Delta Air Lines has reached a deal to buy Pinnacle Airlines after the Delta Connection carrier emerges from bankruptcy.
Atlanta-based Delta last year provided Memphis-based Pinnacle with $74.3 million in financing, and has agreed to invest $52 million more for Pinnacle’s emergence from bankruptcy. The investment would be converted to 100 percent ownership of Pinnacle. Delta would then operate Pinnacle as a subsidiary with a separate operating certificate.
Buying ownership of an affiliate is a reversal for Delta, which sold two regionals operators, Compass and Mesaba, in 2010 and shut down a third, Comair, last year.
“As Pinnacle’s only customer, Delta has an interest in helping Pinnacle take steps that will provide for the airline’s long term stability and profitability,” the airline said in an e-mailed statement.
There are still a number of steps along Pinnacle’s path to reorganizing, including a new labor contract pilots are voting on through Jan. 15. Pinnacle would file a reorganization plan by Feb. 15 providing for Delta or an affiliate to acquire the equity in the reorganized Pinnacle.
The two airlines also announced a deal last month to add to the Pinnacle fleet 40 CRJ-900 76-seat regional jets, which Delta is buying from Bombardier Aerospace.
Pinnacle described all of the agreements as “interdependent” and subject to court approval.
Another issue up in the air since Pinnacle filed for Chapter 11 bankruptcy protection last April is whether its headquarters will remain in Memphis, generating concern for Memphians. A Pinnacle spokesman said no decision has been made.