EXHIBIT 99.1
PINNACLE AIRLINES REPORTS THIRD QUARTER EARNINGS OF $12.6 MILLION
MEMPHIS, TENN. October 28, 2004--Pinnacle Airlines Corp. (NASDAQ: PNCL) today
reported third quarter operating revenue of $168.1 million, resulting in revenue
growth over the comparable period in 2003 of 40%. The company produced operating
income of $18.5 million, an operating margin of 11.0%, and net income of $12.6
million, or diluted earnings per share ("EPS") of $0.58.
Operating revenue for the nine months ended September 30, 2004 was $454.1
million, resulting in revenue growth over the comparable period in 2003 of 38%.
The company produced operating income of $49.8 million, an operating margin of
11.0%, and net income of $30.4 million, or diluted EPS of $1.39.
Interest expense for the third quarter of 2004 decreased by $0.8 million
compared to the same period in 2003 due primarily to decreased borrowings from
Northwest.
Income tax expense for the three months ended September 30, 2004 decreased by
$1.4 million over the same period in 2003, due primarily to a $1.7 million
reduction in amounts previously estimated for 2004 and 2003 income taxes.
The Company's available seat miles ("ASMs") increased by 58%, block hours
increased by 56%, and cycles increased by 42% during the three months ended
September 30, 2004, compared to the same period in 2003. The Company's ASMs
increased by 58%, block hours increased by 53%, and cycles increased by 38%
during the nine months ended September 30, 2004, compared to the same period in
2003. The term "block hours" refers to the elapsed time between an aircraft
leaving a gate and arriving at a gate, and the term "cycles" refers to an
aircraft's departure and corresponding arrival. The increases were driven
primarily by the growth in the Company's fleet of Canadair Regional Jets
("CRJs"), 8 of which were added during the three months ended September 30,
2004. By adding 39 aircraft since September 30, 2003, the Company has grown its
fleet by 56% to include 109 CRJs at September 30, 2004.
In connection with its Initial Public Offering of stock in November 2003,
Pinnacle and Northwest Airlines amended their operating agreement to grow the
Company's fleet to 129 CRJs by the end of 2005, extend their agreement through
2017 and lower the target operating margin provided in the agreement from 14% to
10%. Under the 14% target margin in effect during the three months ended
September 30, 2003, the Company recorded passenger revenue of $118.5 million and
operating income of $16.6 million, an operating margin of 13.8%, and net income
of $8.7 million, or diluted EPS of $0.40. If the reduced target margin had been
in effect during 2003, Pinnacle's growth during the third quarter of 2004 in
passenger revenue and operating income would have been approximately 48% and
64%, respectively, compared to the same period in 2003.
The company generated $25.6 million of cash from operations during the nine
months ended September 30, 2004 and had $38.1 million in cash and cash
equivalents on September 30, 2004.
"Pinnacle experienced yet another quarter of exceptional growth," said Philip H.
Trenary, President and Chief Executive Officer. "Despite the ongoing challenges
we face in the regional airline industry, our People continue to perform at
superior levels, as evidenced by our above-plan financial results for the
quarter. Our focus on productivity remains the primary driver behind lower than
expected costs."
Pinnacle's third quarter results will be discussed in more detail on October 28,
2004, at 2:00 p.m. CST via teleconference. The live audio Webcast of the call
will be available on Pinnacle's Web site at www.nwairlink.com. There will also
be a replay of the call available beginning at approximately 5:30 p.m. CST at
the same Web address.
The Company's Form 10-Q for the quarter ended September 30, 2004, including
exhibits, will be available on the Company's website at www.nwairlink.com
beginning October 28, 2004.
Non-GAAP Disclosures
This release, and certain tables accompanying this release, includes certain
financial information not prepared in accordance with generally accepted
accounting principles ("GAAP"), regarding passenger revenue and operating income
for the third quarter of 2003 as if the target operating margin under the
agreement with Northwest had been 10%. The Company believes that this
information is useful to investors as it indicates more clearly the Company's
comparative year-to-year operating results. Management may also use this
information to better understand the Company's underlying operating results.
