Exhibit 99.1
Pinnacle Airlines Reports 2003 Earnings of $35.1 million.
MEMPHIS, TENN. January 28, 2004--Pinnacle Airlines, Corp. (NASDAQ: PNCL) today
reported annual net income of $35.1 million, or $1.60 per share. Net income
increased by $4.3 million, or 13.9%, over 2002 net income of $30.8 million, or
$1.41 per share.
Annual operating revenue in 2003 reached $456.8 million, up 37.8% from the prior
year, yielding operating income of $64.2 million, which increased by $16.5
million, or 34.7%, over 2002 operating income of $47.7 million.
"In 2003 Pinnacle delivered excellent results in every category, " said Philip
Trenary, President and CEO. "Our airline expanded rapidly last year. Through the
outstanding efforts of our People and our management team, our airline continued
to deliver superior operational performance levels and outstanding service to
our Customers. Our financial performance was in-line with our expectations, and
despite the many challenges in the airline industry, our company continues to
perform well."
Pinnacle, which provides regional jet capacity to Northwest Airlines
("Northwest"), successfully completed an Initial Public Offering of its stock in
November 2003. At the time of the offering, Pinnacle and Northwest agreed to
amend their operating agreement to, among other things, extend the term of the
agreement through December 2017 and reduce the target operating margin from 14%
to 10% effective December 1, 2003. Northwest also made a capital contribution of
$50.0 million to Pinnacle at the time of the offering, which was used to reduce
long-term borrowings.
2003 Full Year Operating Results
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Annual operating revenue of $456.8 million increased $125.2 million, or 37.8%,
over 2002 operating revenue of $331.6 million.
In 2003, Pinnacle completed 210,646 block hours, an increase of 59,248, or
39.1%, and 146,898 cycles, an increase of 41,158, or 38.9%. 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.
Net income increased by $4.3 million, or 13.9%, to $35.1 million compared to
$30.8 million for 2002. Interest expense increased by $7.2 million during 2003
and interest income decreased by $2.6 million. The changes in interest expense
and interest income were due primarily to increased borrowings from Northwest.
2003 Fourth Quarter Operating Results
- -------------------------------------
Operating revenue increased 33.4% to $127.1 million, from $95.3 million in the
same period of the prior year.
Completed block hours increased 21,786, or 54.6%, to 61,709 and completed cycles
increased 13,367, or 47.0%, to 41,783.
Operating income increased $1.0 million, or 6.0%, to $17.6 million from $16.6
million in the fourth quarter of 2002. The operating agreement with Northwest
provided a target operating margin of 14% for October and November of the 2003
fourth quarter, which, following the initial public offering, was lowered to
10%, effective December 1, 2003. This change lowered fourth quarter operating
income by $2.0 million.
Fourth quarter net income of $9.8 million was $0.9 million lower than the same
period in 2002. In 2003, interest expense increased $1.7 million and interest
income decreased $0.8 million as compared to the same period in 2002.
Pinnacle added 25 jets to its fleet in 2003, bringing its total to 76 Canadair
Regional Jets ("CRJ"). Of this 25, six CRJs entered the fleet in the fourth
quarter. Pinnacle's fleet growth continues, with 14 CRJs scheduled for delivery
in the first quarter of 2004. Northwest Airlines has committed to providing
Pinnacle with 129 CRJs by the end of 2005.
Capital expenditures for the year ended 2003 were $10.9 million and cash flow
from operations increased $50.0 million. Pinnacle made a $14.8 million payment
in the fourth quarter to reduce borrowings on its line of credit. Pinnacle had
$31.5 million in cash and cash equivalents on December 31, 2003, which is an
increase of $26.9 million over 2002.
For more information regarding changes that occurred in 2003, primarily with
regard to balances between Pinnacle and Northwest, please refer to Pinnacle's
2002 Consolidated Financial Statements and Notes, which are included in the
registration statement filed at the time of the offering.
Pinnacle Airlines, Inc., operates under the name Northwest Airlink and provides
service to destinations in the United States and Canada. Pinnacle operates an
all-jet fleet of Canadair 44 and 50-seat Regional Jets from Northwest hubs at
Detroit, Memphis and Minneapolis - St. Paul. Pinnacle Airlines maintains its
headquarters in Memphis, Tenn., and employs more than 2,400 People.
