The Delta commuter partner will bring hundreds of employees from its Memphis location.
The Pinnacle announcement means several hundred employees from Memphis will move into vacant office space leased by Delta in the Building C Tower at 34th Avenue S. and Interstate 494. Pinnacle, which will occupy five floors, said Thursday it expects to move to MSP by May.
The move will be a homecoming for Pinnacle CEO John Spanjers, who served as head of Eagan-based Mesaba Airlines before it was acquired by Pinnacle in 2010. It also means that Minnesota will once again be headquarters to two airlines. The other carrier is Mendota Heights-based Sun Country Airlines, which dubbed itself the "hometown airline" after Northwest Airlines was acquired by Delta in 2008.
Pinnacle, which is reorganizing through a Chapter 11 bankruptcy, said the decision to move to the Twin Cities came after "an exhaustive evaluation of the most cost-effective option."
"Both Memphis and the state of Minnesota presented very strong cases. In the end, it was an economic decision," Spanjers said in a statement.
Spanjers said the state, Gov. Mark Dayton, the Metropolitan Airports Commission (MAC) and Delta "were all very aggressive in working with us."
"Our decision was difficult to make," he said.
Pinnacle is a $900 million holding company with 5,100 employees. It operates 191 regional jets with 1,000 flights a day to more than 100 cities in the United States and Canada, including 80 flights from MSP. It has hubs in the Twin Cities, Memphis, Atlanta, Detroit, Cincinnati and New York. Upon emerging from bankruptcy it will be a Delta subsidiary.
"Delta worked with Pinnacle and the government officials in both Tennessee and Minnesota to evaluate the most cost-effective option for a headquarters location following the company's emergence from bankruptcy. Minnesota was the most economic option," said Delta spokeswoman Kristin Baur.
MAC Chairman Dan Boivin said he believes the Minnesota location "offers the best path forward" for Pinnacle to emerge from bankruptcy.
MAC board member Rick King agreed, adding that Pinnacle's choice "strengthened our hand as one of the key aviation centers in the country."
Jeff Hamiel, MAC's executive director, said negotiations with Pinnacle spanned nearly a year as Memphis interests tried to keep the airline in Tennessee.
In June, Paul Morris, president of the Downtown Memphis Commission, told the Star Tribune that the organization helped attract Pinnacle to Memphis in 2010. His organization and the city of Memphis provided $5 million of a total $20 million public/private investment to refurbish the One Commerce Square building into prime real estate. The investment allowed new building owners to provide Pinnacle and other tenants with below-market rates.
Once Pinnacle entered Chapter 11 in April, it was free to renegotiate its leases as part of the reorganization.
"We had a phone conversation with leadership at Pinnacle to express our interest in seeing them move here," Patrick Hogan, MAC's director of public affairs, told the Star Tribune in June.
The MAC is no stranger to airline bankruptcies, having witnessed it firsthand several times, including with Northwest.
Delta already has a headquarters for its commuter operation, Delta Connections, at MSP and it "made good sense" to locate Pinnacle's headquarters here, Hamiel said.
"This is a very good story for us," said Hamiel. "Pinnacle coming here means Mesaba comes back as a larger airline."
Hamiel credited Dayton for taking an active role in the negotiations.
"The company's decision is a great outcome and I appreciate the working partnership the state has had with Delta Air Lines in bringing these new jobs to Minnesota," Dayton said in a statement.
Spanjers was upbeat about the move.
"This is a significant milestone in our restructuring and represents substantial progress that we expect will allow us to continue down a path toward successfully emerging from bankruptcy," he said.
David Phelps • 612-673-7269