Pinnacle, which is based in Memphis, Tennessee, has lost $3.46 million in just the last quarter. They want to change the worker contract agreements with Delta, who outsourced short and medium flight routes to the smaller carrier. Pinnacle is trying to avoid bankruptcy:
“They’re trying to do everything now and avoid a Chapter 11,” said Neidl, of the New York investment firm Maxim Group.
And although Pinnacle does not want to go the Chapter 11 route, it may be the only leverage they have to force Delta to the labor negotiating table:
‘Under a Chapter 11 reorganization, Pinnacle could continue flying and ask a bankruptcy judge to break labor contracts and existing deals with Delta, as well as with United Continental Holdings Corp. and US Airways Group Inc….Pinnacle, according to Neidl, has advantages. If the Memphis line grounds some pilots in bankruptcy, for example, Delta might rely more on its higher-cost Comair subsidiary, which could make Delta favor reaching a deal with Pinnacle.’
Pinnacle employs roughly 7,800 people nationwide.