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 on line from the
Commission. Should one of 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)
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
----------- ------------ ---------- -------------
Operating revenues:
Passenger $ 125,959 $ 93,060 $ 450,611 $ 325,386
Other 1,136 2,228 6,159 6,182
----------- ------------ ---------- -------------
Total operating revenues 127,095 95,288 456,770 331,568
Operating expenses:
Salaries, wages and benefits 21,355 18,319 83,316 69,085
Aircraft fuel and taxes 16,143 9,828 55,007 33,932
Aircraft maintenance, materials and repairs 4,190 2,191 14,116 13,276
Depreciation and amortization 680 1,065 2,912 6,141
Other rentals and landing fees 7,836 6,412 29,255 22,819
Aircraft rentals 38,286 26,018 136,273 87,016
Government reimbursements - - (1,114) -
Other 21,043 14,871 72,836 51,644
----------- ------------ ---------- -------------
Total operating expenses 109,533 78,704 392,601 283,913
----------- ------------ ---------- -------------
Operating income 17,562 16,584 64,169 47,655
Nonoperating (expense) income
Interest (expense) income, net (1,713) 788 (7,157) 2,593
Miscellaneous income 173 21 387 80
----------- ------------ ---------- -------------
Total nonoperating (expense) income (1,540) 809 (6,770) 2,673
----------- ------------ ---------- -------------
Income before income taxes 16,022 17,393 57,399 50,328
Income tax expense 6,216 6,698 22,332 19,543
----------- ------------ ---------- -------------
Net income $ 9,806 $ 10,695 $ 35,067 $ 30,785
=========== ============ ========== =============
Basic and diluted net income per share $ 0.45 $ 0.49 $ 1.60 $ 1.41
=========== ============ ========== =============
Shares used in computing net income per share 21,892 21,892 21,892 21,892
----------- ------------ ---------- -------------
Pinnacle Airlines Corp.
Condensed Consolidated Balance Sheets
(unaudited, in thousands, except share data)
December 31, December 31,
2003 2002
----------------- ------------------
Assets
Current assets:
Cash and cash equivalents $ 31,523 $ 4,580
Receivables, principally traffic from Northwest 17,307 64,818
Expendable aircraft components, net of allowance for obsolescence 3,773 2,822
Prepaid expenses and other assets 6,810 14,592
Deferred income taxes 2,549 2,494
----------------- ------------------
Total current assets 61,962 89,306
Property and equipment:
Aircraft and rotable spares 32,779 24,281
Other property and equipment 14,081 12,679
Office furniture and fixtures 1,258 1,288
----------------- ------------------
48,118 38,248
Less accumulated depreciation (13,832) (11,617)
----------------- ------------------
Net property and equipment: 34,286 26,631
Deposits with Northwest 13,300 8,925
Cost in excess of net assets acquired, net of accumulated amortization 18,422 18,422
----------------- ------------------
Total assets $ 127,970 $ 143,284
================= ==================
Liabilities and stockholders' equity (deficiency)
Current liabilities
Accounts payable $ 9,798 $ 12,672
Accrued expenses 11,621 11,082
Line of credit 10,000 4,245
Income taxes payable to Northwest - 26,843
Income taxes payable 5,596 816
Current portion of deferred credits 217 180
Current portion of note payable to Northwest 12,000 -
----------------- ------------------
Total current Liabilities 49,232 55,838
Deferred credits 719 936
Deferred income taxes 6,400 4,459
Note payable to Northwest 120,000 -
Commitments and contingencies
Stockholders' equity (deficiency)
Common stock, $.01 par value:
Authorized shares - 40,000,000
Issued and outstanding shares - 21,892,060 219 219
Additional paid-in capital 84,973 34,973
Retained earnings (deficit) (133,573) 46,859
----------------- ------------------
Total stockholders' equity (deficiency) (48,381) 82,051
----------------- ------------------
Total liabilities and stockholders' equity (deficiency) $ 127,970 $ 143,284
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Pinnacle Airlines Corp.
Condensed Consolidated Statements of Cash Flows
(unaudited, in thousands)
Twelve Months Ended
December 31,
2003 2002
---------------- ----------------
Cash provided by operating activities $ 50,082 $ (45)
Cash used in investing activities (10,894) (4,416)
Cash provided by (used in) financing activities (12,245) 7,150
---------------- ----------------
Net increase in cash and cash equivalents 26,943 2,689
Cash and cash equivalents at beginning of year 4,580 1,891
---------------- ----------------
Cash and cash equivalents at end of year $ 31,523 $ 4,580
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