Pinnacle strikes deal with Delta, giving it more time to file reorganization plan
Nov 13, 2012 (Menafn - The Commercial Appeal - McClatchy-Tribune Information Services via COMTEX) --The deadline for Pinnacle Airlines Corp. to file a reorganization plan has been extended.
Pinnacle said Tuesday it struck a deal with Delta Air Lines to extend the deadline to Dec. 30 or 30 days after a bankruptcy judge in New York rules on Pinnacle's motion to reject a labor agreement with its pilots.
The deadline was previously Monday under Pinnacle's debtor-in-possession financing agreement with Delta.
Pinnacle filed Chapter 11 bankruptcy on April 1, citing mounting losses and a fundamentally flawed cost structure that kept it from successfully competing in the regional airline industry.
Delta subsequently agreed to provide Pinnacle with 74.3 million in debtor-in-possession financing. The loan was broken down as 30 million in additional liquidity during bankruptcy and a 44.3 million payoff of what Pinnacle owed Delta for the 2010 purchase of now-defunct Mesaba Aviation.
Pinnacle has proposed to emerge from bankruptcy flying exclusively as a Delta Connection carrier.
Pinnacle has extracted labor concessions from each of its unionized workgroups except the 2,700 pilots.
However, pilot concessions would account for nearly 60 million of 76 million a year in targeted cost savings.
The company's motion to reject an agreement with the Air Line Pilots Association was heard in bankruptcy court in October, but the judge hasn't ruled yet.
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