First-quarter profits at Pinnacle Airlines Corp, owner of Pinnacle Airlines and Colgan Air, soared on the strength of a favorable tax settlement and the steady performance of its regional airlines.
Officials at Memphis-based Pinnacle on Thursday reported net income of $18.8 million, including a $16.5 million boost from the income tax issue.
Pinnacle also reported the airlines operation's improvement over the first quarter 2008 was still solid: a 114 percent increase in earnings. Stock analysts had predicted much lower earnings figures.
Vice president and chief financial officer Peter Hunt said the previously announced resolution of an IRS examination of 2003, 2004 and 2005 taxes meant Pinnacle had to pay substantially less tax than had been held in reserve.
Hunt said officials expect utilization of aircraft to be down slightly through the rest of 2009. Pinnacle is taking its Delta Connection planes out of service one by one to be repainted in Delta's livery.
Hunt said integration issues related to Pinnacle's CRJ-200 aircraft are being worked out with Delta. When Delta and Northwest merged last fall, Pinnacle was a major provider of Northwest Airlink commuter flights.
In response to a question from analyst Bob McAdoo of Avondale Partners, Hunt said Pinnacle hasn't felt pressure from Delta to reduce capacity. "We're not really seeing pressure from Delta to purposefully reduce our capacity," Hunt said.
McAdoo said Pinnacle is on sound footing because of its contracts with mainline carriers to provide service to smaller airports.
"The vast majority of [Pinnacle’s] business is going to continue to pay off no matter what because of the contracts," McAdoo said.