None of this information should be considered a substitute for any measures
prepared in accordance with GAAP. The Company 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. The Company operates as a Northwest Airlink carrier at
Northwest's domestic hub airports in Detroit, Minneapolis/St. Paul and Memphis.
Pinnacle currently operates an all-jet fleet of 109 Canadair Regional Jets from
Northwest hubs at Detroit, Memphis and Minneapolis - St. Paul and offers
scheduled passenger service with 636 daily departures to 100 cities in 34 states
plus the District of Columbia, and four Canadian provinces. Pinnacle Airlines
maintains its headquarters in Memphis, Tenn., and employs more than 2,800
People.
Forward Looking Statement
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 the Company 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. The Company does not
intend to update these forward looking statements before its next required
filing with the Securities and Exchange Commission.
For further information, please visit our web-site at www.nwairlink.com.
# # #
PINNACLE AIRLINES CORP.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<Table>
<Caption>
THREE MONTHS ENDED SEPTEMBER 30,
----------------------------------------
2004 2003
------------------ ------------------
Operating revenues:
Passenger $ 167,063 $ 118,487
Other 1,023 1,178
------------------ ------------------
Total operating revenues 168,086 119,665
Operating expenses:
Salaries, wages and benefits 27,425 22,265
Aircraft fuel 22,816 14,881
Aircraft maintenance, materials and repairs 5,412 3,695
Aircraft rentals 55,290 35,432
Other rentals and landing fees 10,047 7,450
Ground handling services 17,777 11,707
Depreciation and amortization 812 767
Government reimbursements - (114)
Other 9,982 7,011
------------------ ------------------
Total operating expenses 149,561 103,094
------------------ ------------------
Operating income 18,525 16,571
Operating income as a percentage of operating revenue 11.0% 13.8%
Nonoperating (expense) income
Interest expense, net (1,129) (1,883)
Miscellaneous (expense) income, net (7) 188
------------------ ------------------
Total nonoperating expense (1,136) (1,695)
------------------ ------------------
Income before income taxes 17,389 14,876
Income tax expense 4,740 6,138
------------------ ------------------
Net income $ 12,649 $ 8,738
================== ==================
Basic and diluted earnings per share $ 0.58 $ 0.40
================== ==================
Shares used in computing basic and diluted earnings per share 21,892 21,892
================== ==================
</Table>
PINNACLE AIRLINES CORP.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<Table>
<Caption>
NINE MONTHS ENDED SEPTEMBER 30,
-----------------------------------------
2004 2003
------------------- ------------------
Operating revenues:
Passenger $ 452,104 $ 324,653
Other 2,034 5,023
------------------- ------------------
Total operating revenues 454,138 329,676
Operating expenses:
Salaries, wages and benefits 75,524 61,963
Aircraft fuel 58,883 38,864
Aircraft maintenance, materials and repairs 16,927 9,926
Aircraft rentals 148,972 97,987
Other rentals and landing fees 26,982 21,419
Ground handling services 46,130 31,715
Depreciation and amortization 2,302 2,232
Government reimbursements (1,114)
-
Other 28,639 20,077
------------------- ------------------
Total operating expenses 404,359 283,069
Operating income 49,779 46,607
Operating income as a percentage of operating revenue 11.0% 14.1%
Nonoperating (expense) income
Interest expense, net (3,558) (5,443)
Miscellaneous income, net 309 213
------------------- ------------------
Total nonoperating expense (3,249) (5,230)
------------------- ------------------
41,377
Income before income taxes 46,530
Income tax expense 16,129 16,116
------------------- ------------------
Net income $ 30,401 $ 25,261
=================== ==================
Basic earnings per share $ 1.39 $ 1.15
=================== ==================
Diluted earnings per share $ 1.39 $ 1.15
=================== ==================
Shares used in computing basic earnings per share 21,892 21,892
=================== ==================
Shares used in computing diluted earnings per share 21,897 21,892
=================== ==================
</Table>
