37,128			(32	%)
Add: Pilot post-retirement liability, net of related tax		883			—			100	%
Add: Provision for losses associated with Northwest and Mesaba bankruptcy filings, net of related tax		866			—			100	%
Deduct: Gain on repurchase of debt, net of related tax		—			(11,302	)		100	%
Non-GAAP net income	$	26,936		$	25,826			4	%
Basic and Diluted EPS:
Basic and diluted EPS in accordance with GAAP	$	1.15		$	1.69			(32	%)
Add: Pilot post-retirement liability, net of related tax		0.04			—			100	%
Add: Provision for losses associated with Northwest and Mesaba bankruptcy filings, net of related tax		0.04			—			100	%
Deduct: Gain on repurchase of debt, net of related tax		—			(0.51	)		100	%
Non-GAAP basic and diluted EPS	$	1.23		$	1.18			4	%

Pinnacle Airlines Corp.
Operating Statistics (Unaudited)

	Three Months Ended June 30,
	2006			2005			Change
Other Data:
Revenue passengers (in thousands)		2,340			2,111			11	%
Revenue passenger miles (in thousands) (1)		1,111,012			1,086,890			2	%
Available seat miles (in thousands)		1,371,539			1,482,481			(8	)%
Passenger load factor (2)		81.0	%		73.3	%	7.7pts.
Operating revenue per available seat mile (in cents)		14.91			14.36			4	%
Operating costs per available seat mile (in cents)		13.49			12.82			5	%
Operating revenue per block hour	$	1,977		$	1,930			2	%
Operating costs per block hour	$	1,788		$	1,724			4	%
Block hours		103,471			110,301			(6	)%
Cycles		63,053			63,998			(2	)%
Average daily utilization (block hours)		9.17			9.26			(1	)%
Average stage length (miles)		467			504			(7	)%
Number of operating aircraft (end of period)		124			137			(10	)%
Employees (end of period)		3,567			3,564			0	%
	Six Months Ended June 30,
	2006			2005			Change
Other Data:
Revenue passengers (in thousands)		4,355			3,780			15	%
Revenue passenger miles (in thousands) (1)		2,082,817			1,904,552			9	%
Available seat miles (in thousands)		2,713,207			2,770,981			(2	)%
Passenger load factor (2)		76.8	%		68.7	%	8.1pts.
Operating revenue per available seat mile (in cents)		15.17			14.71			3	%
Operating costs per available seat mile (in cents)		13.66			13.16			4	%
Operating revenue per block hour	$	1,997		$	1,937			3	%
Operating costs per block hour	$	1,798		$	1,733			4	%
Block hours		206,068			210,444			(2	)%
Cycles		124,318			121,094			3	%
Average daily utilization (block hours)		9.18			9.29			(1	)%
Average stage length (miles)		470			498			(6	)%
Number of operating aircraft (end of period)		124			137			(10	)%
Employees (end of period)		3,567			3,564			0	%

(1) Revenue passenger miles represents the number of miles flown by revenue passengers.
(2) Passenger load factor equals revenue passenger miles divided by available seat miles.