EXHIBIT 99.1
PINNACLE AIRLINES REPORTS SECOND QUARTER EARNINGS OF $13.8 MILLION
MEMPHIS, TENN. August 1, 2005 -- Pinnacle Airlines Corp. (NASDAQ: PNCL) today
reported second quarter 2005 fully diluted earnings per share ("EPS") of $0.63,
an increase of 43% over fully diluted EPS of $0.44 in the second quarter of
2004. Net income was $13.8 million, an increase of 42% over the second quarter
of 2004. Operating margin was 10.7% for the three months ended June 30, 2005 and
11.1% for the same period in 2004.
The year-over-year increase in earnings was primarily attributable to a
significant growth in capacity. In the second quarter of 2005, Pinnacle
completed 110,301 block hours and 63,998 cycles, increases of 46% and 32%,
respectively, over the same period in 2004. Pinnacle ended the second quarter of
2005 with 137 CRJ aircraft in its fleet, 36 more than at June 30, 2004. With the
addition of two CRJ aircraft during July 2005, Pinnacle is now operating 139 CRJ
aircraft, the total number currently provided for under its operating agreement
with Northwest Airlines ("Northwest").
For the six months ended June 30, 2005, the Company produced operating income of
$42.9 million and an operating margin of 10.5%. Net income for the same period
was $37.1 million, or fully diluted EPS of $1.69. Excluding a nonrecurring gain
in the first quarter from the repurchase of its note payable to Northwest, the
Company reported net income of $25.8 million, or fully diluted EPS of $1.18, an
increase of 46% over fully diluted EPS of $0.81 in the same period in 2004.
"This quarter marks our tenth consecutive quarter of strong financial
performance under our Airline Services Agreement with Northwest," said Phil
Trenary, President and Chief Executive Officer. "We continue to provide our
Customers with a valuable product, and I am proud of the work our People perform
for Northwest day in and day out."
In May 2005, Pinnacle announced that it expected to incur certain operational
performance penalties for the six months ended June 30, 2005 under its ASA with
Northwest. Pinnacle's operating performance during May and June exceeded the
Company's high expectations, and as a result, the Company did not record any net
penalties related to its operating performance during the second quarter.
During the quarter, Pinnacle placed a new $17.0 million revolving credit
facility with First Tennessee Bank, replacing the revolving credit agreement
with Northwest that was set to expire on June 30, 2005. Advances under the
credit facility will accrue interest at First Tennessee Bank's base rate, or, at
Pinnacle's option, at LIBOR plus 2.50%. The revolving credit facility is a
one-year commitment that is secured by Pinnacle's inventory of spare parts,
ground equipment, and furniture and fixtures and also contains various financial
covenants standard for this type of agreement. As of June 30, 2005, Pinnacle had
no outstanding borrowings under its new revolving credit facility.
Pinnacle ended the quarter with $66.5 million in cash and cash equivalents, an
increase of $31.6 million over the balance at December 31, 2004. The increase
was attributable primarily to cash flow from operations and the sale of the
Company's 3.25% senior convertible notes due 2025.
Additional information regarding Pinnacle's results for the second quarter and
other current developments, including those relating to Northwest, are included
in its Form 10-Q that will be filed shortly with the Securities and Exchange
Commission.
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 net income and EPS for the six months
ended June 30, 2005 excluding the nonrecurring gain on extinguishment of the
note payable with Northwest. The Company believes that this information is
useful to investors as it indicates more clearly the Company's comparative
year-to-year 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
and the focus cities of Indianapolis and Milwaukee. Pinnacle currently operates
an all-jet fleet of 139 Canadair Regional Jets and offers scheduled passenger
service with 742 daily departures to 111 cities in 37 states and four Canadian
provinces. Pinnacle Airlines maintains its headquarters in Memphis, Tennessee,
and employs approximately 3,600 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 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 contact Philip Reed at (901) 348-4257, or visit
our Web site at www.nwairlink.com.