PINNACLE AIRLINES CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<Table>
<Caption>
SEPTEMBER 30, DECEMBER 31,
2004 2003
------------------ ------------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 38,094 $ 31,523
Receivables, principally from Northwest, net 21,875 17,524
Spare parts and supplies, net 4,401 3,773
Prepaid expenses and other assets 6,339 6,810
Deferred income taxes 900 2,549
------------------ ------------------
Total current assets 71,609 62,179
Property and equipment:
Aircraft and rotable spares 34,467 32,779
Other property and equipment 15,356 14,081
Office furniture and fixtures 1,280 1,258
------------------ ------------------
51,103 48,118
Less accumulated depreciation (13,746) (13,832)
------------------ ------------------
Net property and equipment 37,357 34,286
Other assets, primarily aircraft deposits with Northwest 19,543 14,019
Cost in excess of net assets acquired, net 18,422 18,422
------------------ ------------------
Total assets $ 146,931 $ 128,906
================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) Current liabilities:
Accounts payable $ 14,225 $ 9,798
Accrued expenses 13,227 11,622
Line of credit 5,000 10,000
Income taxes payable 455 5,596
Current portion of deferred credits 494 434
Current portion of note payable to Northwest 12,000 12,000
------------------ -------------------
Total current liabilities 45,401 49,450
Deferred credits 997 1,438
Deferred income taxes 7,477 6,400
Note payable to Northwest 111,000 120,000
Capital lease obligations 37
-
Commitments and contingencies Stockholders' equity (deficiency):
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, issued and outstanding - -
Series common stock, par value $0.01 per share; 5,000,000 shares
authorized; no shares issued - -
Common stock, $0.01 par value:
Authorized shares - 40,000,000
Issued and outstanding shares - 21,892,060 219 219
Additional paid-in capital 84,973 84,973
Retained earnings (accumulated deficit) (103,173) (133,574)
------------------ -------------------
Total stockholders' equity (deficiency) (17,981) (48,382)
------------------ -------------------
Total liabilities and stockholders' equity (deficiency) $ 146,931 $ 128,906
================== ===================
PINNACLE AIRLINES CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<Table>
<Caption>
NINE MONTHS ENDED SEPTEMBER 30,
-----------------------------------------
2004 2003
------------------ ------------------
OPERATING ACTIVITIES
Net income $ 30,401 $ 25,261
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization 2,302 2,232
(Gain) loss on disposal of equipment and rotable spares (132) 67
Deferred income taxes 2,726 769
Provision for spare parts and supplies obsolescence 123 81
Reduction of deferred credits (381) (132)
Changes in operating assets and liabilities:
Receivables (4,351) (10,806)
Spare parts and supplies (927) (601)
Prepaid expenses and other current assets 471 8,137
Other assets, primarily aircraft deposits with Northwest
(5,524) (3,325)
Accounts payable and accrued expenses 5,989 (1,015)
Income taxes payable (5,141) 4,896
------------------ ------------------
Cash provided by operating activities 25,556 25,564
INVESTING ACTIVITIES
Purchases of property and equipment (5,938) (9,965)
Proceeds from the sale of property and equipment 960
-
------------------ ------------------
Cash used in investing activities (4,978) (9,965)
FINANCING ACTIVITIES
Payments on long-term debt (9,000) (15,000)
Repayments on line of credit with bank (4,245)
-
(Repayments) borrowings under line of credit with Northwest 24,800
(5,000)
Payments on capital lease obligation (7)
-
------------------ ------------------
Cash (used in) provided by financing activities (14,007) 5,555
Net increase in cash and cash equivalents 6,571 21,154
Cash and cash equivalents at beginning of period 31,523 4,580
------------------ ------------------
Cash and cash equivalents at end of period $ 38,094 $ 25,734
================== ==================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid $ 4,766 $ 5,576
Income tax payments $ 19,146 $ 10,338
OTHER NON-CASH TRANSACTIONS
Note payable issued to Northwest as a dividend $ - $ 200,000
Settlement of accounts with Northwest as a dividend $ - $ 15,500
Property acquired through a capital lease obligation $ 87 $ -
</Table>
PINNACLE AIRLINES CORP.
