Spring has a special, more than symbolic meaning for Pinnacle Airlines this year.
Later this month the regional carrier will emerge from a painful bankruptcy as a subsidiary of Delta Air Lines, a legacy carrier that is among the largest in the world.
And in May, Memphis-based Pinnacle will become Minnesota-based Pinnacle as it relocates its headquarters to Minneapolis-St. Paul International Airport.
To date, the most evidence of Pinnacle’s move to MSP has been a pair of job fairs held last month to find headquarters employees as well as additional flight attendants. More recruiting events are expected later this month.
“The numbers are still fluid but we expect to have about 250 positions in Minneapolis. Some new, some of whom are transfers,” said Pinnacle spokesman Joe Williams.
Pinnacle is also hiring mechanics and technicians for its new operation.
Pinnacle’s new headquarters will be in a structure known as “Building C Tower” at 34th Avenue and Interstate 494.
Besides administrative functions such as accounting, finance and human resources, the headquarters also will house Pinnacle’s flight operations center, which handles aircraft and crew scheduling.
The relocation of Pinnacle from Memphis to Minneapolis made fiscal sense, said Delta spokeswoman Kristin Baur.
“As they went through bankruptcy, Pinnacle went through an evaluation of its most cost-effective options, and Minneapolis was the most cost effective,” Baur said. “Memphis and Minnesota both made very strong cases for themselves, but in the end it was ultimately an economic decision.”
Minnesota, through the Department of Employment and Economic Development, will provide $550,000 to Pinnacle in the form of a forgivable loan if the carrier creates 200 new full-time jobs in the state.
“Have you seen all the job postings on the Internet?” asked Dan Boivin, chairman of the Metropolitan Airports Commission. “This is good for us.”
Boivin said he hopes that Pinnacle’s move to Minneapolis will result in additional service out of MSP for outstate Minnesota cities where scheduled service has been reduced or eliminated.
Pinnacle has 5,000 employees systemwide, including 1,100 in Minnesota, before the headquarters announcement. Its fleet includes 140 CRJ-200 jets that seat 50 passengers and 41 CRJ-900 jets with a 76-seat capacity and a separate first-class area. Pinnacle serves 124 cities.
According to bankruptcy proceedings, Pinnacle’s fleet will eventually consist of 81 CRJ-900s with the smaller CRJ-200s being phased out over the next two to three years.
Pinnacle is one of seven regional carriers that are part of the Delta Connection system. They provide service on 50- to 76-seat jets on routes to and from Delta’s hub cities. After it emerges from bankruptcy, Pinnacle will be the only connections carrier owned by Delta.
Minneapolis-based Compass Airlines also is part of Delta Connection, as are Atlanta-based ExpressJet and St. George, Utah-based SkyWest.
Last year, Delta closed the only regional carrier it owned at the time, Cincinnati-based Comair Airlines, because its aging fleet of 50-seat aircraft was too expensive to fly and maintain.
“Pinnacle is different from Comair,” said veteran airline analyst Helane Becker of Cowen Securities. “Comair employees were much less willing to adjust pay scales and productivity issues.”
A sense of relief
Indeed, unions at Pinnacle agreed to deep pay cuts during bankruptcy in order to keep the airline flying.
As Pinnacle prepares to emerge from bankruptcy later this month, there seems to be a sense of relief among workers and optimism that the carrier will be a long-term survivor.
“With the move to Minneapolis, and when we exit from bankruptcy, we will be a re-energized airline,” said Terry French, president of the Association of Flight Attendants-CWA unit at Pinnacle.
“The new management team has good ideas how to pull it together and make it profitable, French said. “Going through bankruptcy was very stressful but it positions us to be more competitive.”
The management team includes CEO John Spanjers, the former CEO of Eagan-based Mesaba Airlines before it was acquired by Pinnacle in 2010, and Minneapolis resident Curt Berchtold, who is the airline’s senior vice president and chief financial officer. Berchtold previously was CFO at Silver Airways in Fort Lauderdale, Fla
Spanjers said earlier this year that “Pinnacle will be well-positioned to emerge from bankruptcy with a viable business plan that provides meaningful opportunities for our employees.’’
Analyst Becker said Pinnacle gives Delta more flexibility with its Delta Connection operation.
“Delta wants more than one choice with regional airlines, and Pinnacle provides that,” Becker said. “I think Pinnacle employees feel a lot better about Delta owning them with its deep pockets. It was either that or unemployment.”