# # #
PINNACLE AIRLINES CORP.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED JUNE 30,
---------------------------
2005 2004
--------- ---------
Operating revenues
Regional airline services $ 210,958 $ 151,654
Other 1,941 519
--------- ---------
Total operating revenues 212,899 152,173
Operating expenses
Salaries, wages and benefits 33,027 24,880
Aircraft fuel 28,643 19,527
Aircraft maintenance, materials and repairs 8,835 5,869
Aircraft rentals 69,589 50,062
Other rentals and landing fees 11,062 8,858
Ground handling services 23,125 14,850
Depreciation 1,016 769
Other 14,821 10,448
--------- ---------
Total operating expenses 190,118 135,263
--------- ---------
Operating income 22,781 16,910
Operating income as a percentage of operating revenues 10.7% 11.1%
Nonoperating income (expense)
Interest expense (1,069) (1,252)
Interest income 261 59
Miscellaneous income, net - 230
--------- ---------
Total nonoperating expense (808) (963)
--------- ---------
Income before income taxes 21,973 15,947
Income tax expense 8,177 6,249
--------- ---------
Net income $ 13,796 $ 9,698
========= =========
Basic and diluted earnings per share $ 0.63 $ 0.44
========= =========
Shares used in computing basic earnings per share 21,908 21,892
========= =========
Shares used in computing diluted earnings per share 21,932 21,892
========= =========
PINNACLE AIRLINES CORP.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
SIX MONTHS ENDED JUNE 30,
---------------------------
2005 2004
--------- ---------
Operating revenues
Regional airline services $ 403,709 $ 285,041
Other 3,922 1,011
--------- ---------
Total operating revenues 407,631 286,052
Operating expenses
Salaries, wages and benefits 64,509 48,099
Aircraft fuel 54,105 36,067
Aircraft maintenance, materials and repairs 16,073 11,515
Aircraft rentals 132,895 93,682
Other rentals and landing fees 21,204 16,935
Ground handling services 45,789 28,353
Depreciation 1,978 1,490
Other 28,226 18,657
--------- ---------
Total operating expenses 364,779 254,798
--------- ---------
Operating income 42,852 31,254
Operating income as a percentage of operating revenues 10.5% 10.9%
Nonoperating income (expense)
Interest expense (2,157) (2,540)
Interest income 417 112
Miscellaneous income, net - 315
Gain on extinguishment of debt 18,000 -
--------- ---------
Total nonoperating income (expense) 16,260 (2,113)
--------- ---------
Income before income taxes 59,112 29,141
Income tax expense 21,984 11,389
--------- ---------
Net income $ 37,128 $ 17,752
========= =========
Basic and diluted earnings per share $ 1.69 $ 0.81
========= =========
Shares used in computing basic earnings per share 21,908 21,892
========= =========
Shares used in computing diluted earnings per share 21,930 21,899
========= =========
PINNACLE AIRLINES CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
JUNE 30, DECEMBER 31,
2005 2004
----------- ------------
(UNAUDITED)
ASSETS
Current assets
Cash and cash equivalents $ 66,487 $ 34,912
Receivables, net 28,416 25,139
Spare parts and supplies, net 6,034 5,341
Prepaid expenses and other assets 7,442 5,644
Deferred income taxes 967 860
---------- -----------
Total current assets 109,346 71,896
Property and equipment
Aircraft and rotable spares 37,758 35,837
Other property and equipment 18,363 16,161
Office furniture and fixtures 1,934 1,863
---------- -----------
58,055 53,861
Less accumulated depreciation (16,389) (14,445)
---------- -----------
Net property and equipment 41,666 39,416
Other assets, primarily aircraft deposits 24,601 21,111
Debt issuance costs, net 4,306 -
Contractual rights under airline services agreement, net 15,027 15,115
Costs in excess of net assets acquired, net 18,422 18,422
---------- -----------
Total assets $ 213,368 $ 165,960
========== ===========
PINNACLE AIRLINES CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
JUNE 30, DECEMBER 31,
2005 2004
---------- ------------
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities
Accounts payable $ 19,214 $ 16,983
Accrued expenses 19,449 15,083
Income taxes payable 13,108 1,633
Other current liabilities 1,834 6,756
---------- -----------
Total current liabilities 53,605 40,455
Deferred income taxes 8,209 7,105
Other liabilities 636 948
Senior convertible notes 121,000 -
Note payable and line of credit - 125,000
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 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, 21,945,260 and
21,950,260 shares issued, respectively 219 220
Additional paid-in capital 85,549 85,603
Accumulated deficit (55,721) (92,849)
Unearned compensation on restricted stock (129) (522)
---------- -----------
Total stockholders' equity (deficiency) 29,918 (7,548)
---------- -----------
Total liabilities and stockholders' equity (deficiency) $ 213,368 $ 165,960
========== ===========
PINNACLE AIRLINES CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
SIX MONTHS ENDED JUNE 30,
-------------------------
2005 2004
-------- --------
Cash provided by operating activities $ 31,689 $ 16,735
Cash used in investing activities (9,604) (1,705)
Cash provided by (used in) financing activities 9,490 (6,000)
-------- --------
Net increase in cash and cash equivalents 31,575 9,030
Cash and equivalents at beginning of period 34,912 31,523
-------- --------
Cash and equivalents at end of period $ 66,487 $ 40,553
======== ========
PINNACLE AIRLINES CORP.