RECONCILIATION OF NON-GAAP DISCLOSURES (UNAUDITED)
(IN THOUSANDS)
<Table>
<Caption>
THREE MONTHS ENDED SEPTEMBER 30,
-----------------------------------------------
2004 2003 % INCREASE
------------ ------------- --------------
PASSENGER REVENUE
Passenger revenue in accordance with GAAP $167,063 $118,487 41%
Adjustment to reduce target operating margin to 10%
from 14% (5,287)
-
------------ ------------- --------------
Adjusted passenger revenue with 10% target operating margin
$167,063 $113,200 48%
============ ============= ==============
OPERATING INCOME
Operating income in accordance with GAAP $18,525 $16,571 12%
Adjustment to reduce target operating margin to 10% from
14% (5,287)
-
------------ ------------- --------------
Adjusted operating income with 10% target operating margin
$18,525 $11,284 64%
============ ============= ==============
NINE MONTHS ENDED SEPTEMBER 30,
-----------------------------------------------
2004 2003 % INCREASE
------------ ------------- --------------
PASSENGER REVENUE
Passenger revenue in accordance with GAAP $452,104 $324,653 39%
Adjustment to reduce target operating margin to 10% from
14% (14,450)
-
------------ ------------- --------------
Adjusted passenger revenue with 10% target operating margin
$452,104 $310,203 46%
============ ============= ==============
OPERATING INCOME
Operating income in accordance with GAAP $49,779 $46,607 7%
Adjustment to reduce target operating margin to 10% from
14% (14,450)
-
------------ ------------- --------------
Adjusted operating income with 10% target operating margin
$49,779 $32,157 55%
============ ============= ==============
PINNACLE AIRLINES CORP.
OPERATING STATISTICS (UNAUDITED)
<Table>
<Caption>
THREE MONTHS ENDED SEPTEMBER 30,
---------------------------------------------
2004 2003 CHANGE
------------ ------------ ------------
OTHER DATA:
Revenue passengers (in thousands) 1,777 1,256 41%
Revenue passenger miles (in thousands) (1) 827,798 516,851 60%
Available seat miles (in thousands) 1,159,265 732,112 58%
Passenger load factor (2) 71.4% 70.6% 0.8 pts
Operating revenue per available seat mile (in cents) 14.50 16.35 (11%)
Operating costs per available seat mile (in cents) 12.90 14.08 (8%)
Block hours 87,540 56,146 56%
Cycles 54,946 38,746 42%
Average daily utilization (block hours) 9.16 9.07 0.09 hrs
Average length of aircraft flight (miles) 466 397 17%
Number of operating aircraft (end of period) 109 70 56%
Employees at end of period 2,826 2,438 16%
- ------------------------------------------------------------------------------------------------------------
<Table>
<Caption>
NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------------------
2004 2003 CHANGE
------------ ------------ ------------
OTHER DATA:
Revenue passengers (in thousands) 4,625 3,217 44%
Revenue passenger miles (in thousands) (1) 2,066,875 1,250,019 65%
Available seat miles (in thousands) 2,966,912 1,880,168 58%
Passenger load factor (2) 69.7% 66.5% 3.2 pts
Operating revenue per available seat mile (in cents) 15.31 17.53 (13%)
Operating costs per available seat mile (in cents) 13.63 15.06 (9%)
Block hours 227,976 148,937 53%
Cycles 145,478 105,115 38%
Average daily utilization (block hours) 8.88 8.71 0.17 hrs
Average length of aircraft flight (miles) 447 377 19%
Number of operating aircraft (end of period) 109 70 56%
Employees at end of period 2,826 2,438 16%
- ------------------------------------------------------------------------------------------------------------
(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.