Airline seeking bankruptcy protection won’t affect PI airport, director says

Posted April 04, 2012, at 2:21 p.m.
Last modified April 04, 2012, at 8:12 p.m.

PRESQUE ISLE, Maine — Officials at Northern Maine Regional Airport do not believe the facility will be hurt by the bankruptcy filing of Pinnacle Airlines Corp., whose subsidiary provides flight services to the airport.

Pinnacle is the parent company of Colgan Air, Inc., which provides nonstop service to and from Boston’s Logan Airport to the airport in Presque Isle and to Hancock County-Bar Harbor Airport in Trenton.

The Memphis, Tenn.-based airline on April 1 filed for bankruptcy under Chapter 11 in U.S. Bankruptcy Court in New York. The company listed assets of $1.5 billion and liabilities of $1.4 billion. Under Chapter 11, the debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time.

“I don’t think it will mean that much to us,” Scott Wardwell, director at the Presque Isle airport, said Tuesday. “We are watching it, but right now it does not look to be impacting us. It is a minor annoyance.”

M. Allison Rogers, manager of the Trenton airport, was unavailable to comment Wednesday.

At this point, Colgan Air is in the process of pulling its planes out of both airports.

Colgan Air petitioned the U.S. Department of Transportation this past September to end its service between Boston and Presque Isle and between Boston and Bar Harbor sometime this year. Colgan Air expressed a desire to close its Boston office because the market it serves has become smaller.

The federal Department of Transportation’s Essential Air Service program, established in 1978 during the period of airline deregulation, provides federal assistance to air carriers serving smaller communities that otherwise might lose service because of economic factors.

Under Essential Air Service regulations, Colgan Air was not allowed to leave until a replacement could be found.

Last month, Peninsula Airways of Alaska was chosen to operate under the Essential Air Service program at both the Presque Isle and Trenton airports. Specifically, PenAir will service Presque Isle year-round and provide additional service to Bar Harbor in the summer, while Cape Air will increase its presence in Maine by serving Bar Harbor year-round.

Wardwell said Pinnacle has launched an exit plan to vacate the airport, but said PenAir has not yet set a final date to enter the market. He estimated that it would be at least two months away.

Sean Menke, president and CEO of Pinnacle, said in a statement the company would use the Chapter 11 process to “reset our financial and operational structure in order to position Pinnacle for viability over the long term.”

He added that their business model is not sustainable because of increasing operating expenses, liquidity constraints, business integration delays and difficulties associated with combining its operations. Those obstacles, according to Menke, have hindered the company’s ability to maximize its growth potential.

Pinnacle’s network partners are Delta Connection, United Express and US Airways Express.

The company will use the Chapter 11 process to continue implementing a turnaround plan to address its operational and financial challenges.

According to information provided by Pinnacle, company officials will restructure key operating agreements with Delta Air Lines and cease Essential Air Service flying for US Airways. They also will look to the work force for cost savings.

Pinnacle also has asked the DOT to accelerate the process to find replacement carriers for the Essential Air Service markets it serves through Colgan Air.

Menke said the company is committed to delivering safe, reliable travel throughout the process, and they will continue to maintain an appropriate fleet and accompanying staffing levels.

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