OPERATING STATISTICS (UNAUDITED)
THREE MONTHS ENDED JUNE 30,
-------------------------------------
2005 2004 CHANGE
---------- ---------- ---------
OTHER DATA:
Revenue passengers (in thousands) 2,111 1,618 30%
Revenue passenger miles (in thousands) (1) 1,086,890 725,980 50%
Available seat miles (in thousands) 1,482,481 988,958 50%
Passenger load factor (2) 73.3% 73.4% (0.1) pts
Operating revenue per available seat mile (in cents) 14.36 15.39 (7%)
Operating costs per available seat mile (in cents) 12.82 13.68 (6%)
Operating revenue per block hour $ 1,930 $ 2,011 (4%)
Operating costs per block hour $ 1,724 $ 1,788 (4%)
Block hours 110,301 75,666 46%
Cycles 63,998 48,347 32%
Average daily utilization (block hours) 9.26 8.78 0.48 hrs
Average stage length (miles) 504 449 12%
Number of operating aircraft (end of period) 137 101 36%
Employees (end of period) 3,564 2,477 44%
SIX MONTHS ENDED JUNE 30,
-------------------------------------
2005 2004 CHANGE
---------- ---------- ---------
OTHER DATA:
Revenue passengers (in thousands) 3,780 2,847 33%
Revenue passenger miles (in thousands) (1) 1,904,552 1,239,077 54%
Available seat miles (in thousands) 2,770,981 1,807,647 53%
Passenger load factor (2) 68.7% 68.5% 0.2 pts
Operating revenue per available seat mile (in cents) 14.71 15.82 (7%)
Operating costs per available seat mile (in cents) 13.16 14.10 (7%)
Operating revenue per block hour $ 1,937 $ 2,037 (5%)
Operating costs per block hour $ 1,733 $ 1,814 (4%)
Block hours 210,444 140,435 50%
Cycles 121,094 90,532 34%
Average daily utilization (block hours) 9.29 8.72 0.57 hrs
Average stage length (miles) 498 435 14%
Number of operating aircraft (end of period) 137 101 36%
Employees (end of period) 3,564 2,477 44%
(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.
PINNACLE AIRLINES CORP.
RECONCILIATION OF NON-GAAP DISCLOSURES (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
SIX MONTHS ENDED JUNE 30,
---------------------------------------
2005 2004 % INCREASE
---------- ---------- ----------
(IN THOUSANDS)
NET INCOME
Net income in accordance with GAAP $ 37,128 $ 17,752 109%
Deduct: Gain on extinguishment of debt, net of related tax (11,302) --
---------- ---------- ----------
Net income excluding gain on extinguishment of debt $ 25,826 $ 17,752 45%
========== ========== ==========
BASIC AND DILUTED EPS
Basic and diluted EPS in accordance with GAAP $ 1.69 $ 0.81 109%
Deduct: Gain on extinguishment of debt, net of related tax (0.51) --
---------- ---------- ----------
Basic and diluted EPS excluding gain on extinguishment
of debt $ 1.18 $ 0.81 46%
========== ========== ==========